LITHIA MOTORS INC
For the period ended Jun 30, 2025. Filed Jul 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 30, 2025
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-24.
0001023128-25-000051
Item 2. Management’s Discussion and Analysis of Financial Condition andCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-30.
0001023128-25-000094
Item 2. Management’s Discussion and Analysis of Financial Condition andThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 392 previous paragraphs and 442 current paragraphs.
294 unchanged; 63 reworded; 76 added; 32 removed; 3 previous and 9 current paragraphs rearranged.
Tables are not compared: 39 previous and 54 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (76)
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on our credit facilities.
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Newvehicle revenue for the three months ended June 30, 2025 increased 2.2% compared to the same period of
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2024, driven by same store performance. Same store new vehicle revenue increased 2.0% due toan increase in
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unit volume of 2.0%.
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Same store new vehicle gross profit per unit decreased 8.1%, driven bya decrease in new vehicle gross profit
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margins of 50 bps. Total same store new vehicle gross profit per unit, which includes the finance and insurance
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revenue generated from the sales of new vehicles, decreased $196 to$5,312.
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revenue increased 3.6% due toan increase in unit volume of 2.5% andan increase in average selling prices of
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Used vehicle revenue for the three months ended June 30, 2025 increased 3.6% compared to the same period of
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revenue increased 6.5% due toan increase in unit volume of 3.9% andan increase in average selling prices of
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Total same store used vehicle gross profit per unit, which includes the finance and insurance revenue generated
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from the sales of retail used vehicles, decreased $18 to$3,486.
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vehicle retail sales increased 2.7% due toan increase in unit volume of 1.7% andan increase in average selling
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prices of 1.1%. Total same store used vehicle retail gross profit per unit, which includes the finance and insurance
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same period of 2024, driven by same store performance and supported by acquisition activity. Same store finance
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increased $25 to$1,841.
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Total finance and insurance income increased 5.2% in thesix months ended June 30, 2025 compared to the same
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period of 2024, driven by same store performance and supported by acquisition activity. Same store finance and
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increased $31 to$1,860.
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Our aftersales revenue increased 7.6% in the three months ended June 30, 2025 compared to the same period of
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2024, driven by same store performance and supported by acquisition activity.
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We focus on retaining customers by offering competitively-priced routine maintenance and through our marketing
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efforts. Customer pay revenue accounted for the largest share of our same-store aftersales revenue, representing
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56.3% of the total.
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warranty and customer pay transactions. Overall same store aftersales gross margins increased 180 bps, primarily
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as a result of increased customer pay gross margin of 260 bps.
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Our aftersales revenue increased 7.5% in thesix months ended June 30, 2025 compared to the same period of
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2024, driven by same store performance and supported by acquisition activity. Same store warranty revenues saw a
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Financing operations recorded higher income in the three months ended June 30, 2025 compared to the same
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period of 2024, primarily due to the increased interest income resulting from the growth of the portfolio and a
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decreased cost of funds, which collectively expanded total interest margin to 4.6%.
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Loan originations increased in the three months ended June 30, 2025 compared to the same period of 2024, and
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our penetration rate increased due to increased engagement with our stores. The weighted average contract rate of
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loans originated in the three months ended June 30, 2025 decreased to 8.7%, compared with 9.9% in the same
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decrease in annualized net charge-offs of past due accounts as a percentage of ending managed receivables
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compared to the prior year reflects the increased credit quality of the portfolio as well as improved execution of our
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collateral management team.
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Financing operations recorded higher income in thesix months ended June 30, 2025 compared to the same period
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of 2024, primarily due to increased interest income resulting from the growth of the portfolio and a decreased cost of
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percentage of average managed receivables was flat with the same period of 2024 despite significant portfolio
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availability on our credit facilities. In addition, our unfinanced real estate could provide additional liquidity of
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approximately$52.9 million.
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as a % of gross profit.
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retail revenue increased 5.7% due to an increase in unit volume of 3.6% and an increase in average selling prices
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of 2.0%.
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a decrease in average selling prices of 0.5% combined with a decrease in unit volume of 0.4%. Total same store
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same period of 2024, primarily driven by acquisition activity, and supported by same store growth. Same store
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finance and insurance revenues increased 3.4%, driven by an increase in unit sales volume, but partially offset by a
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unit increased$35 to$1,881.
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Our aftersales revenue increased 7.3% in thethree months ended March 31, 2025 compared to the same period of
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2024, driven by acquisitions, as well as an increase in same store warranty revenues. Same store warranty
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Financing operations recorded income in thethree months ended March 31, 2025 compared to a loss in the same
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period of 2024, primarily due toincreased weighted average contract rate of the portfolio and decreased cost of
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SG&A as a percentage of gross profit was 67.5% for thethree months ended March 31, 2025 compared to 70.0%
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gross profit as well as a decrease in total same store SG&A costs.
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Adjusted SG&A for thethree months ended March 31, 2025 excludes$0.2 million in acquisition-related expenses,
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Adjusted SG&A for thethree months ended March 31, 2024 excludes$7.7 million in acquisition-related expenses.
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Floor plan interest expense decreased $3.6 million in thethree months ended March 31, 2025 compared to the
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same period of 2024 due to decreased inventory levels.
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1 See Non-GAAP Reconciliations for more details.
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borrowings and interest rates compared to the same period of 2024.
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Other Income (Expense), net
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Other income, net in thethree months ended March 31, 2025 decreased$2.7 million compared to the same period
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1 See Non-GAAP Reconciliations for more details.
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affected by a decrease in tax benefit from stock awards vesting in the current period and a reduction in state
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deferred tax rate in the prior period. Our rate was positively affected by an increase in general business credits.
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rate to be 26.3%.
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performance.
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Cash provided by operating activities for thethree months ended March 31, 2025 increased$29.7 million compared
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income, partially offset by changes in floor plan notes payable and accounts receivable compared to the same
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period of 2024.
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Capital expenditures for thethree months ended March 31, 2025, compared to the same period of 2024 was lower
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•The impact of sustainable vehicles and other market andregulatory changes on our business, including
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•The impact of sustainable vehicles and other market and regulatory changes on our business, including
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however consumers desire. As of March 31, 2025, we operated 451 locations representing 52 brands in the United
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however consumers desire. As of June 30, 2025, we operated 448 locations representing 52 brands in the United
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LAD builds magnetic customer loyalty across our 451 stores, our Driveway and GreenCars e-commerce platforms,
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LAD builds magnetic customer loyalty across our 448 stores, our Driveway and GreenCars e-commerce platforms,
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more attractive use of funds than acquisitions. Our current free cash flow deployment strategy has shifted to an
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more attractive use of funds than acquisitions. Our current free cash flow deployment strategy includes an allocation
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allocation of 35% to 45% investment in acquisitions, 25% investment in capital expenditures, innovation, and
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of 25% to 35% investment in acquisitions, 25% investment in capital expenditures, innovation, and diversification
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diversification and 30% to 40% in shareholder return in the form of dividends and share repurchases due to current
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and 40% to 50% in shareholder return in the form of dividends and share repurchases based on current valuation
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valuation trends in acquisitions relative to stock price performance. During the first three months of 2025, we utilized
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trends in acquisitions relative to stock price performance. During the firstsix months of 2025, we utilized$148.8
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$68.7 million for capital expenditures investing in our existing business and paid$13.9 million in dividends and
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million for capital expenditures investing in our existing business, paid $28.2 million in dividends, and$263.3 million
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$143.4 million in share repurchases. As of March 31, 2025, we had available liquidity of approximately$1.4 billion,
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in share repurchases. As of June 30, 2025, we had available liquidity of approximately$1.3 billion, which was
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which was comprised of$234.4 million in unrestricted cash,$53.7 million in marketable securities, and$1.1 billion
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comprised of$202.8 million in unrestricted cash,$52.1 million in marketable securities, and$1.0 billion availability
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by same store increases in aftersales and F&I. New vehicle retail gross profit declined compared to 2024 due to
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by same store increases in aftersales and F&I. New vehicle retail gross profit decreased compared to 2024 due to
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increase in total gross profit, while remaining diligent in keeping SG&A costs under control, reducing our total SG&A
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increase in total gross profit and financing operations, while remaining diligent in managing SG&Acosts, reducing
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months when operations occurred in both periods. For example, a store acquired in February 2024 would be
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months when operations occurred in both periods. For example, a store acquired in May 2024 would be included in
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included in same store operating data beginning in March 2025, after its first complete comparable month of
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same store operating data beginning in June 2025, after its first complete comparable month of operation. The
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operation. Thefirst quarter operating results for the same store comparisons would include results for that store in
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second quarter operating results for the same store comparisons would include results for that store in only the
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only the month of March for both comparable periods.
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month of June for both comparable periods.
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New vehicle retail revenue for thethree months ended March 31, 2025 increased 9.1% compared to the same
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New vehicle retail revenue for thesix months ended June 30, 2025 increased 5.5% compared to the same period of
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period of 2024 primarily due to same store growth, and supported by acquisition activity. Same store new vehicle
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2024, primarily due to same store performance and supported by acquisition activity. Same store new vehicle retail
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Same store new vehicle retail gross profit per unit decreased 12.0%, driven by a decrease in new vehicle retail
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Same store new vehicle retail gross profit per unit decreased 10.1%, driven bya decrease in new vehicle retail
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gross profit margins of 100 bps. Total same store new vehicle retail gross profit per unit, which includes the finance
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gross profit margins of 80 bps. Total same store new vehicle retail gross profit per unit, which includes the finance
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and insurance revenue generated from the sales of new retail vehicles, decreased $412 to $5,168.
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and insurance revenue generated from the sales of new retail vehicles, decreased $303 to$5,231.
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period of 2024 driven by acquisition activity. On a same store basis, used vehicle retail sales decreased 0.9% due to
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2024 driven by same store performance and supported by acquisition activity. On a same store basis, used vehicle
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Used vehicle retail revenue for thethree months ended March 31, 2025 increased 4.2% compared to the same
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Used vehicle retail revenue for thesix months ended June 30, 2025 increased 3.9% compared to the same period
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of used retail vehicles, increased $71 to $3,540.
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revenue generated from the sales of used retail vehicles, increased $25 to$3,508.
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contracts and vehicle and theft protection which drive continued engagement with the consumer throughout the
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contracts and vehicle and theft protection which promotes continued engagement with the consumer throughout the
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Total finance and insurance income increased 7.0% in thethree months ended March 31, 2025 compared to the
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Total finance and insurance income increased 3.6% in the three months ended June 30, 2025 compared to the
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decline in service contract penetration rates. On a same store basis, our finance and insurance revenue per retail
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insurance revenues increased 3.8%. On a same store basis, our finance and insurance revenue per retail unit
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Same store aftersales gross profit increased 7.5%. This increase was primarily due to increased volumes of
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Same store aftersales gross profit increased 11.9%. This increase was primarily due to increased volumes of
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revenues saw a 19.7% increase compared to the prior year.
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20.0% increase compared to the prior year.
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warranty transactions. Overall same store aftersales gross margins increased 270 bps, primarily as a result of
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warranty transactions. Overall same store aftersales gross margins increased 220 bps, primarily as a result of
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increased warranty gross margins of 150 bps and increase customer pay margins of 380 bps.
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increased warranty gross margins of 120 bps and increase customer pay margins of 320 bps.
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The weighted average contract rate on loans originated in thethree months ended March 31, 2025 decreased to
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The weighted average contract rate on loans originated in thesix months ended June 30, 2025 decreased to 8.9%,
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9.1%, compared with 10.2% in the same period of 2024 as we decreased rates to maintain competitiveness
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compared with 10.0% in the same period of 2024 as we decreased rates to maintain competitiveness following
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following Federal Reserve rate cuts. The decrease in provision expense as a percentage of receivables compared
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Federal Reserve rate cuts. The decrease in provision expense as a percentage of receivables compared to the prior
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to the prior year reflected the increased credit quality of the portfolio and improved recovery rates. The decrease in
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year reflected the increased credit quality of the portfolio as well as a decrease in the percentage of ending
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Other financing operations expenses as a percentage of average managed receivables compared to the prior year
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managed receivables constituted by the allowance for loan losses. Other financing operations expenses as a
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reflected improved operational performance and economies of scale.
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growth, reflecting improved operational performance and economies of scale.
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On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 67.0%
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On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 67.4%
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for the same period of 2024. Total SG&A expense increased 2.0%, driven by increases in all areas excluding
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SG&A expense increased 3.0%, driven by increases in all areas excluding advertising, primarily as a result of our
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compared to 68.5% for the same period of 2024. The decrease was related to both an increase in total same store
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compared to 67.4% for the same period of 2024. The decrease was related to gross profit growth outpacing SG&A
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our total SG&A as a % of gross profit.
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of 2024 driven by same store performance and supported by acquisition activity. On a same store basis, used
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and insurance revenues increased 4.5%. On a same store basis, our finance and insurance revenue per retail unit
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Same store aftersales gross profit increased 9.7%. This increase was primarily due to increased volumes of
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period of 2024, primarily due to our maintaining competitive pricing following Federal Reserve rate cuts. The
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On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 67.3%
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by increased SG&A of 3.0%.
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compared to the same period of 2024.
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and higher in existing operations improvements.
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used vehicle retail gross profit per unit, which includes the finance and insurance revenue generated from the sales
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advertising, primarily as a result of our growth in the United Kingdom.
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improvements and new operations purchases and improvements.