Good morning. My name is Denise, and I will be your conference operator today. At this time, I'd like to welcome everyone to the AutoNation First Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Rob Quartaro, Vice President of Investor Relations. You may begin your conference. Thank you. Good morning, and welcome to AutoNation's first quarter 2021 conference call and webcast. Please ensure that your lines are muted until the operator announces your turn to ask a question. Leading our call today will be Mike Jackson, our Chief Executive Officer, and Joe Lower, our Chief Financial Officer. Following their remarks, we will open up the call for questions. I will be available by phone following the call to address any additional questions that you may have. Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call, including any statements regarding our anticipated financial results and objectives, constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks that may cause our actual results or performance to differ materially from such forward-looking statements. Additional discussions of factors that could cause our actual results to differ materially are contained in our press release issued earlier today and in our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. Now I'll turn the call over to AutoNation's Chief Executive Officer, Mike Jackson. Good morning, and thank you for joining us. Today, we reported all-time record quarter results with adjusted EPS from continuing operations of $2.79, an increase of 207% compared to last year. These outstanding results were driven by strong performance in new, used, and Customer Financial Services and disciplined expense management. Demand continues to exceed supply for new vehicles, and we expect this to continue through 2021, in part due to the production disruption. More importantly, low interest rates and consumer preference for vehicle ownership versus ride-sharing and public transportation are supporting demand. We expect our shipments from the manufacturers to double in the second quarter compared to the prior year. AutoNation same-store new vehicle units were up 22% year-over-year and up 12% compared to 2019. We remain focused on our pre-owned vehicle procurement strategy. Nearly 90% of our pre-owned vehicles retailed in the first quarter were self-sourced, meaning we acquired through trade-ins, lease returns, We'll Buy Your Car or service loaners and avoided auctions. Acquiring vehicles at the right price, speed to the front line, a fair one-price environment, and leading digital capabilities are a winning formula for our customers, which shows in our results. AutoNation same-store pre-owned units were up 28% year-over-year and 20% compared to 2019. We continued to leverage our digital capabilities to drive cost reductions and increase efficiency. Tools like Customer 360, which has over 10 million active customer records, enable us to provide a truly comprehensive and personal experience for our customers, which leads to higher close rates and increased vehicle sales. These efforts allowed us to deliver adjusted SG&A as a percentage of gross profit of 62.7% in the first quarter of 2021, which represents a 1,120 basis point improvement compared to the first quarter of 2020. Our target is to operate at or below 65% SG&A as a% of gross profit for 2021. We are committed to our business growth strategy through investment in our existing franchise business, expansion of AutoNation USA, and future acquisitions. We're on track to open five new AutoNation USA stores in 2021 and 12 additional new stores in 2022. Our target is to have over 130 AutoNation USA stores in operation from coast to coast by the end of 2026. Today, we announced that we signed an agreement to acquire 11 stores and one collision center for Peacock Automotive Group in Hilton Head and Columbia, South Carolina, and Savannah, Georgia, representing approximately $380 million in annual revenue. The brands acquired are Porsche, Jaguar, Land Rover, Audi, Subaru, Chrysler, Dodge, Jeep, Ram, Volkswagen, and Hyundai. This acquisition will increase AutoNation's footprint from coast to coast to over 325 locations and is set to close in the summer. We have set a target to sell 1 million combined new and pre-owned vehicles annually. AutoNation remains committed to delivering value to our shareholders, which includes opportunistic share repurchase. During the quarter, we bought back 3.8 million shares, or 5% of our shares outstanding. I will now turn the call over to Joe Lower, our Chief Financial Officer. Thank you, Mike. Good morning, everyone. Today, we reported adjusted net income from continuing operations of $234 million for $2.79 per share, versus $82 million, or $0.91 per share during the first quarter of 2020. This represents an all-time high quarterly EPS and a 207% increase year-over-year. During the quarter, we sold our remaining stake in Vroom for a gain of approximately $6 million after tax, or $0.07 per share, which was excluded from our adjusted results. Turning to operations, our first quarter same-store revenue increased $1.3 billion, or 27%, compared to the prior year, due to strong growth in new, used, and Customer Financial Services. While prior year comparisons are impacted by the onset of the COVID-19 pandemic, we continue to see strong consumer demand exceed supply for new vehicles. Given this backdrop, we remain focused on optimizing our business in the current environment. For the quarter, same-store total variable gross profit increased 52% year-over-year, driven by an increase in total combined units of 25% and an increase in total variable PBR of $767 or 21%. Our customer care business continues to gradually improve, with same-store customer care gross profit increasing 1% year-over-year. Taken together, our same-store total gross profit increased 27% compared to the prior year. Moving to costs, first quarter SG&A as percentage of gross profit was 62.7%. As Mike stated, a 1,120 basis point improvement compared to the year ago period. This strong performance was driven by a combination of strict cost discipline, leverage of our digital capabilities, and healthy vehicle margins. As measured against gross profit, overhead decreased 590 basis points, compensation decreased 320 basis points, and advertising decreased 210 basis points. Based on current business conditions, we project SG&A as a percentage of gross profit to be at or below 65% for the full year 2021. Floorplan interest expense decreased to $9 million in the first quarter of 2021 due to lower interest rates and lower average floorplan balances. This, combined with lower non-vehicle interest expense, a lower effective tax rate, and fewer shares outstanding, generated record adjusted EPS. Regarding our balance sheet and liquidity, we have ample capacity to continue investing in our business, including our AutoNation USA expansion, as well as opportunistic share repurchases and acquisitions. Our cash balance at quarter end was $350 million, which, combined with our additional borrowing capacity, resulted in total liquidity of approximately $2.1 billion. Our covenant leverage ratio of debt to EBITDA declined to 1.3 x at the end of the first quarter, down from 1.8x at the end of the fourth quarter. Including cash and used floorplan availability, our net leverage ratio was 1.1 x at the end of March. Our AutoNation USA expansion continues to provide a very attractive growth opportunity. During the first quarter, our five existing AutoNation USA stores generated over $3 million in pre-tax profit. As Mike referenced earlier, we plan to open five new stores by the end of this year and 12 new stores in 2022, and targeting over 130 total locations by the end of 2026. We're also excited to welcome Peacock Automotive Group to the AutoNation family, and we will continue to look for attractive acquisitions that complement our portfolio and meet our return thresholds. During the first quarter, we purchased 3.8 million shares of common stock for an aggregate price of $306 million. We have approximately $892 million of remaining board authorization for share repurchases and approximately 80 million shares outstanding. Looking ahead, we will continue our disciplined capital allocation strategy, utilizing our strong balance sheet, robust cash flow generation, and ample liquidity to invest in our business and drive long-term shareholder value. With that, I'll turn the call back over to Mike. Thank you, Joe. We had another impressive and record-breaking quarter. We remain focused on delivering a peerless customer experience with industry-leading digital capabilities and outstanding associate interactions. Our commitment to the customer experience is why we're number one for the J.D. Power Dealer of Excellence Program for the third year in a row. Less than 2% of all U.S. franchise dealers achieve this honor. 78 AutoNation stores, representing over 20% of our dealerships, were recognized. Our associates did not let the pandemic interfere with their ability to provide a great experience. They were in the stores and in the offices to meet the needs of our customers. I want to thank each of them who show up every day for our customers and each other. With that, I'm delighted to take any questions. At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Rajat Gupta with JPMorgan. Your line is open. Well, hi. Good morning. Thanks for taking my questions, and congrats on a really strong quarter. I just had a question on the base supply. It dropped pretty materially from the fourth quarter to first quarter. You're obviously sourcing a lot directly from consumers and outside the auction. Just curious as to how do you see that low base supply end of the quarter impacting your second quarter growth? Are you able to sustain the first quarter kind of growth into April? Do you expect that to continue here in the second quarter based on how strong the demand is? Just curious as to how much of a constraint is the supply right now, but both on new and used. Thanks. There's no question that there is more demand than supply. That is the headline. On the new vehicle side, base supply is tight, shipments and production are disrupted with the chip crisis, and will be for the rest of the year. It's nothing like a year ago during the pandemic, when we had the factory shutdowns. Our shipments this second quarter will be double what they were a year ago. It's on the margin as far as shipments. The headline is more demand than supply. We've adjusted pricing to reflect that, and you see the improvement in our front-end gross. The demand for personal transportation is across the board, from price point of $5,000 through $500,000. We've aggressively moved to increase our availability on pre-owned- y ou see that. We have the capability to source 90% of what we retail ourselves, and that's a core capability. The marketplace is good, and our combination to perform within that of a brand, great experience, digital platform, and operating execution, which includes how we acquire and speed the market, and we can do it profitably, is all to the benefit of AutoNation. We're in a very good position. Got it. It looks like the trends online, just the same store comps here, at least comparing versus 2019 levels, that's continued here into April? Or have you seen any slowdown here yet at all, or is it still pretty solid? The demand is very strong. I've been saying it for over a year, that there's been a pivot, a seismic shift. You pick the word. The American spirit is that they want individual transportation, an individual personal vehicle. They want to decide where they go, when, who's with them, who's been in the vehicle before them, and who's been in the vehicle after them. I think this demand shift towards personal vehicle is very strong. You also see it in the housing industry, that people want a bigger, more comfortable home with more electronics in it, hence the competition for chips between the home industry and the automobile industry. Of course, underpinning all this is very attractive interest rates for our customers. The demand we expect to last for the rest of the year. Interest rates will be low for the rest of the year. The chip disruption will be there for the rest of the year. I think it continues. Got it. Just to follow up on capital allocation. Pretty aggressive buybacks here in the last couple of quarters. You also started to ramp up some M&A activity. Could you give us a sense of how we should expect the balance of capital allocation to be going forward? Do we see a bigger pivot towards M&A? Just on the M&A side, if you could comment on what the pipeline is looking like or how the valuations are looking like, therefore assets would be helpful. That would be helpful, Mike. Thank you. Joe, can you take that, please? Sure. To start out, extremely strong cash flow, just before we have to start that discussion. $278 million of free cash flow out of the quarter. We're generating extremely strong cash. Our first priority is always going to be reinvesting in the business. Again, we've come out and communicated expectations on AutoNation USA in a general timetable and kind of giving you a sense, on average, about $10 million a store. In addition, we are going to continue to be opportunistic in M&A. We do have a high threshold for both financial and I'll call it strategic cultural fit. We're very encouraged by what we're seeing in the marketplace, remain disciplined, and still believe that our stock represents an attractive value. Given the strong free cash flow, extremely strong balance sheet, we expect to continue to have a very balanced deployment across all those categories. Obviously, the hardest to predict is the M&A, but that is going to be opportunistic based on situation. Got it. Okay. That's really helpful. Thanks again, and good luck. Thanks. Thank you. Your next question comes from Bret Jordan with Jefferies. Your line is open. Thinking about your used retail sourcing going forward, I think you mentioned not always sourced in-house. Given the current environment, should we expect to see a shift in how these used vehicles are sourced? I guess said another way. There's a slowdown in trade-ins from maybe a lack of new vehicle supply. Should we expect to see more sourcing from off lease and direct to customers? Is there ample opportunity in both those channels? Yeah, we intend to source everywhere aggressively and have the capability to do all of that and have to be prepared to deal with any developments in the marketplace that would be a challenge. We're very excited about our direct purchases from consumers, which are now running over 5,000 per month. We expect to continue to grow that. Clearly our ability to acquire pre-owned is a core capability, acquire them at the right place. More importantly, we have a system and a process that we can recondition to a very high standard, both cost effectively and very quickly, and have them frontline ready, and therefore run a very high turn rate on our pre-owned inventory. We're in a good place with the brand. All our pre-owned is one price, which consumers love. We have a great digital platform where everything is listed, and we have a speed to market and a core ability to acquire pre-owned. We're very confident and optimistic about the future of our pre-owned business, hence the decision to lay out the additional years of our investment in the USA stores that will take us to 130 USA stores in operation by the end of 2026. Okay, great. Thinking about estimated growth, Q1 was another really great quarter in that respect, and obviously a portion of that is due to the higher gross profit you're putting up. It looks like you updated expectations for the year to 65% from, I think your prior target was below 68%. I'm just wondering what opportunities you're seeing there that contributes to that updated outlook. Joe, could you please take that? Sure. Really seeing the deployment of our digital tools, both in the stores and in the back office, really helping. Where we're seeing greater leverage both in overhead and compensation, advertising. As we kind of look across all three categories, we've seen significant improvement. I believe the only kind of difference is very low comp, which actually increased, which is understandable given the strong growth. But, if you look at the underlying drivers, we've continued to see the benefits of strict discipline, fewer heads, lower spending on advertising, lower discretionary spend. When we now look out the rest of the year, we have a high degree of confidence that we can drive that into that 65% range and below. It really is leveraging the tools that we put in place and it's maintaining the discipline on cost going forward. Okay, great. Thank you very much for taking my questions. Your next question comes from [Stephanie Endemann] with Truist. Your line is open. Hi. Good morning. Good morning. Good morning. I think following up on the question that was just asked, I wanted to hear a little bit more about the updated USA store investment. I believe, expanded not only the store count, but it sounds like accelerated the timeline as well. Would love to hear what happened really over the last couple of months that gave you the confidence to accelerate the plans, look at the performance of your existing stores, the overall market. Would love to get more color on what was behind this decision. Thanks. The performance of the existing stores is outstanding and continues to develop really well. Joe, I think the operating profit of the existing stores was $3 million for the quarter. Is that correct? Correct. Exceeded 3 million. Exceeded $3 million in the quarter. Now, as far as what we just announced, we really had already announced 2021 and 2022, I think there's only a slight difference in the store count in those two years. What we really announced today was what we're building from 2023 through the end of 2026. That's just an expression of our confidence that we really have this combination figured out. Not to be repetitive, but it's important, the brand- one price, digital platform, operating skills, speed to market. USA stores are really a reconditioning center that we can, when we acquire vehicles, it's an acquisition point, but a reconditioning center, for pre-owned and for speed to market, and it's a delivery center. We're able to build those very cost effectively and with a very reasonable ramp to profitability. Joe, what would you like to add to that on the USA stores? I think the only thing I would add, Mike, is just underline that is the success we've had in procuring vehicles, which is where it all starts. If you go back just a year, 80% of our procurement was self-sourced. As you cited earlier, in Q1, we're up to 90%. I think the skills we've learned in procuring vehicles directly from customers really is a differentiator in the marketplace and something we think we can leverage going forward. Great. That's really helpful. Mostly just a follow-up question. I don't believe you called out, but any kind of impact this quarter from the weather events in Texas, if you could kind of quantify that in any way or anything that you saw, or do you feel like most of that was recovered at least at some point later on in, we can call it March or so? Yes. I think I said at the time that it was a huge challenge for Texas, but it's one of the most resilient fight-back states in the country, and they really got the state of Texas moving quickly, and I think whatever disruption we had, we were able to recover. Joe, you would know the actual numbers. If I could just- I don't think it was a material impact one way or the other. No, there really wasn't, and if anything, we did better than the market in Texas, I think, as we kind of demonstrated our ability to navigate that. Great. Well, thank you so much. Your next question comes from the line of Rick Nelson with Stephens. Your line is open. Thanks. Good morning, Mike, congrats on a great quarter. Thank you. It carries the new cars side same store units up 22%, up 12% compared to 2019. Are you in fact outpacing the industry? What do you think retail SAAR did in the first quarter? I think we are at or close to retail SAAR for new vehicles in the quarter. I think we've clearly outperformed on pre-owned. There it is. We clearly, with limited supply, have made the decision on new to hold margin. There's no reason to rush things out the door. You can't easily replace it. We've increased front-end gross margins on new considerably, but on pre-owned, while front-end margins are excellent, we clearly have gone for volume and feel the demand is there, and are those customers who are looking for a different price point are not open to paying what's being asked for new vehicles, and we shift them to a pre-owned, which we have, and we can, and do replace. That's how we're moving through this situation. The headline is there's significant demand, significant sustainable demand, and we are moving with market, I would say, on volume, but doing an excellent job on front-end gross margin on new, and are going for volume in pre-owned, hence the plus 28%. The SG&A target 65% or below, I'm curious what that assumes in terms of GPU. Do you think you're going to be able to hang on to these outsized GPUs as we move through the year? Again, our front-end gross on new moved from 4% to 6%. Is that correct, Joe? We've been at 6% before in the past. It's not like we're at some unprecedented level or some unreasonable level. There's a very active discussion by the manufacturers about having some discipline, and maybe, as I've been advocating for 15 years, running a different balance between demand and supply would be intelligent. We'll see. The question won't be answered until 2022. There is going to be more demand than supply for the balance of this year. Yeah. The supply challenge, Mike, do you think the worst is behind us, or does it become more problematic as the year unfolds? Look, from my perspective, in my world, the worst was the factory shutdowns literally a year ago for six, eight, 10 weeks, depending on the manufacturer, and then a very gradual resumption. What we face with the chip is absolutely nothing like that. What is very interesting at the moment is how much of our incoming shipments are pre-sold. Shipments are somewhat disrupted, and they can't run everything at 100%, but it's twice as good as it was a year ago. I sort of think the way it is now is the way it's going to be the rest of the year, from everything I hear from the manufacturers. They really do not have a clear sight line to higher levels of production. We probably are running the plan that we have right now, which is get good front-end grosses on new and go for the volume in pre-owned, and that seems to be a very winning equation in this environment. That makes sense. Thanks, and good luck. Thank you. Your next question comes from John Murphy with Bank of America. Your line is open. Hey, Mike. Good morning. Good morning. Good morning, Joe. Just wanted to follow up real quickly on that comment that you made about the automakers. What the dealer body, including AutoNation, is doing is miraculous, right? With the level of inventories being so low. Selling [16.7] in the first quarter in the industry at large. Mostly retail, not a lot of fleet. Just curious, do you really think that there is a discussion that you're having and that they're having to finally understand this balance? Because they're making a whole lot more money, too, right? It's not just you. They are, too. Are there rumblings of that or is it just still TBD? Yeah, no. Listen, I've been having this conversation for 30-plus years, from my days of running Mercedes-Benz to my days here at AutoNation. I think for the first time ever, I can see a lively, constructive conversation about this issue. In the past, it was always theoretical. I would never wish for this pandemic. It's a horrific, horrible thing that we're going through. If you ever wanted a case study of what the world looks like, if you did it different, this past year and this moment and all of this year will be it. The list of benefits, both at the manufacturer, supplier, and retail level, with a little adjustment here and there, is considerable, and it's long. On top of that, a big part of that is trade-in values for consumers is excellent. That's one of the ways this situation is working for everyone, from the consumer through the manufacturer. Look, it's force majeure at the moment because the chips simply aren't there, and they're not going to be there in any meaningful way for some time compared to the demand. I think, John, at the end of the day, there could be a new way forward. It's very encouraging. Second quick question on acquisitions. It seems like pricing is going up dramatically. This is a very blunt way that we model stuff of 15%-30% of price-to-sales just in our cash flow statements and our models. Joe, how should we think about that roughly? Is that range about right these days? Because some of these numbers seem like they're a bit higher than that on price-to-sales. How should we think about that in modeling it? It's a tough thing for us to do because not a lot of information is disclosed, but just how should we think about it? I'd say we generally think more about it as a multiple of EBITDA than revenue, and it's kind of in that high single-digit range, and returns are mid-teens. Got it. Okay. That's very helpful. Just on the AutoNation USA expansion, it seems like you'll be at 22 stores, I think, by the end of 2022, if my count is correct. It'll be 27 per year for the next four years after that. That's a heavy pace. I'm sure on the capital front and the inventory front, I'm confident you guys could pull it off, but human capital is always a question, right? How do you ramp up those GMs of those stores and staffs of those stores? That's a lot of hiring with people that are tasked with a lot of expensive inventory. No, you're spot on. There's two critical paths as far as sustaining that level of growth, it's both management and the ability to build the stores on the right site for right locations. We've been hard at work at that for the past two years, it's the reason why we waited to say something publicly until we were absolutely convinced that we could do it. On the human capital side, we have AutoNation General Manager University, which is an internal development capability that general management within the company is trained and develops. High potential future general managers are identified years ahead of time and go into development programs. The development programs has a big component around pre-owned cars. Leading a USA store is something now that's aspired to within the company. Everybody sees the success that they are. We have a development pipeline of talent that we will promote from within to lead these stores. Okay. Just lastly, parts and service is still not getting a lot of airtime or ink. Historically, that's been the key driver of the business. You just get UIOs in, you run the parts and service business off them. When do you think we see an inflection point there? Is there a lot of deferred maintenance that second half of this year, early next year, it really pops back up? If what's going on right now continues, and then you get that kicker of parts and service, it just seems like nuclear fuel to earnings and cash flow. When do you think that kicks in? First, in principle, John, you're exactly right. Although in the past year, the number of miles driven was reduced, depending on the period of time you pick, and as such, the pent-up need for maintenance was reduced proportionally to that. There is a point coming, and Joe, you've done the calculations backwards and forwards several times. Yes. Would you describe where we are for the first quarter, and where do you think it goes from here? As we said, it continues to recover. First quarter customer care growth was positive percent, which is a continuation of the progress that's been really month-by-month. The areas that are recovering the fastest, not surprisingly, are customer pay. It's the internal work as far as prepping cars. Warranty and collision has trailed, as we've mentioned, and it really is tied to that miles driven, but we continue to see sequential monthly improvement. That's been the laggard. We do expect that that will continue improve over the course of this year, which will help all of our customer care business. March was our best month we've seen in a while. We continue to see a positive trend. It would be fair to say we're just the precipice of a positive inflection point, but how positive it is still TBD. Is that would be the way you'd characterize, is that fair? I think that's fair. Okay. All right. Thank you very much, guys. Your next question comes from Adam Jonas with Morgan Stanley. Your line is open. Thanks, everybody. Hey, Mike, I'd like to ask you long-term questions because you just got such an unbelievable experience and we all value your views. Volvo is trying to go direct to consumer with their EVs, right, Mike? I'm sure You've been following that. Why, in your opinion, would they want to do that? Can you see the motivation from their perspective? You think they could be successful or are they nuts? That's my first question. To be polite, yeah, they're nuts. Thank you, Adam, for allowing me to say that. I think at the end of the day, they're going to have kicked the beehive and end up not that different from where they are today for very rational, appropriate reasons. Others who talk about this selling direct, and we've experienced with other manufacturers, when the moment of truth finally arrives, they end up with what is basically a reservation listing order bank, which you can't even specify in detail your vehicle with the manufacturer, and it gets turned over to the dealer and the retailer to take over, but they've sort of established a reservation. Reservation is the best word to describe what some of these selling direct things are. Of course, you have the Tesla model, which is absolutely a sell direct model, and you have other electric vehicle startups that are talking about it. I think the Achilles heel in that model is that you do not put in a service infrastructure. The franchise system, in order to get a franchise, you have to invest in the facilities that you are going to care for the units in operation in the marketplace. If you're a startup, you don't need that on day one, but ultimately you need it. I think it's an Achilles heel and very expensive and difficult to build subsequently. If you're a startup, it's your decision to go to market however you wish. I think the franchise model is the best for the manufacturer, for the consumer, and as a retailer, if you're good at the business, it can be a very rewarding return. I think it's viable, sustainable. I was once one, once a manufacturer on the manufacturer side. You sit in these meeting rooms, and you dream all this stuff up. You throw it against the wall and see what sticks. I don't think this is going to stick. I'm not overly concerned about it. I will say, though, unequivocally that retailers who have a proprietary digital capability, unique tools that are very effective, have a significant competitive advantage. I think that's really the headline in all this. For us, it's Customer 360 and Equity Mining, some other fabulous tools that are just unlocking business for us every day. If you're competing against us and you're buying off-the-shelf manufacturer cookie cutter tools to compete. In retail, you are really, unsustainable position because you don't have the scale to go out and build your own tools. You know, Adam, what we went through in 2014, 2015, and 2016 to build these things. I'm glad we did it, especially with the inflection point that came. I think that's driving. I think that's the headline for auto retail. I think you're going to see more buy sells, and a consolidation into bigger entities. The ultimate winners are those who have scale, a big brand, great experience, a digital platform. Oh, and the ability to do all that profitably. Mike, I just got to follow, but I love you. The only thing is I just wish you'd really tell me what you really think sometimes. Yeah. I'm just kidding. Really, don't mince your words. Oh, Adam, like you hold back, right? All right. I want to put at the risk of putting some napalm on the hornets' nest, here I go. Here we go, baby. These state dealer franchise laws, don't you think they're past their sell by date in some areas? What if, just for the sake of discussion, if you're wrong and these startups aren't all going down some path where they say, "Just kidding, we need help. We're not going to go direct to consumer anymore. That was a bad idea. Let's say they actually do, and they start building their parts and collision stuff the way Tesla's doing and going service centers, and they'll have hiccups and stuff. Do we run the risk of having two classes of auto distribution, one where you got the new guys that actually have the option, and they might screw it up, but some won't, of going direct, and then the others that are legally can't do it, and there may be things to do, but they just locked into the one? I wonder if this reaches FTC or Supreme Court. You really think that those 60-year-old laws are just absolutely, they don't need any tweaking? They're just right for this moment in tech? Well, Adam, you've never seen AutoNation object- Yeah, I know. to any of these startups. It is really their decision how they want to go to market. It's their decision, their responsibility, it's their capital, and you've never seen AutoNation protest that in any state or get involved in it. Where state franchise laws have a certain relevance and merit is when a manufacturer comes to us and says, "Okay, here's the deal, build this exclusive facility." Here's the key word, exclusive facility for us in this given market, we're giving you a given territory in return for that exclusive investment. Well, I'm going to object if you make that deal with me and you put another one down the road from me a week later. If you're not asking me to be exclusive, if you let me do what I want as a retailer, which is I'm going to build one great big mega facility delivery center and put everything in it under one roof, then I don't need franchise laws to deal with that issue. As long as you're asking for exclusivity, there has to be some protection on this exclusive investment that's been made. There, franchise laws have relevance. This whole campaign to block startup manufacturers from going direct, we are not involved in. It's really their choice what they want to do. Thanks, Mike. All right, Adam. Good to talk to you. Again, to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from David Whiston with Morningstar. Morning, sir, your line is open. Thanks. Good morning. I guess I know it's too early to talk about a SAAR expectation for next year, but similar to what I think John was asking about on service, given the supply shocks we've had on new vehicles for a couple of years now, plus low interest rates, plus actually healthy demand, do you see a scenario for next year where new vehicle sales could just explode upward? Again, the headline is there's far more demand than there is supply. It's really difficult to judge where the level of demand is out there. I think the pandemic was a scarring event for America. I think shelter in place was a scarring event for America, and people have changed the way they live, and they changed the way they work because of this pandemic. I can remember as a kid meeting my grandparents, which were unbelievably frugal, and I'd say, "Why don't you loosen up and spend a little money?" They would say, "Listen, you don't understand. You haven't been through the Great Depression." I think this has been a scarring event on the psyche of America, and they think differently about their home. There's concern about density. They want more space in their home. They want their home to be able to do more for them. When they do leave their home, they want to control the vehicle that they're in to the greatest extent possible and who's been in it before them. I don't really know where demand has gone because the supply is restricted. We should be careful here. I've never seen so much pre-selling of shipments. These vehicles are coming in and going out if you want an indication of the level of demand. People are buying up the pipeline before they even get to the dealership. We've gone on our digital platform, AutoNation, where we show now and market everything we have incoming. We're selling incoming vehicles that have been produced. The predictability of arrival is not exact with disruptions in production, but it's amazing how many people have changed the way they buy a vehicle in that sense. Again, that's all possible to do where our incoming pipeline is visible on a national basis. It's hard to predict on, and it's premature to predict on 2022. I think I have a pretty good sight line for the rest of the year that the headline is demand is high. They want personal vehicle. They're willing to buy an incoming vehicle. They're willing to switch to a light modeled, the pre-owned, and the demand is across the board. If you manage the business correctly, you can do very well in this environment. Thanks. Somewhat related to that question then is, as you know, there's a balance between the amount of inventory you have and then your pricing power. You talked about right now, you're sticking to getting the high front-end gross, which I agree with. Just crudely speaking, do you want slightly more inventory than you have now? A lot more? Do you want to stay where it is? Yeah. Careful what you wish for. As I walk the stores, I hear that all the time. They say, "Oh, Mike, if we can only get some more cars, we would sell so many. It's just unbelievable." I always say, "Well, be careful what you wish for." Look, I have a very good sight line on the rest of 2021. I think the rest of the 2021 is about as I described, outstanding demand, very attractive interest rates and customer flexibility that they're willing to purchase incoming shipments in advance, and they're willing to switch over to pre-owned to get their personal vehicle. Okay. Just last question on the balance sheet. You have big bond maturities in both 2024 and 2025. They're only at 3.5%. The rates are quite low right now. Do you have any interest in perhaps refine either of those this year to extend the timeline out beyond the 2024 and 2025? Joe, that's in your wheelhouse. Yeah. Not at this time. We continue to evaluate, but not a priority in this current environment. Okay. Thank you. Appreciate it. There are no further questions at this time, Mr. Jackson. I'll turn the call back over to you. Well, I want to thank you for joining us today, and thank you for all your questions. I also want to thank all our associates who put on a mask every day and come to work. Just imagine, through this entire pandemic, on any given day, 95% of our associates were physically at work to take care of our customers. For that, I'm very grateful. This outstanding performance and four record quarters in a row would not be possible without 95% of our associates putting on that mask and coming to work. We have 50% of them are vaccinated at this point. We're working hard that everyone who wants a vaccination can get it, and we look forward to the day that we don't have to wear masks. It's not here yet, but we look forward to that day. Thank you everyone for joining us. Appreciate you. This concludes today's conference call. You may now disconnect.