5 Revealing Analyst Questions From Lithia's Q1 Earnings Call

Lithia’s first quarter saw revenue and adjusted profit come in below Wall Street expectations, though the company did deliver year-on-year sales growth and held operating margins steady. Management credited the performance to increased contributions from its high-margin finance and aftersales businesses, as well as cost control initiatives launched last year. CEO Bryan DeBoer noted that “adjacencies are now contributing meaningfully to our earnings and delivering measurable gains in engagement and unit volume,” underscoring the effectiveness of Lithia’s strategy of serving customers across both digital and physical channels. The quarter benefited from strong execution in vehicle inventory management and a significant uptick in value auto sales, helping offset headwinds from industry tariffs.

Is now the time to buy LAD? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Lithia’s Q1 Earnings Call

• Ryan Sigdahl (Craig Hallum Group) asked about Lithia’s exposure to tariffs and inventory positioning. CEO Bryan DeBoer responded that about 45% of inventory is not affected by tariffs and emphasized dynamic store-level management as key to adapting to market shifts.

• John Murphy (Bank of America) queried if expanding adjacencies like financing could allow Lithia to boost market share, even at lower gross profits. DeBoer replied that transparent customer experiences can create upward price inflection, and the company will balance gross profit and financing growth to drive long-term earnings.

• Rajat Gupta (JPMorgan) questioned sequential increases in SG&A and the path to further reductions. CFO Tina Miller explained recent cost trends were seasonal, with ongoing discipline expected to drive SG&A lower as a percentage of gross profit, supported by technology and vendor initiatives.

• Mark Jordan (Goldman Sachs) inquired about the impact of tariffs on aftersales and potential deferred maintenance. DeBoer stated that demand for repairs is inelastic, and the segment should see minimal impact, with affordable pricing and broad parts sourcing helping retain customers.

• Douglas Dutton (Evercore) asked how dealers are preparing for possible demand fluctuations if tariffs persist. DeBoer said any lumpiness is likely to occur in the fall, but Lithia’s diversified product mix and tariff exposure should mitigate major impacts.

Catalysts in Upcoming Quarters

In future quarters, our analysts will be tracking (1) continued expansion of Driveway Finance’s penetration and its contribution to overall margins, (2) progress in lowering SG&A as a percentage of gross profit through further operational efficiencies, and (3) resilience in aftersales and value auto segments as affordability and tariffs remain dynamic. Developments in digital customer engagement and any large-scale acquisitions will also be important signposts for Lithia’s execution on its growth strategy.

Lithia currently trades at $331.80, up from $296.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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