Good morning, and welcome to the Lithia & Driveway third quarter 2023 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to your host, Amit Marwaha, Director of Investor Relations. You may now begin. Thank you for joining us for our third quarter earnings call for 2023. With me today are Bryan DeBoer, President and CEO, Chris Holzshu, Executive Vice President and COO, Tina Miller, Senior Vice President and CFO, and Chuck Lietz, Senior Vice President of Driveway Finance. Today's discussion may include statements about future events, financial projections, and expectations about the company's products, markets, and growth. Such statements are forward-looking and subject to risks and uncertainties that could cause actual results to materially differ from the statements made. We disclose those risks and uncertainties we deem to be material in our filings with the Securities and Exchange Commission. We urge you to carefully consider these disclosures and not to place undue reliance on forward-looking statements. We undertake no duty to update any forward-looking statements which are made as of the date of this release. Our results discussed today include references to non-GAAP financial measures. Please refer to the text of today's press release for a reconciliation of comparable GAAP measures. We have also posted an updated investor presentation on our website, investors.lithiadriveway.com, highlighting our third quarter results. With that, I would like to turn the call over to Bryan DeBoer, President and CEO. Thanks, Amit. Good morning, and welcome to our third quarter earnings call. We appreciate everyone joining us today and the opportunity to update you on our business, growth initiatives, and progress towards our long-term strategies. In Q3, Lithia & Driveway grew revenues to $8.3 billion, up 13% from Q3 of 2022, resulting in adjusted diluted earnings per share of $9.25. Overall, same-store sales momentum improved sequentially, led by new vehicle units up 5% and after-sales revenues up over 4%. Sequentially, GPUs were in line with our expectations for both new and used vehicles, while F&I margins remained resilient. Year-to-date, GPUs for the new vehicles have come down approximately $100 per month or down 19% from the end of 2022. We are well supplied with new vehicles and parts to meet customer demand across the domestic brands throughout year-end. Our teams are driving both growth and profitability while we focus on continuous gains in efficiency across vehicle operations, DFC, and our other adjacencies. Our business model is flexible and diversified, giving our store teams the tools and autonomy to adjust with local market dynamics and manufacturers. Our goal is to provide customers with a wide variety of products and services and access to solutions that fit their needs throughout the vehicle ownership lifecycle. This allows us to create a culture that is responsive to varying needs and delivers the best possible experience for customers wherever, whenever, and however they desire. Moving on to our financing operations. Driveway Finance Corporation, or DFC, posted Q3 results in line with expectations as receivables grew to $3.1 billion. The DFC team has been methodically and prudently navigating the shifting currents of increasing rates in the ABS and credit markets. The team has managed loan loss provisions in line with expectations and steadily growing their loan portfolio. Our plan remains on track to gradually expand margins, move towards profitability late next year, while improving liquidity as we manage the pace and quality of originations. Both Chris and Chuck will be sharing further details on results of both vehicle and financing operations later in the call. At the heart of our strategy is expanding consumer solutions that are simple, convenient, and transparent. Our network is being designed to be within 100 mi of consumers, which allows us to leverage our physical and virtual infrastructure. Over time, we expect this will generate more convenient impressions, more memorable experiences, better returns on capital, and an ecosystem that is unreplicable. Acquisitions are a core competency to our design and organization. We remain disciplined and opportunistic as we look for accretive opportunities that can improve our business. We target after-tax returns of 15% or more, 15%-30% of revenues, or 3x-7 x normalized EBITDA. Life to date, our acquisitions have yielded over a 95% success rate and after-tax returns of over 25%. We're looking for acquisitions that are complementary to our network development strategy and meet our return thresholds in an unconsolidated industry. During the third quarter, we completed two acquisitions in the United States. Combined, they are expected to generate approximately $290 million in annualized revenues, and year-to-date, we've acquired over $3.8 billion in revenues. In addition, I'm pleased to announce the impending purchase of Pendragon U.K. Motors, the Pendragon Fleet Management business, or PVM, and strategic partnership with Pinewood Technologies. This transformative transaction is a crucial step towards executing on our long-term design, and brings with it a strong partnership with a highly profitable and innovative DMS CRM system, expands our footprint further into fleet management, and finally, grows our retail footprint in the United Kingdom. We expect our annual revenue run rate to grow to approximately $38 billion, and are excited with the addition of two fundamental pillars, DMS and Fleet Management Company, or FMC, to our global business. We'd like to welcome our new and future partners to our Lithia family as we expand our worldwide presence. As a reminder, we target annualized revenues acquired in the range of $3 billion-$5 billion per year. Our primary focus remains on building out our U.S. network and complement our network strategies. We are proud of our team's track record of executing and integrating multiple transactions as we make our way towards and beyond $50 billion in revenue. Moving on to the overall execution of our long-term strategy. Since the launch of our plan, we added important foundational adjacencies and will have acquired over $22 billion in revenues once the Pendragon transaction is completed. In addition, Driveway Finance Corporation, our captive finance division, continues to make steady progress as our top finance partner and have line of sight to realizing the full potential and contributions to our profitability in the future. As you may recall, the average loan we originate at DFC is three times more profitable over its lifetime relative to the fees we receive from third-party commissions. Shifting to our omni-channel platforms, we're making steady progress, growing online MUVs up 34% across our digital channels, while digital transactions grew to over 37,000 units in the third quarter, up 21% compared to last year. Supported by the education provided by GreenCars, sustainable vehicle sales accounted for 16% of total new vehicle sales in the quarter, up from 10% in Q3 of 2022. LAD remains on track to become the preferred international omni-channel provider of products and services, meeting a diverse set of customers' needs throughout the ownership lifecycle and across multiple adjacencies. Our plans have positioned us to improve margins and lower our SG&A through a combination of growth, efficiency, diversification, and scale. Combined, these efforts will disconnect the ratio of $1 of EPS from every $1 billion in revenue, and achieving $1.10-$1.20 for every $1 billion of revenue by 2025. This will be driven by a few key assumptions, namely, achieving through scale a blended U.S. market share of 2.5% through both acquisitions, channel expansion, market share gains, and same-store growth improvements in a normalized SAAR environment. Second, driving SG&A as a percentage of gross profit to below 60% through increased leverage of our cost structure in a normalized GPU environment and optimizing our network. Third, continued maturity and growth of our first adjacency, DFC, achieving profitability in the latter half of 2024. Fourth, continuing to expand revenue and consumer optionality with Driveway by attracting 98% new customers through a seamless and transparent one-price experience with seven-day return privileges and shipping directly to your home. Fifth, GreenCars, educating consumers on sustainable transportation and expanding our penetration levels of electric vehicles. And finally, ongoing return of capital to shareholders through dividends and opportunistic share buybacks. The above opportunities are now well underway, combined with DMS and FMC design additions, sets us up for further growth and profitability in the coming years. In a normalized environment, we can now clearly see the path for significant change, where $1 billion of revenue will ultimately generate $2 of EPS. Key factors underlying our future steady state and now totally within our control, are as follows: First, optimizing our network and continuing to diversify our portfolio through focusing on acquiring larger stores located in higher profitability regions of the South Central and Southeast U.S., filling in the Midwest, and integrating our international businesses while growing our omni-channel platform and other mobility verticals. Second, financing up to 20% of units with DFC and maturing beyond the headwinds associated with CECL reserves. Third, through size and scale, we will continue to drive down vendor pricing, develop competencies internally to save costs, and lower borrowing costs as a path towards an investment-grade credit rating. Fourth, to increase our share of wallet through improving the customer lifecycle by leveraging our cost structure to reduce our SG&A as a percentage of gross profit to below 50%. Finally, maturing contributions from other horizontals, including fleet management, software, charging infrastructure, and consumer captive insurance. In closing, Lithia & Driveway provides a unique and unreplicable mobility platform and transportation solutions that deliver great customer experiences throughout the ownership life cycle at a global scale. Our design is durable, diversified, fast, and nimble to meet the needs of consumers with both online and in-store solutions, coupled with financing solutions like DFC. The combination of our strategy and experienced teams gives us the confidence in our ability to eclipse $50 billion in revenue and produce a ratio of $1.10-$1.20 of EPS for every $1 billion of revenue in the midterm, and ultimately over $2 long term. With the completion of Pendragon transaction, all elements of our original design are now securely in place, allowing us to do what we do best and are known for, and that's execute. With that, I'd like to turn the call over to Chris. Thank you, Bryan. First off, I'd like to provide an early welcome to the 6,000 associates at Pendragon that will be unifying with our Lithia & Driveway U.K. operations team to build what will be one of the strongest dealership platforms in the United Kingdom, with over 10% market share in the brands we represent. Our strategic vision and commitment with Neil Williamson, our U.K. Regional President, was to ensure that his team had the opportunity to bring our mission of growth powered by people across the Atlantic. With this partnership, we are well underway to solidifying that journey. Since the inception of our plan, we have positioned the organization to ensure that whether in the United States, Canada, or the United Kingdom, our cultures would remain centered on entrepreneurial leadership at the local market level, empowered to achieve our high performance. Our seasoned and experienced regional operational leaders remain positioned to drive us towards the future. We remain committed to delivering a customer-centric experience to be the retailer of choice wherever, whenever, or however our customers desire. Focusing on our customer first will always ensure that we provide solutions that create sustainable growth and provide best-in-class returns to our shareholders. Now, as it relates to the quarter, overall, consumer demand remains strong for both vehicle sales and service, despite a high interest rate environment and opportunities in OEM production. We believe we are at the late stages of a full production recovery that caused over 10 million units of product to vanish from the North American pipeline because of COVID-19 supply constraints. While the average consumer APR on finance vehicles is up over 200 basis points year-over-year, the average monthly payments remain stable as consumers continue to invest in personal transportation needs at all price levels, and incentives continue to accelerate. While the rebound in new vehicle production was impacted, the related depressed production put pressure on used inventory availability. This trend has highlighted the benefits of having a diverse network and over 2,000 used vehicle procurement specialists, and a long-standing and disciplined approach to procuring vehicles from multiple channels. Lastly, with the age of the car park at record levels and the number of units in operation increasing, the tailwind we have to deliver customer-centric aftersales to all levels of affordability will remain strong for years to come. Same-store new vehicle revenues were up 5.5% due to unit volumes increasing 5% and ASPs rising 0.5%. New vehicle GPUs, including F&I, were $6,678 per unit, down from $7,500 in Q1 of this year and $8,165 in Q3 of 2022. We expect this trend in GPUs to continue, resulting in further reduction in margins in line with our outlook, that new vehicle SAAR will return to historical levels in the U.S., U.K., and Canada in the next 24 months. New vehicle inventory day supply was 55 days, compared to 47 days at year-end and 39 days in Q3 of 2022. High-demand inventory that has been slow to reach our lots, particularly among the imports, is improving. Despite the headlines related to the OEM strike in North America, supply for D3 vehicles across our network remains healthy at over 70 days on ground. Shifting to used vehicles, same-store used vehicle revenues were down 8%, with unit volumes decreasing 2% and ASPs decreasing 6%. Used car price declines are driven by the availability of later-model vehicles and the reduction in several years of new vehicle supply declines. Core product, or vehicles three to seven years old, make up 50% of our unit sales, and trade-ins for these vehicles is the primary procurement channel for Value Auto, which makes up 20% of our unit sales. While this has put significant pressure on procurement of vehicles to meet demand, it also reinforces the competitive advantage we have of being top-of-funnel new car dealers, where over 75% of purchases are coming from consumer channels only available to franchise dealers. The competitive advantage enables us to provide the transportation needs to customers that fits their budgets, regardless of market economic conditions. For used vehicles, including F&I, GPUs were $3,940, down 14% from last year. Overall, low inventory supply is supporting overall ASPs, but GPUs are seeing variability due to procurement pressure and affordability for consumers when financing vehicles in this environment. We expect GPUs to fluctuate as supply normalizes and interest rates settle. Shifting to used vehicle inventory levels, vehicle inventory day supply was 58 days, compared to 65 days this time last year. Our physical footprint will soon span over 500 locations worldwide, which, combined with the ability to shop, sell, and service vehicles wherever, whenever, and however customers desire, will create massive benefit as we leverage the size and scale of our network and give customers optionality and the experiences they desire. As Bryan mentioned, we are dedicated to creating an international omni-channel provider of products and services that meet a diverse set of consumer needs, and we are still in the early innings of this unrealized opportunity. In the third quarter, Lithia & Driveway's online channels averaged 13.3 million unique visitors, an increase of 34% from the same period last year, with advertising spend down 10%. Total e-commerce sales now represent 22% of retail transactions. Driveway's strategic growth and cost structure continue to be refined as we work towards the right sizing of that business. Brand recognition remains on track as we work towards improving the consumer experience and our product offerings. The average distance to deliver a shop vehicle from our stores is now 800 miles, and most customers have never shopped or serviced with us before. As our physical footprint grows, each location provides the ability to connect with 50 x more customers without the fixed investment as we expand the power and the reach of Driveway. During the quarter, service, body, and parts delivered strong same-store sales, rising 4%, and overall gross profit margin increased 120 basis points. Customer pay, which represents 60% of our after-sales business, was up 3%, while warranty sales were up 13%. As the average age of the vehicles continues to trend higher and the complexity of new vehicles continues to increase, our factory-trained and certified technicians will continue to be a coveted asset that will only enhance our omni-channel solutions. Excluding Driveway-related costs, adjusted SG&A, as a percentage of gross profit, was consistent with last quarter at close to 60% versus 62.7% on a consolidated basis. We remain focused on reducing overall SG&A in our operating model, where size and scale, combined with technology, improve productivity, reducing overall personnel costs, which will be the catalyst to drive down SG&A to 50% long term. In closing, our team is well positioned to build one of the most dynamic omni-channel growth engines to meet the needs of our consumers. While we have yet to fully capitalize on the unprecedented size and scale we have created, we will continue to stay focused on execution that results in exceeding our goal of delivering $2 in EPS for every $1 billion in revenue. With that, I'd like to turn the call over to Chuck. Thanks, Chris. The financing operations segment had a disciplined quarter and narrowed our quarterly operating loss as we executed on our core competencies. DFC originated $502 million in loans in the quarter, and the portfolio now exceeds $3 billion. We hit another milestone as our weighted average APR on loans originated in the quarter hit 10%, up 50 basis points from the prior quarter and 240 basis points over a year ago. This was achieved without an impact to credit quality, as weighted average FICO increased 2 points from the prior quarter to 732. In addition, weighted average front-end LTV decreased slightly from the prior quarter to 95.6%. For the quarter, we had a 9.7 penetration rate, declining from the second quarter, primarily due to our focus on increasing yield rates and to move in line with our top-tier competitors that we benchmark to. Penetration was also impacted by increasing rate subvention from OEM captive lenders, taking our new vehicle mix down to 24% in the quarter. We monitor the overall auto lending ecosystem, and DFC's underwriting standards are consistent with the rates and structures being offered by lenders in Lithia & Driveway's extensive network. As such, DFC's lending practices have not impacted LAD sales volumes. Third quarter net interest margin increased to $29.9 million, as our weighted average APR and originations moved higher. Cost of funds benefited from amendments to our warehouse facilities and the maturation of our capital structure. We now have 84% of our portfolio funded via ABS term issuances or our warehouse facilities as of the end of the quarter. Net provision expense decreased from the prior quarter to $23.1 million, and the allowance for loan losses as a percentage of loans receivable stayed flat at 3.2%. The increasing credit quality of recent originations, along with the impact of decreased origination volumes, have outweighed the volatile current macroeconomic environment. Thirty-day delinquency rates were flat from the prior quarter at 4.1% and down 1.9% from a year ago, reflecting improved portfolio credit quality. We expect that by early 2024, the performance of more recent vintages will offset the negative headwinds resulting from the 2021 and early 2022 vintages that are most exposed to the decline in used vehicle pricing. Overall, the financing operations segment had an operating loss of $4.4 million for the quarter, and losses sit at $43.8 million year to date. While we are still in the startup phase, we remain confident in our path to profitability and that we are tracking to break even towards the latter half of 2024 and will be profitable on a monthly basis exiting next year. We are confident that DFC will realize $650 million of earnings in the LAD future state from a fully mature portfolio and a $50 billion LAD revenue base. With that, I'd like to turn this call over to Tina. Thanks, Chuck, and thank you everyone for joining us today. In the third quarter, we reported adjusted EBITDA of $457 million and $1.8 billion for the trailing 12-month period. This result was driven by strength in new vehicle demand and service and parts, offset by the impact of declining new vehicle gross profits with returning supply, higher floor plan interest costs, and investments associated with our adjacencies. We ended the quarter with net leverage, excluding floor plan and debt related to DFC at 2x, up a little over a quarter of a turn from the second quarter. During the quarter, we generated free cash flows of $261 million and $870 million year-to-date. We continue to maintain strong cash flow generation and a disciplined balance sheet as we execute our growth plans. Our capital allocation strategy targets 65% toward acquisitions, 25% directed to internal investments, including capital expenditures, and 10% for shareholder return in the form of dividends and share repurchases when they're appropriate and opportunistic. Our acquisitions completed during the quarter were funded through using free cash flows from operations and through our working capital facilities. We maintain our targets and financial discipline with leverage below three times, even with the purchase of Pendragon, expected to occur in the fourth quarter. We're confident in our ability to achieve an investment-grade rating over time. However, in the near term, we are prioritizing growth and acquisitions to drive our long-term strategy. Our goal is to fund the growth strategy and investment in adjacencies as they mature, while maintaining a strong, disciplined balance sheet structure. One of the unique elements of our strategy is the resilient annual cash flow generation of our existing business, and our ability to ensure acquisitions are cash flow accretive on day one. We see significant synergies in deploying our capital toward growth as we build out our network, expand the markets we operate in, and invest in adjacencies that provide consumer-centric solutions for the full vehicle ownership lifecycle. Our team is headed towards achieving our revenue goals and margin expansion to have LAD's EPS to revenue ratio, producing $1.10-$1.20 in earnings per share for every $1 billion in revenue, and in the longer term, generating $2 in earnings per share. As demonstrated by our achievements over the past few years, our culture of growth and high performance, coupled with the talents of our team, give us the necessary tools to achieve our plan and create value for our shareholders. This concludes our prepared remarks. With that, I'll turn the call over to the audience for questions. Operator? Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. As a reminder, we ask that you please limit to one question. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Daniel Imbro with Stephens. Please proceed with your question. Yep. Hey, good morning, everybody. Thanks for taking our question. Hi, Daniel. Hey, Bryan. I'll try to follow the rules and keep it to one question or at least one topic. But yeah, I wanted to maybe focus on Pendragon a bit. I guess you said in the slides you still expect it to close in the fourth quarter. Can you talk about the path forward to getting the deal closed? What are the, you know, upcoming dates or important things to keep in mind? And then stepping back from just the near-term accretion, there's obviously a lot of pieces of the asset. There's the Pinewood system, there's growing the technology- Sure. There's fleet. What excites you most? What do you see as the most near-term opportunity for financial accretion and strategic rationale? What are the longer-term pieces? Can you just provide more detail on kind of strategically, how you view all the different assets of Pendragon? Absolutely. Well, as you saw, there was a circular, a circular battle instead of a proxy battle in the United Kingdom. We actually got results of the final vote of shareholders about five hours ago, which is wonderful. There were 72% of the outstanding shares that were voted, and it was approved at a 99% approval rate, which is exceptional. So I think everyone really sees that the future of a software-as-a-service exclusively company is the right answer and ultimately approved our deal. So from this point forward, all that's left is really FCA approval, and we expect a closing, we would expect sometime in late part of Q4, worst case, early part of Q1, but it's all dependent upon what's called the FCA. That has to approve the overall transaction, but we've done our preliminary work. Should be clear sailing. Now, once we get to that point, obviously, there's multiple components, but our big push is for the software as a service company, Pinewood Technologies, led by a Bill Berman. He's going to be driving the marketing and growth, and as you may have saw in some of the press releases, that software company will grow and grow quite quickly, globally outside of North America. We have three of the top ten major groups in the United Kingdom that have verbally committed to join forces with us, as well as one other that most likely will be joining as well. Plus, we'll be growing the platform across Western Europe. That gets us the phase one of the software company. Now, in terms of the North American JV, there's a development plan related to how we're going to approach that. And to be fair, it's probably a year or two out before we get something live and before it ever is truly monetized. It's more of a pathway to be able to attach and attack our $110 million data stack, which is what our tech stack basically costs today, and to curb some of those costs, and most importantly, glue together all the fundamentals about our strategy that are a lot different than a lot of companies out there. So when we look at why, why Pendragon, and why it's such an important transaction to our future, it really built two pillars for our future of the initial four or five that we had established, obviously, the software component allows us to get into a high profitability business, as well as a pathway to leverage our own cost structures through that. And then secondarily is the fleet management company, which is called, Pendragon Vehicle Management or PVM, which is, again, a high profitability business, massive synergies to automotive retail and service and vehicle procurement and vehicle divestiture, and so on, that we think are the real two key parts of this. Now, along with it came $4.5 billion in revenues, that's built on a lot of nice highline dealerships, as well as some mainstream dealerships, that really rounds out our United Kingdom presence with almost, almost 10% market share within the highline brands that we'll have. So our growth really now in the United Kingdom is limited to, I would say, probably VW, Toyota, and maybe continuing to grow with BYD, which we, we will, have about a third of the country in the lower part of the United Kingdom that Pendragon already has. Outside of that, our focus, again, is in North America, okay, to build out our network and reach that $60 billion-$70 billion, which we look at as our true optimized network in North America, to really springboard the adjacencies and build a platform for our customers that's holistic and lifecycle. I know that was long-winded, Daniel. Hopefully, that covered what we're looking for there, and maybe have a quick follow-up? It did cover it. Yeah, and if I have just a quick follow-up, maybe just on the U.S. business. You know, with the ongoing strike, you guys have decent domestic exposure. What have you seen here maybe progressing into October? We've heard anecdotes of parts availability issues and discounting slowing as inventory works down. Just how are you guys planning for that here in the fourth quarter? What are the puts and takes as you look at the rest of the year from the ongoing strike? Great. Great, Daniel. This is Bryan again. I, I think most importantly, believe it or not, our D3 inventory sits at still above 70-day supply on the ground, okay? And in transit, we're still sitting at the same amount we were six weeks ago before the strike. Both of those numbers are consistent, so we look pretty strong going into the end of the year, and, you know, we'd, we'd encourage that, that we try to find a middle ground. So in the future, you know, in Q1, we, we've got some inventory sitting out there. I will say this: if you remember, and go back, Lithia at one time was three-quarters domestic unit sales. Today, Lithia only sits at 23.9% domestic unit sales, okay? So we've flipped it on its head, and now with the international expansion as well as the luxury and import expansion in domestically, we don't have as much exposure as we used to. And again, we sit pretty nicely right now with units on the ground, and let's hope for some type of reconciliation over the next, you know, four to five weeks. On the parts side, has there been any change in parts availability for the service department? Chris, do you have insights on parts? Yeah, Daniel, good morning, it's Chris. Yeah, so we have the highest level of parts inventory that we've seen in the last six months. So you know, what the production ramp-up has done, is given us parts on the ground. I think preparing for, you know, the expected kind of decline in overall parts in the coming kind of quarters, no line of sight on what that's going to look like. And I understand that, you know, there's a lot of training going on right now to kind of make sure that we can keep as many of those parts coming into our stores as possible. I think the pressure that we have right now is more on special parts, kind of fast-moving parts, special warranty, kind of related parts that are, you know, are... Supplies being strained, but too early really to judge the impact on that when you're seeing overall warranty up 13%. Thanks, Daniel. Our next question comes from John Murphy with Bank of America. Please proceed with your question. Good morning, guys. I just wanted to follow up on that inventory question. You know, outside of the D3, you know, how does your inventory stand, and how many sales do you think you're kind of losing or not fulfilling because of that tight inventory in the U.S.? Yeah. Good morning, John. So I think, you know, when it really comes down to it, demand is high. Demand is high for new, demand is high for used. What it really kind of is happening right now is really around affordability. And so, you know, when you think about interest rates going up, you know, we still have the majority of our consumers have a FICO score less than 720. What we're managing is really price point, because payments, you know, overall average payment is staying flat. So, you know, as production continues to kind of drop down in ASP-level trim packages, same product, but maybe decontent it a little bit, I think you're going to continue to see the push up on new vehicles getting back to kind of the 16.5 million-17 million SAAR that we saw, you know, for five straight years, pre kind of COVID pandemic. But the other side of that is that you have a lot of customers that manage their overall payment by going into the used market. And the dynamic that we're dealing with, as I mentioned on the prepared remarks, is we lost 10 million units in production, which is putting a strain on those late-model vehicles that are now coming through the pipeline. And so, you know, we really believe that being a top-of-funnel new car dealer, where 70% of our vehicles come in on trade, is a massive advantage because it allows us to be at least, you know, not buying those vehicles from auctions, where the higher prices are being paid to fill spots, but not fill gross. And so some of the pressure that you saw this quarter on used car gross, it'll probably continue just because, you know, as we have to fill holes and, and move volume, which does benefit us on the recon side, it benefits on F&I, is going to continue to just kind of, you know, balance out between where those prices are and whether consumers go, you know, into new car purchases or used cars. If I could sneak one follow-up, on SG&A attach rate to GPU. So as GPUs come down, there's some natural attach rate on SG&A or sales comp, without you taking any specific actions to lower SG&A or execute incredibly well. Can you kind of remind us, you know, how you think about that SG&A attach rate as GPUs on new, you know, slowly fade here? Yeah, John, it's Chris again. Our big focus there is really on, you know, this whole idea of throughput. And we expect, you know, in good times when gross is going up, that we expect 50% throughput to fall to the bottom line. Now, the same thing should apply when we are going into a declining market. I think we lost $100 million in gross year-over-year in the quarter, and our overall variable expenses were down about $47 million, so about 50%. The opportunity that you run into is when you put a lot of pressure on GPU, specifically on used, we still pay sales associates to move inventory that's aged, maybe not as, you know, profitable as we like. So it does provide a short-term disconnect sometimes on certain products that we're moving. So, you know, it's something that we're focused on, I mean, using technology to drive productivity to, you know, continue to pay higher—above average pay, above average performance is what we're focused on. And, you know, we have some opportunities there that we're going to continue to push through in Q4 and the next year. Thanks, John. Next question. Our next question comes from Rajat Gupta with J.P. Morgan. Please proceed with your question. Great. Thanks for taking the question. Just had a question on, you know, Driveway performance in the quarter. You mentioned prepared remarks that the SG&A to gross, excluding Driveway, stayed flat sequentially. You know, previously, we had assumed that the Driveway losses were coming down, you know, maybe like from $15 million monthly to more like $5 million-$10 million. I'm curious how that progressed through the quarter. Was it an incremental headwind? You know, any color on that to dissect the SG&A performance would be helpful. Sure, sure, Raja. This, this is Bryan. I think most importantly, we continue to make progress in Driveway. The burn rate is similar, primarily because the gross profit levels on used cars came down a little bit. We have been able to curb our expenses in Driveway by about 20, a little over 20%, which is a big move. Ultimately, I mean, we intend Driveway to become a portal for consumers, okay? And really be able to create greater touchpoints, and that's going to change our equation a ton. We are getting probably more traffic than we can actually handle. We're, we're achieving over 3 million unique visitors a month through that site, which is, which is, it's, it's almost unruly, the amount of traffic that we're getting through there. Today, it's really a financability source, and it needs to become more of an experience source, that people are buying cars on Driveway, not because we're able to finance them, but because they like the convenience, the simplicity, and the empowerment that they achieve for that. So we've got some work to do there, but it's neat to see what's happening on Driveway. One other little side note is, this other little incubator called GreenCars.com is doing some pretty special things. We only spend about $150,000-$200,000 a month in marketing on that, and it's producing now over 700,000 unique visitors. And those unique visitors are shopping on and learning and educating themselves on GreenCars, and they're buying cars at Lithia at a rate of about 1,200 a month, okay? There's very little attribution between GreenCars and our stores. If we extrapolate those numbers, and you can be extreme and say, Lithia sells 2% of all the new cars and used cars in the country, so let's just take 50x whatever that 1,200 is, you get to a 75,000 units a month that GreenCars could have attributions to sell, okay? So we're working also on the GreenCars side to be able to monetize to some extent, that educational process, as more and more consumers begin to move to some level of sustainable transportation. Got it. That, that's helpful. And then just on DFC, you know, we've, we've seen some widening in, you know, in spreads, in the ABS market. You know, benchmark rates have also gone up. Does that in any way change, your thinking around, you know, DFC penetration in the near term? And or perhaps another way to ask is, you know, how much flexibility do you have, to manage to your, full year guidance or the fourth quarter guidance, as well as the 2024 guidance for DFC, without, hurting, financing availability for your customer base? Thanks. Hey, Rajat, this is Chuck. Great question. First, as we've been saying, and also in my prepared remarks, our penetration rate did come down to 9.7% this quarter. You know, for many of the reasons you cited, you know, we're really focused on increasing our yields, making sure that we maintain our discipline in terms of our, you know, credit underwriting standards, and then, you know, supporting our stores. We feel like our value proposition to both our customers and to our stores for right now, in terms of just letting our portfolio season, making sure that, you know, we focus on maintaining our discipline, is more important than, say, achieving a specific penetration rate. Relative to your second part of your question, you know, I don't see any real, you know, material impact to maintaining our guidance between now and the end of the year. Obviously, that's subject to change if there is, you know, other, you know, sort of macroeconomic factors that come up in the fourth quarter. But, I think we can, you know, be fairly comfortable that in the next 65-80 days, we should be able to continue the path forward. Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your question. Good morning, guys. Specific question- Hey Ryan. As I look at slide 18 in the mix of CPO versus core versus value. Looking at those ROI expectations from a year ago, slide back to this one, as you'd expect, the ROIs are down for CPO and core. It's actually up for value autos. So I guess my question is: are you seeing improved GPU on value autos despite the more competitive, kinda broader narrative around the used market overall? Hey, Ryan, this is Bryan. I think what you're seeing mostly on that chart is that the turn rate's going up. So as that supply continues to be pressured, and you're gonna see the same thing happen in core on the 10 million units that Chris was talking about. When that bubble moves in, or that lack of bubble moves into core, we're gonna see the same thing, that our turn rate's gonna go up. We're gonna have to be more efficient. And as you know, I mean, we do procure almost three-quarters of our vehicles directly from consumers, whether it's through off lease, whether it's through purchasing directly from consumers, or whether it's through trade-in. Great. Then my follow-up question: just as you think about the 2025 targets, you're reiterating them in the slide deck here, but curious how much of an impact. We know kind of the puts, takes between Driveway and DFC and the core business and M&A, et cetera. But one that is, probably a bigger focus now is the rising interest rates. I guess, how much does that impact, net income and profitability, and what are the assumptions if rates keep going higher on your ability to achieve that 2025, EPS target? Thanks. Ryan, this is Bryan again. I may let Tina follow up with it on the, on the, on the interest cost. I think most importantly, we have now all the foundation that we originally designed into our plan back in 2017. So our ability to achieve the 2025 targets, when we're producing over $1.2 billion-$2.4 billion in capital, the interest costs do impact things and do change the calculus on whether to buy shares back or whether to buy businesses, or whether to expand on the adjacency and the design. But today, we have everything in place that we need ultimately to achieve $2 in EPS for every $1 billion in revenue. Now, that's a steady state basis. If you remember in the prepared remarks, we talked a lot about the driving forces behind that. But in terms of where the market looks, the biggest driver of achieving that 25 is really the ability to get the acquisitions and then execute today. Now, also remember that we're assuming that's a 17 million SAAR, and it's a normalized environment. Okay, we've always, we've always been very clear about that. But ultimately, that's really a short- to mid-term part of the game today. Our design isn't really focused on 25 any longer. It's focused on $2 of EPS for every $1 billion of revenue, and we'll let your minds wander on what that can do. We've got that now earmarked between the DMS, the fleet management, Chuck's area in Driveway Finance Corporation, plus so many other things, that when you have an ecosystem as large as ours now, it's about figuring out how to connect the dots on the ecosystem to make sure that we maximize that performance to get below the 50% SG&A as percentage of gross. Anything on interest, Tina? Yeah. And, Ryan, this is Tina. Just to add to that, when we think about our return metrics, when we're looking at deployment of capital, we are factoring in what the interest rates are, and our hurdle rates have remained similar. So if you think about, you know, the acquisitions that we're looking at and the capital and the profit accretion that we're looking at, that is factoring where rates are today and, you know, the higher for longer sort of tone out there. So that's baked into how we think about, you know, our approach for capital deployment as well. Thanks, Ryan. Our next question is from Ron Josey with Citi. Please proceed with your question. Great, thanks for taking the question. I wanted to ask maybe a few follow-ups on Driveway specifically. I think I heard on the prepared remarks that awareness for Driveway is a brand recognition is on track. Can you just talk to us a little bit more about awareness and brand recognition? And then to that end, Bryan, I think you just mentioned probably off the cuff, that you know, Driveway is getting more traffic than we can handle or expected. Just provide a little more detail there in terms of maybe upside, downside, and how you think about just servicing that traffic. Thank you. Sure. I think in terms of awareness, the experiences on Driveway are quite accepted by our consumers. And again, these are new consumers to Lithia. Over 98% of the consumers haven't done business with us in the last decade and a half. So their awareness is growing relative to what our typical store network looks like. The issue still is that we're not really getting repeat and referral business yet, even though we're now pushing almost three years in activity. That's because we have an acute focus on shop and sell, and need to expand it into the life cycle and ownership experience post-sale. And we've done a lot of the geo-fence, and we've built a lot of the after-sales models. We just need to activate them within Driveway and within the network to create greater attachment to the brand. In terms of the traffic, I think as a young digital retailer, it does take time to build your sales centers to focus on the customer's needs. And I think it's imperative that we, as traditional retailers as well, don't let that pollute our processes and keep it pure with our consumers. Our consumer acceptance rates are quite high. I think we're at 4.4 on Google scores, which is up from where we were about a year ago at 4.2. I believe that it could be 4.8 or 4.9, if we can just create this ecosystem in Driveway, like we have in the store that's more physical, where it's actually playing in the stores or in the consumer's house, in the same way that we do in the stores. And that's gonna take a little bit more coding and a little bit more repeat and referral business. But ultimately, the traffic is overly strong, and our care centers are still learning which customers are the best to be able to focus on when there's that much traffic there. Chris, was there anything else that I missed? No, Bryan, I just think you, you know, you nailed it, that you have shop and sell, and then you have service parts. You know, you have your Driveway finance products, you know, and then eventually even making the connection with RV and kind of the motorcycle businesses that we have. I think that the, you know, sky is the limit, but we just have to stay focused on kind of one tactical execution at a time. And as Bryan said, we have some opportunities there to continue to improve that experience. You're very helpful, guys. Thank you. Thanks, Ron. Our next question comes from Colin Langan with Wells Fargo. Please proceed with your question. Oh, great. Thanks for taking my questions. Just to follow up on Pendragon, can you dive into a bit the DMS opportunity? Because I think you mentioned you're spending $110 million on DMS. Does that get reduced, or do you, since you'd be probably sourcing it through Pinewood, you'd be getting sort of equity stake in from that? And how does the U.S. joint venture work? Do you actually have sort of a stronger interest in that when that grows? Sure, Colin, this is Bryan again. So we have a $110 million tech stack, of which about 60% of it is DMS system today, and then you add on your CRMs and your service systems and your used car systems and stuff like that. In terms of how we think about the progression, so we're gonna own somewhere between 17%-20% of the parent company, Pinewood. And then we own 51% of the North American JV, which eventually, if you extrapolate out the 17%-20% and then add it on to the 51%, we're about 60% ownership of the North American JV. That's not where our focus is, okay? Because we intend to monetize it with other partners as well. We're not really looking at controlling that. We're looking at it, that it's a pathway to develop, to develop a longer-term solution of how to attach our customers to Lithia and Driveway ecosystem in a better way than what we do today. So when you think about the tech stack, I would say that's a three to five-year venture. We've run some base numbers that if and to be fair, Pinewood isn't ready to be put into North America. It needs APIs to manufacturers, and it needs the APIs to each of the state agencies, and tax codes, and DMV codes to be able to move to America, just like when Pinewood moves into a different country, and that will take a couple of years to get there. But if we were to basically extrapolate what a Pinewood charge was at their full profitability, okay, onto Lithia's tech stack today, it's about a $30 million savings. Okay, don't put that in your estimates because we're not ready to do that yet, okay? That's a longer-term vision of where we get to. I think most importantly, what you have in Pinewood is a cloud-based system that is quite adaptable, that we believe is one of the top three functional systems in the world, okay? And as such, it's our pathway to be able to someday glue our different adjacencies together. But more midterm is to create a software-as-a-service company and de-emphasize our influence within that company to bring in other partners to ultimately be able to grow from. Colin, do you have a follow-up question on that? Well, not related to that. Just a quick follow-up overall. Your same-store unit sales were up 5%. I think retail SAAR was up 11%. Why the underperformance versus the market? Is that a geographical mix issue or any color there? Thanks. Yeah, our same-store new was up a little over 5%, but you're absolutely right, and Chris can give you some of the numbers, region or state by state, but we do have a little bit different footprint, and it's still a little bit more depressed in some of the areas that we have footprint. Yeah, just to follow up on that then, you know, like we've talked about the last several quarters, I think the West is seeing kind of different growth rates than we're seeing kind of in, in the Southwest, for example. Northwest region and Southwest region were both, you know, up about. They were both about flat, and then more in the Southwest regions, in the Northeast regions, we were up, you know, double digits, kind of above even the SAAR number that you said. So a lot of it is kind of what our mix is and what our franchises are. As Bryan mentioned earlier, you know, 23% domestic, those units are down 11%, whereas your import and luxuries are up about 12%. Mix has a lot to do with that, and geography has a lot to do with that. But I think our point is to have a diverse network in all regions and, you know, depending on what's happening in the economy and each of those markets, we'll kind of ride that tide. Thanks, Colin. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question comes from David Whiston with Morningstar. Please proceed with your question. Thanks. Good morning. Wanted to go back to the discussion we were just having on the Pinewood DMS JV in North America when it eventually comes here. As you know, Reynolds and CDK are very big, too. And are you just basically hoping you can win share in North America because your system is superior, or is it going to be more of a pricing discussion? Just how do you convince dealers to make that switch? Well, David, this is Bryan again. I think most importantly, if you've ever been into a dealership, and if you think about the experience that CDK and Reynolds and Reynolds provide, it's more of a transactional database. It's not really a relationship generator. So when you think about the Pinewood system, it's all built around the customer experience, both in a digital and a physical presence. And I think with our experience, we can help embellish that process as well. I know that. I mean, we've been one of the largest partners of CDK and still intend to for a fair amount of time, that their intents are always good, but they're starting from a foundation of technology that's just not conducive to our associates or for that matter, our consumers. That they don't really interact with the CDK systems or the Reynolds and Reynolds systems at all. In our ecosystem, as we envision it with Pinewood, the consumers are interacting with our DMS system, just like our associates would interact with it. So we believe that there is an opportunity at some point to be able to conquest market share. And as you know, you know, CDK went private, which means it's private equity money, and there may be a, an opening to some extent to be able to bring in new technology. And I think, I think our ultimate goal would be to join forces with, with multiple other retailers, possibly even manufacturers, or possibly even CDK or other technology companies, to really provide a world-class consumer experience that really isn't out there in one form today. We all add on multiple other systems that are just clunky for associates and consumers. Okay, that's helpful. Thank you. Thanks, David. We have reached the end of the question and answer session. I would now like to turn the call back over to Amit Marwaha for closing remarks. Thank you, everyone, for joining us today. We'll look forward to speaking to you over the next couple of weeks. Look forward to seeing you next quarter. Thank you. Bye, all. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.