Greetings. Welcome to Asbury Automotive Group's fourth quarter 2022 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press * zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll turn the conference over to Karen Reid, Vice President and Corporate Treasurer. Ms. Reid, you may now begin. Thanks, Rob. Good morning, everyone. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's fourth quarter 2022 earnings call. The press release detailing Asbury's fourth quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com. Participating with me today are David Hult, our President and Chief Executive Officer, Dan Clara, our Senior Vice President of Operations, and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open the call up for questions and will be available later for any follow-up questions. Before we begin, we must remind you that the discussion during the call today is likely to contain forward-looking statements. Forward-looking statements are statements other than those which are historical in nature, which may include financial projections, forecasts, and current expectations, each of which are subject to certain significant uncertainties. For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 2021, any subsequently filed quarterly reports on Form 10-Q, and our earnings release issued earlier today. We expressly disclaim any responsibility to update forward-looking statements. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website. We have posted an updated investor presentation on our website, investors.asburyauto.com, highlighting our fourth quarter and full year 2022 results. It is now my pleasure to hand the call over to our CEO, David Hult. David? Thank you, Karen. Good morning, everyone. Welcome to our fourth quarter and full year 2022 earnings call. 2022 was a record year for Asbury. We generated $15.4 billion in revenue, up $5.6 billion from 2021. Our adjusted EBITDA for the year was $1.3 billion, an increase of over $500 million, and we expanded adjusted earnings per share by 38% to $37.66. We sold over 300,000 vehicles in 2022 and hit a milestone in number of cars we serviced at over 3 million. All of this is a result of our long-term trajectory to manage effectively through our growth, even at a much larger size. Looking back to 2017, we were a company with $6.5 billion in revenue. We have grown responsibly to over $15 billion in 2022. We have refined and maintained our operational discipline throughout this period, going from an adjusted SG&A to gross profit profile of 69.1% in 2017 to 56.8% for 2022. Through continuously enhancing our execution and optimizing our portfolio, we've been accretive and efficient while more than doubling the size and power of the company. Turning now to our results in the fourth quarter. We grew adjusted EBITDA by $71 million to $319 million, an increase of 29%, expanded adjusted EPS from $7.46 to $9.12, an increase of 22%, delivered an 8.2% adjusted operating margin, increased revenue by $1.1 billion to $3.7 billion, and grew gross profit by $196 million to $738 million. Our gross profit margin was 19.9%, and our adjusted SG&A as a percentage of gross profit was 56.7%. For the full year 2022, we generated $987 million of adjusted operating cash flow, an increase of $355 million over last year, which speaks to our robust business model. At the end of December, we had $1.5 billion in liquidity. Even with large acquisitions in recent years, we have been diligent about our debt levels to support our long-term growth. Adjusted net leverage has decreased a full turn from 2.7 times at the end of 2021 to 1.7 times at the end of 2022. Our strong cash flow, liquidity, and balance sheet allows us flexibility and muscle to deploy our strategy. It enables us to be opportunistic with potential acquisitions or share buybacks. As announced, we repurchased 1.6 million shares during 2022 for approximately $300 million. Our board has approved an increase to our share repurchase authorization by $108 million to $200 million. We continuously evaluate acquisition opportunities that make sense for Asbury. We believe, based on the last several acquisitions, that we have shown discipline and held ourselves accountable to our robust criteria for opportunistic growth. In December, we divested the North Carolina stores as part of our continuous portfolio optimization. These 9 stores represent an estimated annualized revenue of $590 million. We are opportunistic, strategic, and thoughtful regarding our capital allocation and maximizing our returns for our shareholders. Our guest-centric model also relies on providing a high level of commitment to our team members by offering best-in-class benefits, including equity awards to our teammates in our stores, which is unique among our peers. Our team members have also been giving back to their communities as volunteer hours were up nearly 70% year-over-year through our volunteer time off program of up to 40 hours per team member. Finally, I would like to thank all of my team members for an incredible year and a strong start to 2023. It is your hard work and dedication that provides a great guest experience and strengthens the performance of our business. The best is yet to come. Thank you. I'll now hand the call over to Dan to discuss our operating performance. Dan? Thank you, David. Good morning, everyone. I would also like to extend my thanks to all our team members for their extraordinary results in 2022, and their commitment to consistently delivering an exceptional guest experience. My remarks will pertain to the same-store performance unless stated otherwise. Starting with new vehicles. Our new vehicle inventory ended the quarter at $254 million, which represents a 20-day supply. Our day supply fluctuated by segment, with domestic being at 30 days, import at 13 days, and luxury at 21 days. Even amidst continued supply constraints, our new vehicle volume was flat year-over-year, while we grew new vehicle revenue by 3%. New average gross profit per vehicle decreased $704 from the prior year quarter. For the full year 2022, we increased new vehicle gross profit by 7% year-over-year. On a PBR basis, it increased by $1,348, or 30% to $5,815 for the full year. Turning to used vehicles. Used retail revenue was down 5% from the prior year quarter as the expected choppiness to the market persisted. Used retail gross profit per vehicle was $1,842 for the quarter, a decrease of $840 from the prior year quarter. Our used vehicle inventory ended the quarter at $202 million, which represents a 26-day supply. Our used-to-new ratio for the quarter was 101%, down from 108% from the prior year quarter. Shifting to F&I. We delivered another strong quarter with an F&I TVR of $2,233, an increase of $241 compared to the prior year quarter. In the fourth quarter, our total front-end yield per vehicle decreased on a year-over-year basis by $474 per vehicle to $5,984. Moving to parts and service. Our parts and service revenue increased 12% in the quarter. Customer pay revenue built upon its momentum with a 13% growth, and we expanded its gross profit by 14%. Now, turning to Clicklane. Please note that for Clicklane, we are reporting on an all-store basis. As a reminder, this was the first quarter which included LHM and Stevinson sales since our full rollout. We sold an all-time record of over 8,400 vehicles through Clicklane in the fourth quarter, a 67% increase year-over-year and a 24% increase over the previous best, which was last quarter. For the full year 2022, we generated approximately $1.1 billion of revenue from Clicklane, with over 27,500 vehicles sold via our fully transactional online tool. We expect to generate $2.5 billion in revenue for 2023 from Clicklane across all stores. A key differentiator for Clicklane is our loan marketplace, which works with 51 different lenders, banks, and credit unions to give the consumer the power to select the finance offerings that are best for them. In the fourth quarter, we optimized our F&I menu to 2.0 by presenting a bundle of suggested products, which are tailored to the vehicle, the location, and the customer's usage. This allows the Clicklane consumer to be informed and let them select the best choices for protecting their asset. We are also adding functionality in the first half of 2023 to bring in new features, including enhanced integrations with OEM captive finance arms. During the fourth quarter, over 92% of our transactions were with customers that were incremental to Asbury dealership network. Average transaction time remained roughly in line with prior quarters, 8 minutes for cash deals and 14 minutes for finance deals. Total front-end PBR of $3,518 and an F&I PBR of $2,001, which equates to $5,519 for total front-end deals. The average Clicklane customer credit score increased quarter-over-quarter to 726, which is higher than the average credit score at our stores. 87% of those that applied were approved for financing. 77% of customers received an instant approval, while an additional 10% of customers required some offline assistance. The average distance of a Clicklane delivery from our dealerships was 18.6 miles, giving us the opportunity to retain our new customers in our parts and service departments. Clicklane customers are converting at more than double the rate of traditional internet leads. While we won't see the full potential until inventory levels normalize, we are seeing strong early results. Our top conversion rates among individual stores were executed at 20% for domestic vehicles, 28% for imports, and 48% for luxury. In our journey to become the most guest-centric automotive retailer, we know the most important differentiator we have is the level of service we provide. Consistently delivering an exceptional guest experience builds trust amongst our clients, who in return reward us with loyalty and retention. I will now hand the call over to Michael to discuss our financial performance. Michael? Thank you, Dan. To our investors, analysts, team members, and other participants on the call, good morning. I would like to provide some financial highlights for our company. For additional details on our financial performance for the quarter, please see our financial supplement in our press release today and our investor presentation on our website. Overall, compared to the fourth quarter of last year, adjusted net income increased 24% to $202 million, and adjusted EPS increased 22% to $9.12. Adjusted net income for the fourth quarter of 2022 excludes expenses of $2.7 million related to the significant acquisition that did not materialize, and gains on dealership divestitures net of $202.7 million, primarily related to the North Carolina stores, all of which netted to $6.83 per diluted share. For reference, we received $322 million in cash proceeds for the sale of these divested stores. Adjusted net income for the fourth quarter of 2021 excludes acquisition expenses and acquisition financing expenses of $28.9 million or $1.02 per diluted share. Our effective tax rate for the full year was 24.4% versus 23.7% in 2021. We anticipate our 2023 tax expense to be approximately 24.5%. For 2022, we generated adjusted operating cash flow of $987 million. Excluding real estate purchases, we spent approximately $95 million on capital expenditures for the full year. We expect this to be approximately $200 million for the full year 2023 as we continue planned CapEx related to our 2021 acquisitions. Of this $200 million, about $20 million is related to replacement of leased properties. For the quarter, TCA made $28 million of pre-tax income, which included $4 million of net investment income. TCA generated $80 million of pre-tax income for the year. We anticipate a full rollout of TCA products to our remaining stores by the end of 2023. For GAAP, we are required to defer the commission received of dealerships for TCA products over the life of the contract. To maintain comparability, we will continue to reflect the commission received for such sales in the dealership segment at the time of sale and record the deferral of that income in the TCA segment. With the ownership of TCA, while the overall profitability of the transaction is higher, the timing of income recognition is deferred and amortized over the life of the contract. We expect the negative deferral impact to last 2 to 3 years. Due to the deferral of the income associated with these store rollouts, we expect TCA to generate $25 million of pre-tax income for 2023. Our balance sheet remains strong as we end the year with approximately $1.5 billion of liquidity, comprised of cash, excluding cash at Total Care Auto, floorplan offset accounts, and availability on both our used line and revolving credit facility. Also at the end of the year, our pro forma adjusted net leverage ratio stood at 1.7 times, down from 2.7 times at the end of 2021. We generated robust cash flow. By generating robust cash flow, we were able to quickly lower our net leverage ratio after our large acquisitions in 2021 and strengthen our balance sheet to provide flexibility to achieve our strategic goals. We'll continue to monitor the M&A market as we believe there are potential opportunities that would enhance our already strong dealership portfolio. We will look to return capital through share repurchases. Since the start of 2022, we have repurchased approximately 1.7 million shares for $308 million. As David mentioned earlier, our board has approved an increase to our share repurchase authorization of $108 million to $200 million. Finally, I would also like to join David and Dan in thanking our team members at Asbury for not only a strong quarter, but another strong year. Your hard work and dedication drive our excellent performance. I will now hand the call back over to David to provide some closing remarks. David? Thank you, Michael. As we look to 2023, we believe we are well-positioned in a market where the average age of the car is over 12 years old and day supply begins to build. Our fixed operations continues to be strong, and we anticipate this will continue for 2023. We are planning our business for a SAR in the mid-14 million range. We believe with our disciplined cost management and agile expense structure heading into 2023, we can adapt to changing conditions, including one with a recovering, if uneven, day supply for the industry. Our robust cash flow and balance sheet enables us to have both the flexibility and strength for us to be opportunistic when it comes to our well-diversified revenue streams and when it comes to acquisitions and buybacks. This concludes our prepared remarks. We'll now turn the call over to the operator to take your questions. Operator? Thank you. We'll now be conducting the question-and-answer session. If you'd like to ask a question, please press * one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press * two if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. One moment please while we poll for questions. Thank you. Thank you. Our first question is from the line of Daniel Imbro with Stephens. Please proceed with your questions. Good morning, guys. Thanks for taking our questions. David, I want to start on the new vehicle side of the industry. Obviously, earlier this week, large OEMs started reporting, talking about carrying 20, 30 days lower inventory than historical levels. You know, your inventory is slowly building up to the mid-20s. I guess could you update us on how your conversations are going with the OEM partners? How do you think about the trajectory of inventory? Maybe shed light on how you think that evolves through 2023 and maybe into next year would be great. Sure. This is David. I'll do my best. I'll start with the fourth quarter. Our volume numbers are a little deceiving, because, you know, while the day supply was where it was in the quarter, our largest volume, you know, luxury and import stores had single digit day supply. That really governed our ability to grow what was there. As we walk into 2023, we're still have over 35% of our inventory coming in pre-sold. It's still a robust pipeline. I think it's gonna be a different year for all manufacturers. I think some are gonna come back a lot sooner with day supply, and some it'll take them most of the year to catch up to it. I think it depends upon which brand you're talking about. You know, amongst our peers and ourselves, it's gonna really come down to the mix of brands that we have. We anticipate a quick recovery in the first half of the year with Stellantis, and then another domestic, but it's gonna be a slower uptick as it relates to, say, Toyota and Honda. As we think about the GPU implications of that, obviously, I think new GPU is better than most expected this quarter, you know, barely declining sequentially. I mean, what have you learned about the ability to price as inventory improves, and how do you think that relationship, the inverse relationship with inventory, shake out through the year? Sure. You know what I'll say the last few years have been difficult to navigate from a prediction standpoint between COVID and supply chain issues and so on. I'll tell you know, all the conversations the last few quarters have been, you know, when does it get back to 2019 levels? I just don't see that. You know, 2019 have a 17 million SAR. You know, we're forecasting less than a 15 million SAR. You can look back over history when SARs are below, you know, 16 million, margins hold up pretty well. We think a lot of the OEMs have learned from their day supply, that doesn't mean you won't have spikes at certain moments in time. I think they've been real comfortable with not bringing large incentives to the market. If inventory does back up on a day supply, I assume they'll come forward with incentives. Again, because the average age of the car is over 12 years, while we think it's, you know, not gonna be a gangbuster year, we anticipate margins to hold pretty well. It will certainly vary by OEM depending upon day supply. As we look at Asbury as a whole, we think it'll be a pretty good year for new car margins for us. Yeah, that's great. Last one for me, maybe Michael, jumping over to the balance sheet. You paid down a lot of debt. I think the buyback update was encouraging last week. Wanted to ask just for some color. I mean, you guys were active divesting stores in 4Q. How should we think about capital allocation, also just the portfolio going forward? Are we done with divestitures? Are you back to being a net acquirer in the market? Any update there on usage of capital as we move forward? This is David. I'll start with it, and then Michael can jump in. You know, Michael referenced in the script that, you know, we had $2.7 million in costs from an acquisition that didn't materialize. I've said it for many quarters, we're very focused on our assets and our portfolio of stores that we have, and we're always trying to maximize our opportunities in acquiring things that are accretive to our platform and divesting of stores that might not necessarily be performing at the highest levels. The divestiture of the North Carolina stores was partly due to the anticipation of the new acquisition coming on and making sure we maintained our balance of cash flow and kept our leverage proper. You know, when that didn't materialize, you know, we had already been under contract to sell the North Carolina stores. Yes. You know, adding to David's piece, you know, it leaves us with a lot of capacity. $1.5 billion in liquidity, and a very low leverage ratio. We have plenty of capacity if acquisitions materialize this year to deploy that capital or if, you know, for share buyback. Leaves in a good place for 2023 for capital deployment. Great. I appreciate all the color, guys. Congrats on the results and best of luck. Thank you. Our next question comes from the line of John Murphy with Bank of America. Please proceed with your questions. Good morning, guys. Maybe just to follow up on the GPU question, David, I know this is a little bit unfair, but also kind of fair because it's important. You know, how do you see new vehicle GPUs progressing as we go through the course of this year and where might they ultimately land? Sort of as a corollary to that, you know, how much of the variable compensation you pay to your sales folks is linked to that dollar gross? Meaning there's kind of a natural reduction in SG&A as gross comes down over time. John, it's complicated, right? I mean, every year, no one's predicted the year coming well. There's been a lot of unique things going on. What I'll tell you know, in the fourth quarter, one of our domestic brands, the day supply, I would say, got back to close to normal levels. The gross margins with that brand were significantly higher than what they were in 2019. We have confidence that our margins will be significantly higher in 2023 than they were in 2019. Certainly, you can tell it's fallen off from, you know, prior year results. We think it'll be healthy. We think it'll be well above 2019, but it's really gonna be a story of, you know, how each particular brand comes back and when they come back. Because of a SAR below $15 million and all the things I've stated, we think it's gonna be a pretty good year for new car margins. John, on the, on the SG&A side, you're right. A lot of the commission, a lot of the, you know, the pay in the stores is tied to the gross profit that's generated. There's a natural kind of fall off in the SG&A, to match up with that fall off in the gross profit decline. The other thing I'll add, John. You're talking about new, but I'll bring up used as well. You know, it costs us X number of dollars to do a transaction. To chase volume, and with lower gross really deteriorates or hurts your SG&A. We're very thoughtful about not necessarily chasing volume, but really looking at, you know, each one of these cars as an asset and trying to get a fair return for it while not letting aging catch up to us. Got it. Okay. Yeah, that's definitely helpful. On Clicklane, I think you said two things that were kind of sort of opposite. You said, I think that 92% of the customers or transactions were new to Asbury, but then you said vehicles were delivered within 18 miles, which could indicate they're already in your market. I'm just curious where the Clicklane customers are coming from. Was that statement, you know, correct? Maybe I misheard something there, that 92% were incremental, and if they're within 18, you know, miles, it sounds like they're just coming from another brand as opposed to another dealer maybe. I'm just trying to understand where these folks are coming from because it, you know, sounds like you're gonna have a good bump up here in potentially incremental revenue from Clicklane. John, I'll do my best to answer that. If you need a follow-up, please take it. That 92% incremental means these are local customers that were doing business with other dealer groups that chose to leave the brand or the dealer that they were doing business with to come over to us. We believe they made that decision because of the ease and transparency of being able to transact online instead of sitting in a showroom. At some point over the years, that number will fall off a little bit as the market catches up with transactional tools. We love the fact that it's local. We don't wanna sell a car 500 miles away. We will on certain occasions, you know, the parts and service business, the retention, the relationship is really what we're into. We focus on really a 50-mile radius around our rooftops, and we try and do our Clicklane transactions within that space. Ninety-two percent new customers to us mean they were doing business with other local competitors that we compete against in that market. Okay. Just a follow-up. I mean, if you're saying $1.1 billion-$2.5 billion on Clicklane year-over-year for 2022 to 2023, right? One point four billion in incremental, just shy of 10%, and that's about 9% incremental coming from Clicklane alone. Do you expect that to remain that incremental in 2023? Because I mean, that's, I mean, you know, that's almost like, you know, it's a 9% increase in your base revenue for 2022. It's a kind of a big statement. Some of it's timing. We added LHM and Stevinson in the fourth quarter. We didn't have them in the Clicklane numbers most of the year. We've been on Clicklane software for a couple of years. Anytime a store or a market goes on Clicklane, it takes them a full year to get the conversion rate up right. You're catching up to the conversion for the stores you added. We're assuming SAR is gonna increase a little bit. We're gonna have a higher day supply of new at some points during the year, which is gonna increase the sales as well. As we're experiencing with the tool and our sales incrementally going up. It's just logic-based. If you could spend 15 minutes, you know, purchasing the car very transparently from your living room, would you rather do that than spending 2 and a half hours in a showroom? The additional, you know, $1.4 billion, if you will, is the full company being on it for a full year, the legacy stores improving slightly on conversion and the other new acquisition stores increasing their conversion rates throughout the year. I appreciate you being humble, it is a $1.4 billion incremental, and it is a question of timing, but I mean, it is, you know, it is incremental, so it's pretty impressive performance. Just lastly, on the net leverage, I think you guys just said you were at 1.7 times at the end of 2022. You've been at 2.7 times at the end of 2021. You know, how should we think about where you wanna, you know, target that and where that could go to if there was another, you know, large deal that came available to you? We're comfortable, you know, at 3 times if we had the right deal out there. You know, something in that kind of 2.5 times is probably our ideal place in this, in this, you know, margin environment. I would say, John, we're not aggressively trying to acquire things. You know, we 80% of the things that are put in front of us, we don't even look at. We're really very disciplined, uncertain, looking at acquisitions that are accretive for us. We're not gonna feel the force of having to acquire things to hit a certain target. It's more important that we add value assets to the portfolio that certainly benefit our shareholders. Great. Thank you very much, guys. Appreciate it. Thank you. Our next question is coming from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your questions. Good morning, guys. wanna focus in on used vehicles. pricing seems to be somewhat stabilizing here in January. 1, do you think that's sustainable? 2, what do you think kind of trends are as you look out over the next several months this year? Morning, Ryan. This is Dan. Yeah, we are seeing the used car valuation and pricing stabilizing. You also got to keep in mind, we are approaching our selling season, for a lack of a better term, and also, you know, what comes with the tax credits. we feel that the big valuations that we saw Q3 into Q4 will definitely stabilize. Now there's still gonna be pressure from an availability standpoint, but we believe that the market has stabilized in some capacity, but still some depreciation still coming along. For my follow-up, just curious on interest rates, if that's having any impact, either favorable or not, on attached rates in for the financing. Ryan, this is Dan again. You know, we have not seen a major impact. Obviously, there's always concern when you look at the average payment to own a car across the nation. When you try to add, whether it is, whatever you want to protect the asset with, from an F&I product, it does put pressure on a monthly payment. We have not seen any negative impact that is of concern at the store level. You know, one of the things that I mentioned on the call was, we have our own marketplace. We not only deal with our captive lenders, but we also deal with local lenders, institutions, and credit unions. That gives us flexibility to be able to provide the best rate out there for our consumer. Great. Thank you. Thank you. Our next question is from the line of Adam Jonas with Morgan Stanley. Please proceed with your questions. Hi, this is Daniela Haigian on for Adam Jonas. Tesla came out with a 20% or so price cut, and while that doesn't necessarily compete with all the nameplates you're selling, in some of the stores you might have some comparable products. We're curious to see whether you saw any real-time impact on prices, demand or showroom traffic whatsoever after those cuts. Good morning, Daniela. This is Daniel. You know, the first thing when we saw that announcement was take a real quick assessment of the inventory do we have from a Tesla standpoint across the stores. The good news, it was below 60. In most cases, there were fresh trades we were able to adjust. We did adjust the pricing of the cars to make sure that it was brought down to the current market condition, and paying a close emphasis on retailing those cars. As far as, impact on EVs that we sell, you know, respectfully, I believe that just speaks to the strength of the franchise system, and the integrity that we have within the system, selling EVs, and being a good distributor for the end consumer. We haven't seen any material impact on EV sales with any of our brands because of the repricing of Tesla. Not to say it won't come at some point in time, but we also anticipate incentives to come out throughout the year as well. Great. Thank you. Thank you. The next question is from the line of Rajat Gupta with JPMorgan. Please proceed with your question. Good morning. Thanks for taking the question. I just want to follow up on the SG&A comments. I understand, you know, there was some seasonality from 3Q to 4Q typically. Looks like expenses were down $20 million quarter-over-quarter on a $30 million gross profit decline quarter-over-quarter. Is this kind of a general rule of thumb to think about, you know, when looking into 2023 and as GPUs moderate, particularly on the new vehicle side? Just trying to understand, like how should we think about that drop through, and based on whatever assumptions we make on GPU. I have a follow-up. Thanks. Yeah, Rajat, this is David. I would say, you know, we have a history of being very disciplined and cost efficient. We've been working for years at our legacy stores at productivity per employee and really getting our transactional cost down per sale. All of our new acquisitions naturally aren't at the same level that we are from an efficiency standpoint. We look to work in 23 to really get all those efficiencies that we have in the legacy stores, which we believe is, you know, a potential slight tailwind for us. Got it. Maybe on parts and services, strong growth again here in the fourth quarter. Curious how we should think about the puts and takes for 2023. You know, what is likely to be the key limiter to growth? Is it still technician hiring? Also pricing has been a key contributor to growth last couple of years. And with parts supply improving and maybe some cooling and inflation, how should we think about or how are you planning in terms of growth for that, for that particular business segment this year? It's a great question. I assume most like us, we never have enough techs, and we could always use more. I think what you're seeing with the dollars increasing has more to do with the aging of the car. As the cars age, they need more work and certainly parts costs go up every year. As we look at 2023 from a growth standpoint, at least at this point, we don't think it's gonna look very similar to what our results were in 2022 as far as growth. We don't see it slowing down or leveling off. People are holding on to their cars longer. If, you know, the jobless rate increases over time, that will certainly have an impact on parts and service, but we believe that'll be a positive impact. Got it. Got it. Maybe just one last one. You know, you reiterated the $55 EPS plan. We're still in a somewhat weak used car demand backdrop. You know, you know, you mentioned 14.5 million SAR. It seems like getting to 55 from, you know, $38, you know, it's still a 50% EPS growth. It would need a pretty sharp recovery in the industry, both new and used. So outside of Clicklane, you know, what else gives you confidence in this current backdrop, you know, where prices are still high, rates are high, you know, due to... Supply for used cars like to get tighter in the medium term. What gives you confidence in those targets? Is it reasonable to assume that you see an earnings decline this year, before moving higher again, or you don't see that happening, you know, to that path to $55? Thanks. Rajat, if I miss a piece, please come back. You know, we think that, you know, 90% of the market are stores that are opportunities for acquisition, that it's really only 10% of the market that's owned by large groups like ourselves. There's plenty of potential for acquisitions. We also think naturally over time in the next few years, the SAR will continue to grow. Between the combination of the SAR growth over the next few years, the opportunity with acquisitions, the efficiencies with Clicklane and our ability to lower SG&A over time, I wouldn't say so much in 2023, but over time, with the use of software and tools to become even more efficient, we think all those things still give us the potential and the opportunity to get there. Fast forward out, if acquisitions aren't great the next few years and SAR doesn't recover, your point is valid. We think it's too early to make that call. We still see the next 3 years growing SAR and our opportunity to acquire more stores and get better with our software. Got it. Maybe just on 2023, you know, your comments on parts and services, you know, consistent growth, you know, 14.5 million SAR and still relatively strong GPUs. Is it safe to assume that earnings might not decline this year with that kind of backdrop? You know, it's a fair question. You know, you have the interest rates, you have your floor planning costs, you have different things that'll come up on you. Naturally, your healthcare costs go up every single year, so your cost per employees go up as well. As I sit here today, I don't have a guaranteed timeline for 23, how each manufacturer is gonna recover with day supply. As we sit here today, we truly believe that the new car margins will hold up well throughout the year, that could be altered. I mean, it's been an odd last three years. On the used car side, you've seen margin fall pretty good, we don't think it's going back to 19 levels because you still have a supply issue in the marketplace where it's been depleted the last few years. While we think it may not potentially be quite as strong as it was prior year, as we sit here today, we don't think it'll be far off of 2022. Understood. Thanks for taking the questions. Yes, sir. Our next question is from the line of Bret Jordan with Jefferies. Please proceed with your questions. Hey, good morning, guys. Good morning. On the parts and service, could you talk about traffic versus ticket in the quarter? Sort of what was price versus volumes? Sure, yeah. Bret, good morning. This is Daniel. You know, part of it was price, but we also saw an increase in our customer pay RO count throughout the quarter. You know, when you look at just break it down by the different segments, every segment saw an increase, and domestic was relatively flat, maybe down 2% from an RO count. We're seeing the traffic coming into the stores, and, you know, we keep our schedulers, online appointment schedulers, wide open, for lack of a better term, so that we can service the customers when it benefits them and not when it benefits us, and we're seeing the results out of that. Bret, one thing I would point out, you know, because we're a relatively small company a year and a half ago, we almost doubled the number of rooftops we have in a year. We spent years working on the legacy stores to really get up the production and efficiency within our shops. We now have that same opportunity with all those acquisitions. We think we got a nice tailwind over the next couple of years, working with our great teams out in those markets and becoming more efficient in growing that business. Thank you. Then on SAR, your forecast of mid-14s, is that more production constrained or demand constrained? I guess, when you think about the puts and takes, what is the normal? Would the natural SAR be higher if vehicles were available, or do you just sort of see a smaller group of buyers able to afford in this environment? Yeah, it's the question to ask, and it's a tough one to answer. You know, I made the comment, you know, over 35% of our incoming product is pre-sold. You know, you go back to 19 levels, you are nowhere near that number from a pre-sale standpoint. Still selling, pre-selling 35%+ of your inventory before it hits the ground tells you that demand is still pretty good. I don't wanna be a broken record, but again, that average age of the vehicle being over 12 years creates an opportunity. You have a resilient job market, and with that average age of the car and them not being able to purchase cars the last couple of years because of availability, we think that there's an opportunity to continue that steady growth. We don't think we get back to the 17 million SAR because production won't be there. There's still some supply constraint issues that are out there, and you still have a lot of OEMs converting R&D and working on a lot of launches of EV vehicles over the next 12 to 18 months. I think it's a combination of a lot of things. Certainly, the economy could shift and change where demand drops dramatically. We're just not seeing that at this point. Okay. Then one quick question on leasing, something that obviously has not been a hot topic in the last couple of years, but, you know, as affordability from an outright purchase standpoint gets to be more challenging, do you think there's likelihood the OEs sort of step in and facilitate more leasing to drive volumes, or is that just not a topic lately? Yeah. Selfishly, I certainly hope so. That leasing business is important to us because we retain the customers in the brand. It, it's important to the OEMs because they retain them within their brand as well. There hasn't been that incentive in leasing because the product hasn't been out there and it hasn't been available, and it's been a way for the manufacturer to retain the earnings, which was great. We think over time, leasing has to get feathered back into it. When does it happen? By what brand? It's really gonna depend upon availability. Naturally, your luxury segment would be the first to benefit from leasing returning. Great. Thank you. Thank you. Our final question is from the line of David Whiston with Morningstar. Please proceed with your question. Hi, everyone. Going back to David, you had talked about wanting to get the most out of every vehicle, but just looking at the new vehicle category and the three new vehicle categories, looking at imports, it looked like more of the opposite happened there in that only import had unit growth, but GPU%-wise fell the most. Just given the tight Toyota hot inventory, I was a little surprised by that. Are you not going as high in pricing there because you wanna preserve some import volume? Yeah. I wouldn't say it plays out that way. You have a lot of brands within the segment. The brands with the single day supply had extremely high margins, so we don't think that was a major issue. I get your point as far as the gross profit falling off, we still think for import, that's, you know, $3,800 or in that vicinity, is a very strong number on imports. Again, it's gonna be a competitive market. I don't see Toyota and Honda having a high day supply this year, that will equate to higher margins. There may be some other brands within that import segment that have a hard day supply. Again, as you can see, to your point, with a falling margin like that, we're still generating over 8% operating margin, and we still have a very efficient and healthy SG&A%. With Toyota and Honda, their inventory has been an issue for a long time now industry-wide. I mean, how much communication are they giving you? Is it purely chip shortage? Is it chip plus still some COVID absenteeism? I mean, what do you think is driving it mostly? Sure. You know, look, it's frustrating to us, it's frustrating to our consumers, and it's quite honestly frustrating for them. We're fortunate to represent these brands. They communicate really well with us, as best they can. It's, you know, typically in 30-day increments, as to what we'll see. Then there's conversation and talk about what potentially we could see in the first half of the year. You know, sometimes they hit those targets, sometimes they don't. Unique things come up with supply chain issues. A lot of these parts come from all over the world, and depending upon what's going on, it could have a negative impact at a moment in time. I know you said demand's still strong, but just curious, how worried are you maybe back end of the year? Do high interest rates become an issue at that point? It's a great question. I can only answer it this way. If the Fed raises 1 or 2 more times at 25 basis points, we think we'll be just fine. You know, I think something catastrophic would have to happen in the marketplace for us to alter our belief in what's going on. If there was another war out there or something significantly got worse, if COVID came back to extreme levels like it did when it launched, you know, that would dramatically change things. As we sit here today with all the things we've already discussed, age of the car park, the job market, we believe it's. You know, not that, you know, retail automotive won't be affected like other industries. We think we'll fare better than most throughout the year. Okay. Just one more, if you don't mind. On acquisitions, you referred to that deal that fell through as significant in size. Just generally speaking, I know you can't comment on a specific deal, but when you tell us something like we're pursuing a large acquisition or a significant acquisition, should we still assume that it's significantly smaller than Larry Miller's size? I'll try and navigate this one the best I can. Most opportunities aren't the size of LHM. They're extremely rare. You know, you have everything between one rooftop and 60 rooftops. This probably would have been somewhere in the middle of the two. It was a very healthy size acquisition, but not the size of Miller. Okay. Appreciate it. Thank you. Okay. This concludes today's discussion. We appreciate your participation and look forward to speaking with you after the first quarter. Have a great day. This concludes today's conference. Thank you for your participation. You may now disconnect your lines at this time.