Good morning. My name is Harry, and I'll be your conference operator today. At this time, I would like to welcome everyone to the AutoNation Incorporated 3Q 2024 earnings 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Thank you. I would now like to turn the call over to Derek Fiebig, Vice President of Investor Relations. You may begin. Thanks, Harry, and good morning, everyone. Welcome to AutoNation's third quarter 2024 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 will open up the call for questions. Before beginning, 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 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 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 on our website located at investors.autonation.com. With that, I'll turn the call over to Mike. Yeah, thanks, Derek, and good morning, everyone. Thank you for joining us today. I'm on the slide-- the third slide. I think the third quarter, once again, showed the resolve of the AutoNation team in what was a challenging environment, and notwithstanding the well-known headwinds in the quarter, I'm very pleased to report a number of highlights across our business. In new vehicle sales, we increased our market share, unlocking all the flow-through benefits generated by our new vehicle sale and delivering a welcome reversal of the share performance we experienced at the end of June as a result of our systems outage. In used vehicle sales, as we discussed on our last call, we came into the quarter disadvantaged by the impact of the CDK incident on our used vehicle inventory and resulting sales run rate. However, month over month, we consistently built our inventory back to acceptable levels, maintained our focus on turn rates, and delivered strong margins. The aftersales team continued to deliver great growth and achieve an all-time record gross profit. I'd like to say congratulations to the team, and thank you for the work that you put in on a daily basis. Now, on the cost side, the organization demonstrated continued discipline, all while navigating multiple operational challenges, with July being the most impacted. Now, talking about operational challenges, the CDK outage was not fully resolved until well into July, impacting our performance by approximately $0.21 per share in the quarter. As we all know, the country was hit by significant devastating weather events, which in turn forced the temporary closure of approximately 50 stores. Additionally, we had to navigate an unusually high number of OEM stop sales, which were concentrated in our premium luxury brands. Now, despite all of this, during the third quarter, our new unit sales outpaced the overall industry, with same store units increasing 2%, reflecting growth in all three segments, Premium Luxury, Import, and Domestic. We also believe that new car margins, while continuing to moderate, are stabilizing. The sequential decline during the third quarter in new PVR was largely in line with our experience in the second quarter. Our sales of used units decreased from a very strong sales quarter last year, but increased on a sequential basis. As I mentioned earlier, this is where the CDK outage hit us hard, which left us with a limited used unit vehicle inventory to start the quarter. Used vehicle demand remained stable, and through the efforts of our commercial teams, we were able to maintain relatively strong used PVRs at around $1,600 per vehicle. We're encouraged to see affordability improving, with a notable shift to used vehicles priced under $20,000 per unit. Now, switching to Customer Financial Services, which is comprised two-thirds of vehicle protection products and one-third financial products, the quarter was another case of sequential improvement. By the end of September, our product attachment rates and CFS PVRs were ahead of May's record-setting levels. In addition, we continued to grow our AN Finance business, and year to date, we have now originated over $700 million of new loans. Now, as you know, ANF is now exclusively focused on our AutoNation customers and currently funds over 10% of our finance transactions. Now, for our shareholders, this means a shift to a model that, on a lifetime basis, is two and a half to three times more profitable than that of the traditional third-party finance offering. While this focus can have a near-term impact on CFS, PVRs, and cash flow, it greatly enhances long-term value creation and engenders more regular contact with our customers. From an aftersales perspective, we continue to grow, expand margins, and enhance our customer satisfaction, and are encouraged by our ability to hire, retain, and develop technicians. This more recurring revenue portion of our business is a key part of our customer retention efforts. I mentioned earlier that the aftersales team delivered a record performance in the quarter, and just to put that into perspective, our annual gross profit from aftersales has grown by more than $500 million since 2019. And if I just look at the last two years, same-store after-sales growth has grown by over 15%, and that growth has been delivered during a time when the service park of our dealerships has been reducing. With that level of strong growth, it is no surprise that the comps get harder, but it does underline the significant progress we have and continue to make. After-sales growth now represents nearly half of our total gross profit. Finally, as you saw in today's release, we divested seven domestic stores and one import store from the portfolio during the quarter, generating more than $150 million of proceeds, unlocking value and providing us with a capital reallocation opportunities. Underlying these pruning decisions was the opportunity to defragment portions of our portfolio. We also recognized that the window for elevated asset pricing was closing rapidly, and we moved to take advantage of the attractive valuations that were still available in the market. Now, Tom will take you through more details of the transaction so you can clearly see the benefits to our shareholders. Looking forward, we see moderation in seller expectations for franchise store valuation and look forward to putting more capital to work on acquisitions that give us the opportunity to generate higher returns on the capital we deploy. Of course, we'll weigh these opportunities against other capital allocation opportunities, including share repurchases, which remains a cornerstone of our approach to generating very attractive returns for our shareholders. And with that, Tom, I'm going to hand the call over to you to take them through the results. Okay, thanks, Mike. I'm turning to slide four to discuss our third quarter P&L. Our total revenue for the quarter was $6.6 billion, a decrease of 4% from a year ago. Now, this was expected as our used vehicle unit sales declined, and selling prices on both new and used vehicles moderated, since last year. Gross profit of $1.2 billion increased 2% on a sequential basis, led by CFS and after-sales growth, but was down from 2023, primarily relating to normalization of new vehicle PVRs. The gross profit margin of 18% of revenue was unchanged from the second quarter. Adjusted SG&A reflected a consistent sequential run rate and decreased 3% from a year ago, reflecting our disciplined cost control efforts and lower revenue-based commissions. Adjusted SG&A was 67.4% of gross profit, a bit higher than our ongoing expectations as we battled the inefficiencies related to the CDK outage. Adjusted operating income was stable from the second quarter at just under 5% of revenue. Below the operating line, our third quarter results were impacted by higher interest expense, mainly from floorplan debt, and we benefited from lower income tax expense. The third quarter floorplan interest expense of $61 million was up $22 million from a year ago, as expected, a reflection of higher inventory levels. As a reminder, we reflect floorplan assistance received from OEMs in gross margin. This assistance totaled $38 million, up $7 million from a year ago, so net of these OEM incentives, net new vehicle floorplan expense totaled $20 million, up nearly $17 million from a year ago. Going forward, we expect that the 50 basis points reduction in the federal funding rate announced in the second half of September will improve our net floorplan expense. The gain from our 8 franchise store divestiture, divestitures, offset by other items, which are detailed in our financial tables, improved our reported net income by $24 million for the quarter. Our adjusted net income excludes the impact of this net gain. And just to add what Mike mentioned on the franchise store divestitures, this was a case of optimizing shareholder value. These stores were consistently not achieving the returns on capital that we require for franchise stores, often because they're geographically apart from our markets. Our scale benefits were not being realized. Additionally, we realized an aggregate multiple on these divestitures that was significantly higher than the AutoNation trading multiple, allowing us to redeploy capital to more attractive opportunities. All in, this resulted in adjusted net income of $162 million compared to $244 million a year ago. Total shares repurchased over the past twelve months decreased our average shares outstanding by 8% to 40.3 million shares in the third quarter of 2024. This was a benefit for our adjusted EPS, which was $4.02 for the quarter. These third quarter results were not adjusted for the approximate 21-cent EPS impact from the lost revenue and margins during the quarter caused by the CDK outage. So when I step back from the details, I view the $4.02 as quite strong. When you consider the $0.21 impact from the CDK outage, as well as the stop-sale effect, which we estimate at $0.08-$0.09, plus the transitory and growth impacts of growing our AutoNation Finance portfolio, which itself created a year-over-year negative EPS impact of about $0.25, you can appreciate the real performance we delivered in the quarter. Let me move to slide five for some more color on new vehicle performance for the quarter. New vehicle unit volumes were a strong point for the quarter, recovering well from the CDK impact and increasing both on a year-over-year and sequential basis, reflecting strong supply, better incentives, and good performance by our commercial teams. On a same store basis, unit sales increased 2%, with all segments improving, including our domestic segment, which overcame large declines by a number of brands within the portfolio. We are encouraged by the relative stabilization of our new vehicle gross profit PVRs, which were $2,800 for the quarter. On average, new vehicle unit revenue decreased 2% in the quarter, while new vehicle unit costs increased around 1%, resulting in the moderation of new vehicle gross profit PVR. We expect the fourth quarter PVR moderation to be lower, reflecting a normal seasonal shift to premium luxury brands. The new vehicle supply dynamics have significantly improved. New vehicle inventory levels were at 46,000 units at the end of September, down slightly from the end of June. This represents 52-day sales, also roughly in line with the day sales at the end of June, after adjusting out the adverse CDK impacts, and up from 44 days supply at the end of March. Looking ahead, the fourth quarter new vehicle unit sales and overall PVRs will benefit from the seasonal strength of the premium luxury brands, helping to offset the impacts from the ongoing PVR normalization. We are off to an encouraging start to October and expect total unit sales will be up in the month. Turning to Slide 6. In used vehicles, we had modest sequential unit growth from the second quarter, but tracked lower from Q3 2023, reflecting a difficult performance comparison and CDK-related inventory constraints. Unit sales were down nearly 8% from the prior year. Demand for lower-priced vehicles remains resilient. Total unit sales of vehicles priced under $20,000 increased by nearly 4% from a year ago. Unit sales of mid-priced vehicles and of vehicles priced over $40,000 were down double digits year- over- year, some of which was attributable to OEMs taking actions to improve the affordability of new vehicles. Supply availability has also continued to be a challenge, particularly for the mid and higher price tiers, consistent with the past few quarters, driven by lower new vehicle production during COVID. These trends created a composite 6% adverse selling price mix shift for used vehicles year-over-year. The mix impact was also felt in used vehicle PVR, which was down approximately 9% year-over-year, but is holding in sequentially. Looking ahead, with ample inventory, interest rate reductions, and improved affordability, we expect used unit sales will perform well in the fourth quarter and increase slightly from a year ago. I'm now on slide seven, Customer Financial Services. In August and September, our CFS operations recovered well from the CDK outage, as our commercial associates were able to present product menus to customers in a normal fashion and get back to attaching two products to each vehicle sold. This enabled a 10% sequential CFS PVR growth from June to September that Mike mentioned. Our captive finance company, AN Finance, has originated $700 million of loans year to date, meeting our full year expectations in nine months and becoming AutoNation's largest lender. We expect approximately $1 billion of originations for the full year. As a reminder, AN Finance has tightened underwriting requirements, focused on building a prime portfolio and has eliminated third-party originations. In the third quarter, the average FICO score was over 680. The AN Finance P&L performance continues to improve, and the delinquency rates on the business underwritten since the acquisition has continued to meet our expectations. We're also finding that AN Finance is deepening the relationship we have with our customers. Going forward, we expect continued strong performance in CFS and continued growth of AN Finance. Also, as the AN Finance portfolio continues to grow in size, we expect to shift its funding from a combination of warehouse lending plus AutoNation equity, which is, today is roughly a 75%/25% split, to funding that is based primarily on becoming an ABS prime issuer. The AN Finance portfolio is rapidly approaching $1 billion, up from $400 million at the start of the year, while currently generating losses approaching $0.20 per share per year, for year to date, principally relating to the upfront, life of loan credit provisioning, which is a non-cash charge. This growth is generating significant scale and efficiency will lead to profitability by the end of 2025. Moving to Slide 8, aftersales, representing over one-half of our gross profits. It continued its revenue and margin momentum, growing gross profit by more than 3% year-over-year, led by warranty and customer pay and overcoming the headwinds from the CDK outage. Our tech efficiency and productivity were both higher than a year ago and on a sequential basis, as we're now fully recovered from the CDK outage. We continue to develop and promote our technician workforce, which has led to year-to-date increases in our master and certified technician headcount. Our total store gross margin rate once again increased, reaching 47.7%, up 50 basis points from a year ago, reflecting improved parts and labor rates, tech efficiency, technology innovations, productivity, and higher value orders. And looking ahead, we expect our aftersales business will grow roughly mid-single digits each year. To slide 9, we continue to see consistent cash flow conversion. Adjusted free cash flow year to date through September was $467 million, compared to $850 million a year ago, with the change in line with the change in earnings, along with approximate $75 million dollar impact from the CDK outage. While the quantum of free cash flow is normalizing in line with new vehicle PVRs and profits, the efficiency of our cash generation, as measured by the conversion of net income into free cash flow, has been consistently greater than 90%. Capital investments were slightly below 2023 levels, with an expectation of approximately $300 million in CapEx for the full year and comparable annual amounts going forward. Consistent with the expansion of AN Finance, our auto loans receivable related to the loans originated at our own stores increased by $588 million in the first nine months of the year. We expect continued growth in this portfolio. Moving on to slide ten on capital allocation. We consider capital allocation an opportunity to either re-invest in the business, and this is in the form of CapEx, funding the AN Finance portfolio or M&A, or return the capital to our share owners via share repurchases. CapEx is mostly maintenance-related, compulsory spending, typically around $300 million a year, and fairly linear over the course of the year. The AN Finance portfolio currently requires 25%-30% equity funding, which for 2024 will require approximately $100 million of capital allocation. As the portfolio seasons and we're able to establish a regular ABS funding cadence, this required equity funding should come down to 10% or less. We expect to implement an ABS program sometime in the first half of 2025. We continue to actively explore M&A opportunities, many on the franchise store side. We're competitive buyers, where we're confident in achieving a year three return greater than our weighted average cost of capital for core franchise opportunities. That hurdle is a bit higher for non-franchise opportunities. It's difficult to predict the timing of M&A, of course, and so far, we've not identified opportunities in 2024 that meet these return requirements. But as Mike notes, the landscape seems to be improving, and we're starting to see a more regular flow of opportunities. Share repurchases have been, and will continue to be an important part of our playbook. The third quarter alone, a repurchase spend looks light, but is simply a reflection of higher than normal, second quarter free cash flow and lower than normal third quarter free cash flow, caused by the shift of outgoing payments from the second quarter to the third quarter as a result of the CDK outage. Looking at the year-to-date figures tells the full story. The repurchase spend relative adjusted free cash flow, so we compare, repurchase spend to adjusted free cash flow, you get about a 76% ratio this year. Last year it was 85%, so fairly, consistent, a little less due to the higher, AutoNation Finance portfolio equity funding that I talked about. So our capital allocation decisioning, we continually consider our investment-grade balance sheet and the associated leverage levels. At quarter-end, our leverage was 2.5 times EBITDA, in line with our 2-3 times EBITDA long-term target. Now, let me turn the call back to Mike before we address your questions. Thank you, Tom. Now, as you can imagine, we're pleased to put the various events that we have faced over the past two quarters behind us. And despite them, our diverse portfolio of brands and geographic footprint enabled strong new unit growth in the quarter, which outpaced the overall market. We delivered steady used vehicle margin, as I discussed earlier, which was in what is continuing to be very competitive environment. And we delivered after-sales growth that hit a new record for our company. As I look forward, I'm encouraged by a number of trends. Obviously, reduction in interest rates help to improve affordability, and improving affordability will progressively lift demand for both new and used vehicles. We're also seeing actions by a number of our OEM partners to balance demand and production, either through actions to make vehicles more affordable, increased incentives, for example, or adjusting inventory levels by moderating production, and these actions are well received. Internally, we continue to develop our outsourcing capabilities for used vehicles, which ultimately helps to maintain and improve our margin performance. Now, with that, I'm going to open the lines to take your questions. Thank you. Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad now. If you change your mind, please dial star followed by two to exit the queue. And finally, when preparing to ask your questions, please ensure that your phone is unmuted locally. And for our first question today will be from the line of John Murphy with Bank of America. Please go ahead. Your line is open. Good morning, guys. Just a first question, Mike, on the Parts and Service side. You made a comment that, you know, comps get tougher, but then Tom mentioned, you know, that you guys are still looking for mid-single digit same-store sales growth. But I'm just thinking, as you think about that business, there's a tremendous amount of warranty work that seems to be popping up from stop sales, you know, it ranges across automakers. Doesn't that present a potential opportunity here in the near term and maybe even over the next couple of years, to maybe outstrip that? Sort of, you know, on the other side, on the customer pay, you know, how are you measuring retention levels so that, you know, some of those comps that might get tougher on the customer pay side might be eased by holding onto the consumers for a few years longer? Yeah. Thanks, John, so let me just focus on the customer pay piece to begin with, and we've talked about this before, so we look very closely at our penetration of the vehicle park in each of the areas we represent, zero to three years, three to seven years, and seven years above. We sit, depending on the franchise, higher for premium luxury, a little bit lower for domestics, between 50% and 55% penetration of zero to three years. That's obviously influenced by the number of vehicles that are sold outside of the immediate vehicle park, but it shows you that there is opportunity on the customer pay side to grow and improve penetration there. We have a lower penetration, but in line with industry on three to seven years. I think that's a huge opportunity for us. And frankly, most of our OEM partners are now laser-focused on that as well, and they're very much looking at the content required to win some of those customers back to the franchise network. We're involved with many of them who are developing plans there, so I think we can grow there. And I also believe we're entering a period now where we're gonna start to see some growth in the vehicle park that has typically been addressed by franchise dealerships. After two to three years now of reduction in the three- and the seven-year vehicle park, we're gonna begin to see the three-year park grow as we get into next year, and that'll be followed by the seven-year park. So I think there are a number of positives available for us to continue to grow that business, and we're very, very focused on it. As I think about Tom's comments, I agree with what he said, but clearly what he's doing, he takes a more cautionary approach in terms of what is available in the business, and the discussions that I have with my team are very different focus. But you know, Tom, I think does a phenomenal job at being realistic. I do, I think a different job at setting targets that I think are very ambitious. So somewhere in between, we'll probably end up. And what happens with stop sales, hopefully they get progressively reduced with improved quality, as we've seen over many years, because that can't be our strategy for growth. Got it. Helpful. And then just a real quick second question. Tom, you talked about doing your first ABS deal sometime next year. What does that mean for the relative cost of funding for AutoNation Finance? And, you know, what is the opportunity. Yeah, I mean, what is the opportunity there to lower the, you know, the cost of funding significantly? And at 10% sounds a little bit high, even on the equity side. I mean, could that be closer to 5% of what you might need to put into deals ultimately over time? I mean, Mike said I'm conservative, so maybe you're right on the equity funding. But I think we have to, you know, first get a portfolio that's seasoned enough to, you know, get some ABS activity going, and then, you know, hopefully we can drive some good interest and get good funding levels. I do think it'll be a benefit to the overall, you know, cost of the portfolio compared to our warehouse lines. Not entirely sure what number I'd put on it until we get a little bit closer to those events, but it should be positive relative to the funding cost of the portfolio. Tom, maybe just a follow on that. I mean, if - when do we hit run rate on AutoNation Finance about, like, when we get beyond sort of the stress or sort of the weight of the CECL reserves and get into sort of normal funding? Is that more 2026, 2027? I mean, maybe just kind of directionally, where do we get to steady state on this business, maybe cost of funding, and then get beyond the CECL reserve headwinds? Yeah, I mean. Yeah, it's a good question, John. You know, as we said, we're funding about 10% of the overall finance business comes through the captive. We'd like that to be higher, and, you know, we're trying to drive that higher. So I think we'll continue to see really good origination growth in the next year, 18 months. But, you know, like I said, I do expect us to get to a run rate profitability by the end of 2025 on the portfolio, even with that continued growth. Great. Thank you. The next question today will be from the line of Rajat Gupta with JP Morgan. Please go ahead. Your line is open. Great. Thanks for taking the question. I just wanted to follow up on the capital allocation commentary. You know, I think, Tom, you mentioned, you know, 70%-75% of free cash flow. Is that an indication of what the rule of thumb we should be applying going forward, in terms of, you know, what you're thinking, for buyback? And then just curious, you know, Mike also mentioned a lot about, you know, the deal environment, and I'm curious, like, if this could also mean that, you know, we could start to see, a pivot, to more allocation toward M&A versus buyback, given where the leverage is, you know, just given where valuations are. And I had a quick follow-up. Thanks. Yeah. I'll give you my thoughts. I know Mike has some thoughts on it as well. You know, when you look at the overall capital allocation for 2024 year to date, compared to 2023, I think we're in comparable relative levels of share repurchase, as I said. You know, it does comprise a fairly high percent of our adjusted free cash flow in both years. So, and that's a continuation of our pattern. You know, as we look at the reasons for that, certainly we look at the intrinsic value of our shares and see opportunity there to put capital and create shareholder value. But that's also been in the backdrop of an M&A environment that has been, you know, a bit challenging in the last, you know, two or three years. You have a lot of the, you know, potential targets that we look at that are working off of, you know, P&Ls that were, you know, inflated by, you know, the environment that they were operating in under, you know, with COVID. We try and look through those, and we try and normalize those. As a result, we had a hard time finding, you know, ways to create value for our shareholders at the purchase prices that would have been required. I do think we're seeing a bit of thawing in that. You know, I'm happy to say that we took advantage of that environment, you know, in some of the store sales, you know, that we talked about, but I think as we move forward, I do think we'll have more opportunity, and so I wouldn't, you know, bank on, you know, the exact ratios that we've talked about, you know, on a go-forward basis. We're always gonna make our decisions based on where we think we can create, you know, the best shareholder value. I think it's a good answer, Tom. I mean, I think fundamentally, the business demonstrates and continue to demonstrate good cash generation, which brings a lot of opportunity for us. I think specifically, Tom commented on the share repurchase, and that's obviously very important to us and our shareholders. But in terms of M&A, I think two things really have changed over the last few years. Firstly, as we've looked very closely at our market presence and understand, I think, very, very clearly what acquisitions fit into our operating model, but equally what acquisitions fit into our density model, where other businesses that we have and we've been developing add additional synergies over and above the synergies we bring to the actual operation of the dealership. So that means that we can create value, above what would be a normal acquisition of a franchise business, so long as it is in markets we've identified and in a cluster that we've identified. And then secondly, we are already beginning to see prices drop, not necessarily because multiples have changed dramatically because they haven't, but obviously trailing twelve months, profitability has changed. A combination of those things, I think, mean we're in a very good position to assess what I think will be a good set of opportunities as we come through the balance of this year and into next year. Understood. Understood. That's very clear. Just one follow-up on the used car business. I know in July was impacted, you know, by CDK pretty significantly. Could you give us a sense of, you know, how things have trended, you know, through August, September, maybe October in that business as well? I think Tommy mentioned total units were up in October. I'm not sure, like, how new or used were within that, but just any more color on the recovery in the used would be helpful. Thanks. Yeah, the way that I would ask you to try to think about this and I give you my view. If just look back over the quarterly performance in terms of some of the things that we've been focused on. We've been focused on growing and developing on our used car margin. We had a lot of discussion earlier this year, but we're also focused on the inventory turn that we achieve in our used vehicles so that we get that momentum of working capital flowing through that part of the business. With the focus on that, you can see the direct link of inventory levels and our pricing position in the marketplace to our performance. And therefore, my view on our used car numbers in the quarter. I'm heavily skewed on the fact that we came into it with a much lower retail inventory than I would like. I think the team have done a good job building that through the quarter, and we've come into Q4 in a different position. And as a result of that, we are seeing improvements in terms of our used car run rate. And I think if we continue to do a good job in sourcing, and I mentioned that as part of my earlier comments, then if the market is available, we'll be well positioned to get our share of it. And really, that's been the focus. We've talked before about the different channels to rapidly build used car inventory. We have a very, very disciplined approach to some of those channels because you'll feel good for a couple of days because you significantly added inventory to your portfolio. But trust me, after forty-five to sixty days, you're gonna feel a little bit less good as you see those types of vehicles age and the margin dip into negative territory. So we're very disciplined about how and where we look to build our used car inventory, and that's why it isn't something that's an on, off switch. For us, it's more progressive as our processes kick in place. But the summary to your question is, progressively, our used car performance improved throughout the quarter, and we came into Q4 in a better position than we came into Q3. Got it. Got it. Got it. Great. Thanks for all the color and good luck. The next question is from the line of Michael Ward with Freedom Capital Markets. Please go ahead. Your line is open. Thank you. Good morning. Mike, I think you mentioned that you had 50 stores that were affected by the storms, and I maybe I'm not reading this right, but it doesn't sound like there was severe damage from the storms, and even if some sales were postponed, the service side is probably affected more. Is that correct? And can you quantify that at all? Yeah, Michael, you're quite right. I mean, as we know, service side of the business recovers and usually recovers strongly because unfortunately, all of the damage that's been done to the vehicles, the service side is where you see lingering effects of it, and it did impact us in the quarter on the service side. And obviously, there was some carryover into Q4. The good news is that we asked our after-sales teams to add additional hours into the businesses where they're affected. But even the adding of additional hours means that you can't fully recover everything because there's a large amount of vehicles that would have come into your business that are totaled. I don't have a... I'm sure Tom may well have a specific breakout of the residual impact. It's difficult to call, of course, because how do you actually attribute a new vehicle or a used vehicle sale specifically to a storm and not just a normal purchase? Because you can't use traditional market share and territory numbers to do that, but if I look specifically at the run rate on used vehicles, obviously, we had down days. We were fortunate, very fortunate, firstly, that our people, notwithstanding the fact they had some personal issues in terms of their property, but fortunate that they came through physically okay, and we're pleased about that. That was our number one concern, and then secondly, the damage that we had was largely cosmetic. A couple of the businesses had more heavy damage, but we were able to open them as power recovery came back on. So the downtime for our aftersales business was in the order of, I would say, ranging from two days to a maximum of four to five days. And the team have been working hard to catch that up. On the vehicle sales side, I think everything that that was lost would eventually be recovered over a period. The other thing, Mike- So if you look at the... Just go on. I'm sorry. I was just gonna say, you know, it's tough to exactly, as Mike said, parse out the, you know, the impact, particularly on vehicle sales. We are confident that, you know, our shares in the markets we were serving were not impacted, in fact, marginally, probably improved a little bit. But, you know, overall, as Mike said, it was a short-term, you know, duration event for us, in each of the cases. So if we look at the parts and services, if you had 2.6% same store growth, if you exclude, like, the storm affected, my guess is it's 200-300 basis points higher, and it's probably that mid-single digits that you're referring to. Is that safe to say? I don't think I'd put that much on it, to be honest with you, Mike. You know, it's like I said, it's a tough number to, you know, put your finger on. But, you know, it's probably, you know, a hundred, two hundred basis points, you know, impact on growth in the periods we're talking about. Yeah. Yeah, right. Yeah, Mike- That's what it sounds like. Hey, Mike, this is Derek. In addition to that, we did have the CDK call-outs that we mentioned, this $0.21 a share. Right. Right. Part of that, part of that is aftersales. Right. You'd want to have that in your number. You're looking at it on a same-store basis? I'm guessing that third of that was aftersales. Exactly. Yeah. Right. It definitely- Yeah. It was a third, and that's, that's a good point. I thought, by the way. Okay, so it- You know, No, go on, carry on. Carry on. I'll ask your next question, and then I'll answer it hopefully. No, I just... I was just going to point out, it seems like the aftersales strength was much more than it appears on just the numbers that were printed. That, from my point of view, that is a correct statement. I, that's why I referenced that. For me, you need to look at the combination of where we've come from over the last two years, plus some of the impacts- Yeah. That's in the marketplace. Frankly, as we discussed with the earlier questions, there's more opportunity available for us. We added technicians in the quarter, but we didn't add them at the rate that I wanted to be able to add them into the business place. And our growth in technicians, although it's been good over the last two years, in the quarter, we probably grew that by 1%, maybe 3%, and I think that there's more that we need to do in that area. So notwithstanding the actual number itself, you can take into account the things that we've talked about. I think the fact is that as our teams continue to add technicians, we continue to work on attrition rates, increase the resource that we've got, that there's further opportunity for us. So yeah, we did grow in the quarter. We did hit a record for us. It's now 50% of our gross profit, as we've said. It's a good momentum, but there's more that we can unlock. It just takes time to do it. Thank you much. The next question today will be from the line of Jeff Lick with Stephens Inc. Please go ahead. Your line is now open. Thanks for taking my question. Mike, I was hoping to tap into your OEM experience and background. So like, if you humor me here, I have a bit of a deeper dive, long-winded question. You know, just thinking about the path of new GPUs as well as vehicle affordability and the potential implications this has on the, you know, the used vehicle business. You know, it seems if we stay on this path of high 15s to 16 million SAAR, this has big implications for the economics and the dynamics of the used vehicle biz and then, you know, also new affordability. So, you know, when you look at 3Q inventory levels that just ended here for the major OEMs, you know, on a day supply basis, they've come all the way back relative to 2019, with the exception of Toyota and Honda, which, you know, are really more than half or, you know, around half or more, you know, less. You know, so and it's interesting that Toyota and Honda are the two biggest market share losers in 3Q. So, you know, a series of related questions here. You know, first, do you think Toyota and Honda are willing to sacrifice market share long term in favor of unit profitability? And then second, how do you think about industry dynamics between new and used, total and unit profitability in new and used in the two distinct paths? You know, one being the 16 million SAAR environment, where it kind of ends, and then, you know, where it's more a focus on affordability or, well, unit profitability versus market share, and then, you know, the other would be a more market share focused, higher SAAR, more consumer friendly and affordable environment. I'm just curious how you think about that, and then it'd be great if, you know, based on your knowledge, how would you handicap which one of those two outcomes going forward is more likely? Well, firstly, I don't think Toyota and Honda are in a position where they have to make a sacrifice in terms of their profit to increase their volume. I think that their current supply and demand equation is still very much in their favor, and even if they're able to increase global supply, I think they can bring more inventory to this marketplace and still maintain good margins. I think that the dealerships in their partnerships, us being a big partner with them, will continue to benefit from that as you get into 2025 and beyond. I think they're working very hard to increase production. In terms of the dynamics, I'll talk a little bit about my view on it, and then you can redirect and ask me some more questions, but you talk about the total SAAR. If you look back and actually strip out the retail SAAR, going all the way back to 2022, it's been bouncing around 12-13, but really some very minor growth throughout that period of time, and that, I think, is driven by a number of things. Obviously, we've seen average MSRPs continue to increase. We have seen significant increases in interest rates, and we still see very suppressed incentives and still the leasing channel low, but those dynamics are changing because we've begun to see now the moderation of average MSRPs in the marketplace. They are falling quarter over quarter, and I think that they will continue to moderate down. We are seeing the beginning of interest rates dropping. That's already seen in. If you're a new car buyer, it will seep through slower if you're a used car buyer, but that environment is improving, but it's still very elevated compared to where we were in 2022. So in terms of the retail SAAR, you've seen retail SAAR slow progressive increases, notwithstanding the fact of sustained high MSRPs and significant increase in interest rates. That's been partially offset by manufacturer incentives, I think, going from about $1,000 to $2,500, $2,800. But I think you're gonna see the return to $3,000 plus incentives in Q4, and you haven't seen that since Q1 2021, from memory, and I think that will progressively also add to the demand equation. So my view is that because of that, you're gonna see the retail SAAR continue to improve back end of this year and into next year, which will feed in more favorably into used cars. One of the pressures in used cars, and apologies for talking so much, but there was a lot of questions packed into what you said. But one of the pressures in used vehicles as or one of the year-over-year comps in used vehicles that stood out is those people that were buying $40,000-plus used vehicles that were traditionally new car buyers, that I think will continue to return to the new car environment. But I do think that as that new car sales continues to improve, it's gonna add benefits in the used car market. I don't think it will necessarily have a dramatic effect on used car margins because of the way used cars are bought and sold. They always float within a range, a band, and have done that, and you can see that level of consistency, and that will continue. So I view that as being positive into the future. One of the things that remains as a point that has had some discussion, but it's impacted margin and has also impacted growth, has been the relative imbalance between supply and demand of the various powertrain options. Today, the industry still sits with inventory levels of battery electric vehicles that are higher than the demand, and I think you'll see OEMs work very hard in the next two quarters to clear those out. That will impact pricing, and you're also seeing the inverse on HEVs, where the market seems to be gravitating towards that, and the OEMs are beginning to build more of those. So those impacts, I think, have implications for some continued moderation of margin on the new car side, partially offset by, I think, continued increases in new vehicle inventory in the industry, which will ultimately help used vehicles and supply of used vehicles, particularly for franchise dealers. And if I missed any in your question? No, you know, a quick theoretical follow-up as it relates to: could you see a scenario where, you know, the late model used cars are just in shorter supply, and that drives up the value of those relative to new and higher residuals, where, you know, for a short period of time, we just... we see a real push, you know, even greater than usual into leasing? I mean, leasing is still set at 20, just over 20%, where historically it's been 30%. So I think you're gonna see an increase in leasing anyway. I think it's just a natural progression, and that's what will also fuel the increase in OEM incentives. You know, I think we're at the peak of leasing percentages on battery electric vehicles. I also think the 6%-7% market share is where it's gonna be for a period of time. So any increase in leasing is gonna come through other powertrains, which I think has great benefits for us and our franchise dealerships. I don't think that it will result necessarily in an increase in a strong increase in late-model used residual values, because I think what's gonna happen as a result of that, those leases will be 12 months-24 months. They're progressively gonna be released in the marketplace. So I think- Yeah. And, you know, we overuse this term, but I think normal levels of depreciation, appreciation movements are more likely in the future rather than changes to what's been a historical pattern. Great. I appreciate you, you know, giving me your insights there. The next question today will be from the line of Colin Langan with Wells Fargo. Please go ahead. Your line is now open. Oh, great. Thanks for taking my questions. Just wanted to clarify on the $0.21 CDK impact. Is that just an impact on what you think are the lost sales? I think in the past, you took, like, compensation items as special charges, and I thought last quarter, there was some hope that there would actually be maybe some catch-up. I guess that catch-up was more than offset by continued pressure in the quarter? Yeah, thanks, Colin. Yeah, so you're recalling the second quarter charge that was comprised of two things. One was the one-time payments that we had incurred, or one-time costs we incurred, mostly payments to our associates. And secondly, was the, you know, the impact of the lost sales across new, used, CFS impact, as well as, you know, on the after-sales. In the third quarter, the impact is really just limited to the lost business, and it's split evenly between used, after-sales, and CFS. And, you know, on the used side, as Mike talked about, we came into the quarter with significantly lower inventory levels than, you know, we're normally, you know, working with. And there's a consequence that, you know, the July used car business and the CFS that's impacted, you know, along with those sales, you know, was you know probably two-thirds of that impact. And, you know, the rest was just on the service side. The CDK capability, you know, for the various service you know disciplines and processes, was really not fully restored until, you know, probably, you know, two and a half, three weeks into the month of July. So that impacted our ability on the service side as well. So probably an even split between the three used, CFS, and service. Got it. Good clarification and just a follow-up, I guess. It sort of relates to pricing, but you know, any update on where you think new GPUs eventually stabilize at? I mean, do we get back to historic, you know, percent margins, historic dollar new GPUs? And you know, looking at the data, it actually looks like at least for your overall domestic, looks kind of back to where things were pre-COVID. So have we seen some brands already kind of hit their historic levels on new GPU? Yeah, I think a lot of people have tried to speculate and comment where margins are gonna go. I think, as we've said, that the reduction in margins is moderating. We will see a reduction in Q4. Some of what we've seen, as I alluded to, has been driven by a mix impact between powertrains and the relative margin there. That may not, on the surface, seem to be material, but when 7% to 10% of your volume with battery electric vehicles, the relative margin of a BEV vehicle for the OEM and the retailer compared to an ICE engine or a hybrid engine is very, very significantly different. I think that element, it gets now removed from the marketplace because I think broadly, the mix and the margin effect we're seeing there has been washed out of the system. There are a number of OEMs that are all the way back to 2019. There's no doubt, and some of them are struggling, and I think it's been widely reported in the press. But there are still a lot of OEMs that I think are continuing on what I consider to be a sustainable course of improved margins for them and for us. So I don't see a complete return to 2019 margins per se, across the business. But as I mentioned, as we came into this year, my expectation was that as we exit this year, our margins are gonna look largely like 2019. And we've had discussions about that. It's not that I am planning for that to happen per se, or that it will happen. I think they'll probably be elevated to that as we've seen them develop through the year. But my view is that, and we're beginning to see it, that inventory levels are returning back rapidly, and in some instances, higher than 2019, and we will have an effect on margins. But some OEMs have removed production, some OEMs are looking to reduce their inventory levels in Q4. I think those elements will mean, as we come into 2025, that there will be more stability, but I think you'll see some downward pressure in this quarter. Got it. All right. Thanks for taking my questions. The next question today will be from the line of Douglas Dutton with Evercore ISI. Please go ahead. Your line is now open. Hey. Yeah, hi, team. Thanks for taking my question here. My first question is just gonna be on Hurricane Milton. You know, it sounds like there's some store closures there for however temporary that was. Do you maybe have some early estimates on the effect of both, you know, on operations and perhaps any incremental CapEx that's gonna be needed to refresh these rooftops after the hurricane? You know, from what we've read on store closures, it seems like even Q4 might not be clean. So just curious on the bogey there. Yeah, we're as you can imagine, I mean, for Milton, we're fairly fresh off of it. I myself have, you know, been amazed at the resilience of our operations and, you know, both the preparation for what was coming, as well as you know, the ability of the team to get back online fairly quickly. There'll probably be a modest impact, you know, when you look at our insurance deductibles for store damage, mostly like facade type stuff. But you know, the vehicle damage was fairly limited. So we were really fortunate in, you know, both on that part as well as the safety of our employees. And you know, there'll probably be a modest call-out in the fourth quarter, you know, once we finalize the impact. But I wouldn't say it's you know I wouldn't call it anything you know close to devastating on the operation. And from a CapEx perspective, I don't see significant incremental CapEx as a result of this. Okay, great. Thanks, Tom. And then I'll just ask one more here. Curious on GPUs, you know, sequentially into Q4. I think there was some trading of profitability or margin for volume in Q3 in the wake of CDK, you know, in early July. Again, just trying to think about what a clean quarter looks like, given that CDK has been mentioned in all the walks in the presentation. But, you know, is there a world where GPUs are flat to up before continuing sort of the downward normalization trend in early 2025, you know, on Q4? Not in my opinion. I mean, I think you're gonna see you are going to see the normal seasonal lift in Q4 in terms of our premium luxury brands. I think that is gonna happen. I think the environment that I talked about is going to be more positive. You're going to see increased incentives in the marketplace. I think OEMs are thinking about many of the OEMs I've talked about are thinking about Q4 as an opportunity to get themselves in a great shape for 2025. And I view that, I view that positively, but as we have said, I think you will see lower, but some downward impact on margins in the quarter, partially offset by the mix change that we normally see. But I am thinking positively, even in that context, about the new vehicle industries as we finish the year off. But I do think you're going to see, as we've said, and many of our competitors have said, you are going to see a lower but reduced overall new GPU. Yeah, I would add to that, Doug, that, you know, when you look at the way we've quantified and articulated the CDK impact, you'll notice I didn't mention, you know, new vehicles. We were transacting, you know, out of the gate, and while the business was not perfectly back to normal, I don't think there were significant impacts on profitability, you know, caused by CDK, on unit profitability, on new. So I don't think there's a snapback as a result in Q4. Okay, that makes a lot of sense. Thanks for the detailed answer, guys. Thank you, and this will conclude the Q&A session for today's call, and I would now like to hand the call back over to Mike Manley for some closing remarks. Firstly, thank you for joining us on the call today. I think we covered a load of topics, and I appreciate your questions, and I hope you got the answers that you were looking for. You know, as we've gone through the quarter, and we've talked about the various impacts, and I stand back, I am pleased with the results that we delivered. You know, you can see them stand out in terms of our cost performance, our new vehicle, new unit growth, and our record after sales gross profit. And again, thanks to the teams for that. And looking ahead, as I've talked about, and we've had the discussions on, I think there are many things in the environment, whether it's moderating interest rates, OEM actions, that will drive improved affordability on new vehicles, that, in my mind, will lead to a continuation of that slow but progressive increase in the retail side. So I think that's, you know, that's a positive outlook. And I think all of the things that we have talked about have had their impact on the business, and, you know, we, apart from some minor things that Tom mentioned, we're into what I'm hoping is gonna be a much cleaner quarter from that perspective. So again, thank you all, and look forward to talking to you in the near future. This will conclude the AutoNation, Inc. 3Q 2024 earnings call. Thank you to everyone who was able to join us today. You may now disconnect your lines.