Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's second quarter 2026 financial results conference call. Please be advised that this call is being recorded. At this time, I'd like to turn the floor over to Mr. Pete DeLongchamps, Group 1's Senior Vice President, Manufacturer Relations, Financial Services, and Corporate Development. Please go ahead, Mr. DeLongchamps. Thank you, Jamie, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliations related to the adjusted results we'll refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply, conditions of markets, successful integration of acquisitions, and adverse developments in the global economy, and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call, Daryl Kenningham, our President and Chief Executive Officer, and Daniel McHenry, CEO of the U.K. operations and Chief Financial Officer. I'd now like to hand the call over to Daryl. Thank you, Pete. Good morning. At Group 1, we try to focus on controlling what we can control. In today's environment, the Group 1 business model, built around our proven cluster strategy, leading after-sales operations, and disciplined capital allocation remains strong, and we continue to believe that this model will deliver long term. Today, I'm going to focus my remarks on near-term actions we've taken to build on our strong foundation and unlock value for our shareholders, including the exciting Hennessy automobile transaction we announced earlier today. Our second quarter results were impacted by a variety of factors. Persistent affordability challenges for the automotive consumer, challenges sourcing used vehicles, and short-term disruption from our largely completed corporate rebranding efforts combined to lower our new and used vehicle volumes. While this drop in volumes was disappointing, we're encouraged by steady GPU performance in both new and used vehicles. Starting with used vehicles. We began the quarter with 26 days supply, and in some markets, we never really recovered from that low days supply. An easy solution would've been to restock by purchasing auction units. However, in our minds, that's not a great outcome given the potential gross profit impact that can have. We prioritized PRU and were able to hold margins year-over-year, even though average transaction prices were up $1,400 on average. In three-year-old cars, one of our largest volume segments, ATPs were up much more than that. To improve our execution, we're making concentrated efforts to improve our sourcing of less expensive vehicles, being more aggressive with bids, improving our appraisal practices, and putting more emphasis on trade closing rates. Our focus remains on organic sourcing. Although it's more difficult these days due to higher negative equity levels, we feel that we have opportunity to improve. Turning to after-sales. The U.S. after-sales business, which remains central to our long-term strategy, is undergoing a transitory shift. Consumers who brought vehicles during the low industry volume period of 2020-2022 are now coming in for service today, at a time when many have reached the end of their factory warranties, which is generally a high defection point. Because of those lower SAR volumes in those years, there are fewer of those high RO value customers in the market. They have more provider options, and they have more increased affordability pressures. To ensure we maintain our after-sales mom entum in this changing market, we're adjusting our approach. We've done a great job at Group 1 adding technicians over the years, including in the second quarter. We're going to put additional focus on upgrading our service advisor skills. We need to ensure our advisors are equipped to drive sales of the services our technicians perform, getting more out of this additional technician capacity that we've developed. To capture those four- to seven-year customers, we will also put more affordability messaging into our service marketing. As an example, in June, we launched a $17.76 oil change, which drove our best traffic of the quarter, with strong conversion and good margins. We also have data that confirms we recaptured some at-risk customers that were going to the aftermarket. We were able to execute this successful promotion because of our investments in our proprietary customer data platform, which allowed us to understand what offering would resonate with our customers and who we should target. To put more focus on retention in a high defection environment, we are rolling out One Care, our discounted maintenance plan to all Group 1 U.S. stores. This will keep our best customers coming back to us for their factory-recommended maintenance. Additionally, we're also targeting used car customers whose service retention is typically lower than that of new car customers. We feel these steps will allow us to maximize our customer pay business in what is certainly a changing market. A final note on after-sales. We were pleased with our 4% same-store sales customer pay growth, which lapped a 14% growth quarter last year, and it was 10% before the CDK impact. Over half of our CP growth this quarter was attributable to increased customer count. In the second quarter of 2025, same-store U.S. warranty revenue grew approximately 32%, driven by Tundra and GM engine recalls. This elevated warranty traffic also generated a surge of non-warranty repair and replacement work through our service lanes. Setting aside last year's one-time recall benefit, the underlying performance of the after-sales business remains resilient and reinforces our confidence in the trajectory from here. Turning to F&I. Two years ago, we introduced virtual F&I in our U.S. stores, giving customers the opportunity to complete their transactions virtually with a remote F&I manager. This innovation is now installed in 66 stores across the U.S., and in those stores, 20% of our F&I volume is virtual. We're seeing strong PRU performance, significantly improved transaction times, and lower compensation costs compared to in-store transactions. Customer feedback has been extremely positive, we expect to continue our rollout through the rest of the year. Virtual F&I is only one part of our broader technology effort. As outlined last quarter, we are currently leveraging artificial intelligence to support customer acquisition and retention, improve our inventory sourcing, and digital processes to reduce G&A expenses. We continue to drive these efforts, which remain a key strategic focus for Group 1, and we look forward to sharing more details in the coming quarters. Turning to our Group 1 U.S. store rebranding initiative, another key investment in our future. At Group 1, we believe our business is local. Our business model works when we sell and service customers locally. Prior to this rebranding initiative, we had over 40 different brand names on our stores, with multiple brand names even within the same market. We decided to rebrand to get more leverage locally on our marketing spend and our philanthropy efforts. We've now rebranded over 60 stores, including almost all of our Texas and Maryland stores. This is more than half of our eligible U.S. footprint, and we will continue rebranding our efforts through the rest of the year. Rebranding is the right thing to do long term, it does have its short-term challenges, but we believe they are transitory. As an example, given the time it takes organic search to index website changes, some customers have had difficulty finding our new store names, that has impacted traffic and unit volumes. We are adjusting as we go and supplementing organic search with targeted paid search efforts. We're also addressing this shift towards large language model-driven results and anticipate being well-positioned here going forward. In the long term, we believe going to market with a single, strong, unified brand will improve the effectiveness of our marketing investments and drive greater customer retention, particularly as we focus on owning a greater share of garage in our cluster markets. For example, if a family owns a new Ford F-150, a Toyota Camry, and a pre-owned BMW, we want to own all of the sales and service transactions associated with that household. In households with multiple vehicles, we are encouraged by the progress we are seeing in driving a greater share of garage. Turning to costs. In an uncertain environment, it's critical that we control cost. As we discussed last quarter, we took decisive action in early April with a goal of reducing our headcount by 700 and eliminating $50 million in expense from our U.S. store base. We were able to accomplish this in the second quarter, exceeding our targets in headcount and dollars. Despite lower gross profit in the quarter, our tightly managed personnel costs improved compensation expense as a percentage of gross profit. This quick execution is what drove our U.S. non-GAAP SG&A leverage of 66.4%, a level we were pleased with. We will continue to size our cost structure appropriately for the operating environment in both the U.S. and the U.K., while investing in the areas that we believe will create the most value over time. Lastly, we remain committed to disciplined capital allocation. During the quarter, we acquired four U.S. dealerships, retaining two of them, Stone Mountain Honda and Stone Mountain Toyota, which we expect to generate approximately $205 million in annual revenue. Year to date, we have acquired and integrated dealership operations representing approximately $340 million in expected annual revenues. We also divested four Jaguar Land Rover dealerships in the U.K. during the quarter. Of course, earlier this morning, we announced the acquisition of Hennessy Automobile Companies, which along with Stone Mountain Honda and Stone Mountain Toyota, will boost our presence in the Atlanta market from three to 15 dealerships, making Group 1 a dominant force in an outstanding growth market. Atlanta will become our second-largest market in revenue and our ninth cluster market in the U.S. We plan to execute the same proven playbook in Atlanta as we have in other cluster markets, such as Oklahoma and Boston, such as Houston and Boston, to offer customers great convenience and choice while driving operating efficiency and attractive long-term returns for our shareholders. Atlanta is a robust automotive market with strong fundamentals. The city is the fastest-growing metropolitan statistical area outside of Texas and the largest luxury vehicle market in the Southeast. The Hennessy transaction includes 10 dealerships with a fabulous brand portfolio, including two Lexus stores, three Land Rover stores, two large Porsche stores, Honda, Ford, and Cadillac. The facilities co ntain 500 service bays staffed with 280 technicians. The Hennessy stores' average revenue is $170 million, significantly larger than an average Group 1 store and more than double the national average. Additionally, fixed operations gross margins are above the national average, and EBITDA margins are above 7%. We expect the Hennessy dealerships to generate approximately $1.7 billion in annualized revenue and, pending normal closing conditions, be immediately accretive to our earnings later this year. The acquisition is about much more than just acquiring an outstanding group of great stores. It is also about Group 1 repositioning our portfolio around stores that fit our desired success profile: premium brands, high-revenue rooftops, growing markets, and clusters. At the same time, we are moving away from stores and markets that do not fit that profile. We will have more announcements on some of those planned actions as we execute them in the months ahead. We remain committed to disciplined capital allocation. Last year was the largest stock repurchase year in our history, $550 million in buybacks. This year, we've disposed of stores generating $900 million in revenue that did not fit our success profile. In addition, we're executing on some outstanding acquisitions that will help drive growth well into the future. To close, we're managing the Group 1 business for the long-term durable value creation and making capital investment decisions that will have a positive impact for years into the future. We're executing our cluster strategy and leveraging our customer data better than ever. I'm confident that our modifications to after-sales will bear fruit for a long time into the future. I'm excited about the changes we've made and look forward to our team's continued hard work. I will now turn it over to Daniel McHenry to talk about the financial details of the Hennessy transaction and our significant progress in the U.K. under his leadership as CEO and our second quarter financial results. Daniel? Thank you, Daryl. Good morning, everyone. As you heard from Daryl, Hennessy is a unique opportunity with a clear strategic fit, one that we expect to be immediately accretive to EPS. Given that, we are comfortable temporarily operating above our target rent-adjusted leverage ratio. At closing, we expect our rent-adjusted leverage ratio to be under 4x, still significantly below our credit facility covenants. With strong cash generation of our business and continued portfolio optimization to dispose of underperforming and lower volume stores, we plan to return to our target leverage by mid to late 2027. In the second quarter of 2026, Group 1 Automotive reported revenues of $5.4 billion, gross profit of $861 million, adjusted net income of $115 million, and adjusted diluted EPS of $9.61 from continuing operations. Starting with our U.S. operations, our second quarter results reflected continued affordability pressures on a more normalized margin environment compared to the exceptionally strong prior year period. Throughout the quarter, we remained focused on areas within our control, improving execution, reducing costs, and preserving profitability. New vehicle unit sales declined on both a reported and same-store basis, reflecting ongoing affordability concerns, inventory pressure on certain brands, and a difficult year-over-year comparison. New vehicle GPUs decreased sequentially from $3,313 to $3,260, remained consistent with quarter four 2025 level. In used vehicles, lower retail volumes were partially offset by higher average selling prices. Gross profit per unit remained under pressure as acquisition costs and sourcing competition persisted. We continue to leverage our scale, data analytics, and disciplined inventory management to improve sourcing and position the business for stronger performance. F&I profitability remained resilient, with gross profit per unit essentially flat compared to the strong prior year quarter, demonstrating continued consistency in our sales process. Aftersales continue to provide stability to our earnings. As Daryl discussed, we continue to optimize our collision footprint by reallocating capacity towards traditional service work, where we see stronger long-term results, while also closing collision centers that did not meet our return thresholds. This resulted in a 15% decline in same-store collision revenues. Additionally, aftersales gross profit was negatively impacted by the lower internal reconditioning associated with the declines in used units. Same-store customer pay and warranty revenues increased approximately 4% and 1% respectively, with corresponding gross profit improvement of approximately 3% and 4%. This revenue growth is strong against tough warranty comps that were up 32% from the previous comparable period, which included Tundra and GM engine recalls. In addition, our technician recruiting and retention initiatives continue to generate results, with same-store technician headcount increasing 2% year-over-year. While our U.S. results were below our expectations, the operational and cost actions implemented earlier this year are beginning to improve efficiency, and we remain focused on strengthening the operating performance in the quarters ahead. Turning to the U.K. I'm proud to be leading our U.K. operations and encouraged by initial early progress. Our U.K. business continued to demonstrate resilience despite a competitive operating environment. New vehicle performance remained solid, supported by higher same-store volumes, which was up nearly 4% with a stable gross profit per unit. Used volumes remained under pressure. While same-store revenues declined modestly, we remain focused on balancing volume and profitability as market conditions evolve. Aftersales and F&I continued to build momentum, delivering year-over-year growth in both revenues and gross profit on a same-store basis. These businesses remain central to our strategy of improving earnings quality in the U.K. as we continue to leverage proven operating practices from our U.S. operations to improve the long-term performance. Same-store technician headcount increased 2%, adding value capacity to support future growth. On expenses, same-store SG&A as a% of gross profit on a year-to-date basis was in line with our target at 80%. We have also started relationships with Chinese automakers and opened our first dealership franchise in June, with additional locations expected later in the year. We acted to sell four of our underperforming JLR stores as we previously committed to do so, which generated approximately GBP 50 million. Across both markets, we continue to focus on improving execution, reducing costs, and increasing operational efficiency while positioning the business to deliver stronger returns over time. Turning to our balance sheet and liquidity. Our balance sheet remains strong, providing financial flexibility to continue executing on our disciplined capital allocation strategy. As of June 30th, our liquidity of $684 million was comprised of assessable cash of $322 million and $362 million available to borrow on our acquisition line. Our rent-adjusted leverage ratio, as defined by our U.S. syndicated credit facility, was 3.3x at the end of June. On a pro forma basis, reflecting the two dispositions completed in July, it would have been 3.2x. Cash flow generation year-to-date 2026 yielded $211 million of adjusted operating cash flow and $118 million of free cash flow after backing out $93 million of CapEx. This capital was deployed in the same period through a combination of acquisitions, share repurchase, and dividends, including the acquisition of $340 million in revenues through June 30th. $72 million repurchasing 205,190 shares at the average price of $353.08 and $13 million in dividends to our shareholders. During the second quarter of 2026, we elected to hold cash ahead of the Hennessy acquisition while also preserving flexibility to optimize leverage. We currently have $306.3 million remaining on our board-authorized common share repurchase program. For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release, as well as our investor presentation posted to our website. I will now turn the call over to the operator to begin the question and answer session. Operator. We will now begin the question and answer session. To ask a question, you may press star and then one on your telephone keypads. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys. To withdraw your questions, you may press star and two. We do ask that you please limit yourselves to one question and one follow-up. At this time, we will pause momentarily to assemble the roster. Our first question today comes from Mike Ward from Citigroup. Please go ahead with your question. Thanks. Good morning, everyone. I wonder when you talked Hennessy, it sounds like that is a premium acquisition, so I assume it has got a premium price. Can you talk a little bit about financing it? It sounds like if these brands aren't meeting those or the stores aren't meeting the profile, you are going to be selling some. Can you quantify any of that? Is that some of the way you are going to be paying for Hennessy? Is that what you are looking at? Good morning, Mike. This is Daryl. I'm going to answer part of your question, Daniel will take the rest of it. We are going to, as you've seen over the last year or two, we're working towards having more cluster markets, high revenue, premium brands, and that's what we're moving towards. We've executed against that over the last two or three years, on the buy side and the sell side. We're going to continue to do that. We have identified some dispositions that we're working on, and we'll have more to talk about on that in future months. These are premium brands. They are premium stores. EBITDA margins are excellent. We are really happy with what we paid for these stores, especially compared to what we have seen in other transactions that we've either been bidding in or have learned about. We're really pleased with the valuation and what we paid. Daniel will speak to the other questions you had, Mike. Mike, good morning. It's Daniel. Regarding the purchase price for the Hennessy acquisition, it's approximately $1.3 billion, made up of $1 billion in goodwill, just over $200 million in freehold property or purchased assets, and $100 million in other assets. That's going to be funded by long-term debt. The plan is to go to the bond market in Q3 to purchase that, while in the meantime, there's a 364-day bridge loan in place to purchase the asset. You are correct in what you say around the dispositions. Plan is that there'll be some dispositions Q3, Q4, and that will go towards paying down some of that debt. Okay. Should we think about half and half dispositions and debt funding? I think that's a fair estimate. Okay. On the $50 million cost savings that you identified, that you completed, is that all in the U.K.? When will we see the full benefit of that? U.S. It's in the U.S. Oh, it's in the U.S. Okay. Yes. Let me give you an example of that. We targeted 700 people. We got north of that, and we targeted $50 million. Just let me give you an example that I think quantifies it really well. Personnel costs. Gross margin between Q1 and Q2 on a same store, we were up $4 million, personnel cost was down $17 million. We generated more gross on $17 million less in personnel costs. Multiply that over four years and you get. By four. north of $50 million easy. That's just the people cost. We took a look at some other parts of our business too, Mike. We were pleased with the execution on that. Mike, it's Daniel. Just to put it in perspective, if the SG&A in the U.S. had remained at the same level as it was in quarter one as a percentage of growth, we would have had an extra $19 million of cost in our business. Yeah. All right. Does this cluster strategy help on the cost front as well? It helps, yes. We see better SG&A leverage in our larger. The larger the cluster market, the better SG&A leverage we get. It's due to a variety of things, but yes. Thanks very much. Thank you, Mike. Our next question comes from Jeff Lick from Stephens Inc. Please go ahead with your question. Good morning. Thanks for taking my question. Daryl and Daniel and whomever else, I guess if we could just drill down on. You highlighted a couple different items in the U.S. that might be driving short-term sales pressure. Talked about the branding dynamics. I'm just curious if you could maybe force rank. If you start with same store new down five, the market was kind of flat. What attribution would you give to the branding and the traffic, short-term traffic issues versus other factors? And then, we've always tried to use the new same store sales as a proxy for what you should be because of the trade-in factor. Obviously, that was quite a bit below. If you could just put a little more meat onto that bone as to what kind of drove the variance between the used and the new. Sure, Jeff. Daryl. I would say maybe two-thirds of the 5% is due to the bumps, the transitional issues around rebranding and organic search associated with that, et cetera. We get questions on Texas quite a bit. I do believe gas prices is changing the mix of what's being sold today. You can see it in full size truck mix and full size SUV mix. When you look at our mix, 80% of our Ford and GM business is in Texas. I think that affected it to some degree. Yeah, we didn't get as many trades cause the core volume was down. We also need to do a better job on appraisals and capturing those trades. We saw that ratio drop a little bit in the quarter, more than we would like to see it. It's getting harder to source vehicles organically just because there's more negative equity out there. We feel like we can up our game on the sourcing, and it's really around our appraisal practices. We try to really keep our stores from going heavy on auction cars, especially this time of year, because the values drop in about 60 days from now, 30 days from now. Those are the things that we really need to do a better job of. We're making some progress already on that. Those are things that we really need to. I guess on the new car and the used car side, if you think about Group 1 and our history, we've always driven new and used car volumes really well. There was a time not too long ago when our used to new ratio was 0.7 to 1, and we got it up to 1 to 1 end of last year. Our sales efficiency of our stores, which is an OEM metric on market share. About five years ago, our average Group 1 store was 94% sales efficient, which is 6% below average. Today, our average store in the U.S. is 109% sales efficient. That's the incrementality, and that's measured against other dealers in the same brand. We've had success driving sales volumes in new and used, and I feel like that's a core competency of Group 1. We certainly struggled with it in Q2, though. Just to follow up on the rebranding and the consistent branding or the consolidated branding. As you think about the Boston market, because I think you're looking at that in the fall. You've got some pretty well-established brands in Prime and Ira. Has the Texas experience made you rethink this, and would you do the same? Hennessey's a pretty well-known brand in Atlanta. Would you change that as well? What are your thoughts there in terms of have you thought about maybe just taking a pause on this and seeing how Texas works out? Well, we want to do it well instead of fast, I will tell you that. That's important. We are learning from every market we've rolled out. We look at some markets like El Paso and Lubbock, which are fabulous markets for us, and they've gone great. They tend to be more single point markets, but they've gone really well. Other markets that are a little more competitive, we have to lean in more on paid search and other supplemental advertising through the transition period. We'll do that with the other markets. We are committed to rebranding all the stores in the U.S., and we just feel like we can get a much better, more efficient use of our ad spend, marketing spend, reach more customers that way, by having all the stores the same name. Most customers buy from the store closest to them and service at the store closest to them. The most important name on the store is the OEM brand and the location. Yeah, we're still committed to it, absolutely. We feel like these issues that we're seeing are transitory. We are learning from it, we are going to continue to adjust as we go. There's absolutely no consideration to not continue. Well, best of luck in the rest of the year, look forward to catching up soon. Thanks, Jeff. Our next question comes from Alex Perry from Bank of America. Please go ahead with your question. Yeah. Hi, thanks for taking my questions. I actually just wanted to start there and dig a little bit more on some of the rebranding. I guess maybe any metrics you could share on the sort of rebranded stores versus non, sort of how you expect or how have comps trended after the transition period? Maybe talk through sort of any savings or efficiency impact that you sort of expect from the better marketing leverage. Thanks. Well, let me give you an example in Houston. I think we had five different brand names on stores in Houston. We had Sterling McCall, we had Advantage, we had Beck & Masten, we had others. We spend $1 million a month in marketing in Houston. We can use that $1 million on one brand name or on five. We can certainly get better leverage out of that $1 million on one brand than five. That's certainly how we expect to get the leverage on it. What we ran into, again, in Houston, is we'd own the Ford store and the Toyota store and the BMW store all within three or four miles of each other, and customers didn't know the same company owned all of them. How do you market to that customer about their Ford F-150 and their BMW, they own both of them. The share of garage, and as we get further into it, we will share more of that data. We are already seeing evidence that we are capturing a larger share of the garage. It's too early for us to talk about that, but we are really pleased with the early results of that metric, which is one of the key ones that we have in our cluster markets. That's very helpful. I guess my second question, I wanted to shift and talk through the parts and service business. I guess, how should we be thinking about parts and service from here? Do you think we return to that mid-single digit percent sort of run rate in the back half or is that going to be more difficult with some of the dynamics you mentioned in the prepared remarks around depressed SAR and some of the impact of those higher RO orders? Maybe just talk through how you're thinking about parts and service. Thanks. We think parts and service is still a great business. There is an unlimited amount of parts and service business in our mind. It is more competitive today because of those issues I brought up in my prepared comments. That just means we have to adjust and be more competitive. As franchise dealers, we're not always known as the most affordable choice, and that's really important to customers right now. Especially those ones that are coming out of warranty, high defection points. We've got to adjust our approach there. Even with these changes in the market, it's important that we understand that so we can adjust our approach. When you think about even just the declined work coming through our dealerships, it's in the millions and millions and millions and millions, many tens of millions of dollars per month that customers decline after their vehicle's inspected. There's a lot of work that's still out there to capture. We just have to be smart about getting it. Warranty attachment, I touched on that a little bit. As the warranty business goes, our experience when we were seeing heavy warranty comps a year or so ago was, on every three warranty ROs, there's one CP line. We feel like we get some incremental CP business when there's a lot of warranty. It will fluctuate to some degree based on that. I don't know that we'd be able to say we'll be back to high single digits. I feel good about our 4% CP growth in the quarter. I feel like we still have room to run there, and we still believe that after-sales is just great opportunity in our business. Perfect. That's incredibly helpful. Best of luck going forward. Thank you. Our next question comes from John Babcock from Barclays. Please go ahead with your question. All right. I guess just quickly following up on that, on the parts and service side of things. Earnings were down a little bit from last quarter. I know you talked about competition. Is there anything more you can provide in terms of what drove that? It seemed like the gross margin was generally fine. I'm just wondering if there were any cost factors or anything of the like that maybe we should be taking note of here. Are you talking about in parts and service? Yeah, parts and service. Sorry, I don't know if I clearly didn't specify that, yeah. No, that's okay. There's a little mix shift going on with warranty and CP and collision and wholesale parts right now. We ran some promotional stuff in the quarter, which you're going to see a little different margin in warranty and CP because CP you tend to discount some. In warranty it's full labor rate with the OEMs. As that shifts and we see a little bit of that right now, you will see the total margin percentage change through each quarter. I think we saw some of that. The collision business for us is down, so that also affects our total margin. Daniel may have something to add. I have nothing to add. Okay. In terms of Texas, how was the volume performance there in the quarter? It was down for us. Daniel? John, it was down in terms of new and used. As Daryl said earlier in the call, I think if you look at the market as a whole, the truck market was down virtually across every line for both GM and Ford. I don't think that there was anything different about Group 1 in terms of the percentages down for the Texas market versus the market as a whole. John, just to give you an example, our Texas business down 6% new. El Paso was up six. The rest of our markets were down three to eight-ish kind of thing. Most of our domestic business that Group 1 owns in the U.S. is in Texas and Oklahoma. Okay, thanks. Last question before I turn it over. On to the U.K., what's next in terms of what you would want to accomplish there over the balance of this year? Whether it's more on the SG&A front, whether it's getting more of the Jaguar Land Rover stores off your books. If you could just talk about kind of the next actions from here, that'd be helpful. Sure. Let's talk about the Jaguar Land Rover first. The Jaguar Land Rover that we have disposed of so far this year, that was really the drag on earnings, and the portfolio that we're left with is the better half of the portfolio. We'll continue to evaluate that as time goes on. Regarding key priorities, clearly after-sales remains a key priority for us in the U.K. We've seen some good growth, I would say, there over the last 12 months. It still remains a priority. Our weak point still seems to be used cars. Some of that's just around the market there with EVs returning to the market after their first ownership cycle. We are really focused on our day supply there to try and keep the day supply at a minimum in terms of used vehicle, because the market continues to evolve around used vehicle sales. Regarding portfolio optimization, I still think there's some work to do on our portfolio there, disposing of a couple of our remaining underperforming stores, that will be done in the next couple of months. I would add one thing to that. That we were really pleased with the new car same-store growth in the U.K. We're up 3.9% in the quarter, which was higher than the general market. We don't have Chinese brands in that number to any great degree at all. It was on our legacy brands that that sales increase happened. Really pleased with that. On good margin. Thank you. Our next question comes fr om Rajat Gupta from JPMorgan. Please go ahead with your question. Great. Thanks for taking the question. I just wanted to follow up and clarify on a couple of things mentioned before. Just on the last one, on dispositions. I was surprised to hear that half of the acquisition funding will come from just the disposition proceed. I mean, it seems like a pretty big number. Any way you can size what kind of EBITDA or revenue impact we should see from those underperforming stores that you plan to dispose? That would be one, I have a couple of follow-ups. Hey Rajat, it's Daniel. The EBITDA that we would expect to see from those underperforming stores would be less than half of the EBITDA that we would expect to be generated by the new stores. A number of the stores that we have in the disposition list are at APA stage or LOI stage. EBITDA from those stores is fairly low, I would say, because they do tend to be the smaller stores. Regarding the exact amounts, we're not in a position to give that at this moment in time. Understood. That's helpful. Just to follow up on the parts and services comments, with the car park turning over from the low SAR period. I think the way you described it, should we anticipate maybe the gross profit trajectory or the margin trajectory maybe taking a step back over the next few quarters before it starts to grow again as you adjust? I'm just curious how we should read those comments in terms of just near-term performance. What we find. Yeah. All right. I'm sorry, didn't mean to interrupt you, Rajat. What we find is if we are able to capture customers, generally through a maintenance offering, our average dollars per RO give us good gross margin retention and good dollars per repair order. We saw that with our $17.76 promotion in June, and we have seen that historically when we have run things like our Saturday service events. We see the exact same pattern. We find when we focus on capturing those customers through maintenance offerings, the average mileage of a car coming through a Group 1 store is 68,000 miles. It's a year older than it was a year ago, which there's a lot of work to sell on those kinds of vehicles, that age. That's also one of the reasons we're trying to put more emphasis and focus on service advisory skills, is to do a better job or a good job trying to capture that work. Rajat, just to put it into perspective, it's Daniel. 55.2% customer pay margin in quarter two 2025, 54.8% in 2026. Really tiny reduction in U.S. margin year-on-year. Got it. As you're working through this rebranding exercise, any data points you can give us on July? How was July for the company? New, used, P&S, any update there so we can get comfort that we're cycling past some of those one-time issues? Thanks. Well, we can talk to you about July in October, I can tell you that towards the end of June, we were pleased with the levers we were pulling to address the sales volumes. It obviously didn't help the quarter much, we were pleased with the results of that. Understood. Great. Thank you, and good luck. Thanks. Our next question comes from Rob Saltzman from UBS. Please go ahead with your question. Thanks so much for the time today, guys. Just a quick one here on my end. Given the large luxury exposure on the acquisition, should we expect that to be a tailwind to U.S. new GPU in the back half into 2027? The brand portfolio there is highly levered to the luxury side. If so, if this should be a structural benefit to the new GPU side of the business, how much of a benefit can we expect the acquisition to provide once you're done disposing of the underperforming stores and layering in what you've announced here today? Thanks. I think, based on our modeling that we've done, we will see margin improvement by owning the Hennessy stores. We'll also see margin improvement by disposing of some of the stores that we've identified. We can't be specific on that at this point. One, because the closing is still several months away. Once we close, though, we can talk more specifically about that. That was one of the strategic values of this acquisition, combined with the dispositions that we're doing. Rob, one thing I'll add that's also helpful for the Hennessy acquisition and the dispositions, larger stores, SG&A leverage is much better as a company than smaller stores. We see that time and time again. I think in terms of EPS accretion, disposing of the smaller stores and having stores like Hennessy, as you'll have seen in our investor.deck with a 7%+ margin profile, really helpful to Group 1 as a whole. Got it. Makes sense. That higher gross profit and lower SG&A helps that accretion math that you guys run. It makes sense. Just one last one on my end, just on the $50 million cost reduction. How should we think about that kind of in the back half of this year into 2027? It's just tough to kind of take that $50 million and run rate it on an annualized, quarterly type basis and flow through, because there's a variable component to SG&A. How should you think about SG&A to gross in the back half into the first half of 2027 now that you've completed the $50 million of cost reductions there? Thank you. It's Daniel here again. The way that I would look at it and the way that we characterized it last quarter was take the assumption that we'll save $12.5 million a quarter for the remaining two quarters of the year and then let that flow into 2027. Thanks, guys. Appreciate the time today. Thank you. Our next question comes from Bret Jordan from Jefferies. Please go ahead with your question. Hey, good morning, guys. On the Hennessy 7% EBITDA, is there sort of assumed pro forma benefit to that as well as you integrate it and take out some of the duplicate overhead? Do you need to divest two Lexus stores now that you're gaining two in this transaction? I'll take the first part. Daryl will take the second part. Regarding the 7% EBITDA, that does not assume any synergies. Any synergies that we get are over and above that 7%. We haven't had a discussion yet with Lexus given that we just announced this this morning. You're allowed six Lexus stores. If all of your Lexus stores perform above an average Lexus dealership, you're allowed eight Lexus dealerships. Group 1 has eight Lexus dealerships. We're going to start some discussions with Toyota Motor North America about what that looks like for Group 1. Pete, any color to add to that? No, very well said, Daryl. I have nothing else to add. Okay, then a follow-up on the Geely store that you started in June. Could you sort of talk about sort of broad Chinese dealership economics in the U.K.? Obviously not a lot of used or service in that mix, but are they cheap enough to get into, or is the new unit growth sort of good enough to justify the investment? Or maybe compare the return on invested capital to your legacy business versus Chinese. Okay, let's talk about the one store that we have opened. That one store we've opened, we put into a standalone used car operation that we have that's adjacent to one of our franchise operations. Cost of entry for the franchise is fairly low in terms of CapEx that's required for the store. As it's an operation that we already are paying rent and costs for, it tends to be accretive fairly quickly. That's where it stands today. Okay. What does a GPU look like on a Geely versus maybe a comparable Volkswagen product or what's a big difference? In terms of percentage basis, it's the same. The actual cost of the vehicle is probably a third cheaper. It really depends on what model you're at, but in terms of the percentage profitability, it's the same. Okay. Thank you. Our next question comes from Glenn Chin from Seaport Research Partners. Please go ahead with your question. Wow, was I that late to punch in? Thanks, gentlemen. Welcome, Glenn. Hi, Daryl. Hi, Pete Gidling. Can you just elaborate a little bit on the consumer affordability issue that you cited? I'm just wondering if you felt like it impacted any one of the segments more than the other, new versus used versus parts and services, especially in light of the fact that F&I seem to hold up pretty well, and that's often sometimes the area where it's thought that consumers are first to pull back if there is an affordability issue. Glenn, one thing that's happened, terms have stretched out in F&I over the last 12 months. You've seen it's up, I think, three months in the industry. The percentage of longer-term loans is higher than it's been ever. Consumers are, our PRUs look good, but that's probably hurting the retention side. On the affordability issues, the thing that I think probably hurt us was our ATPs and used went up $1,400. While we had trouble sourcing cars during the quarter, the mix didn't help us. In three-year-old cars, the ATPs went up a lot more than $1,400. I do think that's an affordability issue, and we've got to do a better job sourcing cheaper used cars, and that starts with the appraisal and using the technology we already have in place to be able to do that. I do think there's affordability concerns out there, and I think you see it in other sectors of the economy, and I think we see it in our business, and that's why we're leaning into more affordability messaging and aftersales as well. Okay. What about in service and parts? There's been chatter for a while about consumers potentially deferring service. Are you guys seeing any signs of that? I can't point to anything that says they're deferring service. I've seen some industry data that suggests that they are tapping the aftermarket more frequently. I think it makes sense given the 2020 to 2022 SAR customers, which those SARs were $13 million, $14 million, $15 million, much lower SARs, and they're now coming out of warranty, and that's usually a high defection point. I have seen some industry data that suggests those customers are testing the aftermarket ser vice business, that's why we want to adjust at Group 1. Mm-hmm. Okay. Just going back to the rebranding efforts, I think it's not a surprise that you might encounter some early headwinds from rebranding and renaming, any early benefits you can cite, or is it too early? I think I recall you guys talking about just making uniform some operations amongst certain of the stores. Any benefit from that? Yeah, we're seeing some benefit in the way we're managing the LLM searches that are going on out there. Those don't hit websites anymore. Trying to count your website traffic and your customer traffic is harder than ever because when people use Claude or ChatGPT to go find a deal on a Camry, it doesn't show up like it used to. We are changing our approach there, I think that helps us across a broader footprint of stores, because reputation management is a big driver in those LLM searches, if our reputation is good at one store, that helps us in all of our stores that are named the same thing. In Houston, we have five different store names. If we had a great reputation at one store, that didn't necessarily help us at the others, and it does now. We do believe that will help us, Glenn. As today's customer is searching in a completely different way, I expect that to do nothing but grow. Mm-hmm. Just specifically around the rebranding, I know you had some very well-known legacy brands like Sterling McCall. Is Sterling McCall the name gone now, or is it Sterling McCall by Group 1, or is it Sterling McCall a Group 1's company? Sterling McCall brand is gone. We made that decision because about a year before we made the rebranding decision, we went and surveyed our customers, thousands and thousands and thousands of customer surveys we did. We asked them what the importance of different things about their purchase decision, service decision was. The name of the store, the individual name of the store was very, very low on their consideration. The OEM was really important. The three most important things was the OEM, the location of the store, and reputation of the store, trust. Those were much more important than the name Sterling McCall or Advantage or Beck & Masten or Ira, much, much, much, much more important. That's why we made that decision. Yes, those brands are being retired. Okay. Very good. Thank you. Thank you, Glenn. Our next question comes from John Saager from Evercore ISI. Please go ahead with your question. Guys, thanks. I was wondering on Hennessy. I think even if we were to give you credit for some fairly significant synergies, it still feels like an expensive deal relative to just buying back your stock. I'm wondering if you could just discuss that trade-off and the impact that this will have on buybacks going forward, and just your general net debt ratios. Sure. It's Daniel here. This platform, I think is a unique opportunity for us. Deals like this don't come around every day, year. For us, when we took a look at this deal, we regarded this as a generational asset for us to acquire. Helps build out our cluster strategy in Atlanta, as we talked about earlier, one of the fastest-growing markets in the U.S. Yeah, if you look back over the last five years, from 2021, look at the amount of stock that we bought back, 38% of the company. That's been a significant investment in returning capital to our shareholders. Today, we thought that the best use of our capital was to continue to grow our company for the long term. We will continue to evaluate buybacks based on where our stock is trading. It's unlikely that we'll be buying any stock back until the Hennessy deal closes. After closing, we will continue to evaluate our buybacks. Then just how do you expect this to impact your net debt? In terms of leverage, we would expect our leverage ratio to go to close to four times as we close the deal. After the deal closes, we'll work to bring our leverage ratio back down again to closer to the three times that we like to operate at. Okay. Thank you. Then on the volume side of the business, obviously, we've talked a lot today about the rebranding and the impacts that's had. At what point do you expect these initiatives to start to really take hold and actually claw back some increases in market share? How should we think about the timing of that? If we go back and we look at our same-store sales growth, it's been really good over the years. It's only recent that we've had this issue, and I would expect we'll return to that sometime later this year. Really do. The rebranding, yeah, that's what I expect. Our next question comes from David Whiston from Morningstar. Please go ahead with your question. Good morning. With the Geely partnership starting in the U.K., I'm just curious on any future partnerships with the Chinese. There's a trade-off here where you need to be, excuse me, where do you want to be aggressive, adding more now, getting in on the ground floor, so to speak, when these firms are entering foreign marke ts for them, or other than exceptions for brands like Geely, do you want to wait for them to have more of a higher VIO base? I think there's definitely a trade-off there. I do think that I can foresee in the near future that we will probably add one or two additional Chinese OEMs to our portfolio in the U.K., particularly as some of the legacy brands change the sizes, et cetera, of the showrooms that they expect. I do see some growth there, but growth where we don't have to add any or much incremental cost. On the $1,776 promotion for oil change, is that profitable, and who actually gets that price? We market it, customers come in on it, customers ask for it. We have POP in the stores, too. Nobody's ever made money on oil changes, on any oil changes. We offer oil changes and tire rotations and sell tires and things like that because it keeps us competitive with the aftermarket, which is our real competition as franchise dealers. When customers come in and the average mileage on a car in a Group 1 service drive is almost 68,000 miles, there's a lot of work to sell on a 68,000-mile car. The dollars per RO on those cars are typically very good. With that, ladies and gentlemen, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Daryl Kenningham at Group 1 for closing remarks. Thank you. In summary, we remain committed to our strategic initiatives, local focus, operational excellence, differentiated aftersales, and disciplined capital management. Despite a challenging quarter, we took decisive action on the things within our control, we're building momentum in the U.S. As we head into the second half, we have opportunities in used car sourcing and new car volume. We're encouraged that the U.K. is improving, as Daniel outlined, with our restructuring initiatives and greater operating discipline beginning to take hold in the second quarter. We're extremely excited about the Hennessy acquisition and the value that it will bring to Group 1 as we continue to grow in Atlanta and execute our cluster strategy. We believe consistent execution against these priorities positions Group 1 to navigate the near-term challenges while continuing to build long-term value for our shareholders. Thank you for your time today. We look forward to discussing third quarter results in October. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your line.