Q2 2024 Group 1 Automotive Inc Earnings Call

Operator: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's second quarter of 2024 financial results conference call. Please be advised that this call is being recorded today. I would now like to turn the call over to Mr. Pete DeLongchamp, Group 1's Senior Vice President of Manufacturer Relations, Financial Services, and Public Affairs. Please go ahead, Mr. DeLongchamp.

Operator: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's second quarter of 2024 financial results conference call. Please be advised of this call as being recorded today.

Speaker Change: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's second quarter of 2024 financial results conference call.

Operator: I would now like to turn the call off to Mr. Pete DeLongchamps, Group 1's Senior Vice President of Manufacturer Relations, Financial Services, and Public Affairs.

Speaker Change: Please be advised that this call is being recorded today.

Peter C. DeLongchamps: I would now like to turn the call over to Mr. Pete DeLongchamp, Group 1's Senior Vice President of Manufacturer Relations, Financial Services, and Public Affairs. Please go ahead, Mr. DeLongchamp.

Peter DeLongchamps: Please go ahead, Mr. DeLongchamps.

Peter DeLongchamps: Thank you, Joe.

Peter DeLongchamps: And good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliation related to the adjusted results we will refer to on this call for comparison purposes have been posted to Group 1's website.

Peter C. DeLongchamps: And good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliations related to the adjusted results we will refer to on this call for comparison purposes have been posted on Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Peter C. DeLongchamps: Thank you, Joe.

Speaker Change: And good morning everyone and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results we will refer to on this call for comparison purposes have been posted to Group 1's website.

Peter DeLongchamps: Before we begin, I'd like to make some brief remarks about forward-looking statements and use of non-GAAP financial measures. Except for historical information mentioned during the call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results and future periods to differ materially from forecast results. Those risks included but are not limited to risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturer production levels due to component shortages, conditions of markets, successful integration of our pending In-Scape acquisition, and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services.

Peter C. DeLongchamps: Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing and volume. Inventory supply due to increased customer demand and reduced manufacturer production levels due to component shortages, conditions in markets, successful integration of our pending InScape acquisition and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services.

Speaker Change: Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures.

Speaker Change: Except for historical information mentioned during the call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results.

Speaker Change: Those risks included but are not limited to risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturer production levels due to component shortages, conditions of markets.

Speaker Change: Successful integration of our pending InScape acquisition and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission.

Peter DeLongchamps: Those and other risks are described in the company's filings with the Securities and Exchange Commission.

Peter DeLongchamps: In addition, certain non-GAAP financial measures as defined in our SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliation of any such non-GAAP financial measures for the most directly comparable GAAP measures on its website.

Peter C. DeLongchamps: Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call are Daryl Kenningham, our president and chief executive officer, and Daniel McHenry, senior vice president and chief financial officer. I'd now like to hand the call over to Daryl.

Speaker Change: In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.

Peter DeLongchamps: Participating with me on today's call, Daryl Kenningham, our President and Chief Executive Officer, and Daniel McKennery, Senior Vice President and Chief Financial Officer.

Speaker Change: Participating with me on today's call, Daryl Kenningham, our President and Chief Executive Officer, and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd now like to hand the call over to Daryl.

Daryl Kenningham: I'd now like to hand the call over to Daryl.

Daryl Adam Kenningham: Thank you, Pete. Good morning, everyone. Despite a number of challenges, we are very pleased with our results this quarter. Our U.S. team persevered through extreme weather events and the CDK outage. We witnessed unprecedented teamwork focused on caring for our customers, communities, and our team members. The CDK outage most significantly affected our U.S. operations from June 19 to June 26.

Daryl Kenningham: Thank you, Pete.

Daryl Kenningham: Good morning, everyone. Despite a number of challenges, we are very pleased with our results this quarter. Our US team persevered through extreme weather events and the CDK outage. We witnessed unprecedented teamwork focused on caring for our customers, communities, and our team members. The CDK outage was most significantly affected our US operations from June 19th to June 26th. The company's businesses in the UK were not impacted as we use a different dealership management system there. During the disruption, all Group 1 US dealerships continued to serve our customers using alternative processes until CDK systems were again made available.

Daryl Adam Kenningham: Thank you, Pete. Good morning, everyone.

Daryl Adam Kenningham: Despite a number of challenges, we are very pleased with our results this quarter. Our US team persevered through extreme weather events and the CDK outage.

Daryl Adam Kenningham: We witnessed unprecedented teamwork focused on caring for our customers, communities, and our team members.

Speaker Change: The CDK outage most significantly affected our U.S. operations from June 19th to June 26th.

Daryl Adam Kenningham: Companies and businesses in the UK were not impacted as we use a different dealership management system now. During the disruption, all Group 1 U.S. dealerships continued to serve our customers using alternative processes until CDK systems were again made available. We do believe that we could have sold more vehicles and performed additional service and repair work in the June quarter had we been operating at full capacity with our CDK dealer management. Once we were able to gain access to CDK on June 26th, we mobilized our operations personnel to enter thousands of transactions performed during the outage into the CDK DMS, all of which were completed prior to June 30th. The superior efforts by our field employees, our Accounting Shared Services Center in Houston, and our investments in technology for transactional processing all paid tremendous dividends that enabled us to recover quickly from the outage.

Speaker Change: The company's businesses in the UK were not impacted as we use a different dealership management system there.

Speaker Change: During the disruption, all Group 1 U.S. dealerships continued to serve our customers using alternative processes until CDK systems were again made available.

Daryl Kenningham: We do believe that we could have sold more vehicles and performed additional service and repair work in the June quarter had we been operating at full capacity with our CDK dealer management systems. Once we were able to gain access to CDK on June 26th, we mobilized our operations personnel to enter thousands of transactions performed during the outage into the CDK DMS, all of which were completed prior to June 30th. The superior efforts by our field employees, our accounting shared services center in Houston, and our investments in technology for transactional processing all paid tremendous dividends that enabled us to recover quickly from the outage.

Speaker Change: We do believe that we could have sold more vehicles and performed additional service and repair work in the June quarter had we been operating at full capacity with our CDK dealer management systems.

Speaker Change: Once we were able to gain access to CDK on June 26th, we mobilized our operations personnel to enter thousands of transactions performed during the outage into the CDK DMS, all of which were completed prior to June the 30th.

Speaker Change: The superior efforts by our field employees, our Accounting Shared Services Center in Houston, and our investments in technology for transactional processing all paid tremendous dividends that enabled us to recover quickly from the outage.

Daryl Kenningham: For example, we used our technology to process cardials, complete inventory stockings, and post factory, vendor, and bank statements in an expeditious manner. This phenomenal display of teamwork and unity by our US team allowed us to maintain our financial closed timeline for the June quarter and shift our focus toward the future. We believe these actions are a key reason that we were able to minimize the financial impact of the CDK event on our profit performance. We estimate the pre-tax income impact of the CDK incident to be approximately $17 million, or $0.97 in diluted earnings per share.

Daryl Adam Kenningham: We used our technology to process car deals, complete inventory stock ends, and post factory, vendor, and bank statements in an expeditious manner. This phenomenal display of teamwork and unity by our U.S. team allowed us to maintain our financial close timeline for the June quarter and shift our focus toward the future. We believe these actions are a key reason that we were able to minimize the financial impact of the CDK event on our profit performance. We estimate the pre-tax income impact of the CDK incident to be approximately $17 million, for $0.97 in diluted earnings per share.

Speaker Change: For example, we used our technology to process car deals, complete inventory stock ends, and post factory, vendor, and bank statements in an expeditious manner.

Speaker Change: This phenomenal display of teamwork and unity by our U.S. team allowed us to maintain our financial close timeline for the June quarter and shift our focus toward the future.

Speaker Change: We believe these actions are a key reason that we were able to minimize the financial impact of the CDK event on our profit performance.

Speaker Change: We estimate the pre-tax income impact of the CDK incident to be approximately $17 million, or 97 cents in diluted earnings per share.

Daryl Adam Kenningham: Additionally, we made $5.9 million in one-time pre-tax compensation payments to employees, or approximately $0.34 in earnings per diluted share. This impact is prior to any insurance or other recoveries we expect to receive in future periods. Now I'd like to spend a few minutes discussing what we feel differentiates Group 1.

Daryl Kenningham: Additionally, we made $5.9 million in one-time pre-tax compensation payments to employees, or approximately $0.34 in earnings per diluted share. This impact is prior to any insurance or other recoveries we expect to receive in future periods.

Speaker Change: Additionally, we made $5.9 million in one-time pre-tax compensation payments.

Speaker Change: to employees, or approximately $0.34 in earnings per diluted share.

Speaker Change: This impact is prior to any insurance or other recoveries we expect to receive in future periods.

Daryl Kenningham: Now I'd like to spend a few minutes discussing what we feel like differentiates Group 1. Prior to the CDK cyber attack, our discipline execution led to great after sales and use card performance in the second quarter, and our F and I performance in front and gross margin retention performed well throughout the entire quarter. Our S.G.N.A. leverage was outstanding as we continue to keep our primary cost drivers like headcount and check. Daniel McHenry will outline several specific examples of this disciplined execution in his upcoming comments.

Speaker Change: Now I'd like to spend a few minutes discussing what we feel like differentiates Group 1.

Daryl Adam Kenningham: Prior to the CDK cyber attack, our disciplined execution led to great after-sales and used car performance in the second quarter. And our F&I performance and front-end gross margin retention performed well throughout the entire quarter. Our SG&A leverage was outstanding, as we continue to keep our primary cost drivers, like headcount, in check. Daniel McHenry will outline several specific examples of this disciplined execution in his upcoming comments.

Speaker Change: Prior to the CDK cyber attack, our disciplined execution led to great after-sales and used car performance in the second quarter.

Speaker Change: And our F&I performance and front-end gross margin retention performed well throughout the entire quarter. Our SG&A leverage was outstanding as we continue to keep our primary cost drivers, like head count, in check.

Daniel James McHenry: Daniel McHenry will outline several specific examples of this disciplined execution in his upcoming comments.

Daryl Kenningham: Another differentiator for Group 1 is our capital allocation strategy. We are a pure play new vehicle dealership group. While we regularly evaluate other business adjacencies, we believe that in this environment the best use of our shareholders' capital is investing in new vehicle franchise dealerships. We believe that entering other business verticals not only hurts returns but also dilutes our focus. This year we have acquired dealerships with expected revenues of 1.1 billion. Our ability to integrate these businesses into our existing portfolio allowed these transactions to be accretive from day one. As previously announced, we recently completed the purchase of four Mercedes-Benz dealerships north of London.

Daryl Adam Kenningham: Another differentiator for Group 1 is our capital allocation strategy. We are a pure play new vehicle dealership group. While we regularly evaluate other business adjacencies, we believe, in this environment, the best use of our shareholders' capital is investing in new vehicle franchise dealerships. We believe that entering other business verticals not only hurts returns but also dilutes our focus. This year, we have acquired dealerships with expected revenues of $1.1 billion. Our ability to integrate these businesses into our existing portfolio allowed these transactions to be accretive from day one. As previously announced, we recently completed the purchase of four Mercedes-Benz dealerships north of London.

Daniel James McHenry: Another differentiator for Group 1 is our capital allocation strategy.

Daryl Adam Kenningham: We also look forward to closing the Inchcape acquisition in the third quarter. As a reminder, we anticipate that the 54-inch Cape dealerships will add $2.7 billion in revenue to Group 1, doubling our size in the UK. The brand and geographic mix is outstanding and will give us significant scale and reach and will improve our SG&A library. This is a transformative acquisition for Group 1.

Daniel James McHenry: We are a pure play new vehicle dealership group.

Daniel James McHenry: While we regularly evaluate other business adjacencies, we believe, in this environment, the best use of our shareholders' capital is investing in new vehicle franchise dealerships.

Daniel James McHenry: We believe that entering other business verticals not only hurts returns, but also dilutes our focus.

Daniel James McHenry: This year we have acquired dealerships with expected revenues of $1.1 billion.

Daniel James McHenry: Our ability to integrate these businesses into our existing portfolio allowed these transactions to be accretive from day one.

Daniel James McHenry: As previously announced, we recently completed the purchase of four Mercedes Benz dealerships north of London.

Daryl Kenningham: We also look forward to closing the Inchcape acquisition in the third quarter. As a reminder, we anticipate that the 54-inchcape dealerships will add $2.7 billion in revenue to Group 1, doubling our size in the UK. The brand and geographic mix is outstanding and gives us significant scale and reach and will improve our SG&A looks.

Daniel James McHenry: We also look forward to closing the Inchcape acquisition in the third quarter. As a reminder, we anticipate that the 54 Inchcape dealerships will add $2.7 billion in revenue to Group 1, doubling our size in the UK.

Daniel James McHenry: The brand and geographic mix is outstanding and give us significant scale and reach and will improve our SG&A leverage.

Daryl Kenningham: Research. This is a transformative acquisition for Group 1, and we look forward to welcoming nearly 4,000 new teammates to the company.

Daniel James McHenry: This is a transformative acquisition for Group 1 and we look forward to welcoming nearly 4,000 new teammates to the company.

Daryl Kenningham: An important part of our capital allocation focus is what we don't buy. While we routinely discuss acquisitions that are pending or have closed, what's also important are the acquisitions that don't fit strategically or meet our investment hurdles. Some of those are in great markets with great brands; however, we will not chase revenue just for the sake of growing. Our portfolio optimization efforts are based on returns and strategic fifth.

Daryl Adam Kenningham: And we look forward to welcoming nearly 4,000 new teammates to the company. An important part of our capital allocation focus is what we don't buy. While we routinely discuss acquisitions that are pending or have closed, what's also important are the acquisitions that don't fit strategically or meet our investment hurdles. Some of those are in great markets with great brands. However, we will not chase revenue just for the sake of growing.

Daniel James McHenry: An important part of our capital allocation focus is what we don't buy.

Daniel James McHenry: While we routinely discuss acquisitions that are pending or have closed, what's also important are the acquisitions that don't fit strategically or meet our investment hurdles.

Daniel James McHenry: Some of those are in great markets with great brands. However, we will not chase revenue just for the sake of growing. Our portfolio optimization efforts are based on returns and strategic fit.

Daryl Adam Kenningham: Our portfolio optimization efforts are based on returns and strategic fit. Another important element of our capital allocation strategy is evaluating share buybacks as an alternative to purchasing revenue. We continue to balance acquisitions and dispositions with repurchasing our shares. This year, we bought another 2.6% of the company back for $100 million. Over the past 30 months, we've bought back 25% of our stock.

Daryl Kenningham: Another important element of our capital allocation strategy is evaluating share buybacks as an alternative to purchasing revenue. We continue to balance acquisitions and dispositions with repurchasing our shares. This year, we've bought another 2.6% of the company back for $100 million. Over the past 30 months, we've bought back 25% of our stock.

Daniel James McHenry: Another important element of our capital allocation strategy is evaluating share buybacks as an alternative to purchasing revenue.

Daniel James McHenry: We continue to balance acquisitions and dispositions with repurchasing our shares. This year, we've bought another 2.6% of the company back for $100 million.

Daniel James McHenry: Over the past 30 months, we've bought back 25% of our stock.

Daryl Kenningham: Lastly, we believe close partnerships with our OEM partners has never been more important, and this is certainly a differentiator for Group 1. OEMs need great retail partners now more than ever. The good ones admit that and execute against that. They need our capital, professionalism, and execution to win in this ultra-competitive environment. Our high performance on OEM scorecard metrics enables Group 1 to stay eligible to purchase more stores. Something our team has done enough standing job with the last two years. Our ability to respond to disruptive events quickly and effectively, like the CDK outage and catastrophic weather events, makes us more valuable partners as well.

Daryl Adam Kenningham: Lastly... We believe close partnerships with our OEM partners have never been more important, and this is certainly a differentiator for Group 1. OEMs need great retail partners now more than ever. The good ones admit that and execute again.

Daniel James McHenry: Lastly, we believe close partnerships with our OEM partners has never been more important, and this is certainly a differentiator for Group 1.

Daniel James McHenry: OEMs need great retail partners now more than ever. The good ones admit that and execute against that.

Daryl Adam Kenningham: They need our capital, professionalism, and execution to win in this ultra-competitive environment. Our high performance on OEM scorecard metrics enables Group 1 to stay eligible to purchase more stores. Something our team has done an outstanding job with the last two years, our ability to respond to disruptive events quickly and effectively, like the CDK outage and catastrophic weather events, makes us more valuable partners. As well, our willingness and ability to invest in world-class facilities, professional management, and the community make us more valuable partners.

Daniel James McHenry: They need our capital, professionalism, and execution to win in this ultra-competitive environment.

Daniel James McHenry: Our high performance on OEM scorecard metrics enables Group 1 to stay eligible to purchase more stores, something our team has done an outstanding job with the last two years.

Daniel James McHenry: Our ability to respond to disruptive events quickly and effectively, like the CDK outage and catastrophic weather events, make us more valuable partners as well.

Daryl Kenningham: Our willingness and ability to invest in world-class facilities, professional management, and the community makes us more valuable partners. Our breadth across two major markets gives us and our OEM partners competitive leverage and performance advantages.

Daniel James McHenry: Our willingness and ability to invest in world-class facilities, professional management, and the community makes us more valuable partners.

Daryl Adam Kenningham: Our breadth across two major markets gives us and our OEM partners competitive leverage and performance advantages as a new vehicle dealer. A strong relationship with our OEM partners is more critical than ever, and we don't see that changing in the future. We actually see that OEM relationship growing in importance. We believe the Inchcape acquisition allows Group 1 another outstanding opportunity to demonstrate. And we believe that Group 1 being a great partner to our OEMs gives us significant advantages that tie directly to our capital allocation priorities. Now, I'll turn the call over to our CFO, Daniel McHenry, for an operating and financial overview.

Daniel James McHenry: Our breadth across two major markets gives us and our OEM partners competitive leverage and performance advantages.

Daryl Kenningham: As a new vehicle dealer, a strong relationship with our OEM partners is more critical than ever, and we don't see that changing in the future. We actually see that OEM relationship growing in importance. We believe the Inchcape acquisition allows Group 1 another outstanding opportunity to demonstrate that, and we believe that Group 1 being a great partner to our OEMs gives us significant advantages that ties directly to our capital allocation priorities.

Daniel James McHenry: As a new vehicle dealer, a strong relationship with our OEM partners is more critical than ever, and we don't see that changing in the future.

Daniel James McHenry: We actually see that OEM relationship growing in importance. We believe the Inchcape acquisition allows Group 1 another outstanding opportunity to demonstrate that.

Daniel James McHenry: And we believe that Group 1, being a great partner to our OEMs, gives us significant advantages that ties directly to our capital allocation priorities.

Daniel McHenry: Now, we'll turn the call over to our CFO, Daniel Ackendry, for an operating and financial overview.

Daniel James McHenry: Now I'll turn the call over to our CFO , Daniel McHenry, for an operating and financial overview. Daniel? Thank you, Daryl, and good morning, everyone.

Daniel James McHenry: Thank you, Daryl, and good morning, everyone. In the second quarter of 2024, Group 1 Automotive reported an adjusted net income of $133.1 million. Quarterly adjusted diluted EPS from continuing operations of $9.80. Current quarter total revenues of $4.7 billion, a second quarter record, and all-time records in new vehicle sales of $2.4 billion and F&I of $200 million, starting with our U.S. operation. We achieved an all-time record in new vehicle revenues of $2 billion, driven by record new vehicle sales units sold, up 7% on a reported basis. This reflects the resiliency of demand and our continued emphasis on driving volume. New vehicle GPUs were essentially flat sequentially, dying for only $33.

Daniel McHenry: Dana? Thank you, Darrell.

Daniel McHenry: I'm Good morning, everyone. In the second quarter of 2024, Group 1 Automotive reported an adjusted net income of 133.1 million. Quarterly adjusted diluted EPS from continuing operations of $9.80. Current quarter total revenues of $4.7 billion, a second quarter record. and all-time records in new vehicle sales of 2.4 billion and F&I of 200 million.

Daniel James McHenry: In the second quarter of 2024, Group 1 Automotive reported adjusted net income of $133.1 million.

Daniel James McHenry: Quarterly adjusted diluted EPS from continuing operations of $9.80.

Speaker Change: Current quarter total revenues of $4.7 billion, a second quarter record, and all-time records in new vehicle sales of $2.4 billion, and F&I of $200 million.

Daniel McHenry: Starting with our U.S. operations, we achieved an all-time record in new vehicle revenues of 2 billion driven by record new vehicle sales unit sold up 7% on a reported basis. This affects the resiliency of demand on our continued emphasis on driving volume. New vehicle GPUs were essentially flat sequentially, done only $33. Use cars experienced a volume increase both sequentially and year over year, with only slight declines in GPUs. We were pleased with our ability to hold margin and increase volume despite fluctuations in pricing between the periods. We believe this is a testament to our process, discipline, and use of technology with the pricing of used vehicles.

Speaker Change: starting with our U.S. operations.

Speaker Change: We achieved an all-time record in new vehicle revenues of $2 billion, driven by record new vehicle sales units sold, up 7% on a reported basis.

Speaker Change: This reflects the resiliency of demand and our continued emphasis on driving volume.

Speaker Change: New vehicle GPUs were essentially flat sequentially, dying only $33.

Daniel James McHenry: Used cars experienced a volume increase both sequentially and year-over-year, with only slight declines in GPUs. We were pleased with our ability to hold margin and increase volume, despite fluctuations in pricing between the periods. We believe this is a testament to our process, discipline, and use of technology in the pricing of used vehicles. Our F&I revenues of $184 million were also a quarterly record for the U.S. Our F&I GPUs of $2,393 increased on a same store basis sequentially, and negligibly declined year over year. The performance by our F&I professionals has been outstanding to maintain GPU discipline. Shifting gears to the after show.

Speaker Change: Used cars experienced a volume increase both sequentially and year-over-year, with only slight declines in GPUs.

Speaker Change: We were pleased with our ability to hold margin and increase volume despite fluctuations in pricing between the periods.

Speaker Change: We believe this is a testament to our process, discipline, and use of technology with the pricing of used vehicles.

Daniel McHenry: Our F&I revenues of $184 million were also quarterly records for the U.S. Our F&I GPUs of $2,393 increased on the same store basis sequentially and negatively declined year over year. The performance by our F&I professionals has been outstanding to maintain GPU disciplines.

Speaker Change: Our F&I revenues of $184 million were also a quarterly record for the U.S.

Speaker Change: Our F&I GPUs of $2,393 increased on the same store basis sequentially and negligibly declined year over year.

Speaker Change: The performance by our F&I professionals has been outstanding to maintain GPU discipline.

Daniel McHenry: Shifting years to after sales. Despite the CDK challenges and weather events, after sales, second quarter revenues and gross profits were all-time quarterly highs, outperforming sequentially and year over year. Seam store customer pan warranty revenues for May quarter to day period were up 6% and 12.5%, respectively. These gains against two top double-digit growth comparative prior year periods demonstrate our ability to add after sales capacity on the same store basis. While our overall same store U.S. had kind to decline 5% from 2019; our technician had kind to nearly up 5% in the same period.

Daniel James McHenry: Despite the CDK challenges and weather events, Aftersales second quarter revenues and gross profit were all-time quarterly highs, outperforming sequentially and year over year. CM Store customer pay and warranty revenues for the May quarter to date period were up 6% and 12.5%, respectively. These gains against two top double-digit growth comparative prior year periods demonstrate our ability to add after-sales capacity on a same-store basis. While our overall same-store U.S. headcount has declined 5% from 2019, our technician headcount is nearly up 5% in the same period. Wrapping up the U.S. that was shipped to SG&A.

Speaker Change: Shifting gears to after-sales. Despite the CDK challenges and weather events, after-sales second quarter revenues and gross profit were all-time quarterly highs, outperforming sequentially and year over year.

Speaker Change: CM Store customer plan warranty revenues for May quarter to date period were up 6% and 12.5% respectively.

Speaker Change: These gains against two top double-digit growth comparative prior year periods demonstrate our ability to add after-sales capacity on a same-store basis.

Speaker Change: While our overall same-store U.S. headcount has declined 5% from 2019, our technician headcount is nearly up 5% in the same period.

Daniel McHenry: Rapping up the U.S. that shipped to the S-GNA. U.S. suggested S-GNA as a percentage of gross profits decreased 130 basis points sequentially to 64.4%. Demonstrating our continued focus on managing costs at below pre-COVID levels as new vehicle margins continue to normalize.

Speaker Change: Wrapping up the U.S. that shipped to SG&A.

Daniel James McHenry: U.S. suggested SG&A as a percentage of gross profit decreased 130 basis points sequentially to 64.4%, demonstrating our continued focus on managing costs at below pre-COVID levels as new vehicle margins continue to normalize. Turning to the U.K., top line revenues grew 2.1% year over year, driven by higher new vehicle and parts and service revenues of 8.2% and 9%, respectively. While down from the prior year, new vehicle gross profit per unit slightly improved sequentially at the same time prices declined over the same period. Used vehicles remain challenged, however. We did experience a slight improvement in GPU sequentially.

Speaker Change: U.S. suggested SG&A as a percentage of gross profit decreased 130 basis points sequentially to 64.4%.

Speaker Change: demonstrating our continued focus on managing costs at below pre-COVID levels as new vehicle margins continue to normalize.

Daniel McHenry: Turning to the UK. Top line revenues grew 2.1% year over year, driven by higher new vehicle and parts and service revenues of 8.2% and 9%, respectively. While down from the prior year, new vehicle gross profit per unit decided to improve sequentially at the same time prices declined over the same period. Use vehicles remain challenged, however. We did experience a slight improvement in GPU sequentially. Coltsill losses per unit remain flat compared to the sequential quarter. Regarding the UK adjusted SG&A as the percentage of gross profit, we recognize we still have some challenges to overcome, and we will continue to focus on cost control and business process efficiency as we expand our business in the UK.

Speaker Change: Turning to the UK.

Speaker Change: Top-line revenues grew 2.1% year-over-year, driven by higher new vehicle and parts and service revenues of 8.2% and 9% respectively.

Speaker Change: While down from the prior year, new vehicle gross profit per unit slightly improved sequentially at the same time prices declined over the same period.

Speaker Change: Use cycles remain challenged however. We did experience a slight improvement in GPU sequentially.

Daniel James McHenry: Wholesale losses per unit remain flat compared to the sequential quarter. Regarding the UK adjusted SG&A as a percentage of gross profit, we recognize we still have some challenges to overcome, and we will continue to focus on cost control and business process efficiency as we expand our business in the UK. Turning to our balance sheet and liquidity, our strong balance sheet, cash flow generation, and leveraged position will continue to support a flexible capital allocation approach.

Speaker Change: Wholesale losses per unit remain flat compared to the sequential quarter.

Speaker Change: Regarding the UK adjusted SG&A as a percentage of gross profit, we recognize we still have some challenges to overcome and we will continue to focus on cost control and business process efficiency as we expand our business in the UK.

Daniel McHenry: Turning to our balance sheet on liquidity, our strong balance sheet, cash flow generation, and leverage position will continue to support a flexible capital allocation approach. As of June 30th, our liquidity of 644 million was comprised of the accessible cash of 159 million and 486 million available to borrow on our acquisition line. Our rent adjusted leverage is defined by our U.S. Syndicated credit facility was 2.44 times at the end of June. Cash flow generation through the first half of 2024 yielded 302 million of adjusted operating cash flow and 223 million of free cash flow after backing at 79 million of CAPEX.

Daniel James McHenry: As of June 30th, our liquidity of $644 million was comprised of accessible cash of $159 million and $486 million available to borrow on our acquisition line. Our rent-adjusted leverage, as defined by our U.S. syndicated credit facility, was 2.44 times at the end of June. Cash flow generation through the first half of 2024 yielded $302 million of adjusted operating cash flow and $223 million of free cash flow after backing out $79 million of CapEx.

Speaker Change: Turning to our balance sheet and liquidity.

Speaker Change: Our strong balance sheet, cash flow generation, and leverage position will continue to support a flexible capital allocation approach.

Speaker Change: As of June 30th, our liquidity of $644 million was comprised of assessable cash of $159 million and $486 million available to borrow on our acquisition line.

Speaker Change: Our rent-adjusted leverage is defined by our U.S. syndicated credit facility was 2.44 times at the end of June .

Speaker Change: Cash flow generation through the first half of 2024 yielded $302 million of adjusted operating cash flow and $223 million of free cash flow after backing out $79 million of CapEx.

Daniel McHenry: This capital was deployed in the same period for a combination of acquisitions, share repurchases, and dividends, including the acquisition of a billion dollars in revenues through the 30th of June. A hundred million repurchasing approximately 353 thousand shares of an average price of $282 and 81 cents, resulting in a 2.6 percent reduction in our share accounts in January the first and 12.8 million dividends to our shareholder. As of June 30th, approximately 53 percent of our 4.6 billion in floor plan and other debt was fixed, resulting in an annual EPS of about $1.23 cents for every 100 basis points increase in secured overnight funding rate.

Daniel James McHenry: This capital was deployed in the same period for a combination of acquisitions, share repurchases, and dividends, including the acquisition of a billion dollars in revenues through the 30th of June. A $100 million in repurchasing approximately 353,000 shares at an average price of $282.81, resulting in a 2.6% reduction in our share count since January 1, and $12.8 million in dividends to our shareholders. As of June 30th, approximately 53% of our $4.6 billion in floor plan and other debt was fixed, resulting in an annual EPS of about $1.23 for every 100 basis points increase in the secured overnight funding rate.

Speaker Change: This capital was deployed in the same period for a combination of acquisitions, share repurchases and dividends.

Speaker Change: including the acquisition of a billion dollars in revenues through the 30th of June .

Speaker Change: $100 million, repurchasing approximately 353,000 shares at an average price of $282.81, resulting in a 2.6% reduction in our share count since January 1st.

Speaker Change: and $12.8 million in dividends to our shareholder.

Speaker Change: www.mercierfilms.ca

Speaker Change: As of June 30th, approximately 53% of our $4.6 billion in floor plan and other debt was fixed, resulting in an annual EPS of about $1.23 for every 100 basis points increase in secured overnight funding rate.

Daniel McHenry: For additional detail regarding our financial condition, please refer to the schedule of additional information to the news release, as well as our investor presentation posted on our website.

Daniel James McHenry: For additional detail regarding our financial condition, please refer to the schedule of additional information in the news release, as well as our investor presentation posted on our website. I will now turn the call over to the operator to begin the question and answer session.

Speaker Change: For additional detail regarding our financial condition, please refer to the schedules of additional information to the news release, as well as our investor presentation posted on our website.

Operator: I will now turn the call over to the operator to begin the question-and-answer session, operator. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys, and to withdraw a question, press star than two. We ask that you please limit yourself to one question and one follow-up on today's call.

Speaker Change: I will now turn the call over to the operator to begin the question and answer session. Operator.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, press the star, then two. We ask that you please limit yourself to one question and one follow-up on today's call. At this time, we will pause just momentarily to assemble our roster. And our first question here will come from Rajat Gupta with J.P. Morgan. Please go ahead.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, press star, then 2.

Speaker Change: We ask that you please limit yourself to one question and one follow-up on today's call. At this time, we will pause just momentarily to assemble our roster.

Operator: At this time, we will pause this momentarily to assemble our roster.

Rajat Gupta: And our first question here will come from Rizhat Gupta with J.P. Morgan.

Rajat Gupta: Please go ahead. Great. Thanks for taking the question, and to Matt, for the strong education this quarter.

Speaker Change: And our first question here will come from Rajat Gupta with J.P. Morgan. Please go ahead.

Daryl Adam Kenningham: Great, thanks for taking the questions and congratulations on strong execution this quarter. I wanted to just follow up on just the CDK impact in the second quarter and how we should think about the run rate of certain components of the BML into July or the third quarter, if you could give us that. Really, the focus was more on SG&A to gross. We've seen very strong execution sequentially, despite some of the deleveraging you might have seen from lost sales and lost service.

Rajat Gupta: Great, thanks for taking the questions and congrats on strong education this quarter. Now I wanted to like just follow up on just the CDK impact in the second quarter.

Rajat Gupta: I wanted to just follow up on just a CDK and back in the second quarter and how should we think about the runway of certain components of the B&L into July or the fourth quarter if we could give us and really the focus was more on S-GNA to gross. I'm purely in a way strong, you know, executions sequentially, you know, despite, you know, some of the delay regime you might have seen from lost sales and bus service.

Speaker Change: And how should we think about the run rate of certain components of the P&L in July or the third quarter, if you could give us. And really the focus was more on SG&A to gross.

Speaker Change: very strong, you know, execution sequentially, you know, despite, you know, some of the deleveraging you might have seen from lost sales and lost service, so...

Rajat Gupta: So, could you have, like, frame for us, you know, how should we think about the estimated gross level in the third quarter and any color you could give us, you know, how the service business is doing so far to July and your executions for the third quarter and anything else that you might want to, you might want to add? I have a quick, yeah, thanks.

Daryl Adam Kenningham: Could you help, like, frame for us, you know, how we should think about the SG&A to gross level for the third quarter and any color you could give us around, you know, how the service business is doing so far in July and your expectations for the third quarter, and anything else that you might want to highlight. And I'll have a quick follow-up. Thanks.

Speaker Change: Could you help like frame for us, you know, how should we think about the SG&A to gross level into the third quarter and any color you could give us?

Speaker Change: around, you know, how the service business is doing so far in July and your expectations for the third quarter, and anything else that you might want to highlight, and have a quick follow-up.

Daryl Adam Kenningham: Rajat, Daryl, one clarification in our script: we had mentioned that our head count was down 5% from 2019, but our technician head count is actually up 20% since that time period. So I wanted to clarify that point.

Daryl Kenningham: Resaud, Daryl, one clarification in our script: we had mentioned that our head count was down 5% from 2019, but our technician head count is up actually 20% since that time period. So, I want to clarify that point, and that's one reason our SG&A as a percentage of growth has been good, as we've done a really good job managing our overall head count and only adding where it drives capacity and after sales effectively. So, and that's allowed us to maintain our after sales growth over a period of time and control SG&A at the same time.

Speaker Change: Rajat, Daryl, one clarification in our script, we have...

Daryl Adam Kenningham: mentioned that our headcount was down 5% from 2019.

Speaker Change: But our technician headcount is up actually 20% since that time period.

Daryl Adam Kenningham: And that's one reason our SG&A as a percentage of gross has been good, because we've done a really good job managing our overall head count and only adding where it drives capacity and after sales effectively. So, that's allowed us to maintain our after sales growth over a period of time and control SG&A at the same time. So I think in terms of the, and I'll ask Daniel to speak to some more SG&A issues, but I think in terms of. The CDK impact, you know, I think, largely, most of the impact is behind us. You know, the CRM came up a little later than the DMS did.

Speaker Change: So I wanted to clarify that point. And that's one reason our SG&A as a percentage of gross has been good, is we've done a really good job managing our overall headcount and only adding where it drives capacity and after sales.

Speaker Change: effectively. So, and that's allowed us to maintain our after sales growth over a period of time and control SG&A at the same time. So, I think in terms of the, and I'll ask Daniel to speak to some more SG&A issues, but I think in terms of

Daryl Kenningham: So, I think in terms of the, in all I stand to speak to some more SG&A issues, but I think in terms of the CDK impact, you know, I think largely mostly impact is behind us. You know, the CRN came up a little later than the DMS did, so there's still some work being done to try to recover the information on those customers as we move forward. But, you know, we've seen the recovery; you know, I would say much of it is behind us, and I don't expect a material impact of the sort of corner.

Daniel James McHenry: The CDK impact, you know, I think...

Daniel James McHenry: Largely, most of the impact is behind us.

Daryl Adam Kenningham: So there's still some work being done to try to recover the information on those customers as we move forward. But you know, we've seen the recovery. I would say much of it is behind us. And I don't expect a material impact from it. Daniel, what would you add?

Daniel James McHenry: You know, the CRM came up a little later than the DMS did, so there's still some...

Daniel James McHenry: Some work being done to try to recover the information on those customers as we move forward. But, you know, we've seen the recovery, you know, I would say much of it is behind us and I don't expect a material impact in the third quarter.

Daryl Kenningham: Daniel, you know, you know, clearly in terms of SG&A, there was that one-timer of additional pay that we made to employees, you know, that's 5.9 million. You know, clearly we messed out on a chunk of growth in June that would have really helped us dilute some of our expenses and help drive some further SG&A leverage in the quarter. Clearly there's work still to be done in the UK, you know, tagging on the DMS stores in this quarter. You know, that should help us deliver in the UK, certainly going into 2025.

Daniel James McHenry: Clearly, in terms of SG&A, there was that one-timer of additional pay that we made to employees of that 5.9 million. Clearly, we missed out on a chunk of growth in June that would have really helped us dilute some of our expenses and help drive some further SG&A de-leverage in the quarter. Clearly, there's work still to be done in the UK, but taking on the end-shape stores in this quarter should help us deliver in the UK, certainly going into 2025.

Daniel James McHenry: Daniel, what would you add?

Daniel James McHenry: You know, clearly in terms of SG&A,

Daniel James McHenry: There was that one timer of additional pay that we made to our employees.

Daniel James McHenry: You know, that 5.9 million, you know, clearly we missed out on a chunk of growth in June that would have really helped us dilute some of our expenses and help drive some further SG&A de-leverage in the quarter. Clearly, there's work still to be done in the UK, you know, taking on the end-shape stores in this quarter, you know, that should help us deliver in the UK, certainly going into 2025.

Daniel James McHenry: And just, you know, on exchange growth in the U.S., I mean, you could, you know, you give us this helpful breakdown of U.S. versus U.K., you know, given that the U.S. was still hurt from some deleveraging, is it fair to assume that the 64.4 that you saw in the US should continue to move lower from here, you know, because of some catch-up in July and just because, you And just like any color on services into July that you can give us as well.

Rajat Gupta: And just, you know, on SG&A growth in the U.S., I mean, because, you know, you give us a helpful breakout of the U.S. Worse in the UK, you know, given, you know, the U.S. was still hurt from some delivering. Is it trying to assume that you know the 64.4 that you saw in the U.S. Shishit continued to move lower from here, you know, because of some catch-up in July, and just because, you know, X CDK, that number would have actually been better than the 54.4 reported.

Speaker Change: And just, you know, on SG&E growth in the U.S., I mean, you could give us a helpful breakout on U.S. versus U.K. Given, you know, the U.S. was still hurt from some deleveraging, is it fair to assume that

Speaker Change: You know, the 64.4 that you saw in the U.S. should continue to move lower from here, you know, because of some catch-up in July and just because...

Speaker Change: you know, ex-CDK, that number would have actually been better than the 54.4 reported. And just like any color on like services into July that you can give us as well. Thanks.

Daryl Kenningham: And if, like, any color on, like, services in July, that you can give us as well. Thank you. You know, tough to predict on this 64.4. You know, we saw our front end margins on new vehicles stay relatively flat sequentially over year. I'm sorry, quarter of a quarter. So, you know, that's certainly helped us. And, and we're obviously watching that margin. And, and that impacts the S.J.A. number of percentage of gross numbers. So, you know, I'm pumped to predict a little move lower in the near-term, Rajap. You know, we're seeing our service business; you saw it in through May. Our CP was up 6% the year of year, same store.

Daniel James McHenry: You know, tough to predict on the 64.4. You know, we saw our front-end margins on new vehicles stay relatively flat sequentially year over year, I'm sorry, quarter over quarter. So, you know, that certainly helped us, and we're obviously watching that margin, and that obviously impacts the SG&A number, percentage of gross number. So, you know, tough to predict if it will move lower in the near term, Rajat.

Speaker Change: You know, tough to predict on the 64.4. You know, we saw...

Speaker Change: Our front-end margins on new vehicles stay relatively flat sequentially year-over-year, I'm sorry, quarter-over-quarter. So, you know, that certainly helped us, and we're obviously watching that margin, and that obviously impacts the SG&A percentage of gross number.

Speaker Change: You know, Puff to predict if it'll move lower in the near term, Rajat. You know, we're seeing our service business, you saw it in through May.

Daniel James McHenry: You know, we're seeing our service business, you saw it through May, our CP was up 6% year over year, same store. Our warranty was up 12% year over year, same store. We're really happy with that. We continue to be able to add technician capacity, which is driving that. And we expect we'll be able to continue that here into the rest of the year as well.

Speaker Change: Our CP was up 6% year-over-year, same store. Our warranty was up 12% year-over-year, same store.

Daryl Kenningham: Our warranty was up 12% the year of the same store. We're really happy with that. We continue to be able to add technician capacity, which is driving that. And we expect will be able to continue that here into the rest of the year as well.

Speaker Change: We're really happy with that. We continue to be able to add technician capacity, which is driving that, and we expect we'll be able to continue that here into the end of the rest of the year as well.

John Murphy: and our next question will come from John Murphy with Bank of America. Please go ahead.

John Joseph Murphy: And our next question will come from John Murphy with Bank of America. Please go ahead.

Speaker Change: And our next question will come from John Murphy with Bank of America. Please go ahead.

John Murphy: Good morning, guys. I don't usually do this on a public call, but remarkable execution. Very good, very impressive quarter.

Daniel James McHenry: Good morning, guys. I don't usually do this on a public call, but this was a remarkable execution. Very good, very impressive quarter. Just a first question. When we think, Daniel, about the parts in service that may have been lost during the CDK outage, is that the kind of revenue that you think could get engrossed that can get picked back up or got picked back up? Or is that kind of just lost in the wind, and we should see a normalization, but not necessarily a catchback up, in the third quarter?

John Joseph Murphy: Good morning, guys.

John Joseph Murphy: I don't usually do this on a public call, but remarkable execution, very good, very impressive quarter. Just a first question, when we think, Daniel, about that parts in service that may have been lost during the CDK outage,

John Murphy: Just a first question: you know, when we think, Daniel, about that, that parts and service that may have been lost during the CDK outage. Is that the kind of revenue that you think could get and grows that can get picked back up or got picked back up? Or is that kind of just lost in the wind and, you know, we should see a normalization, but not necessarily a catch back up in the third quarter? You know, on its annual here, it's kind of hard to judge so early in the quarter. We had some pretty severe weather in Houston in the first, you know, week to weeks of the quarter.

Speaker Change: Is that the kind of revenue that you think you get and gross that can get picked back up or got picked back up or is that kind of just lost in the wind and we should see a normalization but not necessarily a catch back up in the third quarter?

Daniel James McHenry: It's kind of hard to judge so early in the quarter. We had some pretty severe weather in Houston in the first week, two weeks of the quarter.

Speaker Change: It's kind of hard to judge so early in the quarter. We had some pretty severe weather in Houston in the first week, two weeks of the quarter.

Daryl Kenningham: It's harder to pick up parts and service business because that's more of a definitive R, effectively, our time slot that you've sold at the technician. It's harder to pick that up, but I would expect there to be some pickup from that. However, I think the vehicle picked up, you know, that doesn't also be out there as well because clearly I think a lot of those the sales could just be delayed sales with so many stores and so many operators under the CDK platform. One thing John to note is our average miles driven increased again this quarter for cars coming through our service department.

Daniel James McHenry: It's harder to pick up parts and service business because that's more of a definitive R, effectively our time slot that you've sold to a technician. It's harder to pick that up, but I would expect there to be some pick up from that. However, I think the vehicle pickup will also be out there as well because, clearly, I think a lot of those sales could have just been delayed sales with so many... to many stores and to many operators under the CDK platform.

Speaker Change: It's harder to pick up parts and service business because that's more of a definitive R, effectively our time slot that you've sold of a technician.

Speaker Change: So it's harder to pick that up, but I would expect there to be...

Speaker Change: some pick up from that. However, I think the vehicle pickup, you know, that will also be out there as well because clearly I think a lot of those sales could have just been delayed sales with so many.

Daniel James McHenry: One thing, John, to note is our average miles driven increased again this quarter for cars coming through our service department, and excuse me, the average dollars per RO continue to rise mainly, I believe, as a result of the age of the vehicle population. So I think that, you know, is just good things, means good things for parts and services.

Speaker Change: To many stores and to many operators under the CDK platform.

Speaker Change: One thing, John , to note is our average miles driven

John Joseph Murphy: increased again this quarter for cars coming through our service department.

Daryl Kenningham: And excuse me, the average dollar for our continue to rise mainly I believe is a result of that the age of the population. So that I think that, you know, is just good things means good things for parts of service in the future.

John Joseph Murphy: And, excuse me, the average dollars per R.O. continue to rise mainly, I believe, as a result of that, the age of the vehicle population. So that, I think that, you know, is just good things, means good things for parts of service in the future.

John Joseph Murphy: Yeah, yeah, it's helpful. Just a second follow up on interest rates. Excuse me. I mean, Daniel, you mentioned the impact of if rates go up, but God forbid, you know, rates go back down, which, you know, hopefully they will, you know, sometime soon. Is that impact sort of linear on the downside? And then also, if we think about sort of the flow through of rates, I mean, you know, the whole industry has faced about a 400 basis point increase in barring rates at the consumer level over the last two and a half years, but pricing has been very resilient.

John Murphy: Yeah, it's awful. Just a second follow up on, excuse me, interest rates. I mean, you mentioned the impact of rates going up, but God forbid, you know, rates go back down, which, you know, hopefully they will, you know, sometime soon. Is that impact sort of linear on the downside? And then also, if we think about sort of the flow through of rates, I mean, you know, the whole industry is faced by a 400-based point increase in in bar and rates at the consumer level last two and a half years, but pricing has been very resilient.

John Joseph Murphy: Yeah, yeah, it's helpful. Just a second follow-up on, excuse me, on interest rates. I mean, Danny, you mentioned the

Danny: The impact if rates go up

Speaker Change: But God forbid, you know, rates go back down, which, you know, hopefully they will sometime soon. Is that impact sort of linear on the downside? And then also, if we think about sort of the flow through of rates, I mean, you know, the whole industry is faced about a 400 base point increase in.

Speaker Change: in barring rates at the consumer level the last two and a half years but pricing has been very resilient.

John Murphy: Grocers have come down, you know, a little bit from the peak, but, you know, how do you think about what could happen on the demand side and the pricing side as that, you know, that massive surge in interest rate and expense backs off on the consumer and maybe put a little bit more money, not the interest expense, but to the price of the vehicle and maybe, maybe grosses. I mean, it just seems like there's a misunderstanding of how big a headwind this interest burden is and to the consumer, and it might actually be relieved sometime soon.

John Joseph Murphy: Those have come down, you know, a little bit from the peak, but, you know, how do you think about what could happen on the demand side and the pricing side as that, you know, that massive surge in interest rates and expenses backs off, and the consumer can maybe put a little bit more money, not to interest expense, but to the price of the vehicle and maybe grosses? I mean, it just seems like there's a misunderstanding of how big a headwind this interest burden is for the consumer, and it might actually be relieved sometime soon.

Speaker Change: Grocers have come down, you know, a little bit from the peak.

Speaker Change: But, you know, how do you think about what could happen on the demand side?

Speaker Change: and the pricing side as that, you know, that massive surge in...

Speaker Change: In an interest rate and expense backs off and the consumer can maybe put a little bit more money not the interest expense but to the price of the vehicle and maybe grosses. I mean it just seems like there's a.

Speaker Change: A misunderstanding of how big a headwind this interest burden is to the consumer and it might actually be relieved sometime soon.

Peter C. DeLongchamps: Hey, John. This is Pete DeLongchamp.

Peter DeLongchamps: Hey, John, this is Pete DeLonge, y'all. I think you're absolutely correct. You know, one of the things that we're fortunate to have is, you know, terrific financial services company attached to the OEMs that have been able to prevent the rates. You look at our attachment rates now; they're up to 75% penetration on new F&I. So that's a positive. And I think where we could also really pick up some business through lower rates from the use side because those penetration rates are 62, 63%. So I think you're spot on with lower rates. It's going to certainly help our use car business and make the new car affordability.

Peter C. DeLongchamps: Yeah, I think you're absolutely correct. And, you know, one of the things that we're fortunate to have is, you know, terrific financial services companies attached to the OEMs that have been able to lower the rates. You look at our attachment rates now; they're up to 75 percent penetration on new F&I. So that's a positive. And I think we could also really pick up some business through lower rates on the used side because those penetration rates are 62, 63 percent. So I think you're spot on. With lower rates, it's going to certainly help our used car business and make new car affordability, I think, better for the consumer. John, this is Daryl. Our data is...

Speaker Change: Hey John , this is Pete DeLongchamp.

John Joseph Murphy: Yeah, I think you're absolutely correct. One of the things that we're fortunate to have is a terrific financial services company attached to the OEMs that have been able to subvent the rates. You look at our attachment rates now, they're up to 75% penetration on new F&I, so that's a positive.

John Joseph Murphy: And I think where we could also really pick up some business through lower rates on the used side, because those penetration rates are 62, 63%. So I think you're spot on. With lower rates, it's going to certainly help our used car business and make the new car affordability.

Peter DeLongchamps: I think better for the consumer.

Daryl Adam Kenningham: John, this is Daryl. Our data says that the average selling price of a new car in the third quarter was down $1,000. So if you combine that with some lower interest rates, that should take some pressure off the consumer and hopefully sell some more cars.

Peter DeLongchamps: John, this is DeLonge. Our data says that the average selling price of a new car in the third quarter was down $1,000. So if you combine that with some lower interest rates, that should take some pressure off the consumer and hopefully drive some.

John Joseph Murphy: I think, better for the consumer. John , this is Daryl. Our data says that average selling price of a new car in the third quarter was down $1,000. So if you combine that with some lower interest rates, that should take some pressure off the consumer and hopefully drive some more volume.

David Whiston: Our next question will come from David Whiston with Morningstar.

David Whiston: Our next question will come from David Whiston with Morningstar. Please go ahead.

David Whiston: Please go ahead. Thanks, good morning.

Speaker Change: Our next question will come from David Whiston with Morningstar. Please go ahead.

David Whiston: Thanks. Good morning. First, clarification on CDK, and a follow-up on that is, did you say a lost business is $0.97 plus it's $0.34 for the comp, so it's $1.31 total?

David Whiston: This first clarification on CDK and a follow-up with that is, did you say lost us? This is 97 cents; it's 34 cents for the comp, so it's $1.31 total. David, this is Daniel. $1.31 total, but the disaster pay on mine was already adjusted out of the 980.

David Whiston: Thanks. Good morning. Just first, a clarification on CDK and a follow-up with that is, did you say a loss business is $0.97 plus it's $0.34 for the comp, so it's $1.31 total?

Daniel James McHenry: David, this is Daniel. A $1.31 total, but the disaster pay on mine was already adjusted out of the $9.80. So the difference between, you know, the $9.80 and, you know, what you would deem to be the loss.

David Whiston: David, this is Daniel. $1.31 total, but the disaster pay on mine was already adjusted out of the $9.80, so the difference in the $9.80 and what you would deem to be the losses about a buck.

Daniel McHenry: So the difference in, you know, the 980 and, you know, what you're deemed to be the lost is a butter bug.

Daryl Kenningham: Okay, and is it just luck that you guys got your service back, core service back in about a week, or were you able to work the CDK back behind the scenes to get that back behind you? Absolutely. Absolutely no luck at all, David. Come on.

Daniel James McHenry: Okay, and is it just luck that you guys got your service back, core service back in about a week, or were you able to work with CDK behind the scenes to get the top of the line? Absolutely no luck at all, David. Come on.

Speaker Change: Okay, and is it just luck that you guys got your service back, core service back in about a week, or were you able to work with CDK about time it seems to get to the top of the line?

Daniel James McHenry: The harder you work, David, the luckier you get.

Daryl Kenningham: You know, the harder you work, David, the luckier you get. You know, David, it's hard to say why. I mean, we, one, we think our systems are architected in a way that helped us move faster. We felt comfortable being able to move with less risk. I think our team has a very good relationship with CDK. And honestly, we tried to work with all the public groups that try to help the industry get back, honestly. I don't know how much helped us get back faster, but those were all things. And I think a lot of the technology on our back office really helped us get things back once we did have CDK access.

Speaker Change: Absolutely no luck at all, David. Come on.

Daniel James McHenry: You know, David, it's hard to say why. I mean, one, we think our systems are architected in a way that helped us move faster. We felt comfortable being able to move with less risk. I think our team has a very good relationship with CDK, and honestly, we tried to work with all the public. Group 1 Automotive, Group 2 Automotive, Group 3 Automotive, Group 4 Automotive, Group 5 Automotive,

Speaker Change: The harder you work, David, the luckier you get.

David Whiston: David, it's hard to say why. I mean, one, we think our systems are architected in a way that helped us.

David Whiston: We felt comfortable being able to move with less risk.

Speaker Change: I think our our team has a very good relationship with CDK and honestly we tried to work with all the public.

Speaker Change: that try to help the industry get back, honestly. I don't know how much it helped us get back faster, but those were all things. And I think a lot of the technology on our back office really helped us get things back once we did have CDK access.

David Whiston: And just on cap allocation with buybacks, very long term, even in the next decade. Should we think about you guys kind of doing what automation's done for a very long time, where you're just trying to get that share count as low as you possibly can?

Daniel James McHenry: And just on capital allocation with buybacks, very long term, even in the next decade, should we think about you guys kind of doing what AutoNation has done for a very long time, where you're just trying to get that share count as low as you possibly can?

Speaker Change: And just on capital allocation with buybacks, very long term, even in the next decade, should we think about you guys kind of doing what AutoNation has done for a very long time, where you're just trying to get that share count as low as you possibly can?

Daryl Kenningham: No, the way, you know, we don't think about it in terms of share count necessarily. What we look at is when we're faced with an acquisition, we want to do just the math on a buyback using that capital for a buyback or using that capital for an acquisition. And if it's closed, we'll do the acquisition because we want to grow the company and we think scale is important and growing your clusters is important, things like that. But we think about it in the context of just other uses of capital. We don't necessarily think about this share count.

Daniel James McHenry: No, the way you know, we don't think about it in terms of share count necessarily. What we look at is when we're faced with an acquisition, we want to do just the math on a buyback, using that capital for a buyback or using that capital for an acquisition. And if it's closed, we'll do the acquisition because we want to grow the company and we think scale is important and growing in clusters is important, things like that. But we think about it in the context of just other uses of capital. We don't necessarily think about the share count. Daniel, you might have. I don't have anything further at the moment.

Speaker Change: No, we don't think about it in terms of share count necessarily. What we look at is when we're faced with a

Speaker Change: Acquisition. We want to do just the

Speaker Change: The math on a buyback, using that capital for a buyback, or using that capital for an acquisition.

Daniel James McHenry: If it's closed, we'll do the acquisition because we want to grow the company and we think scale is important and growing in clusters is important, things like that. But we think about it in the context of just other uses of capital. We don't necessarily think about the share count. Daniel, you might have something to add.

Daniel McHenry: Daniel, you might have something to add to that. I'd add anything further at the moment.

Daniel James McHenry: I don't have anything further at the moment.

Operator: Again, if you have a question or an additional follow-up, please press star one to join the queue.

Speaker Change: Again, if you have a question or an additional follow-up, please press star, then 1 to join the queue.

Michael Ward: Our next question will come from Michael Ward with Freedom Capital.

Operator: Again, if you have a question or an additional follow-up, please press star then 1 to join the queue. Our next question will come from Michael Ward with Freedom Capital. Please go ahead.

Michael Ward: Please go ahead. Thanks.

Speaker Change: Our next question will come from Michael Ward with Freedom Capital. Please go ahead.

Michael Patrick Ward: Thanks. Good morning, everyone.

Michael Ward: Good morning, everyone. I just want to try to clarify the CDK impact. So you had new and used unit sales loss, service business loss. In total, that was a $17 million hit pre-tax. Then you hit the one-time comp charges of $5.9 million. And that's included in the SG&A number we see. Is that the right way to think about it? That's correct. It's a one-timer charge in our SG&A. and it's included. You didn't call that out. The 9 million called out for catastrophic events was the weather-related impact yet. That was weather and the CDK. So that's, you know, let's have ballpark 2-3rd CDK adjustment, a third weather.

Michael Patrick Ward: Thanks, good morning everyone. I'd like to clarify, I just want to try to clarify the CDK impact. All right, so you had new and used unit sales lost, service business lost, in total that was a 17 million dollar hit.

Michael Patrick Ward: To clarify, I just want to try to clarify the CDK impact. So you had new and used unit sales lost, and service business lost. In total, that was a $17 million hit. Pre-tax, then you have the one-time comp charges of $5.9 million, and that's included in the SG&A number we see. Is that the right way to think about it?

Speaker Change: Pre-tax. Then you have the one-time comp charges of 5.9 million and that's included in the SG&A number we see. Is that the right way to think about it?

Daniel James McHenry: That's correct. It's a one-timer charge in our SG&A.

Speaker Change: That's correct. It's a one-timer charge in our SG&A.

Daniel James McHenry: and it's included. You didn't call that out. The nine million called out for catastrophic events was the weather-related impact you had.

Speaker Change: and it's included. You didn't call that out. The nine million called out for catastrophic events was the weather-related impact you had.

Daniel James McHenry: That was weather and the CDK. So that's, you know, let's say ballpark, two-thirds CDK adjustment, and a third weather.

Speaker Change: That was weather and the CDK. So that's, you know, let's say ballpark, two-thirds CDK adjustment, a third weather.

Daniel James McHenry: Okay, okay. I just want to, Daniel, I think you said something like the service in April and May in the U.S. was running up 5 or 6% same store, is that correct?

Daniel McHenry: Okay. I just want to, Daniel, I think you said something like the service in April and May in the US was running up 5 or 6% same store. Is that correct? Customer pay was up 6% through the end of May, second quarter. April May, CP was up 6%, warranty was up 12. Okay. And so then, in total. So that suggests somewhere around a 20 or 30 million dollar hit from the CDK on the service revenue. You know, somewhere in that one or two-week period in June. Is that ballpark? That's probably, I think that's a far assessment.

Speaker Change: Okay, okay. I just want to, Daniel, I think you said something like the service in April and May in the U.S. was running up five or six percent, same store, is that correct? Customer pay was up six percent through the end of May, second quarter April-May.

Daniel James McHenry: Customer pay was up 6% through the end of May, second quarter April-May. The warranty fee was up 6%, and warranty was up 12%.

Daniel James McHenry: Okay, and so in total, that suggests somewhere around a 20 or 30 million dollar hit from the CDK on service revenue.

Speaker Change: CP was up 6%. Warranty was up 12%.

Speaker Change: Okay, and so then in total, so that suggests somewhere around a 20 or 30 million dollar hit from the CDK on the service revenue.

Speaker Change: You know, somewhere in that one or two week period in June , is that ballpark?

Daniel McHenry: Okay. And you know, like it's Daniel here, it's Daniel. It just took longer to process every transaction, and it took longer to process every transaction back into the system than it normally would. It was just very inefficient. Okay. And from your performance coming out of it relative to the rest of the dealer group was much better. And so it sounds like it was the call center and the seller ride that really contributed. Is that right?

Speaker Change: I think that's a prior assessment.

Daniel James McHenry: I think that's a prior assessment. Okay. You know, Mike, it's Daniel here.

Daniel James McHenry: You know Mike, it's Daniel here. It just took longer to process every transaction and it took longer to process every transaction back into the system than it normally would. It was just very inefficient.

Daniel James McHenry: And from your performance coming out of it relative to the rest of the dealer group was much better and so it sounds like it was the call center and the seller ride that really contributed is that is that right? Well, I think there was a number of things that can

Mike: And from your performance coming out of it relative to the rest of the dealer group was much better and so it sounds like it was the call center and the seller ride that really contributed is that is that right?

Daniel McHenry: Well, I think there was a number of things that contributed. I think the technology in both at our customer contact center as well as our digital retail solution and our back office processes. I think all of that help. Plus, we had some alternative technology we could use in the service drive that helped us as well. So I think a lot of the technology really did help us. Yes.

Daniel James McHenry: Well, I think there were a number of things that contributed. I think the technology, both at our customer contact center, as well as our digital retailing solution and our back office processes, I think all of that helped. Plus, we had some alternative technology we could use in the service drive that helped us as well. So I think a lot of the technology really did help.

Mike: Well, I think there was a number of things that contributed. I think the technology, both at our customer contact center, as well as

Speaker Change: Our digital retail solution and our back office processes, I think all of that helped. Plus we had some alternative technology we could use in the service drive that helped us as well. So I think a lot of the technology really did help us, yes.

Ron: And our next question here will come from Ron, Jessica. With you behind security, security, please go ahead. Yeah, good morning and congrats on the quarter, team. It's really impressive with the CDK outage on inventory level. You call out you expected to normalize post. I think that you number that looks like it was pretty heavily impacted by CDK in terms of the new days supply. Is that the right way to think about that, and should we assume if it goes back towards like 45 days, that is the right way to estimate the new vehicle sales impact as well.

Operator: And our next question here will come from Ron Jusicow with Guggenheim Securities. Please go ahead.

Speaker Change: And our next question here will come from Ron Jusicow with Guggenheim Securities. Please go ahead.

Ron Jusicow: Yeah, good morning, and congrats to the quarter team. It's really impressive with the CDK outage. On the inventory level, you call out, you expect it to normalize post, I think, the June number that looks like it was pretty heavily impacted by CDK in terms of the new day's supply. Is that the right way to think about that? And should we assume if it goes back towards like 45 days, that is the right way to estimate the new vehicle sales impact as well?

Ron Jusicow: Yeah good morning and congrats on the quarter team. It's really impressive with the CDK outage.

Speaker Change: on

Speaker Change: On inventory level, you call out, you expect it to normalize post, I think, the June number that looks like it was pretty heavily impacted by CDK in terms of the new day's supply.

Speaker Change: Is that the right way to think about that, and should we assume if it goes back towards like 45 days, that it's a good idea?

Speaker Change: is the right way to estimate the...

Ron: Ron, Ron, and Samuel here in our investor deck. In page five, we've laid it out pretty easily. You know, at the end of March, we had 43 days supply; end of April with 46 steady supply; end of May with 45 days supply. And assuming that we would have had a normal sales rate at run rate in June, I would have imagined that would have increased significantly over that ballpark. Now to put the total thing into perspective and absolute unit inventory. So at the end of March, we had 19,896 vehicles and inventory at the end of June.

Daniel James McHenry: Ron, it's Daniel here. In our investor deck on page 5, we've laid it out pretty easily. At the end of March, we had a 43-day supply. At the end of April, we had a 46-day supply. At the end of May, we had a 45-day supply.

Speaker Change: The New Vehicle Sales Impact.

Speaker Change: as well.

Ron Jusicow: Ron, anything?

Ron Jusicow: Ron, it's Daniel here. In our investor deck in page 5, we've laid it out pretty easily.

Ron Jusicow: You know, at the end of the...

Ron Jusicow: March, we had 43 days supply. End of April , we had 46 days supply. End of May, we had 45 days supply. And assuming that we would have had a normal sales rate, run rate in June , I wouldn't have imagined that would have increased significantly over that ballpark.

Daniel James McHenry: And assuming that we would have had a normal sales run rate in June, I wouldn't have imagined that it would have increased significantly over that ballpark. Now, to put the total thing into perspective, in absolute unit inventories at the end of March, we had 19,896 vehicles in inventory. At the end of June, we had 23,412 vehicles in inventory, and about 1,000 vehicles are currently on stop sale out of that 23,400. That's an 18% increase quarter on quarter. So my expectation is that with an increased sales run rate, we will see the day supply come down pretty quickly.

Ron Jusicow: Now to put the total thing into perspective, in absolute unit inventories at the end of March, we had 19,896 vehicles in inventory.

Ron: We had 23,412 vehicles of an inventory, and about a thousand vehicles are currently on stop sale of that 23,400. That's an 18% increase quarter and quarter. So my expectation is that with an increased sales run rate, we will see the day supply come down pretty quickly.

Ron Jusicow: At the end of June , we had 23,412 vehicles in inventory and about 1,000 vehicles are currently on stop sale of that.

Speaker Change: 23,400. That's an 18% increase quarter and quarter. So my expectation is with an increased sales run rate that we will see the day supply come down pretty quickly.

Daryl Adam Kenningham: Okay, that's super helpful. And then on new profit per unit was really impressive this quarter in terms of pretty much stabilization versus the first quarter. How much of that do you think is attributable to either your internal efforts or your brand mix, where I think you really do probably have the best brand mix in the industry in terms of what consumers want today? But how much of that, and how much do you think is reflective of the industry as a whole seeing more stabilization?

Ron: Okay, that's, that's super helpful. And then on, new profit per unit was really impressive this quarter in terms of the pretty much stabilization versus the first quarter. How much of that do you think is attributable to either your internal efforts or brand mix, where I think you really do probably have the best brand mix in the industry in terms of what consumers want today? But how much is that, and how much do you think is reflective of the industry as a whole seeing more stabilization?

Speaker Change: Okay, that's super helpful. And then on new profit per unit was really impressive this quarter in terms of the pretty much stabilization versus the first quarter. How much of that do you think is attributable to?

Speaker Change: Either your internal efforts or brand mix, where I think you really do probably have the best brand mix in the industry in terms of what consumers want today. But how much of that and how much do you think is reflective of the industry as a whole seeing more stabilization?

Daryl Kenningham: Well, I think this is Daryl. I think our brand mix helps, you know, Toyota's performing while their hybrid mix helps. Hybrid is, is in total our most profitable vehicle will sell. So I think that certainly helps, but I do think there's some moderation across the board on the decline. And so I, I believe we'll see that. And we saw some improvement in things like EV gross margin. Even though it's a very small part of our next week, we did see some strengthening and EV margins this quarter. And that was good to see because they were really tough in the first quarter.

Daryl Adam Kenningham: Well, I think this is Daryl. I think our brand mix helps, you know, Toyota's performing well; their hybrid mix helps. The hybrid is, in total, our most profitable vehicle we'll sell, so I think that certainly helps, but I do think there's some moderation across the board on the decline, and I believe we'll see that. And we saw some improvement in things like EV gross margin. Even though it's a very small part of our mix, we did see some strengthening in EV margins this quarter, and that was good to see because they were really tough. Well, I think there seems to be a sort of a leveling off, which I think is probably a bit of an indication of the health of the consumer as well. Anything you guys would add?

Speaker Change: Well I think, this is Daryl,

Daryl Adam Kenningham: I think our brand mix helps, you know, Toyota's performing well, their hybrid mix helps.

Daryl Adam Kenningham: So I believe we'll see that. And we saw some improvement in things like EV gross margin.

Daryl Adam Kenningham: Even though it's a very small part of our mix, we did see some strengthening in EV margins this quarter, and that was good to see because they were really tough.

Daryl Kenningham: I think there seems to be a sort of a leveling, which I think is probably a bit of an indication on the health of a consumer as well. I think you guys would add that.

Daryl Adam Kenningham: in the first quarter.

Speaker Change: I think there seems to be a sort of a leveling, which I think is probably a bit of an indication on the health of the consumer as well. Anything you guys would add?

Glenn Chin: And our next question will come from Glenn Chin with the Seaport Research Partners. Please go ahead. Thank you for asking. Darryl, maybe just a follow-on to that just around the consumer. We've been getting a lot of mixed signals out of the consumer, and, you know, we're seeing it in restaurants, consumer discretionary, especially higher dollar. Are you guys detecting any change in consumer strength or consumer behavior? You know, Glenn, we haven't seen a shift, a material shift in like brand mix as a result of, you know, resistance. I would look at our, our use car performance was we were pleased with it and the gross is held up and usually that's where you'll, you'll see, you know, pressure.

Glenn Edward Chin: And our next question will come from Glenn Chin with Seaport Research Partners. Please go ahead.

Speaker Change: And our next question will come from Glenn Chin with Seaport Research Partners. Please go ahead.

Glenn Edward Chin: Thank you. Congratulations, team.

Glenn Edward Chin: Thank you. Congrats team. Daryl, maybe just a follow-on to that, just around the consumer. We've been getting a lot of mixed signals out of the consumer and you know, we're seeing it in restaurants.

Daryl Adam Kenningham: Daryl, maybe just to follow on to that just around the consumer, we've been getting a lot of mixed signals out of the consumer, and you know, we're seeing it in restaurants. Consumer discretionary spending, especially higher dollar amounts. Are you guys detecting any change in Consumer Strength or Consumer Behavior?

Speaker Change: Consumer discretionary, especially higher dollar. Are you guys detecting any change in consumer strength or consumer behavior?

Daryl Adam Kenningham: You know, we haven't, Glenn, we haven't seen a shift, a material shift in... like brand mix as a result of, you know, resistance. I would look at our used car performance. We were pleased with it, and the gross is held up, and usually that's where you'll see you know pressure. You know the mix versus the used car mix versus 2019 is still changing quite a bit. You know people aren't buying cheap cars, but that's not a new thing. So I didn't, I don't, I can't, looking at our data for Group 1, say that we saw..., are seeing any changes in the consumer. Many material changes have occurred.

Speaker Change: You know, we haven't, Glenn, we haven't seen a shift, a material shift in

Speaker Change: like brand mix as a result of, you know, resistance. I would look at our used car performance. We were pleased with it. Negros has held up, and usually that's where you'll...

Daryl Kenningham: You know, the mix versus the use car mix versus 2019 is still changing quite a bit. You know, people aren't buying cheap cars, but that's not a new thing. So I didn't, I don't, I can't looking at our data for group one, say that we saw, are seeing any, any changes in the consumer, many material changes.

Speaker Change: you'll see, you know, pressure, you know, the...

Speaker Change: The used car mix versus 2019 is still changing quite a bit. People aren't buying cheap cars, but that's not a new thing.

Speaker Change: So I can't, looking at our data for Group 1, say that we saw or seeing any changes in the consumer, any material changes in the consumer.

Daryl Adam Kenningham: Also, maybe just to follow on to that, Daryl, so no change in, I guess, evidence of consumers maybe downsizing or training down trim levels or Decontenting or otherwise.

Daryl Kenningham: Also, maybe just a follow-on to that. So no change in, I guess the evidence of consumers, maybe downsizing or training down trim levels or, you know, deconenting or otherwise. Well, we saw $1,000 to client average selling price versus the last quarter. We went to like $52,000 to $51,000. 51,169 is our average selling price in the quarter. We're over 52 last year. So, you know, we see that. Now there is more OEMs' invention on rates this year than it was last year. I'm sure that that probably maybe holds that up a little bit, but so that that's what we're seeing.

Speaker Change: Also, maybe just follow on to that, Daryl. So no change in, I guess, evidence of consumers maybe...

Daryl Adam Kenningham: downsizing or training down trim levels or

Daryl Adam Kenningham: Well, we saw a $1,000 decline in average selling price versus the last quarter. We went from like 52,000 to 51,000. 51,169 is our average selling price for the quarter. We were over 52 last year.

Daryl Adam Kenningham: Decontenting or otherwise.

Daryl Adam Kenningham: Well, we saw a $1,000 decline in average selling price.

Daryl Adam Kenningham: versus the last quarter. We went from like $52,000 to $51,000.

Speaker Change: 51,169 is our average selling price in the quarter. We're over 52.

Daryl Adam Kenningham: So, you know, we see that. Now, there is more OEM subvention on rates this year than there was last year. So, I'm sure that probably holds that up a little bit, but so that's what we're seeing. I don't know that we've seen a material change from high-trim level to mid-trim level or low-trim level that we've been able to see. You know, the pickup truck mix is down a little bit, and that's across the industry.

Speaker Change: last year so you know there's we see that now there is more OEM subvention on rates this year than there was last year so I'm sure that that probably maybe holds that up a little bit but

Daryl Kenningham: I don't know that we've seen a material change from high trim level, the mid trim level, or low trim level. That we've been able to see, you know, there's, there's the pickup truck mix is down a little bit, and that's that's through the industry. I know some people have a pine that’s due to pricing pressure. But, you know, the SUV mix is still as strong as ever, and SUVs are not cheap, as we know.

Speaker Change: So that's what we're seeing, I don't know that we've seen a material change from high trim level to mid trim level or low trim level.

Speaker Change: that we've been able to see. You know, the pickup truck mix is down a little bit, and that's through the industry. I know some people have opined that that's due to pricing pressure. But, you know, the SUV mix is still as strong as ever, and SUVs are not cheap, as we know.

Daniel James McHenry: Glenn, it's Daniel here. There's only one thing that I would add to all of that. I think, you know, part of our capital allocation strategy and the geographies that we currently operate in tend to be fairly demographically strong. And I think that's really helped with, you know, our GPUs and just our total operations.

Daniel McHenry: Glenn, it's Daniel.

Daryl Adam Kenningham: I know some people have argued that that's due to pricing pressure. But, you know, the SUV mix is still as strong as ever, and SUVs are not cheap, as we know. Glenn, it's Daniel here. There's only one thing that...

Daniel McHenry: There's only one thing that I would add to all of that. I think part of our capital allocation strategy and the geography that we currently operate in, they tend to be fairly demographically strong, and I think that's really helped with our GPUs and just our total operations.

Speaker Change: Glenn, it's Daniel here. There's only one thing that I would add to all of that.

Glenn Edward Chin: I think, you know, part of our capital allocation strategy and the geographies that we currently operate in, you know, they tend to be fairly demographically strong and I think that's really helped with, you know, our GPUs and just our total operations.

Operator: And with no remaining questions, we will conclude today's question-and-answer session in addition to today's call. Thank you very much for attending today's presentation, and you may now disconnect your lines. Thank you very much.

Operator: And with no remaining questions, we will conclude today's question and answer session in addition to today's call. Thank you very much for attending today's presentation, and you may now disconnect your lines.

Speaker Change: And with no remaining questions, we will conclude today's question and answer session, in addition to today's call. Thank you very much for attending today's presentation, and you may now disconnect your lines.