LITHIA MOTORS INC

Previous wording

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

Current wording

•The growth, expansion, make-up and success of our network, including our finding accretive acquisitions that meet our target valuations and acquiring additional stores

Previous wording

•Annualized revenues from acquired stores

Current wording

•Annualized revenues from acquired stores or achieving target returns

Previous wording

•The growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation (DFC), their synergies and other impacts on our business and our ability to meet Driveway and DFC-related targets

Current wording

•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

Previous wording

•Expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses (SG&A) as a percentage of gross profit and any projections

Current wording

•Expected operating results, such as improved store performance, continued improvement of SG&A as a percentage of gross profit and any projections

Previous wording

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 2023 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 Securities and Exchange Commission (SEC).

Current wording

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 2023 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.

Previous wording

Lithia and Driveway (LAD) is one of the largest global automotive retailers 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 June 30, 2024, we operated 470 locations representing 52 brands in the United States, the United Kingdom, and Canada.

Current wording

Lithia and Driveway (NYSE: LAD) is one of the largest global automotive retailers 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 September 30, 2024, we operated 467 locations representing 52 brands in the U.S., the U.K., and Canada.

Previous wording

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 automotive repair and maintenance. We strive for diversification in our products, services, brands and geographic locations to reduce dependence on any one

Current wording

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 automotive repair and maintenance aftersales. We 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.

Previous wording

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 enables us to provide 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 complement our in-store experiences in the United States and provide convenient, simple and transparent platforms that serve as our e-commerce home solutions and allow us to deliver differentiated, proprietary digital experiences. Enhancing our business, our captive auto financing division allows us to provide financing solutions for customers and diversify our business model with adjacent products.

Current wording

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 enables us to provide 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 complement our in-store experiences in the U.S. and provide convenient, simple and transparent platforms that serve as our e-commerce home solutions and allow us to deliver differentiated, proprietary digital experiences. Enhancing our business, our captive auto financing division allows us to provide financing solutions for customers and diversify our business model with adjacent products.

Previous wording

LAD builds magnetic brand loyalty in our 470 stores and with Driveway, our e-commerce home delivery experience, and GreenCars, our electric vehicle learning resource and marketplace. Operational excellence is achieved by focusing the business on convenient and transparent consumer experiences supported by proprietary data science to improve market share, consumer loyalty, and profitability. By promoting an entrepreneurial model with our in-store experiences, we build strong businesses responsive to each of our local markets. Utilizing performance-based action plans, we develop high-performing teams and foster manufacturer relationships.

Current wording

LAD builds magnetic brand loyalty in our 467 stores and with Driveway, our e-commerce home delivery experience, and GreenCars, our electric vehicle learning resource and marketplace. Operational excellence is achieved by focusing the business on convenient and transparent consumer experiences supported by proprietary data science to improve market share, consumer loyalty, and profitability. By promoting an entrepreneurial model with our in-store experiences, we build strong businesses responsive to each of our local markets. Utilizing performance-based action plans, we develop high-performing teams and foster manufacturer relationships.

Previous wording

Our acquisition growth strategy has been successful both financially and culturally. Our disciplined approach focuses on acquiring new vehicle franchises, which operate in markets ranging from mid-sized regional markets to metropolitan markets. Acquisition of these businesses increases our proximity to consumers throughout North America and the United Kingdom. While we target annual after tax return of more than 15% for our acquisitions, we have averaged over a 25% return by the third year of ownership due to a disciplined approach focusing on accretive, cash flow positive targets at reasonable valuations. In addition to being financially accretive, acquisitions aim to drive network growth that improves our ability to serve customers through vast selection, greater density and access to customers and ability to leverage national branding and advertising.

Current wording

Our acquisition growth strategy has been successful both financially and culturally. Our disciplined approach focuses on acquiring new vehicle franchises, which operate in markets ranging from mid-sized regional markets to metropolitan markets. Acquisition of these businesses increases our proximity to consumers throughout North America and the U.K. While we target annual after tax return of more than 15% for our acquisitions, we have averaged over a 25% return by the third year of ownership due to a disciplined approach focusing on accretive, cash flow positive targets at reasonable valuations. In addition to being financially accretive, acquisitions aim to drive network growth that improves our ability to serve customers through vast selection, greater density and access to customers and ability to leverage national branding and advertising.

Previous wording

We manage our liquidity and available cash to support our long-term plan focused on growth through acquisitions and investments in our existing business, technology and adjacencies that expand and diversify our business model. In the current market of elevated acquisition pricing, we have adjusted our free cash flow deployment strategy. Under current conditions, including recent trends in our stock price, we may consider repurchases as a more attractive use of funds than acquisitions. Our current free cash flow deployment strategy has shifted to an allocation of 50 to 60% investment in acquisitions, 25% investment in capital expenditures, innovation, and diversification and 15 to 25% in shareholder return in the form of dividends and share repurchases. During the first six months of 2024, we utilized $209.7 million for capital expenditures investing in our existing business and paid $28.2 million in dividends and $217.2 million in share repurchases. As of June 30, 2024, we had available liquidity of approximately $1.3 billion, which was comprised of $516.4 million in unrestricted cash, $51.4 million in marketable securities, and $0.8 billion availability on our credit facilities. In addition, our unfinanced real estate could provide additional liquidity of approximately $0.3 billion.

Current wording

We manage our liquidity and available cash to support our long-term plan focused on growth through acquisitions and investments in our existing business, technology and adjacencies that expand and diversify our business model. In the current market of elevated acquisition pricing, we have adjusted our free cash flow deployment strategy. Under current conditions, including recent trends in our stock price, we may consider repurchases as a more attractive use of funds than acquisitions. Our current free cash flow deployment strategy has shifted to an allocation of 50% to 60% investment in acquisitions, 25% investment in capital expenditures, innovation, and diversification and 15% to 25% in shareholder return in the form of dividends and share repurchases. During the first nine months of 2024, we utilized $271.9 million for capital expenditures investing in our existing business and paid $42.4 million in dividends and $273.2 million in share repurchases. As of September 30, 2024, we had available liquidity of approximately $1.1 billion, which was comprised of $209.8 million in unrestricted cash, $53.9 million in marketable securities, and $863.2 million availability on our credit facilities. In addition, our unfinanced real estate could provide additional liquidity of approximately $353.0 million.

Previous wording

We experienced growth of revenue in 2024 compared to 2023, primarily driven by increases in volume related to acquisitions. Gross profit on new and used vehicle retail sales declined compared to 2023 due to continued normalization of margins. Net income decline was primarily driven by this margin normalization, increased interest expense, and increased SG&A as a percentage of gross profit.

Current wording

We experienced growth of revenue in 2024 compared to 2023, primarily driven by increases in volume related to acquisitions. Total gross profit grew in 2024 compared to 2023, primarily driven by acquisition growth and supported by same store increases in aftersales. New and used vehicle retail gross profit declined compared to 2023 due to continued normalization of margins. Net income decline was primarily driven by this margin normalization, increased interest expense, and increased SG&A as a percentage of gross profit.

Previous wording

Same store measures reflect results for stores that were operating in each comparison period and only include the months when operations occurred in both periods. For example, a store acquired in May 2023 would be included in same store operating data beginning in June 2024, after its first complete comparable month of operation. The second quarter operating results for the same store comparisons would include results for that store in only the month of June for both comparable periods.

Current wording

Same store measures reflect results for stores that were operating in each comparison period and only include the months when operations occurred in both periods. For example, a store acquired in August 2023 would be included in same store operating data beginning in September 2024, after its first complete comparable month of operation. The third quarter operating results for the same store comparisons would include results for that store in only the month of September for both comparable periods.

Previous wording

We believe that our new vehicle retail sales create incremental profit opportunities through certain manufacturer incentive programs, arranging of third-party financing, vehicle service and insurance contracts, future resale of used vehicles acquired through trade-in, and parts and service work. Our leaders in each market continue to adapt to changing conditions, respond to customer needs and manage inventory availability and selection.

Current wording

We believe that our new vehicle retail sales create incremental profit opportunities through certain manufacturer incentive programs, arranging of third-party financing, vehicle service and insurance contracts, future resale of used vehicles acquired through trade-in, and aftersales. Our leaders in each market continue to adapt to changing conditions, respond to customer needs and manage inventory availability and selection.

Previous wording

New vehicles revenue for the three months ended June 30, 2024 increased 9.7% compared to the same period of 2023, driven by acquisition activity. Same store new vehicle revenue decreased 3.7% primarily due to a decrease in unit volume of 4.7%, partially offset by an increase in average selling prices of 1.1%. Same store new vehicle unit volumes in our North American locations were negatively impacted by the CDK Global software platform shutting down for a two-week period due to a cyber incident in the latter half of June. This shutdown interfered with the sale of retail vehicles.

Current wording

New vehicles revenue for the three months ended September 30, 2024 increased 14.0% compared to the same period of 2023, driven by acquisition activity. Same store new vehicle revenue increased 1.3% primarily due to an increase in unit volume of 2.0%, partially offset by a decrease in average selling prices of 0.7%.

Previous wording

Same store new vehicle gross profit per unit decreased 27.1%, driven by a decrease in new vehicle gross profit margins of 260 bps. Total same store new vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of new vehicles, decreased $1,295 to $5,571.

Current wording

Same store new vehicle gross profit per unit decreased 27.2%, driven by a decrease in new vehicle gross profit margins of 250 bps. Total same store new vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of new vehicles, decreased $1,261 to $5,385.

Previous wording

New vehicle retail revenue for the six months ended June 30, 2024 increased 15.4% compared to the same period of 2023 primarily due to acquisition activity. Same store new vehicle retail revenue decreased 1.0% due to a decrease in unit volume of 1.0%, which resulted primarily from the CDK Global cyber incident, however yielded no change to average selling price.

Current wording

New vehicle retail revenue for the nine months ended September 30, 2024 increased 14.9% compared to the same period of 2023 primarily due to acquisition activity. Same store new vehicle retail revenue decreased 0.1% due to a decrease in average selling prices of 0.3%, partially offset by an increase in unit volume of 0.2%.

Previous wording

Same store new vehicle retail gross profit per unit decreased 28.2%, driven by a decrease in new vehicle retail gross profit margins of 280 bps. Total same store new vehicle retail gross profit per unit, which includes the finance and insurance revenue generated from the sales of new retail vehicles, decreased $1,436 to $5,665.

Current wording

Same store new vehicle retail gross profit per unit decreased 27.9%, driven by a decrease in new vehicle retail gross profit margins of 270 bps. Total same store new vehicle retail gross profit per unit, which includes the finance and insurance revenue generated from the sales of new retail vehicles, decreased $1,375 to $5,565.

Previous wording

Used vehicle retail sales are a strategic focus for organic growth. We offer three categories of used vehicles: manufacturer certified pre-owned (CPO) vehicles; core vehicles, or late-model vehicles with lower mileage; and value autos, or vehicles with over 80,000 miles. We continue to focus on procuring vehicles across the full spectrum of the addressable used vehicle market to provide customers with a wide selection meeting all levels of affordability, driving increased used vehicle unit volumes. Our used vehicle operations provide an opportunity to generate sales to customers unable or unwilling to purchase a new vehicle, sell brands other than the store’s new vehicle franchise(s) and increase sales from finance and insurance and parts and service.

Current wording

Used vehicle retail sales are a strategic focus for organic growth. We offer three categories of used vehicles: manufacturer certified pre-owned (CPO) vehicles; core vehicles, or late-model vehicles with lower mileage; and value autos, or vehicles with over 80,000 miles. We continue to focus on procuring vehicles across the full spectrum of the addressable used vehicle market to provide customers with a wide selection meeting all levels of affordability, driving increased used vehicle unit volumes. Our used vehicle operations provide an opportunity to generate sales to customers unable or unwilling to purchase a new vehicle, sell brands other than the store’s new vehicle franchise(s) and increase sales from finance and insurance and aftersales.

Previous wording

Used vehicle revenue for the three months ended June 30, 2024 increased 21.6% compared to the same period of 2023 driven by acquisition activity. On a same store basis, used vehicle revenue decreased 6.8% due to a decrease in unit volume of 1.2% and a decrease in average selling prices of 5.6%. Same store used vehicle unit volumes in our North American locations were negatively impacted by the CDK Global cyber incident noted above.

Current wording

Used vehicle revenue for the three months ended September 30, 2024 increased 8.5% compared to the same period of 2023 driven by acquisition activity. On a same store basis, used vehicle revenue decreased 14.6% due to a decrease in unit volume of 9.6% and a decrease in average selling prices of 5.6%.

Previous wording

Total same store used vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of retail used vehicles, decreased $544 to $3,975.

Current wording

Total same store used vehicle gross profit per unit, which includes the finance and insurance revenue generated from the sales of retail used vehicles, decreased $68 to $3,894.

Previous wording

Used vehicle retail revenue for the six months ended June 30, 2024 increased 23.6% compared to the same period of 2023 driven by acquisition activity. On a same store basis, used vehicle retail sales decreased 5.9% due to a decrease in average selling prices of 4.6% and a decrease in unit volume of 1.4%. Volume decreases were driven by decreasing volumes associated with certified vehicles. Total same store used vehicle retail gross profit per unit, which includes the finance and insurance revenue generated from the sales of used retail vehicles, decreased $350 to $3,940.

Current wording

Used vehicle retail revenue for the nine months ended September 30, 2024 increased 18.2% compared to the same period of 2023 driven by acquisition activity. On a same store basis, used vehicle retail sales decreased 9.1% due to a decrease in average selling prices of 5.0% and a decrease in unit volume of 4.3%. Total same store used vehicle retail gross profit per unit, which includes the finance and insurance revenue generated from the sales of used retail vehicles, decreased $244 to $3,929.

Previous wording

Total finance and insurance income increased 6.9% in the six months ended June 30, 2024 compared to the same period of 2023, driven by acquisition activity. Same store finance and insurance revenues decreased 5.0%, driven by a decline in service contract penetration rates. On a same store basis, our finance and insurance revenue per retail unit decreased $83 to $2,039.

Current wording

Total finance and insurance income increased 3.1% in the three months ended September 30, 2024 compared to the same period of 2023, driven by acquisition activity. Same store finance and insurance revenues decreased 6.7%, driven by a decline in service contract penetration rates. On a same store basis, our finance and insurance revenue per retail unit decreased $58 to $1,982.

Previous wording

Total finance and insurance income increased 6.8% in the three months ended June 30, 2024 compared to the same period of 2023, driven by acquisition activity. Same store finance and insurance revenues decreased 5.7%,

Current wording

Total finance and insurance income increased 5.6% in the nine months ended September 30, 2024 compared to the same period of 2023, driven by acquisition activity. Same store finance and insurance revenues decreased 5.6%,

Previous wording

driven by a decline in finance reserve revenues as we increase our penetration rates associated with Financing Operations and the growth of our captive auto loan and lease portfolio businesses. On a same store basis, our finance and insurance revenue per retail unit decreased $58 to $2,001.

Current wording

driven by a decline in service contract penetration rates. On a same store basis, our finance and insurance revenue per retail unit decreased $74 to $2,020.

Previous wording

We provide automotive repair and maintenance services for customers for the new vehicle brands sold by our stores, as well as service and repairs for most other makes and models. These after sales services are an integral part of our customer retention and the largest contributor to our overall profitability. Earnings from after sales continue to prove to be more resilient during economic downturns, when owners tend to repair their existing vehicles rather than buy new vehicles.

Current wording

We provide automotive repair and maintenance services for customers for the new vehicle brands sold by our stores, as well as service and repairs for most other makes and models. These aftersales services are an integral part of our customer retention and the largest contributor to our overall profitability. Earnings from aftersales continue to prove to be more resilient during economic downturns, when owners tend to repair their existing vehicles rather than buy new vehicles. We believe the increased number of units in operation will continue to benefit our aftersales revenue in the coming years as more late-model vehicles age, necessitating repairs and maintenance.

Previous wording

We focus on retaining customers by offering competitively-priced routine maintenance and through our marketing efforts. The largest contribution to our service, body and parts revenue was same store customer pay revenue of $443.2 million.

Current wording

We focus on retaining customers by offering competitively-priced routine maintenance and through our marketing efforts. The largest contribution to our aftersales revenue was same store customer pay revenue of $488.4 million.

Previous wording

Same store service, body and parts gross profit increased 3.2%. This increase was primarily due to increased volumes of warranty transactions. Overall same store service, body, and parts gross margins increased 130 bps, primarily as a result of increased warranty gross margin. Same store customer pay gross margin decreased 90 bps.

Current wording

Same store aftersales gross profit increased 6.3%. This increase was primarily due to increased volumes of customer pay and warranty transactions. Overall same store aftersales gross margins increased 70 bps, primarily as a result of increased customer pay gross margin of 80 bps.

Previous wording

Our service, body, and parts revenue increased 20.9% in the six months ended June 30, 2024 compared to the same period of 2023, driven by acquisitions, as well as an increase in same store warranty and customer pay revenues. Same store customer pay revenues was the largest contribution to our service, body and parts revenue at $857.6 million.

Current wording

Our aftersales revenue increased 20.9% in the nine months ended September 30, 2024 compared to the same period of 2023, driven by acquisitions, as well as an increase in same store warranty and customer pay revenues. Same store customer pay revenues was the largest contribution to our aftersales revenue at $1.3 billion.

Previous wording

Same store service, body and parts gross profit increased 0.2%. This increase was primarily due to increased volumes of warranty transactions. Overall same store service, body, and parts gross margins increased 90 bps, primarily as a result of increased warranty gross margin. Same store customer pay gross margin decreased 200 bps.

Current wording

Same store aftersales gross profit increased 4.4%. This increase was primarily due to increased volumes of warranty transactions. Overall same store aftersales gross margins increased 100 bps, primarily as a result of increased warranty gross margin. Same store customer pay gross margin decreased 20 bps.

Previous wording

In the United States, Financing Operations is a captive lender, originating loans only from our stores and Driveway. In Canada, Financing Operations originates loans and leases from both our Canadian stores and third-party dealerships. In the United Kingdom, Financing Operations is related to our fleet funding and management division. Financing Operations provides an opportunity to capture additional profits, cash flows, and sales while managing our reliance on third-party finance sources.

Current wording

In the U.S., Financing Operations is a captive lender, originating loans only from our stores and Driveway. In Canada, Financing Operations originates loans and leases from both our Canadian stores and third-party dealerships. In the U.K., Financing Operations is related to our fleet funding and management division. These product offerings add diversity to the business model and provide an opportunity to capture additional profits, cash flows, and sales while managing our reliance on third-party finance sources.

Previous wording

2 Units financed as a percentage of total new and used vehicle retail units sold.

Current wording

2 Units financed as a percentage of total U.S. new and used vehicle retail units sold.

Previous wording

6 The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at wholesale auctions.

Current wording

6 The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at wholesale auctions, on a trailing twelve month basis.

Previous wording

Financing operations recorded income in the three months ended June 30, 2024 compared to a loss in the same period of 2023 primarily due to the increased interest income resulting from the growth of the portfolio and increased customer rates, decreased cost of funds, along with a decrease in provision expense due to a release in the allowance for credit losses driven by improving portfolio performance and the effect of tightening of underwriting standards in recent periods.

Current wording

Financing operations recorded income in the three months ended September 30, 2024 compared to a loss in the same period of 2023, primarily due to the increased interest income resulting from the growth of the portfolio and increase in portfolio-wide weighted average contract rate charged to customers which collectively expanded total interest margin to 4.1%, offset by increased provision expense.

Previous wording

Loan originations increased as we continue to grow and mature our portfolio. The weighted average contract rate of loans originated in the three months ended June 30, 2024 increased to 9.9%, compared with 9.5% in the same

Current wording

Loan originations increased slightly in the three months ended September 30, 2024 compared to the same period of 2023, and our penetration rate decreased due to acquisition growth as we maintained underwriting standards and focused on originating loans with the highest risk-adjusted returns. The weighted average contract rate of loans

Previous wording

period of 2023, primarily due to increasing rates charged to borrowers, which had a negative impact on our penetration rate. The decrease in annualized net charge-offs past due accounts as a percentage of ending managed receivables compared to the prior year reflects the increased credit quality of our portfolio, along with continued operational improvements.

Current wording

originated in the three months ended September 30, 2024 decreased to 9.8%, compared with 10.0% in the same period of 2023, primarily due to our maintaining competitive pricing. The increase in annualized net charge-offs of past due accounts as a percentage of ending managed receivables compared to the prior year reflects increasing financial stress on borrowers and an uncertain macroeconomic environment.

Previous wording

Financing operations recorded income in the six months ended June 30, 2024 compared to a loss in the same period of 2023 primarily due to increased contract rates to borrowers, resulting in an expansion of total interest margin to 3.8%, a decrease in provision expense, and the addition of the UK Financing Operations business.

Current wording

Financing operations recorded income in the nine months ended September 30, 2024 compared to a loss in the same period of 2023 primarily due to increased contract rates to borrowers and decreasing cost of funds, resulting in an expansion of total interest margin to 3.9%, both of which outpaced the growth in SG&A and provision expense, and the addition of the U.K. Financing Operations business.

Previous wording

The weighted average contract rate on loans originated in the six months ended June 30, 2024 increased to 10.0%, compared with 9.2% in the same period of 2023. The decrease in provision expense compared to the prior year reflected a release of the allowances for credit losses driven by the increased credit quality of the portfolio and tightening of underwriting standards. The decrease in selling, general and administrative expenses as a percentage of receivables compared to the prior year reflected improved operational performance and economies of scale.

Current wording

The weighted average contract rate on loans originated in the nine months ended September 30, 2024 increased to 10.0%, compared with 9.5% in the same period of 2023. The decrease in provision expense as a percentage of receivables compared to the prior year reflected the increased credit quality of the portfolio. The decrease in selling, general and administrative expenses as a percentage of receivables compared to the prior year reflected improved operational performance and economies of scale.

Previous wording

SG&A as a percentage of gross profit was 68.5% for the three months ended June 30, 2024 compared to 60.8% for the same period of 2023. SG&A expense increased 15.8%, driven by increases in all areas, primarily as a result of our growth in the United Kingdom.

Current wording

SG&A as a percentage of gross profit was 66.0% for the three months ended September 30, 2024 compared to 62.0% for the same period of 2023. SG&A expense increased 10.9%, driven by increases in all areas except advertising, primarily as a result of our growth in the U.K.

Previous wording

On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 66.6% compared to 60.0% for the same period of 2023. The increase was primarily related to the decrease in gross profit exceeding the decrease in same store SG&A costs.

Current wording

On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 64.0% compared to 62.2% for the same period of 2023. The increase was primarily related to the decrease in gross profit exceeding the decrease in same store SG&A costs.