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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-14733

Lithia Motors, Inc.

(Exact name of registrant as specified in its charter)


Oregon			93-0572810
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
150 N. Bartlett Street	Medford,	Oregon	97501
(Address of principal executive offices)			(Zip Code)

(541) 776-6401

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock without par value	LAD	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to

such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to

submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,

or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and

“emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	Non-accelerated filer	Accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2026, there were 22,805,820 shares of the registrant’s common stock outstanding.

LITHIA MOTORS, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS


Item Number	Item	Page
	GLOSSARY	1

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	2
	Consolidated Balance Sheets (Unaudited) - March 31, 2026, and December 31, 2025	2
	Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 2026 and 2025	3
	Consolidated Statements of Comprehensive Income (Unaudited) – Three Months Ended March 31, 2026 and 2025	4
	Consolidated Statements of Equity (Unaudited) - Three Months Ended March 31, 2026 and 2025	5
	Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2026 and 2025	6
	Condensed Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 5.	Other Information	37
Item 6.	Exhibits	37

	SIGNATURE	38


		GLOSSARY	1

Table of Contents

GLOSSARY OF DEFINITIONS

The following are abbreviations and definitions of terms used within this report:


Terms		Definitions
AFS		Available-for-sale
ASC		Accounting Standards Codification
ASU		Accounting standards update
Board		Board of directors
BNS		The Bank of Nova Scotia
BPS		Basis points
CAD		Canadian Dollar ($)
CORRA		Canadian Overnight Repo Rate Average
CPO		Certified pre-owned
DFC		Driveway Finance Corporation
EBITDA		Earnings before interest, taxes, depreciation, and amortization
EPS		Earnings per share
FASB		Financial Accounting Standards Board
GAAP		Generally accepted accounting principles
GBP		Great Britain Pound (£)
LAD		Lithia and Driveway
LMMH		Lithia Marubeni Mobility Holdings
NM		Not meaningful
NYSE		New York Stock Exchange
PINE.L		Pinewood Technologies Group PLC
PPA		Purchase price allocation
RSU		Restricted stock units
SEC		Securities and Exchange Commission
SG&A		Selling, general, and administrative
SOFR		Secured Overnight Financing Rate
U.K.		United Kingdom
U.S.		United States of America
USB		US Bank National Association
YTD		Year-to-date


		CONSOLIDATED FINANCIAL STATEMENTS	2

Table of Contents


CONSOLIDATED BALANCE SHEETS
(In millions; Unaudited)	March 31, 2026	December 31, 2025
Assets
Current assets:
Cash, restricted cash, and cash equivalents	$421.3	$341.8
Accounts receivable, net of allowance for doubtful accounts of $7.3 and $6.9	1,261.4	1,134.1
Inventories, net	6,193.2	6,119.6
Other current assets	275.9	262.5
Total current assets	8,151.8	7,858.0

Property and equipment, net of accumulated depreciation of $1,052.4 and $1,004.9	4,994.5	4,936.0
Operating lease right-of-use assets	708.1	717.2
Finance receivables, net of allowance for credit losses of $149.1 and $143.7	5,012.9	4,755.1
Goodwill	2,471.8	2,476.7
Franchise value	2,770.2	2,777.4
Other non-current assets	1,640.4	1,586.8
Total assets	$25,749.7	$25,107.2

Liabilities and equity
Current liabilities:
Floor plan notes payable	$1,910.4	$1,992.6
Floor plan notes payable: non-trade	4,374.1	3,016.3
Current maturities of long-term debt	110.4	64.2
Current maturities of non-recourse notes payable	68.2	69.7
Trade payables	489.3	339.5
Accrued liabilities	1,247.3	1,214.4
Total current liabilities	8,199.7	6,696.7

Long-term debt, less current maturities	6,448.8	7,274.9
Non-recourse notes payable, less current maturities	2,565.8	2,404.2
Deferred revenue	466.6	452.7
Deferred income taxes	531.3	516.3
Non-current operating lease liabilities	651.8	662.1
Other long-term liabilities	476.2	471.9
Total liabilities	19,340.2	18,478.8

Equity:
Preferred stock - no par value; authorized 15.0 shares; none outstanding	—	—
Common stock - no par value; authorized 125.0 shares; issued and outstanding 22.8 and 23.5	—	—
Additional paid-in capital	—	18.1
Accumulated other comprehensive income	42.1	67.3
Retained earnings	6,342.1	6,517.8
Total stockholders’ equity - Lithia Motors, Inc.	6,384.2	6,603.2
Non-controlling interest	25.3	25.2
Total equity	6,409.5	6,628.4
Total liabilities and equity	$25,749.7	$25,107.2

See accompanying condensed notes to consolidated financial statements.


		CONSOLIDATED FINANCIAL STATEMENTS	3

Table of Contents


CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended March 31,
(In millions, except per share amounts; Unaudited)	2026	2025
Revenues
New vehicle	$4,379.4	$4,580.4
Used vehicle	3,489.4	3,250.5
Finance and insurance	359.7	364.3
Aftersales	1,042.9	983.1
Total revenues	9,271.4	9,178.3
Cost of sales
New vehicle retail	4,119.8	4,287.0
Used vehicle retail	3,301.7	3,061.8
Aftersales	428.2	419.1
Total cost of sales	7,849.7	7,767.9
Gross profit	1,421.7	1,410.4

Finance operations income	21.3	12.5

Selling, general and administrative	1,037.4	952.7
Depreciation and amortization	69.8	63.9
Operating income	335.8	406.3
Floor plan interest expense	(55.9)	(57.1)
Other interest expense, net	(70.3)	(65.5)
Other (expense) income, net	(67.6)	0.8
Income before income taxes	142.0	284.5
Income tax provision	(40.0)	(73.3)
Net income	102.0	211.2
Net income attributable to non-controlling interest	(1.6)	(1.7)
Net income attributable to Lithia Motors, Inc.	$100.4	$209.5

Basic earnings per share attributable to Lithia Motors, Inc. common stockholders	$4.29	$7.96
Shares used in basic per share calculations	23.4	26.3

Diluted earnings per share attributable to Lithia Motors, Inc. common stockholders	$4.28	$7.94
Shares used in diluted per share calculations	23.4	26.4

Cash dividends paid per share	$0.55	$0.53

See accompanying condensed notes to consolidated financial statements.


		CONSOLIDATED FINANCIAL STATEMENTS	4

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Three Months Ended March 31,
(In millions; Unaudited)	2026	2025
Net income	$102.0	$211.2
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(23.3)	35.9
Unrealized (loss) gain on debt securities, net of tax benefit (provision) of $0.1 and $(0.1)	(0.3)	0.4
(Loss) gain on cash flow hedges, net of tax benefit (provision) of $0.5 and $(0.3)	(1.6)	0.8
Total other comprehensive (loss) income, net of tax	(25.2)	37.1
Comprehensive income	76.8	248.3

Comprehensive income attributable to non-controlling interest	(1.6)	(1.7)
Comprehensive income attributable to Lithia Motors, Inc.	$75.2	$246.6

See accompanying condensed notes to consolidated financial statements.


		CONSOLIDATED FINANCIAL STATEMENTS	5

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CONSOLIDATED STATEMENTS OF EQUITY
	Three Months Ended March 31,
(In millions; Unaudited)	2026	2025
Total equity, beginning balances	$6,628.4	$6,674.1

Common stock, beginning balances	—	793.1
Stock-based compensation	30.2	26.4
Issuance of stock in connection with employee stock purchase plans	5.8	5.6
Repurchase of common stock, including excise tax	(36.0)	(145.7)
Common stock, ending balances	—	679.4

Additional paid-in capital, beginning balances	18.1	107.2
Stock-based compensation	(18.1)	(11.4)
Additional paid-in capital, ending balances	—	95.8

Accumulated other comprehensive income (loss), beginning balances	67.3	(3.6)
Foreign currency translation adjustment	(23.3)	35.9
Unrealized (loss) gain on debt securities, net of tax benefit (provision) of $0.1 and $(0.1)	(0.3)	0.4
(Loss) gain on cash flow hedges, net of tax benefit (provision) of $0.5 and $(0.3)	(1.6)	0.8
Accumulated other comprehensive income, ending balances	42.1	33.5

Retained earnings, beginning balances	6,517.8	5,753.5
Net income attributable to Lithia Motors, Inc.	100.4	209.5
Dividends paid	(12.8)	(13.9)
Repurchase of common stock, including excise tax	(263.3)	—
Retained earnings, ending balances	6,342.1	5,949.1

Non-controlling interest, beginning balances	25.2	23.9
Distribution of non-controlling interest	(1.5)	(1.2)
Net income attributable to non-controlling interest	1.6	1.7
Non-controlling interest, ending balances	25.3	24.4

Total equity, ending balances	$6,409.5	$6,782.2

See accompanying condensed notes to consolidated financial statements.


		CONSOLIDATED FINANCIAL STATEMENTS	6

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CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended March 31,
(In millions; Unaudited)	2026	2025
Cash flows from operating activities:
Net income	$102.0	$211.2
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	86.3	77.7
Stock-based compensation	12.1	15.0
Net loss on disposal of other assets	3.3	1.3
Net gain on disposal of stores	—	(9.4)
Unrealized investment loss, net	70.0	6.0
Deferred income taxes	16.2	33.8
Amortization of operating lease right-of-use assets	24.3	22.5
(Increase) decrease (net of acquisitions and dispositions):
Accounts receivable, net	(135.8)	(153.5)
Inventories	(97.2)	186.4
Finance receivables	(261.2)	(179.1)
Other assets	(51.2)	(36.2)
Increase (decrease) (net of acquisitions and dispositions):
Floor plan notes payable	(65.5)	23.3
Trade payables	152.8	21.7
Accrued liabilities	28.3	103.7
Other long-term liabilities and deferred revenue	7.2	(2.3)
Net cash (used in) provided by operating activities	(108.4)	322.1
Cash flows from investing activities:
Capital expenditures	(97.1)	(68.7)
Proceeds from sales of assets	11.3	5.4
Net cash used for other investments	(9.4)	(12.5)
Cash paid for acquisitions, net of cash acquired	(145.3)	(84.5)
Proceeds from sales of stores	—	43.2
Net cash used in investing activities	(240.5)	(117.1)
Cash flows from financing activities:
Borrowings (repayments) on floor plan notes payable, net: non-trade	1,378.3	(44.0)
Borrowings on lines of credit	3,436.5	3,698.5
Repayments on lines of credit	(4,216.2)	(3,846.9)
Principal payments on long-term debt and finance lease liabilities, scheduled	(12.6)	(10.0)
Principal payments on long-term debt and finance lease liabilities, other	(6.5)	(1.3)
Principal payments on non-recourse notes payable	(372.1)	(309.6)
Proceeds from issuance of non-recourse notes payable	532.1	564.0
Payment of debt issuance costs	(2.0)	(2.5)
Proceeds from issuance of common stock	5.8	5.6
Repurchase of common stock	(297.0)	(143.4)
Dividends paid	(12.8)	(13.9)
Payment of contingent consideration related to acquisitions	—	(9.4)
Other financing activity	(1.5)	(60.1)
Net cash provided by (used in) financing activities	432.0	(173.0)
Effect of exchange rate changes on cash, restricted cash, and cash equivalents	(1.7)	0.3
Increase in cash, restricted cash, and cash equivalents	81.4	32.3
Cash, restricted cash, and cash equivalents at beginning of year	391.3	445.8
Cash, restricted cash, and cash equivalents at end of period	$472.7	$478.1

See accompanying condensed notes to consolidated financial statements.


		CONSOLIDATED FINANCIAL STATEMENTS	7

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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Three Months Ended March 31,
(In millions)	2026	2025
Reconciliation of cash, restricted cash, and cash equivalents to the consolidated balance sheets
Cash and cash equivalents	$160.8	$234.4
Restricted cash from collections on auto loans receivable and customer deposits	260.5	195.9
Cash, restricted cash, and cash equivalents	421.3	430.3
Restricted cash on deposit in reserve accounts, included in other non-current assets	51.4	47.8
Total cash, restricted cash, and cash equivalents reported in the Consolidated Statements of Cash Flows	$472.7	$478.1

Supplemental cash flow information:
Cash paid during the period for interest	$185.4	$168.9
Cash paid during the period for income taxes, net	24.1	7.3
Debt paid in connection with store disposals	—	10.2

Non-cash activities:
Acquisition of finance leases in connection with acquisitions	23.3	—
Right-of-use assets obtained in exchange for lease liabilities	21.6	13.1
Unsettled repurchases of common stock and excise taxes	2.4	2.3

See accompanying condensed notes to consolidated financial statements.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. INTERIM FINANCIAL STATEMENTS

Basis of Presentation

These Consolidated Financial Statements contain unaudited information as of March 31, 2026, and for the three

months ended March 31, 2026 and 2025. The unaudited interim financial statements have been prepared pursuant

to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting

principles generally accepted in the United States of America for annual financial statements are not included

herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only

normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our

2025 audited Consolidated Financial Statements and the related notes thereto. The financial information as of

December 31, 2025, is derived from our Annual Report on Form 10-K filed with the SEC on February 25, 2026. The

results of operations for the interim periods presented are not necessarily indicative of the results to be expected for

the full year.

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying Consolidated

Financial Statements to maintain consistency and comparability between periods presented. Within our

Consolidated Statements of Operations, we combined used wholesale revenue with used retail revenue and now

present these revenues collectively as used vehicle revenue. In addition, we combined fleet revenue with new retail

revenue and now present these revenues collectively as new vehicle revenue.

These changes were made to better reflect how management evaluates our revenue performance and to improve

comparability with industry practice. The reclassifications had no impact on total revenue, gross profit, operating

income, net income, or cash flows for any period presented.

NOTE 2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


(In millions)	March 31, 2026	December 31, 2025
Contracts in transit	$496.4	$468.6
Trade receivables	163.9	148.6
Vehicle receivables	244.7	177.6
Manufacturer receivables	347.3	327.9
Other receivables, current	16.4	18.3
	1,268.7	1,141.0
Less: Allowance for doubtful accounts	(7.3)	(6.9)
Total accounts receivable, net	$1,261.4	$1,134.1

The long-term portion of other receivables was included as a component of Other non-current assets in the

Consolidated Balance Sheets.

NOTE 3. INVENTORIES AND FLOOR PLAN NOTES PAYABLE

The components of inventories, net, consisted of the following:


(In millions)	March 31, 2026	December 31, 2025
New vehicles	$3,593.0	$3,586.1
Used vehicles	2,337.6	2,266.7
Parts and accessories	262.6	266.8
Total inventories	$6,193.2	$6,119.6

Vehicle inventory costs are generally reduced by manufacturer holdbacks and incentives, while the related floor plan

notes payable are reflective of the gross cost of the vehicle.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	9

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(In millions)	March 31, 2026	December 31, 2025
Floor plan notes payable	$1,910.4	$1,992.6
Floor plan notes payable: non-trade	4,374.1	3,016.3
Total floor plan debt	$6,284.5	$5,008.9

NOTE 4. FINANCE RECEIVABLES

Interest income on finance receivables is recognized based on the contractual terms of each receivable and is

accrued until repayment, reaching non-accrual status, charge-off, or repossession. Direct costs associated with

originations are capitalized and expensed as an offset to interest income when recognized on the receivables.

The balances of finance receivables are made up of loans and finance leases secured by the related vehicles. More

than 99% of the portfolio is aged less than 60 days past due with less than 1% on non-accrual status.

Finance Receivables, net


(In millions)	March 31, 2026	December 31, 2025
Asset-backed term funding	$3,104.7	$2,954.6
Warehouse facilities	1,611.0	1,514.8
Other managed receivables	419.6	403.4
Total finance receivables	5,135.3	4,872.8
Accrued interest and fees	26.7	26.0
Less: Allowance for credit losses	(149.1)	(143.7)
Finance receivables, net	$5,012.9	$4,755.1

Finance Receivables by FICO Score


	As of March 31, 2026
	Year of Origination
($ in millions)	2026	2025	2024	2023	2022	Prior to 2022	Total
<599	$11.4	$38.1	$29.9	$19.6	$10.4	$4.0	$113.4
600-699	201.4	583.8	329.9	219.9	147.2	38.9	1,521.1
700-774	253.5	721.0	341.3	224.0	144.9	17.7	1,702.4
775+	290.9	723.0	299.9	170.3	86.9	4.2	1,575.2
Total auto loan receivables	$757.2	$2,065.9	$1,001.0	$633.8	$389.4	$64.8	4,912.1
Other finance receivables 1							223.2
Total finance receivables							$5,135.3


		As of December 31, 2025
		Year of Origination
($ in millions)	2025	2024	2023	2022	2021	Prior to 2021	Total
<599	$42.0	$34.4	$22.7	$12.0	$4.7	$0.5	$116.3
600-699	629.9	369.1	250.9	173.0	45.2	3.3	1,471.4
700-774	784.1	382.1	254.7	168.4	20.4	1.3	1,611.0
775+	810.5	338.5	197.3	102.0	4.8	0.4	1,453.5
Total auto loan receivables	$2,266.5	$1,124.1	$725.6	$455.4	$75.1	$5.5	4,652.2
Other finance receivables 1							220.6
Total finance receivables							$4,872.8

1Includes legacy portfolio, loans that are originated with no FICO score available, lease receivables, and deferred origination

fees.

In accordance with FASB ASC Topic 326, the allowance for credit losses on finance receivables is estimated based

on our historical write-off experience, current conditions and forecasts, as well as the value of any underlying assets

securing these receivables. Consideration is given to recent delinquency trends and recovery rates. Account

balances are charged against the allowance upon reaching 120 days past due status.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	10

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Rollforward of Allowance for Credit Losses on Finance Receivables

Our allowance for credit losses on finance receivables represents the net credit losses expected over the remaining

contractual life of our managed receivables. The allowance for credit losses on finance receivables consisted of the

following changes during the period:


	Three Months Ended March 31,		2026 vs. 2025
(In millions)	2026	2025	$ Change	% Change
Allowance for credit losses at beginning of period	$143.7	$123.4	$20.3	16.5%
Charge-offs	(41.8)	(43.1)	1.3	(3.0)
Recoveries	20.8	21.7	(0.9)	(4.1)
Net charge-offs	(21.0)	(21.4)	0.4	(1.9)%
Change in provision due to portfolio size	5.4	4.1	1.3	31.7
Change in provision due to net charge-offs	21.0	21.4	(0.4)	(1.9)
Allowance for credit losses at end of period	$149.1	$127.5	$21.6	16.9%

Charge-off Activity by Year of Origination


	Three Months Ended March 31,
(In millions)	2026	2025
2026	$0.1	$—
2025	10.9	—
2024	12.3	11.5
2023	8.8	15.9
2022	6.2	10.7
2021 and prior	1.3	3.2
Other finance receivables 1	2.2	1.8
Total charge-offs	$41.8	$43.1

1Includes legacy portfolio, loans that are originated with no FICO score available, and finance lease receivables.

NOTE 5. GOODWILL AND FRANCHISE VALUE

The changes in the carrying amounts of goodwill are as follows:


(In millions)	Vehicle Operations	Financing Operations	Consolidated
Balance as of December 31, 2024	$2,099.3	$16.2	$2,115.5
Additions through acquisitions 1	383.1	—	383.1
Reductions through disposals	(39.2)	—	(39.2)
Currency translation	16.5	0.8	17.3
Balance as of December 31, 2025	2,459.7	17.0	2,476.7
Currency translation	(4.6)	(0.3)	(4.9)
Balance as of March 31, 2026	$2,455.1	$16.7	$2,471.8

1Our purchase price allocations (PPA) for the 2024 acquisitions were finalized in 2025. As a result, we added $348.2 million

of goodwill. Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $34.9 million of goodwill. Our PPA for

the remaining 2025 acquisitions are preliminary and goodwill is not yet allocated to our segments. These amounts are

included in other non-current assets until we finalize our purchase accounting. See Note 12 – Acquisitions.

The changes in the carrying amounts of franchise value are as follows:


(In millions)	Franchise Value
Balance as of December 31, 2024	$2,550.3
Additions through acquisitions 1	231.1
Reductions through divestitures	(20.9)
Reductions from impairments 2	(5.8)
Currency translation	22.7
Balance as of December 31, 2025	2,777.4
Currency translation	(7.2)
Balance as of March 31, 2026	$2,770.2

1Our PPA for the 2024 acquisitions were finalized in 2025. As a result, we added $218.0 million of franchise value.

Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $13.1 million of franchise value. These amounts

are included in other non-current assets until we finalize our purchase accounting. See Note 12 – Acquisitions.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	11

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2In our annual impairment testing in 2025, we determined the franchise value of one underperforming store was not

recoverable, resulting in an impairment of $5.8 million being recorded in the Consolidated Statements of Operations as

Asset impairments. Balance as of March 31, 2026 and December 31, 2025 is net of accumulated impairments of this

amount only.

NOTE 6. INVESTMENTS

Marketable Securities

As of March 31, 2026 and December 31, 2025, marketable equity securities recorded within other current assets in

the Consolidated Balance Sheets were $2.4 million and $2.4 million, respectively. There were no net unrealized

gains or losses recognized during the three months ended March 31, 2026 and 2025 on marketable equity

securities held at the reporting date.

Marketable debt securities accounted for as available-for-sale (AFS), and recorded within Other current assets in

the Consolidated Balance Sheets, were as follows:


	As of March 31, 2026
					Fair Value of Securities with Contractual Maturities
(In millions)	Amortized Cost	Total Net Gains1	Total Net Losses1	Fair Value	Within 1 Year	After 1 Year through 5 Years	After 5 Years
U.S. Treasury	$20.8	$0.1	$—	$20.9	$3.7	$14.5	$2.7
Municipal securities	10.5	0.1	—	10.6	0.2	9.0	1.4
Corporate debt	22.0	0.1	—	22.1	4.1	14.5	3.5
Total	$53.3	$0.3	$—	$53.6	$8.0	$38.0	$7.6


	As of December 31, 2025
					Fair Value of Securities with Contractual Maturities
(In millions)	Amortized Cost	Total Net Gains1	Total Net Losses1	Fair Value	Within 1 Year	After 1 Year through 5 Years	After 5 Years
U.S. Treasury	$21.4	$0.2	$—	$21.6	$3.7	$14.5	$3.4
Municipal securities	10.4	0.2	—	10.6	0.1	9.0	1.5
Corporate debt	21.5	0.3	—	21.8	4.0	14.3	3.5
Total	$53.3	$0.7	$—	$54.0	$7.8	$37.8	$8.4

1Represents total unrealized gains for securities with net gains (losses) in accumulated other comprehensive income.

Proceeds from the maturity of AFS debt securities were $0.7 million and $0.6 million for the three months ended

March 31, 2026 and 2025. There were no gross realized gains or losses on the maturity of AFS debt securities for

the three months ended March 31, 2026 and 2025.

Equity Method Investments

Our common stock voting interests in Pinewood Technologies, PLC (PINE.L), a U.K.-based automotive dealership

management system provider, increased from 25.50% to 31.95% in July 2025. The investment is accounted for as

an equity method investment. The investment is measured at fair value based on quoted market prices, and all fair

market value changes in the investment are recorded as unrealized gains or losses as a component of Other

(expense) income, net in the Consolidated Statements of Operations. The fair value of our investment was $101.3

million and $177.2 million as of March 31, 2026 and December 31, 2025, respectively. See Note 11 – Fair Value

Measurements.

Our investment in Wheels, Inc., an automotive fleet management provider, through Lithia Marubeni Mobility

Holdings (LMMH) consists of 26.5% of the common stock voting interests accounted for as an equity method

investment. The investment is measured at cost plus or minus our share of equity method investee income or loss

as a component of Other non-current assets in the Consolidated Balance Sheets. The book value of our investment

was $213.7 million and $222.0 million as of March 31, 2026 and December 31, 2025, respectively. We received a

dividend of $9.8 million during the three months ended March 31, 2026. Using the cumulative earnings approach,

this dividend is classified within Operating Activities in the Consolidated Statements of Cash Flows, as it is less than

our cumulative equity in the investee's earnings.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	12

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NOTE 7. COMMITMENTS AND CONTINGENCIES

Contract Liabilities

We retain the obligation for various contracts sold to our customers and assumed in acquisitions. These amounts

are recorded as a contract liability. At the time of sale, we defer the full sale price and recognize the revenue based

on the rate at which we expect to incur further costs.

The amount of revenue recognized related to aftersales contract liabilities is calculated, net of cancellations, using

an input method, which most closely depicts performance of the contracts. Our contract liability balances associated

with aftersales were $516.1 million and $501.5 million as of March 31, 2026, and December 31, 2025, respectively;

we recognized $34.8 million of revenue in the three months ended March 31, 2026, related to our opening contract

liability balances associated with aftersales.

The amount of revenue recognized related to operating lease vehicle contract liabilities is recognized evenly over

the life of the related lease contracts. Our contract liability balances associated with operating lease vehicles were

$140.2 million and $136.4 million as of March 31, 2026, and December 31, 2025, respectively; we recognized $17.7

million of revenue in the three months ended March 31, 2026, related to our opening contract liability balances

associated with operating lease vehicles.

Our contract liability balances are included in Accrued liabilities and Deferred revenue.

Litigation

We are party to numerous legal proceedings arising in the normal course of our business. Although we do not

anticipate that the resolution of legal proceedings arising in the normal course of business will have a material

adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with

certainty.

NOTE 8. DEBT

Credit Facilities

US Bank Syndicated Credit Facility

On February 27, 2026, we amended our existing syndicated credit facility with US Bank as agent (USB credit

facility), now comprised of 18 financial institutions, including six manufacturer-affiliated finance companies, maturing

February 27, 2031. The amendment extended the maturity date, converted the existing used vehicle floorplan and

service loaner floorplan facilities to VIN-specific facilities, eliminated the credit spread adjustment of 0.10%, and

reduced the margin on used vehicle floor plan financing from 1.40% to 1.20%.

This USB credit facility provides for a total financing commitment of $6.5 billion, which may be further expanded,

subject to lender approval and the satisfaction of other conditions, up to a total of $7.0 billion. The allocation of the

financing commitment is for up to $2.7 billion in new vehicle inventory floorplan financing, up to $1.3 billion in used

vehicle inventory floorplan financing, up to $150 million in service loaner vehicle floorplan financing, and up to

$2.4 billion in revolving financing for general corporate purposes, including acquisitions and working capital. We

have the option to reallocate the commitments under this USB credit facility, provided that the aggregate revolving

loan commitment may not be more than 50% of the amount of the aggregate commitment. All borrowings from, and

repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as part of Net cash

provided by (used in) financing activities.

Our obligations under our USB credit facility are secured by a substantial amount of our assets, including our

inventory (including new and used vehicles, parts and accessories), equipment, accounts receivable (and other

rights to payment), real property, and our equity interests in certain of our subsidiaries.

The interest rate on the USB credit facility varies based on the type of debt, with the rate of one-day SOFR plus a

margin of 1.10% for new vehicle floor plan financing, 1.20% for used vehicle floor plan financing, 1.20% for service

loaner floor plan financing, and a variable interest rate on the revolving financing ranging from 1.00% to 2.00%

depending on our leverage ratio. The annual interest rates associated with our commitments are as follows:


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	13

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Commitment	Annual Interest Rate at March 31, 2026
New vehicle floor plan	4.78%
Used vehicle floor plan	4.88%
Service loaner floor plan	4.88%
Revolving line of credit	4.93%

Bank of Nova Scotia Syndicated Credit Facility

On February 27, 2026, we amended our syndicated credit agreement with The Bank of Nova Scotia as agent (BNS

credit facility), which is comprised of six financing institutions, including two manufacturer-affiliated finance

companies. The amendment extended the maturity date, converted the existing used vehicle floorplan facility to a

VIN-specific facility, and reduced the margin on used vehicle floor plan financing from 1.25% to 1.10%.

The BNS credit facility provides for a total financing commitment of approximately $1.1 billion CAD, including a

working capital revolving credit facility of up to $125 million CAD, a wholesale flooring facility for new vehicles up to

$375 million CAD, used vehicle flooring facility of up to $100 million CAD, wholesale leasing facility of up to $500

million CAD, and daily rental vehicle facility up to $25 million CAD.

The interest rate on the BNS credit facility varies based on the type of debt, with the daily compound rate of the

Canadian Overnight Repo Rate Average (CORRA) plus a margin of 1.25%-2.25%. The annual interest rates

associated with our commitments are as follows:


Commitment	Annual Interest Rate at March 31, 2026
Wholesale flooring facility	3.57%
Used vehicle flooring facility	3.37%
Daily rental facility	3.77%
Wholesale leasing facility	3.87%
Working capital revolving facility	3.82%

All BNS facilities other than the wholesale and used flooring facilities, which are demand facilities, mature on

March 18, 2029. The credit agreement includes various financial and other covenants typical of such agreements.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	14

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Non-Recourse Notes Payable

In 2026, we issued $532.1 million in non-recourse notes payable related to asset-backed term funding transactions.

Below is a summary of outstanding non-recourse notes payable issued:


($ in millions)	Balance as of March 31, 2026	Initial Principal Amount	Issuance Date	Interest Rate Range	Final Distribution Date
LAD Auto Receivables Trust 2022-1 Class C	20.4	23.0	08/17/22	6.85% to 6.85%	Various dates through Apr 2030
LAD Auto Receivables Trust 2023-1 Class C-D	46.8	68.0	02/14/23	6.18% to 7.30%	Various dates through Jun 2030
LAD Auto Receivables Trust 2023-2 Class B-D	84.5	102.3	05/24/23	5.45% to 6.30%	Various dates through Feb 2031
LAD Auto Receivables Trust 2023-3 Class A-D	90.7	124.4	08/23/23	5.95% to 6.92%	Various dates through Dec 2030
LAD Auto Receivables Trust 2023-4 Class A-D	109.9	121.1	11/15/23	6.24% to 7.37%	Various dates through Apr 2031
LAD Auto Receivables Trust 2024-1 Class A-D	103.4	179.4	02/14/24	5.17% to 6.15%	Various dates through Jun 2031
LAD Auto Receivables Trust 2024-2 Class A-D	163.5	232.2	06/20/24	5.46% to 6.37%	Various dates through Oct 2031
LAD Auto Receivables Trust 2024-3 Class A-D	301.2	306.3	11/15/24	4.52% to 5.18%	Various dates through Feb 2032
LAD Auto Receivables Trust 2025-1 Class A-D	327.4	461.4	02/12/25	4.60% to 5.52%	Various dates through May 2032
LAD Auto Receivables Trust 2025-2 Class A-D	398.5	443.3	08/13/25	4.25% to 5.01%	Various dates through Dec 2032
LAD Auto Receivables Trust 2025-3 Class A-C	491.9	583.2	11/13/25	4.03% to 4.60%	Various dates through Mar 2033
LAD Auto Receivables Trust 2026-1 Class A-C	495.8	532.1	02/18/26	3.75% to 4.42%	Various dates through Aug 2033
Total non-recourse notes payable	$2,634.0	$3,176.7

NOTE 9. RETIREMENT PLANS AND POSTRETIREMENT BENEFITS

Company-Sponsored Defined Benefit Pension Plan

We maintain two company-sponsored defined benefit plans applicable to a portion of salaried past and present

team members, which are closed to future accrual.

Net Periodic (Benefit) Cost

Interest cost represents the increase in the projected benefit obligation, which is a discounted amount, due to the

passage of time. The expected return on plan assets reflects the computed amount of current-year earnings from

the investment of plan assets using an estimated long-term rate of return.


	Three Months Ended March 31,
(In millions)	2026	2025
Interest cost	$8.5	$8.0
Expected return on plan assets	(9.1)	(10.3)
Amortization of net loss	0.1	—
Net periodic benefit	$(0.5)	$(2.3)

During the three months ended March 31, 2026, funding of pension plans was $2.0 million. For the remainder of

2026, we estimate approximately $6.2 million of cash contributions.

NOTE 10. EQUITY

Repurchases of Common Stock

Repurchases of our common stock occurred under a repurchase authorization granted by our Board and related to

shares withheld as part of the vesting of RSUs.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	15

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Our Board has approved repurchase authorizations totaling up to $3.2 billion of our common stock. Share

repurchases under our authorization were as follows:


	Repurchases Occurring in 2026		Cumulative Repurchases as of March 31, 2026
	Shares	Average Price1	Shares	Average Price
Share Repurchase Authorization	941,979	$274.62	12,238,943	$227.73

1Price excludes excise taxes imposed under the Inflation Reduction Act of $2.4 million for the three months ended March 31,

2026.

As of March 31, 2026, we had $362.9 million available for repurchases pursuant to our share repurchase

authorizations from our Board in 2025 and prior years.

In addition, during 2026, we repurchased 115,228 shares at an average price of $332.30 per share, for a total of

$38.3 million, related to tax withholding associated with the vesting of RSUs. The repurchase of shares related to

tax withholding associated with stock awards does not reduce the number of shares available for repurchase as

approved by our Board.

NOTE 11. FAIR VALUE MEASUREMENTS

Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad

categories:

•Level 1 - quoted prices in active markets for identical securities;

•Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates,

prepayment spreads, credit risk; and

•Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.

We determined the carrying value of cash, restricted cash, cash equivalents, accounts receivable, trade payables,

accrued liabilities, finance receivables, and short-term borrowings approximate their fair values because of the

nature of their terms and current market rates of these instruments. We believe the carrying value of our variable

rate debt approximates fair value.

We have money market securities, which include restricted cash from collections on finance receivables, recorded

as a component of Cash, restricted cash, and cash equivalents in our Consolidated Balance Sheets, as well as

restricted cash on deposit in reserve accounts, recorded as a component of Other non-current assets in our

Consolidated Balance Sheets. These money market securities consist of highly liquid investments with original

maturities of three months or less and are classified as Level 1.

We have investments consisting of equity securities, available for sale debt securities, and equity method

investments with a fair value election. We calculated the estimated fair value of the equity securities, equity method

investments, and U.S. Treasury debt securities using quoted market prices (Level 1). The fair value of corporate and

municipal debt securities are measured using observable Level 2 market expectations at each measurement date.

See Note 6 – Investments.

We have fixed rate debt primarily consisting of amounts outstanding under our senior notes, non-recourse notes

payable, and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices

for the identical liability (Level 1). The fair value of non-recourse notes payable are measured using observable

Level 2 market expectations at each measurement date. The calculated estimated fair values of the fixed rate real

estate mortgages and finance lease liabilities use a discounted cash flow methodology with estimated current

interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and

summed to compute the fair value of the debt.

We have derivative instruments consisting of an offsetting set of interest rate caps. The fair value of derivative

assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is

recorded as other current assets, current liabilities and other long-term liabilities in the Consolidated Balance

Sheets.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	16

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Nonfinancial assets such as goodwill, franchise value, or other long-lived assets are measured and recorded at fair

value during a business combination or when there is an indicator of impairment. We evaluate our goodwill and

franchise value using a qualitative assessment process. If the qualitative factors determine that it is more likely than

not that the carrying value exceeds the fair value, we would further evaluate for potential impairment using a

quantitative assessment. The quantitative assessment estimates fair values using unobservable (Level 3) inputs by

discounting expected future cash flows of the store for franchise value, or reporting unit for goodwill. The forecasted

cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates,

margins, working capital requirements, and cost of capital, for which we utilize certain market participant-based

assumptions we believe to be reasonable. We estimate the value of other long-lived assets that are recorded at fair

value on a non-recurring basis on a market valuation approach. We use prices and other relevant information

generated primarily by recent market transactions involving similar or comparable assets, as well as our historical

experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation

approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we

determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence.

When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and

brokers, to corroborate our estimates of fair value. Real estate appraisers’ and brokers’ valuations are typically

developed using one or more valuation techniques including market, income and replacement cost approaches.

Because these valuations contain unobservable inputs, we classified the measurement of fair value of long-lived

assets as Level 3.

There were no changes to our valuation techniques during the three-month period ended March 31, 2026.

Below are our assets and liabilities that are measured at fair value:


	As of March 31, 2026				As of December 31, 2025
(In millions)	Carrying Value	Level 1	Level 2	Level 3	Carrying Value	Level 1	Level 2	Level 3
Recorded at fair value
Marketable securities
Restricted cash - collections	$123.9	$123.9	$—	$—	$131.3	$131.3	$—	$—
Restricted cash - reserve	34.3	34.3	—	—	34.3	34.3	—	—
Total money market funds	$158.2	$158.2	$—	$—	$165.6	$165.6	$—	$—

Equity securities	$2.4	$2.4	$—	$—	$2.4	$2.4	$—	$—

U.S. Treasury	$20.9	$20.9	$—	$—	$21.6	$21.6	$—	$—
Municipal debt	10.6	—	10.6	—	10.6	—	10.6	—
Corporate debt	22.1	—	22.1	—	21.8	—	21.8	—
Total debt securities	$53.6	$20.9	$32.7	$—	$54.0	$21.6	$32.4	$—

Equity Method Investment
PINE.L	$101.3	$101.3	$—	$—	$177.2	$177.2	$—	$—

Derivatives
Derivative assets	$0.3	$—	$0.3	$—	$0.7	$—	$0.7	$—
Derivative liabilities	0.3	—	0.3	—	0.7	—	0.7	—

Recorded at historical value
Fixed rate debt 1
4.625% Senior notes due 2027	$400.0	$393.0	$—	$—	$400.0	$398.0	$—	$—
3.875% Senior notes due 2029	800.0	752.0	—	—	800.0	770.0	—	—
5.500% Senior notes due 2030	600.0	584.3	—	—	600.0	602.3	—	—
4.375% Senior notes due 2031	550.0	509.4	—	—	550.0	526.6	—	—
Non-recourse notes payable	2,634.0	—	2,641.5	—	2,473.9	—	2,489.0	—
Real estate mortgages and other debt	738.9	—	747.6	—	730.0	—	703.8	—

1Excluding unamortized debt issuance costs


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	17

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NOTE 12. ACQUISITIONS

In the first three months of 2026, we completed the following acquisitions:

•In February 2026, Mercedes-Benz of Medford in Oregon.

•In March 2026, Toyota of Gallatin in Tennessee.

•In March 2026, Read Motor Group in the United Kingdom.

The acquisitions were accounted for as business combinations under the acquisition method of accounting. The

results of operations of the acquired stores are included in our Consolidated Financial Statements from the date of

acquisition.

Revenue and operating income contributed by the 2026 acquisitions subsequent to the date of acquisition were as

follows (in millions):


Three Months Ended March 31,	2026
Revenue	$18.1
Operating income	0.8

The following tables summarize the consideration paid for the 2026 acquisitions and the PPA for identified assets

acquired and liabilities assumed as of the acquisition date:


(In millions)	Consideration
Cash paid, net of cash acquired	$145.3
Total consideration transferred	$145.3


(In millions)	Assets Acquired and Liabilities Assumed
Inventories, net	$21.5
Property and equipment	42.4
Other assets	107.1
Debt and finance lease obligations assumed	(23.3)
Other liabilities and deferred revenue	(2.4)
Total net assets acquired and liabilities assumed	$145.3

The PPA for the 2026 acquisitions is preliminary, as we have not obtained and evaluated all of the detailed

information necessary to finalize the opening balance sheet amounts in all respects. We recorded the PPA based

upon information that is currently available and recorded unallocated items as a component of Other non-current

assets in the Consolidated Balance Sheets.

We expect all of the goodwill related to U.S. acquisitions in 2026 to be deductible for U.S. federal income tax

purposes.

In the three-month period ended March 31, 2026, we recorded $0.3 million in acquisition-related expenses as a

component of SG&A expense. Comparatively, we recorded $0.2 million of acquisition-related expenses in the same

period of 2025.

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three-

month periods ended March 31, 2026 and 2025 had occurred on January 1, 2025:


	Three Months Ended March 31,
(In millions, except per share amounts)	2026	2025
Revenue	$9,320.7	$9,253.9
Net income attributable to Lithia Motors, Inc.	102.6	212.3
Basic EPS attributable to Lithia Motors, Inc. common stockholders	4.38	8.06
Diluted EPS attributable to Lithia Motors, Inc. common stockholders	4.38	8.05


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	18

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We calculated these amounts by applying our accounting policies and estimates. The results of the acquired stores

have been adjusted to reflect the following: depreciation on a straight-line basis over the expected lives for property

and equipment, accounting for inventory on a specific identification method, and recognition of interest expense for

real estate financing related to stores where we purchased the facility. No nonrecurring proforma adjustments

directly attributable to the acquisitions are included in the reported proforma revenues and earnings.

NOTE 13. EARNINGS PER SHARE

We calculate basic EPS by dividing net income attributable to Lithia Motors, Inc. by the weighted average number of

common shares outstanding for the period, including vested RSU awards. We calculate diluted EPS by dividing net

income attributable to Lithia Motors, Inc. by the weighted average number of shares outstanding, adjusted for the

dilutive effect of unvested RSU awards and employee stock purchases.

The following is a reconciliation of net income attributable to Lithia Motors, Inc. and weighted average shares used

for our basic EPS and diluted EPS:


	Three Months Ended March 31,
(In millions, except per share amounts)	2026	2025
Net income attributable to Lithia Motors, Inc.	$100.4	$209.5

Weighted average common shares outstanding – basic	23.4	26.3
Effect of employee stock purchases and restricted stock units on weighted average common shares outstanding	—	0.1
Weighted average common shares outstanding – diluted	23.4	26.4

Basic EPS attributable to Lithia Motors, Inc. common stockholders	$4.29	$7.96
Diluted EPS attributable to Lithia Motors, Inc. common stockholders	$4.28	$7.94

We evaluated the effect of antidilutive securities on common stock for the three-month periods ended March 31,

2026 and 2025 and determined the effect to be immaterial.

NOTE 14. SEGMENTS

We operate in two reportable segments: Vehicle Operations and Financing Operations. Our Vehicle Operations

consists of all aspects of our auto merchandising and aftersales operations, excluding financing provided by our

Financing Operations. Our Financing Operations segment provides financing to customers buying and leasing retail

vehicles from our Vehicle Operations, as well as leasing vehicles from our fleet management services provider.

All other remaining unallocated corporate overhead expenses and internal charges are reported under Corporate

and Other. We do not utilize asset information by segment for purposes of assessing performance or allocating

resources and, as a result, we do not present such information.

The reportable segments identified above represent our business activities for which discrete financial information is

available and for which operating results are regularly provided and reviewed by our CODM to allocate resources

and assess performance. Our CODM is our Chief Executive Officer. The CODM assesses segment performance

using segment income, which is measured as net segment profit before taxes on a U.S. GAAP basis.

We do not regularly provide total asset information by segment to our CODM or utilize the information for purposes

of assessing performance or allocating resources and, as a result, we do not present such information. Certain

financing operations asset information including total managed receivables are used by the financing operations

segment manager to manage operations and are included in various reports regularly provided to our CODM. See

Note 4 – Finance Receivables.


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	19

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Certain financial information on a segment basis is as follows:


	Three Months Ended March 31,
(In millions)	2026	2025
Vehicle operations
Total revenue	$9,271.4	$9,178.3

Total gross profit	1,421.7	1,410.4
Floor plan interest expense	(55.9)	(57.1)
Personnel expense	(541.1)	(514.1)
Rent and facility expense	(202.2)	(182.4)
Advertising expense	(79.7)	(69.9)
Other vehicle operations expenses1	(310.1)	(278.2)
Vehicle operations income	232.7	308.7

Financing Operations
Interest and fee income	110.5	94.4
Interest expense	(51.6)	(48.1)
Total interest margin	58.9	46.3
Lease income	23.9	20.5
Lease costs	(20.2)	(16.8)
Lease income, net	3.7	3.7
Provision expense	(26.4)	(25.5)
Other financing operations expenses2	(14.9)	(12.0)
Financing operations income	21.3	12.5

Total segment income for reportable segments	254.0	321.2

Corporate and other3	95.7	91.9
Depreciation and amortization	(69.8)	(63.9)
Other interest expense	(70.3)	(65.5)
Other (expense) income, net	(67.6)	0.8
Income before income taxes	$142.0	$284.5

(1)Other vehicle operations expenses includes management fees, data processing fees, outside services fees, insurance

expense, office and other supplies expense, banking expense, and certain overhead expenses.

(2)Other financing operations expenses includes personnel expense, data processing fees, outside services fees, expenses

attributable to underwriting, funding, and loan servicing, and certain overhead expenses.

(3)Corporate and other includes management fee income.

The following table presents revenue by geographic area:


	Three Months Ended March 31,
(In millions)	2026	2025
Revenue from external customers:
United States	$7,007.9	$7,071.7
United Kingdom	1,987.2	1,850.1
Canada	276.4	256.5
Total revenue from external customers	$9,271.4	$9,178.3


		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	20

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NOTE 15. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement

expenses. The amendments in this update require public entities to disclose incremental information related to

purchases of inventory, team member compensation, and depreciation, which will provide investors the ability to

better understand entity expenses and make their own judgments about entity performance. The amendments in

this update are effective for fiscal years beginning after December 15, 2026. We plan to adopt this pronouncement

and make the necessary updates to our disclosures for the year ending December 31, 2027, and, aside from these

disclosure changes, we do not expect the amendments to have a material effect on our financial statements.

In December 2025, the FASB issued ASU 2025-11 that included amendments to improve the organization of

required interim disclosures and clarified the scope of their applicability. The amendments in this update are

effective for fiscal years beginning after December 15, 2027. We plan to adopt this pronouncement and make the

necessary updates to our disclosures for the year ending December 31, 2028, and, aside from these disclosure

changes, we do not expect the amendments to have a material effect on our financial statements.

In December 2025, the FASB issued ASU 2025-12 intended to make financial reporting more straightforward by

addressing 33 specific issues within the FASB ASC. The amendments in this update are effective for fiscal years

beginning after December 15, 2026. We plan to adopt this pronouncement and make the necessary updates to our

disclosures for the year ending December 31, 2027, and, aside from these disclosure changes, we do not expect

the amendments to have a material effect on our financial statements.


		MANAGEMENT’S DISCUSSION AND ANALYSIS	21

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Item 2. Management’s Discussion and Analysis of Financial Condition and

Results of Operations

Forward-Looking Statements and Risk Factors

Certain statements under the sections entitled “Management’s Discussion and Analysis of Financial Condition and

Results of Operations,” and “Risk Factors” and elsewhere in this Form 10-Q constitute forward-looking statements

within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Generally,

you can identify forward-looking statements by terms such as “project,” “outlook,” “target,” “may,” “will,” “would,”

“should,” “seek,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “likely,”

“ensure,” “goal,” “strategy,” “future,” “maintain,” and “continue” or the negative of these terms or other comparable

terms. Examples of forward-looking statements in this Form 10-Q include, among others, statements we make

regarding:

•The profitability of our strategy and growth

•Future market conditions, including anticipated vehicle and other sales, gross profit and inventory supply

•Our business strategy and plans, including our achieving our long-term financial targets

•The growth, expansion, make-up and success of our network, including our finding accretive acquisitions that

meet our target valuations and acquiring additional stores

•Annualized revenues from acquired stores or achieving target returns

•The growth and performance of our Driveway e-commerce home solution and DFC, their synergies and other

impacts on our business and our ability to meet Driveway and DFC-related targets

•The impact of sustainable vehicles and other market and regulatory changes on our business, including

evolving vehicle distribution models

•Our capital allocations and uses and levels of capital expenditures in the future

•Expected operating results, such as improved store performance, continued improvement of SG&A as a

percentage of gross profit and any projections

•Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit

facilities, unfinanced real estate and other financing sources

•Our continuing to purchase shares under our share repurchase program

•Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements

•Our programs and initiatives for team member recruitment, training, and retention

•Our strategies and targets for customer retention, growth, market position, operations, financial results and risk

management

The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties, and

situations that may cause our actual results to materially differ from the results expressed or implied by these

statements. Certain important factors that could cause actual results to differ from our expectations are discussed in

the Risk Factors section of our 2025 Annual Report on Form 10-K, as supplemented and amended from time to time

in Quarterly Reports on Form 10-Q and our other filings with the SEC.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events that

depend on circumstances that may or may not occur in the future. You should not place undue reliance on these

forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We

assume no obligation to update or revise any forward-looking statement.

Overview

Lithia and Driveway (NYSE: LAD) is the largest global automotive retailer providing an array of products and

services throughout the vehicle ownership lifecycle. Simple, convenient and transparent experiences are offered

through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet

management offerings, and other synergistic adjacencies. We have delivered consistent profitable growth in a

massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the

flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever and

however consumers desire. As of March 31, 2026, we operated 465 locations representing 57 brands in the United

States, the United Kingdom, and Canada.

We offer a wide array of products and services fulfilling the entire vehicle ownership lifecycle including new and

used vehicles, financing and insurance products, and aftersales automotive repair and maintenance services. We


		MANAGEMENT’S DISCUSSION AND ANALYSIS	22

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strive for diversification in our products, services, brands, and geographic locations to reduce dependence on any

one manufacturer, reduce susceptibility to changing consumer preferences, manage market risk and maintain

profitability. Our diversification, along with our operating structure, provides a resilient and nimble business model.

We seek to provide customers with a seamless, blended online and physical retail experience, broad selection, and

access to specialized expertise and knowledge. Our comprehensive network provides convenient touch points for

customers and provides services throughout the vehicle life cycle. We seek to increase market share and optimize

profitability by focusing on the consumer experience and applying proprietary performance measurement systems

fueled by data science. Our Driveway and GreenCars brands and online customer portal complement our in-store

experiences in the United States and provide convenient, simple, and transparent platforms that serve as our e-

LITHIA MOTORS INC 10-Q