Q1 2025 Group 1 Automotive Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's first quarter 2025 financial results conference call. Please be advised that this call has been recorded.
Speaker Change: I would now like to turn the call over to Mr. Peter DeLongchamps, Group 1 Senior Vice President, Manufacturers, Relations and Financial Services. Please go ahead, Mr. DeLongchamps.
Speaker Change: Okay, and thank you, Jacob, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliation related to the adjusted results that we will refer to on this call for comparison purposes have been posted to Group 1's website.
Speaker Change: Before we begin I'd like to make some brief remarks about forward-looking statements in the use of non-GAB financial measures.
Speaker Change: Except for his story of information mentioned during the conference 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 and future periods to differ materially from forecast results.
Speaker Change: Those risks include but are not limited to risk associated with pricing.
Speaker Change: Volume, Inventory Supply, Conditions of Markets, Successful Integration of Acquisitions, and Adverse Developments in the Global Economy and Resulting Impact on the Man for New and Used Vehicles and Related Services.
Speaker Change: Those and other risks are described in the company's findings with the Securities and Exchange Commission. In addition, certain non-GAF financial measures as defined that their SEC rules may be discussed on its call.
Speaker Change: As required by applicable SEC rules, the company provides reconciliation of any such non-GAF financial measures to the most directly comparable GAF measures on its website.
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.
Speaker Change: Okay, so now I'll hand the hand the call over to DeLongchamps. Thank you, Pete. Good morning, everyone. Thanks to our teams in the UK and the US, we were pleased with our performance in the first quarter. Let me start with our UK business.
Speaker Change: Are UK businesses on a good track in the first quarter? The UK market overall was up 6.4% while the retail or private market was up 9.5%
Speaker Change: Group 1 delivered record UK results in the first quarter, achieving our internal profit and cost targets.
Speaker Change: We're extremely pleased with the integration of our acquisitions in the UK, which has substantially grown our market presence there.
Speaker Change: We're back to pre-acquisition levels on SGNA as a percentage of gross profit and on track to take out 10% of our headcount and save north of 30 million pounds this year. Most of it in the first half.
Speaker Change: In addition, we are aligning our business processes across our entire UK platform.
Speaker Change: including our use car pricing and acquisition processes, technician recruiting and compensation plans, customer contact centers, and finance and insurance products.
Speaker Change: Our team remains focused on managing our legacy business operations and our same-store S.T.A. leverage trended down year over year.
Thank you very much.
Michael Ward, Peter DeLongchamps, John Murphy, David Whiston
We delivered improvement across many key financial and operating metrics.
Speaker Change: Record New and Use Vehicle Volumes, Health Offset, Moderating New and Use Vehicle GPUs on a same store basis.
Speaker Change: Our use vehicle management has improved with better vehicle aging and significantly lower same-store wholesale losses year-over-year. Technician productivity has improved and our total gross margins have expanded.
Speaker Change: We will continue to optimize our UK business. Thanks for our strong OEM engagement and acquisition of proofability. In the quarter, we added three Toyota and one Lexus dealership.
Speaker Change: At the same time, we undertook the strategic closure of eight standalone use vehicle sites and three less secretive franchise sites.
Speaker Change: The strategy mirrors the approach taken in the US over the past few years, improving our performance and we believe leading the higher shareholder returns.
Now, Turning Door, US Business
Speaker Change: Our U.S. team managed the business very well in the first quarter due in used vehicles revenue and revenues sold were up on an as reported and same store basis F and I performance performed well in the quarter up ninety eight dollars on a same store basis.
Speaker Change: As used vehicle finance, vehicle service contract, and other product penetrations improved.
Speaker Change: We continue to view after sales as a differentiator at Group 1, and we are pleased with our performance in the quarter.
Speaker Change: Customer pay was up over 6% to go along with a nearly 30% increase in warranty revenue.
Speaker Change: We continue to believe that after sales is the most under-invested area of our business.
Speaker Change: By the end of the year, we will be nearly finished with our workshop air conditioning project having invested over $25 million in our technicians of our technicians.
Speaker Change: We are converting some of our collision footprint into traditional service operations, expecting the increased capacity where needed for the higher margin service business.
Speaker Change: Adding human capacity is a critical leverage point in driving continued performance growth. We ended the first quarter of 2025, with our U.S. technician had count nearly 8% higher than the year ago period.
Speaker Change: Given our flexible scheduling, all day Saturday focus and improving technician productivity, we still have significant capacity in our existing dealerships to increase our after sales business, and we look to be even more aggressive in the future.
Speaker Change: In the US in the first quarter, we didn't leverage SGNA as well as we could have [inaudible]
Speaker Change: We had some creep in January and February in the variable part of our business, specifically compensation outside services. As a result, we put some focus on it, saw some improvement in March, continuing to monitor it and will take additional steps as needed.
Speaker Change: In the force quarter, we also kicked off a branding effort in the US where a number of our dealerships will be rebranded with a Group 1 name.
Speaker Change: This project, with combined with our integrated marketing and customer data efforts, will open opportunities across our footprint.
Speaker Change: It's important to note that we continue to believe that the retail automotive business is a local business and that's where we'll put our emphasis.
Speaker Change: We've learned a great deal about this model from our UK business where all of our dealerships are already branded with a Group 1 name.
Speaker Change: Lastly, a few thoughts on the evolving U.S. landscape and broader global Black
Speaker Change: There's a great deal of conjecture about Washington and the impact the new administration's policies have on our training partners, automotive retailers, OEMs, and consumers.
Speaker Change: That's an ever-moving target. In our view, the best way to capitalize on these changes is to ensure that Group 1 stays nimble and focused on execution.
Speaker Change: We continue to see demand across all lines of service. However, we are being cautious moving forward. Expectations are that new and used vehicle GPUs could remain elevated as inventories tighten from imposed tariffs.
Speaker Change: We have deferred some capital expenditure projects and have reevaluated some discretionary spending.
Speaker Change: We also have contingency plans in place. Should we see a mark change in the competitive environment?
Now shifting the capital allocation.
Speaker Change: We continue to balance acquisitions and dispositions with repurchasing our shares. In the first quarter of 2025 we acquired $100 million of revenues and bought back another 2% of the company for $122.8 million.
Speaker Change: At current valuation levels, we believe buying back stock at every opportunity makes sense, especially given our liquidity position.
Speaker Change: and we will continue to optimize our portfolios in the U.S. and the UK.
Speaker Change: Testament to that is since the beginning of 2023. We've bought assets generating $5 billion dollars in annual revenue and dispose of assets generating billion dollars in revenue.
Speaker Change: Properly allocating our shareholders capital will always be our highest priority.
Speaker Change: While we regularly evaluate other businesses' agencies in this environment, we believe staying focused on the new vehicle retail franchise business is the best use of our shareholders
Speaker Change: We will continue to be inquisitive, but we are also being very measured in valuing acquisitions engaging only in deals that we feel provide long-term value for Group 1 shareholders.
Speaker Change: And now, I'll turn over the call to our CFO , Daniel McHenry, for an operating and financial overview.
Thank you, Daryl, and good morning, everyone.
Daniel McHenry: In the first quarter of 2025, Group 1 Automotive reported Quarterly Record Gross Profit of 890
Adjusted net income of $134.7 million.
Daniel McHenry: and quarterly adjusted diluted earnings per share from continuing operations of $10.17.
Starting with our U.S. Operations [inaudible]
Daniel McHenry: Revenue growth on as our reported basis and same-store basis occurred across all lines of business with new vehicle revenues leading the way at 9.4% and 7.4% respectively over a comparable prior year quarter.
Daniel McHenry: We experienced higher muvegal units sold on a reported basis and a same store basis of 7.1% and 5.2% respectively.
Daniel McHenry: At the same time, volumes increase, we saw prices increased by 2.2% on a reported and same store basis, coupled with the decline in GPUs of 7.5% and 9.6% respectively.
Daniel McHenry: These dynamics of lower GPUs of higher volumes helped us hold same store and reported gross profit to a modest decline of less than 0.9%
and 4.9% respectively, versus the prior year comparable period.
Daniel McHenry: Much like new vehicles, we saw a similar pattern for used vehicles, power units sold, higher prices, and Lord's APUs versus the prior year comparable period.
Daniel McHenry: DPUs were only done $55 and $66 unreported in same-store basis, or 3.1% and 3.8% respectively.
Daniel McHenry: We believe our ability to hold gross profit to modest declines while driving volume against higher prices versus the prior year comparable period is a testament to our process, discipline and use of technology with pricing-abused vacuals.
Daniel McHenry: The quenchely units sold were up 2.4%, and we were able to increase GPUs by $230, are 15.6% while prices fell 2.1%.
Daniel McHenry: Our first quarter F and I GPU of $2,426 is up $11 and $86 sequentially and year-over-year
Daniel McHenry: The performance by our F and I professionals has been outstanding to maintain GPU disciplines.
and Daryl Kenningham.
Shifting gears to off-presils
Daniel McHenry: After Sills, Revenue increased 7.3% and 5.6% on a reported and same-store basis respectively.
Daniel McHenry: These revenue increases coupled with slight margin increases, generated growth in growth profit of 8.5% and 6% on a reported and sim-store basis respectively.
Daniel McHenry: Same-store customer plan warned due revenues comprised of 70.8% of the total same-store aftershills revenues for the first quarter, versus 67% for the prior comparable quarter.
Daniel McHenry: Warranty work is up virtually across all brands. However, Toyota and Honda have the largest year-over-year increase, generated by some larger recalls ongoing in the first quarter.
Daniel McHenry: We expect this work to continue for some time given the nature of the repairs.
Daniel McHenry: In the case of Toyota we're seeing increased work from the open Tundra engine recall.
Rocking up the U.S. Let's turn to S-G-N-A [inaudible]
Daniel McHenry: U.S. suggested SGNA as a percentage of gross profit increased 228 basis points sequentially
Daniel McHenry: We have refocused our efforts on operational efficiency and resource management to bring these metrics in line with historical levels.
Turning to the UK, what an outstanding quarter.
Daniel McHenry: High-closition activity fueled all-time quarterly growth in total revenues and gross profit, leading to a 92% and 109.6% year-over-year increase respectively.
Daniel McHenry: We were pleased with the growth and growth profit of 8.7% on the same store basis thanks to improvement in new vehicles, aftershales, and F&I.
Daniel McHenry: DeMStore Retail Growth Vehicle Unit Sold increased nearly 6% year over year, and GPUs decreased by 10.7%.
Daniel McHenry: The increased volume helped limit the decline in gross profit of approximately 5% on a constant currency basis.
Daniel McHenry: Same-store wholesale losses pre-unit improved to $8 from $842 loss compared to the prior
Daniel McHenry: After sales is continuing to be an positive growth path, with the 3.5% increase in same-store revenues on a constant currency basis, and almost 6% increase in same-store growth profit on a constant currency basis, over a prior year for year.
Daniel McHenry: Same story, adjusted SGNA is a percent of gross profit declined 78 basis points versus the prior year quarter. We will continue to focus on cost control and business process efficiency as we execute our business integration activities.
Daniel McHenry: We occurred 11.1 million of non-requiring restructuring costs in quarter one 2025 in relation to our ongoing UK restructuring plan.
Thank you. Thank you. Thank you.
Starting to our balance sheet and liquidity.
Daniel McHenry: Our strong balance sheet, cash flow generation, and leverage position will continue to support flexible capital allocation approach.
Daniel McHenry: As of March 31st, our liquidity of 1 billion comprised of accessible cash of 176 million and 819 million available to borrow on our acquisition line.
Daniel McHenry: Our rent adjusted leverage ratio is defined by our US syndicated credit facility with 2.7 times at the end of March.
Daniel McHenry: Cashflow generation through the first quarter of 2025 yielded 138 million of adjusted operating cashflow on 105 million of free cashflow after backing out 33 million of CapEx.
Thank you. Thank you. Thank you.
Daniel McHenry: This capital is deployed in the same period through a combination of acquisitions, sherry purchases, and dividends, including the acquisition of 100 million in revenues through March 31st.
and 6.6 million inhabitants to our shareholders.
Daniel McHenry: Subsequent to the first quarter, we purchased a hundred thousand nine hundred and eighteen shares under a rule ten b five one trading plan had an average price per common share of three hundred and eighty five dollars and twenty eight cents for a total cost of thirty eight point nine million
Daniel McHenry: This has resulted in an approximate 3% reduction in resharkance in January 1st.
Daniel McHenry: We currently have 314 million remaining on our board authorized common repurchase plan.
. . . . . . . .
Daniel McHenry: As of March 31st, approximately 60% of our 5 billion and 4 million other debt was fixed.
Daniel McHenry: This would result in an annual EPS impact of about $1.21 for every hundred basis point increase in the secured overnight funding rate.
Daniel McHenry: For an additional detail regarding our financial condition, please refer to the schedules of additional information attached to our news release, as well as our investor presentation posted on our website.
Daniel McHenry: I will now turn the call over to the operator to begin the question and answer session. Operator.
Thank you.
Speaker Change: 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 are using a speakerphone, please pick up your handset before pressing the star keys.
To withdraw your question, please press star, then two [inaudible]
Speaker Change: We ask that you please limit yourself to one question and one follow up.
Speaker Change: The first question comes from Rajat Gupta with JP Morgan, please go ahead.
Speaker Change: Great. Thanks for taking the question. I just had one question on the pre-bi-comment in the slide deck.
Speaker Change: You know, is there any way for us to estimate, you know, how much of the volume like late March? No, what you might be seeing very early April is driven by pre-buy versus what you feel is like normal business course.
Speaker Change: And then anything that you've seen since the pre-by starters, maybe last week, last couple of weeks, has the traffic sustained? Have you started to slow down?
Speaker Change: Any color you can give there on how things have trended and just what our expectations are for the remainder of the year, about the new and new scars, and I had one quick follow up on SGNA.
Speaker Change: We saw grosses from some during that time period, being the end of a quarter, sometimes it's harder to tell, what is driven by the end of quarter activity on OEM incentives, things like that with their targets.
Speaker Change: Generally, our estimate was about a 5% lift in those last 10 days or so.
Daniel McHenry: Rajat, Daniel, you'll hear one thing I would add to that is...
You know, that was...
Daniel McHenry: A big part of our portfolio, as you know, is Toyota Lexus.
Daniel McHenry: You know, when you look at the day supply that we ended the quarter-end for Toyota and Lexus said...
and Peter DeLongchamps.
Our Margin Patterns, Rajat, at least on new cars.
Daniel McHenry: didn't differ materially between, you know, the third month of the quarter and Q1 versus
Daniel McHenry: the 2-4 of last year or 2-3 of last year. So, you know, you always get a little bump in the third month of a quarter. We got a little bump in Q-1, we got a little bump in Q-4, but it wasn't anything that's really different.
Speaker Change: Anything on April ? Like, you know, I was April , shake out so far, you know, you didn't notice like from our checks, like early April was strong, but maybe things have cooled off in recent weeks, you know, any comment on that?
Speaker Change: Well, I think your read's probably pretty good. You know, the thing that I'm watching is our employees, they're a little tight at the end of March and some of the OEMs are being able to cause us about allocations right now and...
Speaker Change: Nobody's taking any drastic steps, but we ended the quarter around 20,000 in a year.
Speaker Change: We're kind of watching that. That'll affect, obviously, gross patterns and that supply can impact some of the, some of the brands you saw that with Toyota last year quite a bit.
Daniel Hagen: Thank you. The next question comes from Daniel Hagen with Morgan Stanley Tisquard.
Daniel Hagen: Thanks, so can you speak a little bit more to the efficiencies you've seen so far with your cluster marketing initiative? You spoke to some learnings from branding in the UK business. What proof points can we look to in localizing inventory and reconditioning?
Daniel Hagen: It's very early still and we are still literally in the process of renaming the stores which is kind of the first step in it we've done.
Daniel Hagen: One, a reconditioning pilot up in Boston that we're still assessing and evaluating, and so it's hard for us to quantify what the
Daniel Hagen: What is done for us so far, we expect that what we'll be able to do is leverage our, we've brought a lot of our marketing and customer data management in-house concurrent with this.
Daniel Hagen: Bank, and what we believe will allow us to do is manage our customers on a more proactive basis across our store base and...
Daniel Hagen: across the country or anything like that. We still believe our business is local, so.
Daniel Hagen: That's where we expect to get leverage and be able to bring customers. We had shared some data earlier about in a loyalty of customers that buy a used car at a same brand car store versus an off-brand store. Those are things we're trying to leverage with this segment.
Speaker Change: about it. And then any shift to your capital allocation strategy with the current environment, you know, does the policy on certain T complexities bring more private dealerships to the table for M&A? How have you seen that evolve if at all?
Speaker Change: Probably haven't seen the uncertainty drive the acquisition environment yet.
Speaker Change: Had some conversations with some folks yesterday that they feel like it hasn't changed yet.
Speaker Change: on capital allocation for us. We have deferred some capital projects that were, you know, discretionary and when I say deferred we've...
Speaker Change: We've put them off like six months just to see, you know, if the environment is still uncertain or if those are ones that we could do. And so we have deferred some of those. We haven't canceled anything. We've reviewed some of our discretionary spending.
and things that potentially we could reign and we did.
Speaker Change: And we do have a plan that outlines the steps that we would take from, you know, least severe to most severe and the time frame with which we would execute those. So we're trying to just be prepared and as we mentioned in our comments being nimble.
Speaker Change: Thank you! The next question comes from John Murphy, with Bank of America, please go ahead.
Speaker Change: Good morning guys. Just wanted to ask first Daryl, is you think about the increase of 8% in your text? You're just curious how much capacity you think you have.
Speaker Change: If we see a real slowdown at the front end on new and used sales and people hold on to their vehicles longer and we see an uptick in service opportunities, that's something you think you can capture significantly and is their potentially room to ramp that tech and capacity count even more.
Speaker Change: of Bays that we can grow into in addition to leveraging the Bays that we have.
Speaker Change: more efficiently. Even though we added 8% more tax year-over-year, we also improved our tech productivity year-over-year. And so we do feel that way. We're looking at some other things that try to drive more efficiency and productivity in our shops. And so we're looking at some other things that try to drive more efficiency and productivity in our shops.
Right now, we're just studying those, but, um...
Speaker Change: And, you know, the thing will be done with our air conditioning project this year and just to remind everybody.
and a Group 1 shop.
Speaker Change: The tech turnover is up to 9 percentage points lower in a shop that has air conditioning than a shop that doesn't, and so in our minds, that's well worth the trade-off on the capital spend.
Speaker Change: to be able to have our technicians working in the air conditioning and hopefully increasing our retention rate, lowering our turnover, which will effectively increase our capacity
Speaker Change: Okay, and then just maybe one quick follow up. There's a lot of attention being paid to tariff, but there's another significant policy.
Speaker Change: around CARB and NHTSA and the EPA that is pushing EV still.
Speaker Change: But that seems like we're going to get some relief on that real soon. I'm just curious either the current state of EVs in the business, how negative the GPUs are, and how much they're dragging you down the total. And if we get relief on the carb.
Speaker Change: You know what that means for the business on operating bases and maybe making acquisitions going forward in Carbstates.
It's really quite good at the moment, we're at…
Speaker Change: out there record low levels over the last two years and some of that's what we did last a quarter in terms of managing our EV inventory.
Speaker Change: I would say the drag and GPU that we had seen for M.E.V. has reduced over the last quarter. However, however, we're still talking about a $1,000 differential between the GPU on a...
FAB versus a nice fecal regarding the second part of the question I'll pass that over to Daryl. It hasn't changed our view on acquisition strategy and, you know,
Farb States or not.
Speaker Change: It's not something we're certainly afraid of. Hopefully more natural demand that's out there in the future that we'll see in.
That's how we look at it.
Speaker Change: Thank you. The next question comes from David Whiston from Morningstar. Please go ahead.
David Whiston: Hey guys, good morning. I get on the UK first. Can you talk a little bit about the over four to fifty people who are let go? What roles were they in?
David Whiston: That's where we had, I guess, between doing the acquisitions and the original Legacy Group 1 stores where we had...
Speaker Change: Double Functions. So, you know, two CFOs, two CEOs.
Speaker Change: two heads of marketing, etc. That was kind of the first phase I would have said.
Speaker Change: The second phase was centralized facilities like accounting, where we centralize that all into one office, our one function. The third phase was we went out to the stores and looked at some store reductions.
Speaker Change: But, again, generally, judicative roles. That was principally what we have undertaken so far.
Were there any major salesperson reductions?
No.
Speaker Change: We kept technicians and salespeople as a matter of fact, we were focused on adding technicians and salespeople and some of the indicate retail stores. They were a little understaffed.
Speaker Change: I'm sorry, David. If the market is growing in the UK now, we don't want to pull back on the customer facing positions at all.
Yeah, is that why your UK new vehicle inventories
down to 16 days.
Speaker Change: Is there another supply chain reason? It's Daniel here. Traditionally March is the biggest selling month, March and September of the year in the UK. So effectively that tends to be cyclical and that's generally the case. Now it's slightly lower than we would have expected but our sales rate was pretty strong in March. [inaudible]
Thank you.
Michael Ward: The next question comes from me, Kael Ward with CD, please go ahead.
Thanks very much. Good morning, everyone.
Or Mike?
Speaker Change: On a voluntary basis, the UK penetration has gone from under 20% now, I think it's going to be a period of the overall revenue. Can you continue to expand it? Do you see a day where they could catch the 50-50?
Speaker Change: that you don't have to go to the west side, we are going to go to the north side and just take care of it. Great. Thanks a lot. Thanks. See you. Thanks. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.
Speaker Change: Mike, this is Daryl. I'm going to repeat the questions that everybody can hear. Your voice is a little muffled. What are UK exposure ever get the 50-50 from a third?
Speaker Change: At least for the foreseeable future, the acquisition opportunities we see are at more US-based than UK-based. It doesn't mean we won't do them in the UK, but I don't expect they will be of the scale that you've seen over the last three or four years in the UK.
Speaker Change: very strong relative to the market in the U.S. I think that's despite one or two
Speaker Change: Hi, Mike. It's Daniel here. I would have said that it did have some impact in February in the Northeast and Houston in particular. The stores were closed for a number of days in that period, which makes it...
Speaker Change: Pretty difficult to catch up that service work, you know, generally when you look at our shops and look at the efficiency and the capacity and our shops that we have today, we're already fully full, so it's hard to catch that business bike.
Speaker Change: Thank you. The next question comes from Bret Jordan, with Jeffrey Stisquad.
Hey, good morning, guys.
Speaker Change: I brought the parts and service, 30% growth and warranty. Is that tied to a major program like the Tundra Engine Recall or I guess how long you know what drives that and how long can we expect that kind of a run run?
Speaker Change: Yeah, it was a lot of it, it was the 100th number. I think Daniel might have the exact number on
Speaker Change: Bret, I don't have the number to hand, but Toyota and Honda with a line share of that increase and you know, Tundra is ongoing currently, so we don't see that dropping off significantly this quarter.
Speaker Change: Okay, and I guess we look at parts and service going forward, and obviously the tariff changes daily, but as it stands today, what do you think the price contribution to parts and service growth would be into the second half?
Speaker Change: Are you going to see mid-single digits pick up just on price without any traffic as well or I guess Adiab reconciled traffic versus ticket today? Well, we would please this quarter with our traffic when you look at our increase.
Speaker Change: We're trying not to take some anymore in the after sales business. Now, you know, tariffs hit parts that could obviously change that. But, you know, when you when you look at
Uh...
Speaker Change: I think that still the retention opportunities that are still significant, which wouldn't
Speaker Change: Lead us to believe there's traffic count opportunity. One thing that could drive dollars up is...
Speaker Change: The average mileage in early 2025 is up another 1,000 miles.
Speaker Change: from last year, which as mileage increases, that increase is usually the dollars per
So, that could lead up to higher dollars.
Speaker Change: Thank you. The next question comes from Thomas Wendler with Stephen's Inc. Please go ahead.
Speaker Change: Hey, good morning, everyone. I just wanted to go back to the UK for a second here. March was registration month and the market was up, called 6%, but Mercedes, Audi and BMW were all down for the quarter. This kind of indicates that the midlines are outperforming luxury and that the luxury buyer is pulling back a bit in the UK.
Speaker Change: I think the Audi piece is more product cycle driven, to be honest with you. A lot of their new products come, they've launched in Q1, like the new Q5, but we haven't been able to sell them until they get the pipeline full.
Speaker Change: We were pleased with our Mercedes business, and pleased with our BMW business, honestly, in the UK.
Speaker Change: Q1, I can't say that I could make a general statement about midline buyers versus luxury buyers, and Daniel DeLongchamps, and I'm not even bad at this moment.
Speaker Change: All right, that was the only one for me, thank you.
Thank you, thanks.
Speaker Change: Thank you. Reminder to all participants to ask a question, you may press star then one.
Speaker Change: The follow-up question is from Rajat Gupta with JP Morgan T-Square
Rajat Gupta: Great. Thanks for squeezing me back in with the follow-up question rules. It's pretty straight. I had a question on the exterior slide.
Rajat Gupta: I noticed that, you know, your stain store head contradiction number is now 8% versus 2019.
Rajat Gupta: The last quarter of that number was 6%. Are curious, like, has there been more change or turnover that's happening at the stores?
Speaker Change: Or is this pro forma for inch tape? I know you're not taking out sales head count at inch tape but maybe like other staffing because it's curious if you could just clarify that. That was the only question I had. Thanks.
Speaker Change: Rajat, I think that we continue to increase that kind of Ryan technicians in particular. That 8% excludes.
Speaker Change: Not adding additional cost whenever it's non-technation. Rajat, I'll just add one thing. In the US, we added over 150 salespeople.
Speaker Change: Year over year, but our salesperson productivity with our volume increases was just dead flat year over year so we're seeing capturing the scale on those additional heads.
Speaker Change: as well, but there's not a concerted effort to change that.
Thank you. Thank you. Thank you.
Understood. Thanks for clarifying. Good luck.
Speaker Change: Thank you. The next question comes from Ron Jesikow with Google NIM. Please go ahead.
Yeah, good morning and thanks for taking my question.
Speaker Change: You mentioned you had some S&A creep in the U.S. in the quarter.
Speaker Change: maybe I missed this but is there a way to quantify the impact of the higher spend in January and February and if that was normalized in March or just the process of getting that cost back in line kind of just started in March.
You know, I would have said some of it, Ron, and-
S.G.A. is a percent of gross with-
Speaker Change: This February I would have said was a little weaker, January and February was a little weaker in terms of SG&A leverage and some of that was...
Speaker Change: is possibly around the lack of growth. And we talked earlier about the weather, etc. Not that I ever really like to give weather as a reason for that.
Speaker Change: But equally so, we just saw some creep and variable expense, salespeople commission, manager commission, etc. And I think there just needs to be some realignment of that and we realign some of it in March and continuing in quarter and two.
Speaker Change: Okay, and I know we're only kind of three weeks into the potential new world with tariff changes, but I did kind of have a question just on OEM plans from here. It seems like...
Speaker Change: We will start getting some modest price increases starting in May, emphasis on modest, but during your conversations with your OEM partners...
Speaker Change: What are they signaling to you kind of with their respect, with respect to their strategy going forward around volume price and I think dealer support incentives are pretty important topic care.
Speaker Change: I think what we'll see is a moderation of incentives first, and then I think on pricing, formal pricing, not just transaction pricing, we'll see...
Speaker Change: Wembley Modest with their increases early. The thing that I'm...
Speaker Change: I guess most interested in as parts to see how that that is affected and where that's affected. And so that's what they've been saying to us.
Okay, that's super helpful. I appreciate you taking my questions.
Thank you very much.
Speaker Change: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.