Good morning, everyone. Welcome to the Boyd Group Services Inc. First Quarter 2023 Results Conference Call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Boyd's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Boyd's annual information form and other periodic filings and registration statements, and you can access these documents at SEDAR's database filed at sedar.com. I'd like to remind everyone this co-conference call is being recorded today, Wednesday, May 10th, 2023. I would now like to introduce Mr. Tim O'Day, President and Chief Executive Officer of Boyd Group Services Inc.. Please go ahead, Mr. O'Day. Thank you, Operator. Good morning, everyone, thank you for joining us for today's call. On the call with me today is Jeff Murray, our Vice President of Finance and Interim Chief Financial Officer. We released our 2023 first quarter results before markets opened today. You can access our news release as well as our complete financial statements and Management Discussion and Analysis on our website at boydgroup.com. Our news release, financial statements, and MD&A have also been filed on SEDAR this morning. On today's call, we will discuss the financial results for the three-month period ended March 31st, 2023 and provide a general business update. We will open the call for questions. During the first quarter of 2023, we delivered record sales and adjusted EBITDA, although adjusted EBITDA margins remained below pre-pandemic levels. Demand continues to be strong, with results once again constrained by the tight labor market and accompanying wage pressure. Supply chain disruption continues to normalize. However, sustained levels of high demand continue to result in elevated levels of work-in-process inventory. While the ability to service demand continues to be constrained by market conditions, new technician training and other initiatives are providing some improved capacity. However, the path to servicing the level of demand requires continuing increases in technician compensation to attract more labor into the industry and company, and this will require continued price increases from our customers. As we address this issue, we will be able to reduce cycle times and increase customer satisfaction levels. During the first quarter, we recorded record sales of $714.9 million, adjusted EBITDA of $84.7 million, and net earnings of $20.8 million. Sales were $714.9 million, a 28.4% increase when compared to the same period of 2022. This reflects a $23.7 million contribution from 52 new locations. Our same-store sales, excluding foreign exchange, increased by 25.2% in the first quarter, recognizing the same number of selling and production days in the US and Canada when compared to the same period of 2022. Same-store sales benefited from high levels of demand for services as well as some increase in production capacity related to technician hiring, growth in the technician development program, as well as productivity improvement. Ongoing staffing constraints continued to impact sales and service levels that could be achieved. Sales also increased based on higher repair costs due to increasing vehicle complexity, higher part content and cost, increased scan and calibration services, as well as general market inflation. Gross margin was 45.7% in the first quarter of 2023, compared to 44.1% achieved in the same period of 2022. Gross margin benefited from improvements in part margins, and parts are once again being sourced from primary suppliers, and the mix of alternative parts continues to move toward historical levels. Increased scan and calibration services also positively impacted gross margin. Labor margins have improved but continue to be negatively impacted by the tight labor market, which has resulted in continued wage pressure and to both retain and recruit staff. Operating expenses for the first quarter of 2023, $242.4 million or 33.9% of sales, compared to $191.6 million or 34.4% of sales in the same period of 2022. Operating expenses as a% of sales was positively impacted by improved sales levels, which provided an improved leveraging of certain operating costs, partially offset by wage and other inflationary increases, as well as increased sub-cost related to recruitment and training, including the costs associated with the technician development program. Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments and costs related to acquisitions and transactions was $84.7 million, an increase of 57.5% over the same period of 2022. The increase was primarily the result of improved sales levels and gross margin percentage, which also improved leveraging of certain operating costs. Net earnings for the first quarter of 2023 was $20.8 million, compared to $1.6 million in the same period of 2022. Excluding fair value adjustments and the acquisition and transaction costs, adjusted net earnings for the first quarter of 2023 was $21.2 million, or $0.99 per share, compared to $2.1 million or $0.10 per share in the same period of the prior year. Adjusted net earnings for the period was positively impacted by increased sales and improvements in gross margin percentage, as well as improved leverage of operating expenses. At the end of the period, we had total debt net of cash of $1.0088 billion compared to $963 million December 31, 2022. Debt net of cash increased when compared to prior periods, primarily as a result of increased lease liabilities resulting from location growth as well as lease renewal activity. During the first quarter of 2023, the company was able to reduce the level of long-term debt held under the revolving credit facility by approximately $8.2 million. During 2023, the company plans to make cash capital expenditures, excluding those related to the acquisition and development of new locations, within the range of 1.6% and 1.8% of sales. In addition to these capital expenditures, the company plans to invest in net-network technology upgrades to further strengthen our technology and security infrastructure and to prepare for advanced technology needs in the future. The investment expected in 2023 is in the range of $5 million-$8 million, with similar investments expected in 2024 and 2025. This investment is expected to begin in the second half of 2023. Looking ahead, we remain focused on the key challenges of building capacity through increased staffing and negotiating sufficient price increases to recover lost margin from continuing wage pressure. We continue to experience high volumes of work and elevated levels of work in process. We continue to benefit from increased scanning and calibration revenue. Thus far in the second quarter, our sales run rate is modestly above that experienced in the first quarter of 2023, and same-store sales results have been slightly lower than the growth experienced recently. The balance of 2023, beginning in May and June, has higher comparative periods for which same-store sales will be measured against. We remain committed to addressing the labor market challenges so that we can service additional demand. Price increases for labor continue to work their way through the system, market by market and client by client. Modest improvements in labor margins have been experienced. However, pricing increases have not been sufficient to attract requisite talent into the industry and to offset the wage increases experienced to date. As communicated previously, performance credit-based programs may cause margin to vary on a quarter-by-quarter basis. Our intake location strategy is intended to drive same-store sales growth at times when capacity is not constrained. In late 2022 and in early 2023, we decided to close many intake locations based on the reality of our current capacity constraints. We're pleased to have opened or acquired 30 collision repair locations thus far in 2023, and the pipeline to add new locations and to expand into new markets is robust. Operationally, we're focused on optimizing performance of new locations as well as scanning and calibration services and consistent execution of the WOW Operating Way. Given the high level of location growth in 2021, the strong same-store sales growth during 2022, and the combination of same-store sales growth and location growth thus far in 2023, we remain confident the company is on track to achieve its long-term growth goals, including doubling the size of the business on a constant currency basis from 2021 to 2025 against 2019 sales. With that, I would now like to open the call to questions. Operator? Thank you. Ladies and gentlemen, we'll now conduct the question-and-answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay. Your first question comes from Michael Doumet from Scotiabank. Michael, please go ahead. Morning, Michael. Hey. Good morning, Tim. Hey, Jeff, as well. Nice quarter. Maybe to just start on the Q2 sales or same-store sales commentary. It seems like you're suggesting that April same-store sales are trending at kind of ±25%. Pretty slow May, June, given the tougher comps last year. Just in order to get a better sense for that, any way you can comment on how much May, June sales increased last year versus April? Yeah, just anything that can help us there. I think what we were trying to provide some color around, Michael, was that, you know, same-store sales growth was pretty strong in April. We know we're up against tougher comps, and we tried to provide, you know, some information that the sales run rate that we're seeing right now is modestly above what we saw during the first quarter. I would look at our run rate during the first quarter and probably build off of that. Got it. I guess just to add as well, you know, in terms of comparison to, you know, thus far in the quarter compared to the comparative period, you know, we have seen it's been lower than what we've experienced the last couple of quarters, not just the most recent quarter. You factor that in as well. Helpful, Ralph. Thank you. I guess turning to the margin discussion. I've had this conversation, I guess several times with many investors. As we think about the return to normalized margin and what that means for, you know, dollar margin versus percentage margin. If I, if I look at the Q1 EBITDA on a per shot basis, your, you know, your Q1 EBITDA, you know, is higher versus 2019 levels, again on a per shot basis, but you're still 200 basis points below. How do you think about dollar margin versus percentage margin? Where is your confidence, you know, in terms of recovering the percentage margin longer term? Well, we haven't really, we haven't expressed a specific goal on the EBITDA margin we're targeting long term, but we're still negatively impacted on our labor margins because of the wage price and the wage inflation that we've experienced. I think we've been pretty clear that that has not yet been offset. I'm pleased with the progress we've made on our EBITDA margin with increased throughput. We did see increased throughput in the most recent quarter coming from, you know, multiple components. We saw an increase in, you know, the contribution from our technician development program, increased productivity from our experienced technicians and some increased staffing relative to the prior quarter. I think we've made good progress on building up our revenue, and we've got plenty of demand. You know, part of the long-term solution is continuing to build our capacity to process this demand to offset the increased costs we've experienced over the past couple of years. Got it. Then maybe just in terms of, you know, longer term margin expectations. Was that closer? Was that in reference to maybe the labor margin is what you guys were looking to recoup? We certainly expect to and need to recoup more labor margin. We do have some other tailwinds, Michael, that we've talked about. I mean, I think the increase in repair complexity, which comes along with increased scanning and calibration services, is a long-term opportunity and tailwind for us that has the opportunity to, you know, enhance margin, both gross margin and EBITDA margin because it's new revenue that three or four years ago the industry barely had. You know, we've got multiple, you know, multiple ways to continue to drive EBITDA margin in addition to just improving throughput. Improving throughput and offsetting our operating or kind of our fixed operating costs is really a key focus. Got it. Those are my questions. Thanks, guys. Thanks, Michael. Your next question comes from Steve Hansen from Raymond James. Steve, please go ahead. Yeah. Thanks for the time. Tim, a follow-up on the last question in regard to calibration and scanning opportunities. Can you maybe just give us a bit of a roadmap for the rollout of that opportunity within your network? I think you've described in the past it's still relatively early, but you know, how quickly can you expect to roll out these services, you know, and how does that approach, I guess, dovetail with sort of the broader industry adoption of the trends as well in the collaborative supply stream? Yeah, I think we are early on in rolling out calibration services across our network. Having said that, we're performing calibrations. There's just a higher percentage of that work being done by third parties that are not our employees or not kind of part of the Boyd companies. I think the opportunity is the market will continue to grow for scanning and calibration, the size of the market, which will add to the size of the collision repair market. We will look to grow our capacity in our calibration company to service that business both for Boyd and for other companies. I think it's a, you know, it's a good long-term tailwind that we're in the early stages of. Okay. Very helpful. Just to clarify from just a regional standpoint, is this something that you roll out in the U.S. first and I suppose in the Midwest with your small group and then Canada over time? Or how does that play from a regional standpoint? Not necessarily. We're not dependent on just growing from the base that we have. We believe we can, you know, open and add that service in markets that we operate in today and, you know, service more of the work ourselves. Okay. Very helpful. Then just one follow-up, if I may, is on the M&A front. You've been more active, which is positive, and good to see. How do you feel about the pipeline? I know it's been described as robust, but maybe just some additional color to give us a sense for your expected cadence or your, maybe just your perception on how appealing that market is right now from a Boyd's point. Thanks. As you can see from our Q1 results and even Q4, we're pretty focused on single shop growth. I feel really good about what we accomplished in the first quarter. Our team is, I think, doing a really good job of identifying and executing on opportunities. We've got plenty more in the pipeline that we expect to continue to execute on. These are, you know, primarily single shop acquisitions for greenfield and brownfield developments that have good high returns on capital. It's not necessarily year one return on capital, but as we've talked about before, we expect our single shop acquisitions generally to have a return on capital post, you know, synergized, including post-close investment in year two of 25%. Our greenfield and brownfields, we generally have higher expectations than that. There's plenty of opportunity out there, and I think our team is doing a really nice job of executing on that. Appreciate that. Your next question comes from Gary Ho from Desjardins Securities. Gary, please go ahead. Thanks. Good morning. Maybe just to tack on Jeff's last question on M&A. You hear the PE guys are suffering from higher financing and redeployment costs. Do you have some insight for maybe larger MSOs if they're available in the market? Yeah, I think we've always been clear that we're interested in any growth that enhances shareholder value. I think what we have to be, you know, cautious of is making acquisitions that aren't accretive or take on more risk than makes sense for the nature of the acquisition. You know, we'd be very interested in transformative opportunities if they make sense from a shareholder value standpoint. Anything in the pipeline, anything in the market that you can comment on, or is it still fairly quiet on that front? Well, I wouldn't comment on it either way. You know, there's certainly likely opportunities in the market, but nothing that we would comment on. Okay. Our focus is pretty keenly on the highly accretive single shop growth, and we're confident in our ability to achieve our 2025 revenue goals, even with that strategy alone. That makes sense. My next question, just from your comments, Gary suggests, you know, some relief on the parts margin side, but labor continues to be challenging. Maybe a two-part question. You know, at the margin, have you seen kind of wage pressure starting to abate? Second, you know, you mentioned same-store sales growth is up against tougher year-over-year comps. You know, as the top line growth slows, are you able to still manage the labor front to show margin improvement? Just wondering if there's a lag between those two that maybe could hurt margins in the second half of the year. Look, the labor margin, we have made a little bit of progress on labor margins, not as much as I would like. You know, I do think that the wage pressure has diminished somewhat, but it's still there. I mean, when you have an industry that relies on highly skilled labor and there's a shortage in that pool, and there's lots of revenue available, people are gonna fight for that labor as much as they can. You know, we continue to invest in our technician development program to grow our workforce, and we've seen great results with that. Last year, we beefed up our focus on recruitment. We've had success with that. I think as supply chain has normalized a bit, and we get back to really focusing on the WOW Operating Way, we have been able to drive productivity improvements from our existing workforce. That combination is really what's driving our same-store sales growth, and we're gonna continue to focus on those things. I think in the absence of meaningful short-term labor margin improvement, which we're very focused on, we think revenue throughput, the revenue throughput opportunities are still available to us. Maybe I'll just add to the strong comps part of the question. Even though we will be facing some strong comps, the throughput is still and the demand for services is still sufficiently high that it wouldn't be a negative to our, to our overall sales levels. We still expect sales levels to continue to increase. It's just that due to the higher costs, if you look at it on a same store basis, it won't be at the same rate that they've been at the same sort of historically. Okay. Thank you for touching on those comments. Thanks, Gary. Your next question comes from Bret Jordan from Jefferies. Bret, please go ahead. Hey, good morning, guys. Morning, Bret. On the scan and calibration business, could you maybe give us some more color on the margin profile there? As you're doing more third party for other collision facilities, what kind of margin you're looking at? Is there a CapEx cycle here? Obviously, if you're doing third party, maybe there's a van fleet or more hardware required. Could you maybe talk about what that looks like? Yeah. We haven't disclosed a lot of detail on that, Bret, but, you know, it is a... there's a fair amount of calibration within our company today that's being done as a sublet service. To the extent that we can internalize that, we should be able to shift that revenue from sublet margins, which are the least attractive in our industry, to labor margins. That's obviously very favorable to us. There is a capital investment required. Much of the calibration work today is done via mobile, although we are equipping stores with, you know, where we have space for putting in some of the targeting systems, and mobile technicians can travel to our stores and do a mobile workaround on a hub and spoke basis to provide some of that work. I think the we're gonna continue to see a growth in revenue around scanning and calibration. We're going to internalize more of it. I'd say those are both, you know, positive tailwinds for us probably for several quarters to come. Okay, great. I guess on market growth at your comp of 25% plus, could you know, maybe give us some color how you think that compared to what happened in the overall collision market? Obviously, you know, supply chain has improved a bit, could you know, sort of frame that in the, in the scope of maybe share gain? It's tough for me to give you any good numbers on that, Bret. I mean, CCC publishes some data that's claims data versus repair data, typically. We believe we've picked up share because we've increased our capacity, and we've certainly added units. You know, the average cost of repair has been going up, but our same-store sales gains are, you know, well above the level of inflation. Our throughput is up, which would indicate a share gain. Okay. Any order of magnitude or, just up? I don't have a number that I'd be comfortable giving you, but we're moving in the right direction on it and building our capacity, our labor capacity is really the key. It could be higher, and I think we've been pretty clear in our MD&A that, you know, our revenue is still constrained by a lack of labor capacity that we're working to address. Great. Thank you. Thanks, Bret. Your next question comes from Jonathan Lamers from Laurentian Bank Securities. Jonathan, please go ahead. Good morning. Morning. The gross margin result for the quarter was very strong, and yet you continue to highlight the opportunity for labor margins to be stronger, and you continue to negotiate, you know, rate improvements, as you're expanding the scanning and calibration program. Now as you continue to roll out your scanning and calibration business and negotiate higher rate increases, would you be willing to hazard a guess as to how much higher those margins could be than historical levels? We won't provide projections on that, Jonathan, some of the improvement that we've seen recently, some of that is in the parts area. We've been commented supply chain is normalizing, and that's been two things on the parts side. It's allowed us to use more higher margin alternative parts, especially aftermarket parts, because of improved availability. LKQ has been pretty clear on their, you know, their fill rates have gone way up, and we're seeing the benefit of that. We also have been able to rely more on our primary suppliers as supply chain has freed up a bit, which has kind of recovered our part margins to more normal levels. The scanning and calibration is definitely another one of the benefits that we're seeing on the labor side because we do have more going through that, more sales going through scanning and calibration, and some of it is being serviced internally. We're not providing a projection of where those margins will end up. That's fine. Thanks. Just a clarification question for Jeff on the sales run rate. The way that I like to think about this is same-store sales percentages in your report, if I multiply those through since 2019, the trend is kind of up 22% in Q1, improved from up 16% in Q4. You know, I would think that that could be continuing into Q2, you know, I can kind of back out what that means for the same-store sales number for the quarter. Is that the right way to think about the run rate, or are you talking about dollars per location or something else that's not coming through? Yeah, I think you're right. You could probably look at it different ways, though, as you ask to clarify that. You know, the way we were thinking about it is if you looked at our Q1 sales and looked at the number of production days, that really gives us a perspective as to what our current business is performing at from a sales perspective on a per day basis. Then if you were to use that into Q2, that would be a reasonable way to sort of maybe triangulate a little bit. Really the complexity has come in just because of some of the variability of the strong costs and the shifting month to month. It becomes very difficult to give meaningful guidance when the range is starting to kind of be more broad. We thought we'd give that additional perspective to help to give another perspective. Thanks. From looking at some others in the industry in Q1, severity seems to have been strong. Can you tell from the information you have, if something like cost inflation is accelerating, or is it kind of too hard to tell? You know, I think it's, I would not have thought it was accelerating. Although, you know, repair cost inflation has definitely been a contributor. You have repair complexity, number of parts, average cost per part, the increase in, you know, the need to calibrate vehicles that the damage that's been growing. It's, it's not just inflation. It's really, you know, the average repair today has more labor hours on it and likely more calibration on it than an average repair did even two years ago. Thanks for your comments. Great. Thanks, Jonathan. Your next question comes from Zachary Evershed of National Bank Financial. Zachary, please go ahead. Hi, Zach. Good morning. Thanks for taking my questions. Of course, an introductory one on how labor negotiations are going. What's the sense of urgency with your insurance partners knowing that there was an uptick in length of rental and backlogs? I think that insurance carriers generally are worried about having adequate capacity to service their policyholders. I think the sense of urgency for everyone in the value chain is very high. You know, we've continued to see, you know, a good pace of increases in labor rates even through Q1. The carriers, you know, are looking for capacity. I think the urgency is similar to what it's been over the last several quarters. The industry is still not servicing automobile owners as effectively as we were prior to the pandemic. Length of rental is still very elevated. customer satisfaction scores, in part because of, you know, high repair times, long repair times and still some supply chain disruption and labor issues, aren't where they should be. You know, we're all working hard to get back to making sure that we're taking great care of our customers. Okay, Tyler, thanks. Could you give us a comment on the legislative landscape with respect to some insurance commissioners taking a stance against big insurer premium hikes and what that might do for your labor negotiations? You know, it's a, it's a good question. I think that insurers need quality repair capacity, and they're competing for that repair capacity. I think that there's not necessarily a direct connection between those two. If you look at the data, our insured clients have, by and large, been very successful at seeking and receiving rate increases. I think there are some states that there's been a fair amount of noise over, like, you know, Georgia recently, which had some very large increases by carriers last year. I think there's been some recent legislation to try and control that. California's been tough. You know, at some point, regulators have to provide enough rate for insurance companies to make money, and cars are more complex and more expensive to repair. You know, insurance carriers have a way of reducing their books if they can't go out and get adequate rate. You know, I don't think there's a direct connection to that. There is. You know, over time, there's probably a direct connection, but I think carriers will continue to get the rate they need to be profitable with their book of business because they can't survive long term without that. Great answer. Thanks. Just one last one. How quickly can MAS centers come back online when your backlogs are returning to normal? We could bring them back online pretty quickly. They're not complicated to open, and they weren't complicated to close. It just didn't make sense for us to chase volume that we couldn't service. The, you know, the expense of doing that wasn't that significant. It just didn't make sense. You know, we've had this model in place in Canada for years. It's been highly successful. It was actually very successful in the US if we could have serviced it. We're confident in our ability to bring that model back when it makes sense. Thanks very much. I'll turn it over. Thanks, Zach. Ladies and gentlemen, as a reminder, should you wish to ask a question, please press star followed by one. Your next question comes from Sajid Hanjra from RBC Capital Markets. Please go ahead. Hi, Sajid. Hey, good morning. I guess there's been a lot of discussion about the labor topic. Just wanted to get a little bit more color, I guess. As the macro evolves, are you seeing any signs of maybe folks from other, you know, periphery industries, complementary industries that might be looking for jobs? Or is it too early for the labor pool to become larger or, you know, industries you can maybe hire from? I think it's difficult for us to really see that. We need to continue to make sure that we're competitive against, you know, alternatives that people with the skill level we're looking for have. I think we've made progress toward that. I don't think we're where we need to be to attract as much new talent into the industry as we would like. We've had success at both recruiting experienced technicians. I can't tell you whether they've come from competitors or from other industries. I'm really pleased with the success we've had with our technician development program. You know, we continue to invest pretty heavily in that. This year we'll see quite a few graduates come in with the maturing program. We'll start to see a fair amount of graduates come into that program. I think there's two stages to it as well. You need to stop the outflow. Stopping the outflow is, I think, most important at the immediate term. At some point, if the rates can go sufficiently high, we may attract, but I think the focus is to make sure there's no outflow. Yeah. No, that makes sense. As you just think about the technician development program, you know, is that 400 a limit just set based on the capacity availability, or could that program become bigger if the pool of labor increases? Well, we've had good luck recruiting for that program. That's one area where I would say the availability of new entrants into the workforce via that program has not been a significant constraint. We could grow the program further. I think what we need to do is understand, you know, the benefits of investing in that long term versus continuing to attract, you know, new labor into the industry. It's probably a combination, but we're not, we're not, I'm not opposed to continuing to grow that program. We just need to understand that it's the right way to invest our money. We've ramped it up very quickly. Yeah. in a short period of time, and so we just need to make sure- Yeah, you're right. that it flushes out the way we- We were 200 at the beginning of last year. We were a little over 400 by the time we reported in November of last year. It's a very well-received program by our operating teams. It's got tremendous support both in the locations and up through the ranks of the operating team. You know, I'm confident that if we choose to, we have the ability to grow. It just takes some extra support resources, trainers, administrative team members, recruiters to build around it. It's a scalable program because it's a distributed program that's mentor-based. We've got trained mentors in the system today that don't currently have an apprentice, so we can scale it up. I guess just on that, the program, you know, what is typically the demographic concerning it? Is it younger folks that are looking to enter the industry? Because obviously the average technician age was becoming a bit of an issue for the industry. Do you know, do you prefer people under 30, for example? Or do you basically, "Hey, look, if you've got a certain amount of working age left, we'll take you in the program. We've really looked at the technician development program as an opportunity to not only bring in a younger workforce because we're recruiting typically from schools or bringing people into entry-level positions like porters or parts clerks in our organization, making sure that they're committed, their attendance is good, and then giving them the opportunity to go through the TDP program. We also see good diversity across the spectrum. We have, you know, more women, more African Americans, more Asians, more Hispanics in TDP than our company average. It's really a great opportunity for us to begin to diversify our workforce. It does tend to skew much, much younger. Our typical recruit would probably be, you know, late teens to mid-20s. No, that's great, Cullen. Just one last quick one. Obviously, the macro is evolving but I'm assuming there's a lot of competition out there for transactions. You know, what are some of the factors that are influencing the multiples that maybe these mom-and-pop shops with the single shop owners might be basing their, you know, willingness to sell on? Also just generally, how are multiples trending broadly in the private space? Well, on the single shops, we have not seen any real pressure on multiples, and we're able to underwrite those at our, you know, our targeted return of 25% return on invested capital, including post-close capital in a year or two, with synergies. That, we've been underwriting to that standard for a number of years. Really seeing no change there. There's plenty of opportunity out there. I would say over the past couple of years, we've seen greater pressure on multiples for the multi-shop acquisitions. We've responded to that by really stepping up our focus on single shop acquisitions. I think what you saw in the first quarter and really thus far through when we've reported, we've opened quite a few shops. I think seven were brownfield or greenfield. The balance were single shop acquisitions. You know, those are very attractive returns for us. The MSO acquisitions that we saw last year, some of those traded at multiples that wouldn't make sense to us, and we would not have participated in those. I'd reiterate that we're confident in our long-term growth goals with our current approach to growth, but we're open to MSO acquisitions as long as they are accretive to us. We've seen fewer MSOs trade over the past, say, six or seven months, which is probably a good sign. I don't know that we can say that valuations have changed as a result of that until we start to see some trading again. Thanks very much for taking the questions. Thanks, Evan. We have another question from Michael Doumet from Scotiabank. Michael, please go ahead. Lots of questions, I appreciate you taking the follow-up. A couple of modeling questions, if you can help me in kind of walking down from EBITDA to free cash flow, and in particular, I'm focused on the lease liabilities and the lease cash charge on the cash flow statement. It It looks to be approximately up 7%. Can you comment on the average length of your lease and the incremental costs of the bills? Sure. Well, our typical approach for our leases is to be 5-year, a 5-year lease with extensions. That's what we typically try to work towards. You know, with that factor, then basically you see about, you know, a 20% turnover approximately every year, which is, you know, with our number of locations is quite a number, which can start to shift the, you know, the amount of leases between current and ones that we have in place. Which results in different interest rates and things like that flowing through that cash flow statement, those cash flow numbers. More recently, I think with the brownfield greenfields, we typically sign up for a slightly longer tenure. Initially, the initial term is usually longer than that, 10 or 15 years. When, when you've got those entering the mix, and as they become a greater proportion of the mix, then that turnover element should reduce a little bit. Okay. That's really helpful. Then maybe just turning to WIP, that was down quarter on quarter, but I think still relatively high on a historical basis. Are you seeing, you know, maybe sufficient improvements in the supply chain that you think that WIP could work down, you know, quite nicely in the next kind of quarters? We've certainly, I think we both increased our production capacity, and we have seen supply chain improvements that's allowed us to grow same-store sales and actually reduce work in process, right? It's relatively modest reduction, but given the same-store sales growth, it's a pretty meaningful reduction. I would hope that supply chain will continue to improve and throughput will improve. There is a lot of demand out there. You know, the WIP you see on our balance sheet really reflects cars that have either been brought into our shops or where we've invested in parts for shop, for vehicles that are coming into our shops. I think we're a little better at managing that today too than we were a year and a half ago as the disruption was occurring. I would expect, I would hope that we would continue to see supply chain improvement and improvement in throughput and a whittling down of that work in process in the coming quarters. That'd be healthy. I think that would. Yeah. a real positive development if that, if that's the way it plays out. Great. Perfect. Helpful. Thank you, guys. Thanks, Michael. There are no further questions at this time. I'll turn it back to Mr. Tim O'Day for closing remarks. Very good. Well, thank you, operator, and thanks to all of you once again for joining our call today. I look forward to reporting our second quarter results to you in August. Thanks again, and have a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.