Good morning. I'm Bryan DeBoer, President and CEO of Lithia Motors and Chairman of this annual meeting of shareholders. On behalf of our Board of Directors, it's my pleasure to welcome you to our 2026 Annual Meeting. We are happy to have you with us today and are looking forward to updating you on our plans for the future. I will now turn over the call to David Stork, our Chief Administrative Officer, to conduct the official portion of this meeting.
Thank you, Bryan. I call this meeting to order. It is now 8:30 A.M. Pacific Time on 30 April 2026. I now declare the polls open for each matter to be voted on today. We will present the official business and vote on agenda items first. Adjourn the annual meeting for a short presentation from our CEO, followed by an opportunity to ask questions. In the online portal, you will find the meeting materials, including our rules of conduct and meeting agenda. You may also cast your vote and submit questions in the online portal. I would like to start by introducing the members of our board and management team.
The nominees for Directors who are present with us today are Richard Bailey, Priya Huskins, James Lentz, Stacy Loretz-Congdon, Shauna McIntyre, Cassandra McKinney, Lou Miramontes, Heidi O'Neill, Bryan DeBoer, who is also our President and CEO, and Sid DeBoer, who is also our Founder and Chairman of the Board. Some members of management of the company who are present today in addition to myself are Tina Miller, Senior Vice President, Chief Financial Officer. Charles Lietz, Senior Vice President, Finance. Katie Macaddino, Senior Vice President, People and Culture. Edward Impert, Vice President, General Counsel and Secretary. Dianna du Preez, Chief Customer Officer. Also with us today are Aaron Conaway and Chris Caldwell from KPMG, our independent public accounting firm, and Allison Handy from Perkins Coie, our outside legal counsel. Tina Miller will serve as the Inspector of Elections today.
Now that we have gone through our introductions, a few words regarding mailing of notice and presence of a quorum. A notice of meeting and Internet availability was mailed on or about 11 March 2026 to all shareholders of record as of 27 February 2026. An affidavit to that effect has been received from Broadridge Financial Solutions and will be attached to the minutes of this meeting. A list of Lithia shareholders of record as of 27 February 2026 is available for inspection during the entire meeting on the online portal. Based upon the shares represented in person or by proxy as reported by the Inspector of Elections, I can declare that a quorum is present and we can proceed with the meeting.
Having established a quorum, in the interest of time, I would like to dispense with the reading of the minutes from last year's shareholder meeting. Copies of the minutes are available in the online portal if anyone wishes to read them. I would now like to proceed with the business of this year's meeting. As set forth in the notice and the accompanying proxy statement, there are four matters to be voted upon by the shareholders. The first matter is the election of a board of directors to serve until the next meeting of shareholders and until their successors are duly elected and qualified. The board of directors has been nominated and recommends the election of the ten nominees named in the proxy statement. We did not receive any other nominations. The nominees are Richard J. Bailey, Sidney B. DeBoer, Bryan B. DeBoer, Priya C. Huskins, James E.
Lentz, Stacy C. Loretz-Congdon, Shauna F. McIntyre, Cassandra M. McKinney, Louis P. Miramontes, and Heidi L. O'Neill. All nominees other than Ms. Priya Huskins presently serve on the board. The second item is an advisory vote on the compensation of our named executive officers as disclosed in our proxy statement. The results of the vote are not binding but will be considered by the Compensation Committee and the full Board of Directors when making future compensation decisions. The board recommends that shareholders vote for the advisory approval of the 2025 compensation of our named executive officers. The third item to be voted upon is the ratification of KPMG LLP as our independent registered public accounting firm for the year ending 31 December 2026.
The board recommends that shareholders vote for the ratification. The fourth matter to be voted on is a shareholder proposal requesting that our board appoint an independent board chair. The board recommends that shareholders vote against proposal number four. Proposal number four is a shareholder proposal submitted by John Chevedden, which is set forth in the proxy statement along with the proponent's supporting statements and the board's statement in opposition. I will now turn it over to Mr. John Chevedden for up to three minutes to speak to proposal number four.
Hello, this is John Chevedden, Proposal four, Independent Board Chairman. Charles requested the board of directors to adopt an enduring policy to amend the governing documents in order that two separate people hold the office of the Chairman and the office of the CEO as soon as possible. The Chairman of the Board shall be an independent director. A lead director shall not be a substitute for an independent Board Chairman. The board shall have the discretion to select an interim Chairman of the Board who's not an independent director to serve while the board is required to seek an independent Chairman of the Board on an accelerated basis. An independent Board Chairman at all times improves corporate governance by bringing impartiality, objective oversight, and external expertise to board decisions, mitigating conflicts of interest, enhancing transparency, and boosting shareholder confidence.
This detached perspective allows the chairman to focus on shareholder interests, strengthen management accountability, and provide critical checks and balances, ultimately contributing to long-term sustainability and profitability. Now is a good time for a change since Lithia Motors stock was at $418 in 2021 and is at only $291 now despite a robust stock market. Please vote yes. Independent Board Chairman, Proposal four.
Thank you, Mr. Chevedden. As indicated in our proxy statement, the board recommends that shareholders vote against proposal number four. Please refer to the proxy statement for the board's response in opposition to proposal number four. If you have provided your proxy card, your shares will be voted accordingly. Please do not vote through the online portal unless you want to change your proxy vote. If you have clicked the voting button on the online portal, please finish marking your choices and submit your votes. I now declare the polls closed. The Inspector of Election reports that there is a sufficient number of shares of common stock present and voting at this meeting in person or by proxy. The inspector also reports that in regard to proposal number one, the 10 nominees named in the proxy statement have been elected to the board of directors.
In regard to proposal number two, the advisory vote is for the compensation of our named executive officers in 2025. In regard to proposal number three, the ratification of KPMG as our independent registered public accounting firm for the year ending 31 December 2026, has been approved by the required vote. Lastly, the shareholders did not approve proposal number four, a shareholder proposal requesting that our board appoint an independent board chair. A formal report of the Inspector of Election detailing the results of the vote on each proposal will be filed with the minutes of this meeting. This concludes the business to be conducted today. The formal shareholders meeting is officially adjourned. Bryan DeBoer will now proceed with the information portion of our presentation today.
Thank you, David. Good morning, everyone, and thank you for joining us. On behalf of the board of directors and leadership team, I want to thank you for your continued investment in Lithia & Driveway. Your partnership, confidence, and support have been instrumental as we continue to build the world's largest, most diversified, and most innovative automotive retailer. 2025 was a defining year in our journey. We delivered another year of record performance, growing revenue to $37.6 billion, and made meaningful progress against our long-term targets. Across every part of our business, we demonstrated that the ecosystem we built is scaling in ways that create lasting value now and in the future. Our strategy is built on a simple conviction that customers win when they have the real choice in how they shop, buy, finance, and service their vehicles.
By meeting customers wherever, whenever, and however they choose to engage us, we deepen relationships, expand our share of ownership lifecycle, and unlock durable, profitable growth. 2025 was a year of meaningful progress across every part of our business. In addition to record revenues, we delivered adjusted diluted earnings per share of $33.46 or a 16% increase over the prior year. Generated durable free cash flows that gave us flexibility to invest in growth and return capital to shareholders. Over the course of the year, we allocated $1.1 billion to share repurchases, buying back more than 11% of our outstanding shares while continuing to fund accretive acquisitions at attractive valuations. Across our core operations, every business line contributed to this year's performance
New and used vehicle sales grew share, particularly in our core strength of used value vehicles. Finance and insurance remained a consistent profit contributor, and after-sales expanded to 41% of our gross profit, continuing to be the anchor of our customer funnel. At the same time, we drove operational efficiency across the enterprise and created the operating leverage, all reinforced by our scale advantages. On the strategic front, Driveway Finance Corporation reached 15% U.S. penetration and grew its managed portfolio to nearly $5 billion, generating $75 million in financing operations income and becoming a consistent contributor to earnings. We deepened our partnership with Pinewood.AI, laying the foundation for a fully integrated technology platform across our global operations by the end of 2028. Together, these accomplishments reinforce the strength of our model and the momentum behind our strategy.
Lithia and Driveway is an omni-channel ecosystem covering every stage of the vehicle ownership life cycle. Across more than 450 stores and 50 OEMs, we serve customers through new and used vehicle retail, captive financing through DFC, recurring after-sales and service, our e-commerce platforms, Driveway and GreenCars, and other fleet and adjacency businesses, including Wheels. No public franchise, peer, or e-commerce retailer provides this full range of offerings, and our ability to deliver simple, quick, transparent, and empowering experiences is unparalleled with our national network density reaching 95% of the U.S. population. This integrated model is the foundation for compounding customer experiences and regenerative cash flows. Each interaction creates the opportunity for the next, whether that's trade-in, a finance relationship, or a service visit. It is what allows us to deepen loyalty, expand wallet share, and convert scale into durable long-term earnings power.
As we look to 2026, our priorities are quite clear. First, we deepen loyalty, which is the leading driver of margin expansion and shareholder return through empowered store leaders and richer and more memorable experiences across every touch point. Second, we drive performance across our core operations, unlocking store and departmental potential through disciplined execution to accelerate operating leverage across our network. Third, we will continue our disciplined approach to network development and capital deployment, allocating cash to an unwavering commitment to ongoing share repurchases and high return to acquisitions. Lithia has a long-standing track record of delivering results and creating value in all market conditions. Our growth in revenue and earnings over the past decade remains unmatched, and 2025 reinforced the durability of the model and scale we've built.
This legacy of performance, now 80 years in the making since our founding here in Southern Oregon, continues to be driven by the strength and dedication of our people. We are energized by the opportunities ahead. The foundation to unlock our massive potential is in place. Our strategy is both proven and differentiated, and our momentum is accelerating. In 2026, we will continue to execute with discipline, invest with conviction, and unlock the promise of the ecosystem we have built. Thank you again for your partnership. We look forward to another year of progress and performance at Lithia & Driveway. With that, I'd like to open the portal up to questions.
We have one question, and the question comes to us today from John Chevedden. The question is as follows: Please advise the Lithia response to the Federal Trade Commission looking into accusations that Lithia sold used cars with unrepaired safety recalls.
Thank you for the question. This is Bryan here. If I'm remembering correctly, I believe there was four groups that were suggested that they needed to clarify their disclosures on recalls of selling used vehicles, and that there was no wrongdoing found on that research. I believe it was seven, eight years ago. It was somewhere before COVID, as I recall. Hopefully, that answered your question, John
Thank you, Bryan. We have no further questions.
Well, that was short. Thank you again for being part of the journey with us, and we really look forward to making 2026 our strongest year yet. Bye-bye, everyone.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.