Hello everyone, and welcome to the AutoNation Inc. Q4 2023 earnings conference call. My name is Bruno and I'll be operating your call today. During this presentation, you can register to ask a question by pressing * followed by 1 on your telephone keypad. I'll now hand over to your host, Derek Fiebig, Vice President of Investor Relations. Please go ahead. Thank you, Bruno, and good morning everyone. Welcome to AutoNation's Q4 2023 conference call. Leading our call today will be Mike Manley, our Chief Executive Officer, and Tom Szlosek, our Chief Financial Officer. Following their remarks, we'll open up the call for questions. Before we begin, I'd like to remind you that 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 Security 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 today and in our filings with the SEC. Certain non-GAAP financial measures, as defined under SEC rules, will be discussed on this call. Reconciliations are provided in our materials and on our website at investors.autonation.com. With that, I'll turn the call over to Mike. Yeah, thanks, Derek, and good morning everybody. Thank you for joining us today. I'm on slide 3, and I'm going to provide some opening remarks before I hand over to Tom, who's going to take you through our Q4 results in greater detail. Now, as we know, there continue to be mixed economic signals in the economy and concerns over affordability, but from our perspective, consumer demand for new vehicles remains robust. Now, during the quarter, our total new vehicle revenue increased 7% and unit sales increased 8%, and this reflected strong import growth as well as the seasonal uplift in premium luxury sales. New vehicle margins continue to decline, but the rate of moderation in the Q4, which was approximately $120 per month, was more modest than earlier quarters. Total new vehicle inventory levels of 36 days increased from 19 last year and 31 in the Q3. We have 66 days of domestic brands, 29 days of luxury, and 24 days of import brands. Inventory levels are expected to continue to grow in 2024, and as such, we expect to see a continued moderation of new vehicle margin, which we anticipate will be roughly the same pace as we experienced in Q4. Turning to used vehicles, same store units decreased 8% a year ago, while total units were down 4%, which reflects the growth of ANUSA stores in the year. The more recent sequential comparisons have a slightly better than the market. Now, we're managing several critical variables in the used market at the moment. Firstly, we continue to see tight availability, and this has been with us throughout 2023 and will no doubt continue into 2024. Notwithstanding the inventory availability, we're seeing used vehicle depreciation, which is broadly back to normal and historical levels. Mix between price bands is also normalizing, and as a result, we've seen lower demand and higher price used vehicles, partly because of affordability and partly because new vehicles are becoming more available with lower net transaction price, which is often accompanied by subsidized lending rates, which makes new products more compelling for a number of our customers. Tom's going to give you some of the specifics on unit sales by pricing band. Our inventory turns on used vehicles decline modestly during the quarter. The mix change I just noted, combined with slower turns, moderated our used PVR, and we expect these market conditions to continue into 2024. As a result, we expect our Q1 2024 used margins to be in the same range as our Q4 results. Now, we maintained our industry leading performance in customer financial services in the quarter as the team continued to do an outstanding job to overcome a higher interest rate environment by maintaining solid growth in product sales per unit sold compared to a year ago. This performance, combined with a 2% increase in total retail units sold, resulted in higher CFS Gross Profit. After-sales delivered a record Q4 for revenue and margin, total store revenue was up 11% and our gross profit was up 13%. Growth came from all major categories. The greater complexity of vehicles is leading to higher values per repair order, and this coupled with increased numbers of repair orders from a year ago resulted in what I think is an excellent performance. The strength of our balance sheet and cash generation, which Tom will discuss, allowed us to deploy an additional $150 million towards share repurchases during the quarter, repurchasing more than 1.1 million shares. Now, aside from the solid quarter, from a financial perspective, there are a few other highlights I'd like to touch on. We continue to focus on our customers and we're working to garner a greater share of customers' wallets. As such, during the quarter, we continued integrating AutoNation Finance across our portfolio, including the launch into nearly all of our franchise stores. We also continued with the rollout of our ANUSA stores, opening locations in Plano, Texas, and Fort Myers, Florida, during the quarter. We opened additional stores in Florida early this year with Wesley Chapel, Sanford, and Jacksonville, adding to density in these markets. I think our business model is resilient, working well, and we continue to deliver a strong financial performance. Now, this performance is, of course, made possible by our 24,000-plus AutoNation associates who take care of our customers every day. And I think the team efforts continue to be recognized by outside parties because of this. And this year, AutoNation once again made Fortune's Most Admired list, jumping 4 spots to number 3 in the specialty retailer section. Congratulations to everybody. Thank you for the things that you do for us. And with that, Tom, I'm going to hand over to you. Thank you. Okay, perfect. Thanks, Mike. I'm turning to slide 4 to comment on our Q4 P&L. Total revenue increased slightly as growth in new vehicle and after-sales revenue more than offset lower used vehicle revenue. As expected, gross profit was down 5% and margin was 18% for the quarter. A strong growth in after-sales partially offset declines for new and used vehicles, which I'll address in later slides. Adjusted SG&A increased 5% to $791 million, with stable core spending and incremental costs related to our growth initiatives. This resulted in adjusted operating income of $368 million for the quarter, which decreased 22% from a year ago. Below the operating line, our Q4 results were impacted by higher interest expense for both floor plan and non-vehicle debt and benefited from lower income tax expense. The Q4 floor plan interest expense of $47 million was up from $20 million a year ago, a reflection of higher rates and inventory levels as expected. As a reminder, we reflect floor plan assistance received from OEMs in gross margin. And in the Q4, the increased assistance helped to offset partially the increase in floor plan interest expense. Interest expense from non-vehicle debt was $46 million for the quarter, up from $38 million a year ago. The increase reflects increased borrowing and higher rates. Income tax expense for the quarter was $62 million compared to $91 million in 2022, reflecting lower taxable income and a modestly lower income tax rate. All in, this resulted in adjusted net income of $216 million compared to adjusted net income of $319 million a year ago. The impact of our share repurchase activity partially offset the EPS effect of the lower net income. Total shares repurchased over the year decreased our average shares outstanding by 14% to 42.9 million shares in the Q4. Our adjusted EPS was $5.02 for the quarter. Starting with slide 5, I'd like to build on the color Mike gave on the performance in our various revenue categories for the quarter. New vehicle volumes were up 8%, which includes increases of 16% on imports, 3% on premium luxury, and flat domestic units. New vehicle gross profit PVRs continued to moderate. While selling prices were stable, vehicle costs were higher. The rate of decline for the Q4 in gross profit PVRs was about $375 per unit, which slowed from the approximately $600 per unit sequential decline in recent quarters. This reflected the higher seasonal premium luxury mix and a more stable, although still less than ideal, environment for battery electric vehicles. New vehicle inventory levels, including vehicles in transit, have increased from 18,100 units in 2022 to 35,300 units at the end of 2023. Moving on to slide 6. In used vehicles, we had a unit volume decline of 4% from a year ago, as Mike mentioned, on a total store basis and 8% on a same-store basis. There continues to be a shift to lower-priced used vehicles. Our same-store unit sales of used vehicles priced under $20,000 increased 7%, while used vehicles over $40,000 increased 20%, and used vehicles priced from $20,000-$40,000 were down 11%. From a segment standpoint, used unit volume performance was strongest in our import brands. Year-over-year, unit sales and gross profit PVRs in used vehicles were adversely impacted by the pricing band mix I mentioned and reflect an overall softer used car pricing environment. Used vehicle inventory levels increased sequentially and year-over-year, reflecting our stepped-up buying activity in anticipation of the customary spike in Q1 used car volumes. As Mike mentioned, we expect our Q1 PVRs to be at or slightly below Q4 levels, reflecting a conscious effort to align inventory levels and turn rate with the market. Used PVR improvement is expected late in the Q1 as the Q4 inventory is fully turned. Used vehicle sales and profitability continue to be a big area of focus for us as we emphasize effective sourcing, pricing, and speed while optimizing customer satisfaction. I'm now on slide seven. In customer financial services, our industry-leading performance continued. As you can see, gross profit PVRs for CFS remain strong and would have been even stronger absent the shifting of economics related to AutoNation Finance lending. The upfront fee previously received from non-recourse third-party lenders is now deferred over the life of the AutoNation Finance loan. New vehicle product attachment and finance penetration in CFS remain strong and increased from a year ago. We have seen an increase in leasing, which represents 23% of new sales in the Q4 compared to 13% last year. This is a minor headwind for CFS PVR, as leased vehicles historically have a lower CFS attachment rate. On used vehicles, there were slight decreases from a year ago on both the finance and product side of CFS as higher interest rates consumed more of our customers' monthly payment capacity. As Mike mentioned, in addition to fully supporting all ANUSA stores, we now have AutoNation Finance present in nearly all franchise stores. In the Q4, we originated approximately $110 million in loans, up from $63 million in the Q3. The AutoNation Finance business continues to improve in all dimensions, including penetration in our stores, profitability, and delinquency rates. Let's move to slide 8. After-sales represents about 44% of our total gross profit for the quarter and continued to grow, with total store revenue increasing 11% to $1.1 billion, or 9% on a same-store basis. Customer pay, warranty, and internal all experience double-digit year-over-year growth. The value per order is improving, and our total number of repair orders has also increased. Gross profit grew 13% year-over-year on a total-store basis and 12% on a same-store basis. Total gross profit was up double digits for customer pay, warranty, and internal, and our gross profit margins were up more than 70 basis points to 47%, reflecting higher value repair orders and scale benefits from the increase in the number of repair orders. For the full year, our after-sales gross profit was more than $2.1 billion, which is up more than $500 million from 2019. This high-margin business is a key part of our continued engagement with our customers, and we're focused on capacity utilization, technician development to support the continued growth of the business. Importantly, our total technician workforce increased 6% from a year ago on a same-store basis and 11% in total. Moving to slide 9, our adjusted operating income was 5.4% for the quarter, down from last year but up more than 150 basis points from pre-pandemic levels. The decrease from 2022 mostly reflects the moderation in new vehicle unit profitability, which was expected and is consistent with the industry, as well as higher SG&A. The growth in SG&A reflects investments for growth, increased advertising spend, and inflation. Normalized SG&A as a percentage of gross profit is expected to remain lower than pre-pandemic levels. During the Q4, we recognized about $7 million of severance expenses as we streamlined our regional field team and rationalized some support functions. On slide 10, you can see that our adjusted pre-cash flow for the year was $969 million compared to $1.5 billion a year ago. The change year-over-year was consistent with our change in EBITDA. A reconciliation for adjusted pre-cash flow is included in the appendix of this presentation. Year-over-year, our total inventory increased by approximately $1 billion, which was largely funded by higher trade floor plan financing and non-trade floor plan financing, which increased $424 million from a year ago. While we expect a continued normalization of new inventory levels, we are focused on the velocity with which we turn our overall vehicle inventory. Consistent with the expansion of AutoNation Finance, our net auto loans receivable increased by $230 million, and we expect continued growth in this portfolio. CapEx for the full year was $410 million compared to $329 million a year ago, reflecting primarily capacity growth at franchise stores, IT spending, and facility electrification infrastructure. This resulted in an adjusted free cash flow of $969 million and a strong conversion of 94% of our adjusted net income. Slide 11 shows our capital allocation for the years 2022 and 2023. In 2023, we had a balanced mix of reinvestments and return to shareholders. CapEx of $410 million was about $80 million higher than 2022, as I mentioned. M&A investments, which occurred earlier in the year, totaled $271 million. With significant cash flow generation and a strong balance sheet, we returned $864 million to shareholders via share repurchases, reducing our shares outstanding by 13%. We have an additional $320 million remaining under our current board authorization for share repurchases. At quarter-end, our leverage was 2.19x EBITDA, the lower end of our two to 3x target, and we continue to maintain our investment-grade credit rating. Moving forward, we'll continue to allocate capital to maximize shareholder value, considering both near-term market conditions, the M&A landscape, particularly for core franchise operations, and the longer-term direction of the industry. Now I'll turn the call back over to Mike to provide some commentary regarding 2024. Yeah, thanks, Tom. Yeah, we thought it would be helpful just to provide some thoughts regarding 2024 and how we see things maybe progressing. On the new side of the business, as we know, vehicle supply is going to continue to return to pre-pandemic levels, and I think leasing and retail incentives are clearly going to pick up through the year, but I think we'll remain below pre-pandemic levels in total. So inventory levels will continue to increase over the course of 2024, but we expect demand to be robust. Battery electric vehicle product introduction and customer interest in these vehicles is clearly going to be a key dynamic this year. As widely reported, BEV PVRs consistently fell during 2023, and in most instances, they're lower than similar combustion engine vehicles. As with all things, it's about balance, and it does appear OEMs are adjusting their plans and actions to match demand more closely, and frankly, this will be well received. Hybrids are doing well in the marketplace, and we have good exposure to this portion of the market based upon our brand mix, and we expect our new margins to continue to moderate over the course of 2024, but at a somewhat slower pace than we experienced in 2023. The used vehicle market will likely remain constrained as late-model used vehicle availability remains limited, and additional new vehicles are available. The key is going to be our effectiveness, as always, in purchasing pricing and turning our inventory, and we're going to remain nimble in our approach to those things in the market as it develops. I expect our CFS to continue to perform well, even with pressures coming from overall monthly payments, vehicle mix, and OEM actions to support unit sales, and as you've seen, it's a very consistent and clear strength of our organization. After-sales has been and will remain a significant area of focus for us. We saw the results in our Q4 outcome, and after strong growth in 2023, obviously, our year-over-year comps will moderate, but we expect this area of our business to continue to grow attractively, and we will, as always, be focused on managing the controllable variables, which includes cash flow and capital deployment. And with that, Tom, let's hand it over to Derek to get some questions. Yeah. Bruno, if you could please remind the audience how to get in queue for question and answer, please. Sure. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. That's star one on your telephone keypad. To withdraw the question, star followed by two, and please do also remember to unmute your microphone when it's your turn to speak. Okay, we do have our first question. The question comes from John Murphy from Bank of America. John, your line's now open. Good morning, guys. Just wanted to ask a first question, Mike, on after-sales. I mean, it's obviously a bright spot. Seems like the efforts there to hire techs is really paying off. You keep talking about share of wallet increasing. This seems like the area where share of wallet for the consumer is, there's obviously the most opportunity other than getting to the second and third turn of the used vehicle. So as you think about this in 2024, and maybe even just beyond in sort of a strategic standpoint, what do you think you need to do to continue to drive that significantly higher? Is it just a function of hiring more techs? Is it an increasing connectivity? Is it getting involved in the second and third used vehicle turn? I mean, what's the key strategy there, and what are the opportunities to drive that faster or farther? So John, it's probably a combination of all of the above. If I think about our franchise business, firstly, we have a penetration in the vehicle parks that we're responsible for, so that's our areas of operation that our franchises represent, of probably around 50% plus-minus. What we know is that customers move on to other sources for their service when their vehicles get seven years old or they're 25 miles beyond the radius. There's a lot of opportunity within the territories that we have, and then we're providing channels and access to our customers who would have migrated to a different source for their servicing and repairs through things such as our mobile service, which, as you know, is a new addition to us. I think partly, in terms of our installed assets, we have sufficient bay capacity. We saw, from memory, I think it was a 5%-6% increase in our technicians during the period. There is opportunity for us to continue to grow that, adding services onto it, and then we'll backfill with mobile services for those customers that don't, for whatever reason, have moved away from the franchise environment. So that's going to be a big focus for us this year. There's plenty of opportunity. It's not easy to unlock because once a customer has migrated, they obviously form a relationship. And that leads me to the last thing, and that is we have a fantastic brand. I think last time we checked our brand, which we do relatively regularly, it was the most known automotive brand in the United States, and I think we can do a better job of communicating all of the products and services to our customers to help them understand that we can increasingly look after a broader set of needs that they have, not just for themselves, but also in their family. Okay, that's helpful. And then just a second question on the used car business. Obviously, GPUs are down. Sounds like there's a little bit of mix going on, also sort of a little bit of inventory management. Is this the kind of thing that you think is really a function of the next couple of quarters, and then you get back to normal GPUs, or is there something happening here sort of cyclically or on a secular basis that would keep these numbers low? No, absolutely. As Tom mentioned, I think one of the things that as we came into 2023, our inventory levels were very low, and we felt that we missed out on some of the marketplace. We put in place a number of initiatives middle of last year, through the end of last year, to enable us to source the vehicles that we need, and we did that very, very effectively. At the same time, I think some of the market dynamics were changing. One of the things that had increased dramatically during the COVID period was the percentage mix of vehicles above, say, 35,000, and Tom gave you the mix, and we're seeing those customers who maybe came into the high end of the used car market because they couldn't get new now returning back to the new car market with lower transaction prices and more incentives from manufacturers. And what we need to be is very, very agile to make sure that as the market changes, and I think it will continue to change, that we are ahead of those mix changes. And we have some work to do. We started that work before the end of last year, continued through January. I think that work will be largely completed by the end of Q1, very early Q2, so in my mind, it's transitory. The good news is that each one of those unit sales comes with phenomenal CFS performance and obviously is going straight into our after-sales database for us to be able to look after them. So every customer comes now, from our perspective, with a great opportunity, not just in the sale. So Mike, when you get the turn and earn back being efficient, would it be fair to say that that $1,800 range on PVR is something that we should think about sort of mid- to long-term as we get through the course of this year and beyond? Yeah, I think that's a very I think that's an achievable number for sure. Yeah. Great. All right. Thank you very much. Thanks, John. Our next question comes from Daniel Imbro from Stephens Inc. Daniel, you may proceed with your question. Yeah. Hey, good morning, everybody. Thanks for taking our questions. Mike, I wanted to start maybe on the new vehicle side. Obviously, a little bit lighter moderation. Your commentary suggested that's going to continue into 2024. Curious if you can just update us how the OEM conversations are going. Are you seeing any change in tone, especially at some of the brands where inventory maybe has built? And then I'm curious, given your experience on the OEM side, what leverage do you think the OEMs pull? Do you see them cut MSRP? Kind of how do you think they navigate through some of the heavier inventory situations out there? Yeah, thanks, Daniel. Well, even though, and I mentioned this in my opening commentary. Until the time we're seeing some increases in terms of retail incentive rates and leasing back up to 23%, we're still not at the levels that we had seen before. And I think as we begin to see inventory build, we will see continued action in that area from the OEMs. Leasing, in my view, by the end of this year, early next year, will be back to pre-pandemic levels. And I think we've seen much more subsidized finance, obviously, with the interest rates that we have, and that will continue as we get deep into 2024. When I think about overall days of supply, obviously, it's very different depending on the manufacturers and the brand partners that we have, but clearly still well below, in many instances, the level we saw. And from my point of view, as the industry develops this year, I think we will truly see, hopefully, how the manufacturers are thinking about the balance of their inventory and prevailing market conditions because we talked a lot about this when we were deep in the pandemic. I think this year we're going to see how each OEM is going to address that, and some will be more disciplined, some will be less. Got it. That's helpful. And then maybe, Tom, on the finance side, I think Mike and you both mentioned you've rolled out AutoNation Finance into all the franchise stores. Curious if you could, or maybe we missed it, provide some stats around the loan growth in the quarter, maybe the CFO reserves you're taking or provision for losses, and then how those loans are performing as we think about the changing consumer credit backdrop today. Thanks for the question, Daniel. As everybody knows, we bought AutoNation Finance in October 2022. We closed. It started out entirely as a third-party lender, mostly to subprime. We've, over the course of the last year, completely converted that to now supporting AutoNation exclusively, both the ANUSA stores as well as the franchise stores. Very little in terms of subprime, so it's really gone through a nice transition. We love the platform. We love the team. The trends have been very, very strong. We've got, as I said, improvement in the origin mix with all AutoNation customers. FICO scores have improved between 15 and 100 basis points in terms of what we're originating. The credit quality trends, 30-day delinquencies, have been really strong. I mean, in the Q3, we were probably 7.5% delinquent. That's improved by about 200 basis points through the end of January. So teams are doing a nice job in what is not an easy environment for consumer credit, so we're happy with that. The penetration rates amongst our stores where we're present has been growing, has been very strong. So it's about a $450 million portfolio, and that is after a sale of a chunk of the business in the Q3, which was about $80 million. We're excited about 2024. We think the originations could double, and we just couldn't be more pleased with how the business has developed over time. Appreciate that. The quick accounting follow-up, where do those CFO reserves, as the loan balance you said they're going to double the loan growth, I guess. Where does that flow through the income statement as we think about modeling out to growth in the finance business? It's all in that either one line other income and expense on the P&L. While growing, like I said, it's probably not material enough for us to break that out. I think at some point, we'll address that depending on how the growth is, but it's all basically collapsed in that one line. Great. Thank you so much, guys. Best of luck. Our next question comes from Rajat Gupta from JPMorgan. Rajat, your line's now open. Great. Thanks for taking the question. Thanks for all the color on 2024 expectations around the new business, the used as well. But curious, is there a range you're targeting for SG&A to gross for the year in context of the steady new GPU decline, some of the pressures in the used business? How should we think about SG&A to gross for 2024? And I have a quick follow-up. Thanks. Yeah, Rajat. The way that we're thinking about this is obviously in what I would call our core businesses, the things that we have put in place over the last few years continues to have, I think, clear benefits. Our SG&A also includes some of the investments that we have been making progressively in the last two years. So the percentage that we see doesn't represent the core businesses themselves, but I think the range that we sit in now is the range that we're going to continue to target going forward, and it will fluctuate, as I said, based upon the additional investments that we are making, for example, in mobile services, for example, in our parts commerce business as we grow those businesses. So that's kind of my view on SG&A at this time. The thing I would add to that, as Mike mentioned, we do have some investments in ANUSA as those stores roll out. You don't get to a full run rate of profitability for about a year, so that can dampen the SG&A rate and also the investments that Mike has mentioned, strategic investments. And also advertising, as we've seen some inflation there. I would say we probably would be in the longer-term basis, mid-60s kind of level relative to gross profit, but we are paying close attention. As we mentioned, we've taken some modest actions in the Q4 to address and take advantage of some delayering opportunities in the regions as well as to economize some of the support functions. So it's a pretty important area for us. We continue to drive productivity where we can. Got it. Got it. That's helpful color. Just on capital allocation, obviously, we've seen what's very steady and pretty elevated clip of buybacks over the last few years. Curious how that toggle between M&A and buyback looks today based on what you're seeing in the pipeline for deals and related multiples. Curious if we should expect any shift in strategy there, maybe more get to an M&A versus historically buyback. Thanks. Yeah, it's a great question. Thank you. The great news, John, is that we generate a lot of cash, so it gives us optionality. You're probably very familiar with how we've allocated capital the last two or three years. I don't think there is a material change in how we're looking at it. The focus is on maximizing shareholder return. When we do see allocation opportunities, whether it's internally to CapEx or to M&A opportunities, we think we're pretty disciplined in terms of our analytical evaluation and our incorporation of synergies and where the deals look like they could be accretive and meet our hurdle rates, and we'll go after them aggressively. But we also have had great success with shareholder purchases and feel that that's going to continue to be an important part of our capital allocation playbook. Are you seeing any changes in just multiples for these deals the last few months? Any change in tone or any increasing propensity for sellers to offload? Curious if anything in the market that you've seen that's shifted on the M&A side. John, can you clarify? You were muffled a little bit in your question. I'm sorry. I just wanted to ask, have you seen any changes in the multiples or the valuation of some of the assets that are out there in the market from an M&A perspective over the last few months? Yeah, as you can imagine, sellers tend to have amnesia when it comes to where their prices used to be before all these run-ups in the last few years. But I don't think there's been any market change in valuations, maybe here and there, but we're not seeing anybody walk away from last year's prices per se or anything like that. No, but it's also true to say that our conversations around the basis for people's valuations are heavily pointed at the last 12 months and trading conditions and our view moving forward. And as we move, frankly, throughout last year and as we move further into this year, obviously, the TTM is going to reflect the reality of the fact that there's a normalization in margins, and ultimately, it will impact values, and that's something we're very much looking for and something that we're talking to people about. But as Tom said, at this moment in time, obviously, people are holding on as much as they possibly can to 2022. Got it. Got it. That's helpful color. Thank you and good luck. Our next question comes from Michael Ward from Freedom Capital Markets. Michael, your line's now open. Thanks very much. Good morning, everyone. Mike, I think in your comments, you mentioned that on the parts and services side, complexity has led to higher content. Can you quantify either some of the content you're talking about or the retention rates you're getting on the parts and services side with the increased complexity vehicles? So the work that Christian's been doing with his team shows us that even though the frequency of service and repair in our so let me say service. I'll come back to repair in a minute. Drops. Loyalty goes up fairly significantly, and the time that the vehicle is in the shop goes up significantly. So as we were thinking about this transition to electrified vehicles, we were very concerned, as many people were, about drop-off on parts and services. That hasn't been what we've experienced so far for those two reasons. In terms of repair, obviously, the profile of that's changing. Some of the repairs now are done remotely, and we really, I think, are still looking at that and learning about that. But at this moment in time, if we look at the population of our customers and their vehicles, the combination of higher loyalties and longer time in shop has been better than our expectation, let me put it that way. Along with that, could you give an update on RepairSmith and where that stands and what are your growth objectives with it as you go forward? Yeah, absolutely. Well, we rebranded RepairSmith, which was not unexpected, and it's now AutoNation Mobile Services. It's progressively being integrated alongside ANUSA because, as you know, many standalone used car sites don't have an after-sales provision. In the same way as we aligned AutoNation Finance with ANUSA, we were aligning RepairSmith to be the provider of refurbishment and service maintenance warranty needs for those customers. We've opened up now our relationships with multiple fleet customers across the country and introducing mobile services to those guys and expanding the products that the fleet offers. I would say at this moment in time, there's a lot of work for us to do. That integration work will probably continue through the balance of this year. We see a lot of growth, but we now need to drive up our returns. Just one last question on the M&A front. You took a look at Pendragon. Does that suggest that as you look out over the next couple of years, that expansion outside of the U.S. could be in the cards? I think it goes back to Tom's comments. I thought he summed it up really well. We are looking at opportunities that come across our desk in a very, very consistent way. We liked what we saw with Pendragon at the price that we had indicated in the marketplace, and at that point, we thought it was good, but clearly, that one was not for us. So I would tell you that we have an eye to a number of opportunities at this moment in time. Beautiful. Thank you very much. Our next question comes from Bret Jordan from Jefferies. Brett, your line's now open. Hey, good morning, guys. On the mobile services question, I guess you're talking about expanding the products offered. Could you talk maybe a bit about the logistics of the mobile services? What can you do in that format? And I guess from a staffing standpoint, cold, rainy days probably not appealing to work outdoors, but what are you seeing as far as building out that model? Yeah, well, the good news is that if you think about our geographic footprint, we are largely the vast majority of our business falls in states where you can operate full 12 months without certainly snow first, no. But I take your point. So obviously, services, so maintenance and repair work is a given. We are in the process of expanding to tires. We're in the process of expanding to glass. And as you know, we have a very good business in our collision centers, and that will include calibration. So there are multiple things that these vans so equipped can do, and that's effectively what we're doing. We had already done some pilot work on glass, which was successful in some of our Texas businesses, so that's going to be expanded throughout this year. There's a demand for tires, which can easily be done from a properly equipped van. So there's quite an expansion in terms of products that we can offer. And as you can imagine, as we grow AutoNation USA and they are as successful as they have been in terms of CFS, many of those CFS products are associated with extended warranties or maintenance contracts, and we're now able to completely fulfill them ourselves rather than those customers maybe migrating to a competitor to have that work done. So I'm very excited about mobile services. It's a business that we, as I said, are centering in those markets where we already have density in a customer base. It's now associated clearly with our brand, which I think does bring a degree of credibility, which is important when you think about a van turning up on someone's drive, and I think it will help us. So let's see how we develop it this year. Okay. Thanks. And a quick question on domestic DSI, 66 days. Could you talk about the sort of spread between the manufacturers and that inventory exposure? And obviously, I think there's been a lot of talk about Stellantis maybe increasing their promotional level or decreasing pricing. Are you seeing anything that's sort of changing as far as, I guess, promotional cadence recently? I'm not seeing any changes from my perspective. I think we're coming into traditional months where all of the domestics will focus heavily on their trucks. That's normal. That, I think, is something that will continue. The different seasons in the year's not going to change. I think that if you think about the percentage of sales by vehicle segment, it is natural that those OEMs who have a very high percentage of sales in trucks, whether it's light, medium, or heavy, are going to have a higher day supply purely because of the selection required. And even though Stellantis' day supply has increased, it is significantly lower than it's been historically. Great. Thank you. As a reminder, to ask a question, please press star 1 on your telephone keypad. Star 1 on your telephone keypad. Our next question comes from Douglas Dutton from Evercore. Douglas, your line's now open. Hi, team. Thanks for having me on. Congrats on the quarter. Two quick questions from me. Just first, on the new vehicle PVR point and the normalisation that we continue to see, is it fair to think that there may actually be a higher trough cycle over cycle, maybe remaining at about a 20%-30% premium over 2019 levels? I'm just curious if perhaps you are beginning to see some structural reasons that a decrease to pre-COVID levels may not be the reality given the rate of change on profit per unit has begun to slow, like Tom mentioned, as the Q4. was actually the best sequential in three quarters. Yeah, Doug, welcome. A lot of moving pieces in that question. As you know, one of the things that I think we have to really watch closely this year is what's happening with battery-electric vehicles and hybrids. And as you know, all of the OEMs at this moment in time are working towards a set of GHG targets, which vary by state, and that may well change depending on what happens later this year and as you move forward. But there is and has been a significant impact on margin as battery-electric vehicles have continued to grow in terms of the share that they represent. I mean, their increased share roughly doubled from the end of 2022 through to 2023. And as a result of that, that's had an impact on our total margins, obviously. So the answer to your question is, truthfully, I expect a return to very similar margins to 2019. And by the way, that would include the impact, in my view, of battery-electric vehicles and hybrid-electric vehicles. How that happens is very much going to depend on how the OEMs are thinking about the mix of their BEVs, their hybrids, and their combustion engines through the balances this year and how they're going to achieve their targets. It is not an easy question to answer, so that's my best effort. But I would say what we are doing in our business is to really focus on those areas where we have more control and more opportunity. And those areas are CFS, used as we've talked about, obviously, after sales, and how we can provide more products and services to the customers that we have won over many, many years of being in the marketplace. To make sure that on new vehicles, we're not an outlier either with lower margins or poor market share, that we obviously control our costs because, to a large extent, how the new vehicle market develops, as you can completely understand, even though we're a very large player in this industry, we're still a tiny player in terms of the total new vehicle market. So I think we have to be realistic about the things we can do. Okay. That's helpful color. I appreciate you giving the detail there. Just to be crystal clear here, a slightly lower growth from EVs, as a lot of us now expect, for at least 2024 through maybe 2025, 2026 would actually be a positive. That's the correct way to think about that? Yeah, based upon the margins we saw develop last year, that's exactly how I would think about it. Okay. Thanks, team. Our next question comes from Colin Langan from Wells Fargo. Colin, your line's now open. Oh, great. Thanks for taking my questions. I think you mentioned in your comments CFS is supposed to be strong. I mean, how should we be thinking about that, though? Because, I mean, I think if there's more leasing, I think that puts a little bit of pressure on. There's possible normalization of vehicles, maybe to a mass market, we might put pressure on that. But is that still going to be up year-over-year, or should we think of that just moderating a bit as we go into next year? Yeah. Thanks for the question, Colin. Yeah, in my commentary, I was referencing a little bit higher lease penetration in the CFS commentary. I think on balance, leases are accretive to what we're trying to accomplish. Yeah, I mean, maybe you sell a little bit fewer products on a CFS perspective, but it's not massive. I mean, and it is outweighed by the fact that we have a shot at getting the used car once it comes off lease. It also helps with vehicle affordability. And we have typically third-party financers taking a residual risk. So it's net-net a win-win for us on leasing, and I would think of it that way. We've been able to manage through with CFS over the years with higher leasing volume. Got it. And then just going back to your comments to the last question on expecting profitability to sort of normalize to pre-COVID 2019 levels, is that already pretty much there on the domestics? If I look at the Q4 margin, the% margin looks pretty similar to pre-COVID. So is that kind of driving some of those thoughts? Is that those companies that have already kind of restocked a lot of the inventory are already kind of back to normal levels? Yeah, the answer to your question is that it is pretty much there for some of our OEMs. Got it. All right. Thanks for taking my questions. You're welcome. We currently have no further questions, so I'd like to hand the call back to the management team for closing remarks. Over to you. Well, firstly, thanks for going through your questions. I'm just going to touch on the margin question that I received earlier. One of the things that I think is relevant and important as you think about our performance going forward. ANUSA, a valuable addition to our company, our organization, particularly where we have areas of significant density, their used vehicle margin does not perform in the same way for obvious reasons as our franchise businesses. So when you think about the $1,800 that we discussed, don't think about that in the context of ANUSA. The way that they source their vehicles is very different. The way that they can attach manufacturer and OEM programs is significantly different. So their whole business model, including the capital invested, is very, very different. So as you think about my comments on $1,800 margin, make sure you factor in the impact of ANUSA on our average margins going forward because they will not and have not been at that level, and I don't anticipate that anytime going forward. But with that said, when I think about 2024, it's clearly going to have its normal mix of headwinds and tailwinds. But for me, after a very significant year in 2023 of planned leadership transitions, I'm feeling positive about our development as we enter this year. We have Jeff Parent joined our group, as you know, as the Chief Operating Officer. Tom came in last year. CMO joined us, Rich Lennox, who joined earlier in 2023. So from my point of view, our leadership team, that year of transition which was planned is now complete. I think all of the members that we've added bring vast experience to AutoNation. These guys, along with their colleagues who sit on our executive leadership team, are certainly going to help us build on our success and position our company well for the future. Really, that enables us, I think, to really look at how the investments that we've made in various parts of our businesses are performing and understand how we can get to a period of growth in some of those and in others how we can make sure that we're driving up our margins. So with that, thank you for joining the call. We'll see how the year goes, and I look forward to talking to many of you between now and most of you at next quarter. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.