Lithia & Driveway posts record Q2 revenues, raises dividend by 23%
Lithia & Driveway delivered record Q2 2026 revenues of $9.8 billion and a 17% increase in diluted EPS to $11.54, driven by stable new vehicle margins and operational efficiency. The company raised its quarterly dividend by 23% to $0.70 per share and repurchased $242 million in stock, leaving $620 million available for buybacks.
*this image is generated using AI for illustrative purposes only.
Lithia & Driveway (NYSE: LAD) reported record second-quarter 2026 revenues of $9.8 billion on July 29, 2026, driven by stable new vehicle margins and improved used vehicle profitability. The Medford, Oregon-based automotive retailer achieved a 17% year-over-year increase in diluted earnings per share (EPS) to $11.54. This performance underscores the company’s ability to generate differentiated growth across its platform, including meaningful sequential improvements in selling, general, and administrative (SG&A) efficiency.
The Board of Directors approved a quarterly dividend of $0.70 per share, representing a 23% increase from the prior year period of $0.57. The dividend is expected to be paid on August 21, 2026, to shareholders of record on August 7, 2026. Additionally, the company repurchased approximately 854,000 shares during the quarter at a weighted average price of $284, totaling $242 million. This buyback activity accounted for 3.7% of outstanding shares in the quarter and 7.6% in the first half of 2026. Approximately $620 million remains available under the current share repurchase authorization as of June 30, 2026.
Financial Performance Overview
Total revenues for the second quarter of 2026 increased 2% to $9.8 billion from $9.6 billion in the same period of 2025. Net income rose 1.3% to $261.6 million, compared to $258.2 million in the second quarter of 2025. Adjusted net income, however, decreased 6% to $227.6 million, primarily due to adjustments related to an unrealized gain on the company’s investment in Pinewood Technologies Group PLC and other non-core items.
| Metric | Q2 2026 | Q2 2025 | YoY Change |
|---|---|---|---|
| Total Revenue | $9.8 billion | $9.6 billion | 2% |
| Net Income | $261.6 million | $258.2 million | 1.3% |
| Diluted EPS | $11.54 | $9.87 | 17% |
| Adjusted Diluted EPS | $10.03 | $9.20 | 9% |
For the first six months of 2026, revenues increased 2% to $19.1 billion from $18.8 billion in 2025. Diluted earnings per share for the first half declined 12% to $15.68 from $17.80 in the prior year, while adjusted diluted earnings per share increased 1% to $17.32 from $17.12.
Operational Highlights
New vehicle unit sales rose 2.7% to 104,089 units, while used vehicle retail sales decreased 2.7% to 106,114 units. Aftersales gross profit increased by 3.1% on a same-store basis, with gross margin expanding by 120 basis points to 59.2%. Adjusted SG&A as a percent of gross profit improved by 290 basis points sequentially to 68.6%.
Financing Operations delivered record income of $37 million and record originations of $884 million, achieving a 17.5% penetration rate. Bryan DeBoer, President and CEO, stated that the team delivered differentiated growth with record quarterly revenues and stable new vehicle margins. He noted that Financing Operations delivered 80% income growth with expanding margins and increasing penetration.
What the Numbers Show
The divergence between GAAP net income growth (1.3%) and adjusted net income decline (6%) highlights the impact of non-core investment gains on reported profitability. While core operational metrics such as aftersales margin expansion and SG&A efficiency improved significantly, the adjusted bottom line was pressured by these non-recurring items. Furthermore, the substantial share repurchase program—reducing diluted shares outstanding by 13.1% year-over-year—was a primary driver behind the 17% surge in diluted EPS, despite modest revenue growth.
Balance Sheet and Corporate Development
Lithia & Driveway ended the second quarter with approximately $1.3 billion in cash, cash equivalents, marketable securities, and availability on revolving lines of credit. In terms of corporate development, the company acquired five stores expected to generate $340 million in annualized revenues and divested three stores representing $120 million in annualized revenues. New vehicle inventory days’ supply stood at 59 days, compared to 54 days at the end of 2025 and 63 days in June 2025.
How might the 59-day new vehicle inventory supply impact Lithia's negotiating power with OEMs and potential margin compression in Q3?
Will the $620 million remaining share repurchase authorization be sufficient to sustain EPS growth if revenue momentum slows in the second half of 2026?
What is the expected timeline for full integration of the five newly acquired stores, and how will they contribute to SG&A efficiency targets?
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