Greetings and welcome to the Lithia Motors Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amit Marwaha, Director, Investor Relations. Thank you, Amit. You may begin. Thank you for joining us for our Fourth Quarter And Full Year 2023 Earnings Call. With me today are Bryan DeBoer, President and CEO, Chris Holzshu, Executive Vice President and COO, Tina Miller, Senior Vice President and CFO, Chuck Lietz, Senior Vice President of Driveway Finance, and finally, Adam Chamberlain, Chief Customer Officer. 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 the reconciliation of comparable GAAP measures. We have also posted an updated investor presentation on our website, investors.lithiadriveway.com, highlighting our fourth quarter results. With that, I would like to turn the call over to Bryan DeBoer, President and CEO. Thank you, Amit. Good morning and welcome to our fourth quarter and full year earnings call. In Q4, Lithia and Driveway grew revenues to $7.7 billion, up 11% from Q4 of last year, and generated adjusted diluted earnings per share of $8.24. 2023 was a record year for us as we reached just over $31 billion in total full year revenues. Results in the quarter were driven by continued strength in new vehicle sales, with same-store units up 10% and after-sales revenues up 3%. This was offset by lower new vehicle GPUs continuing to normalize, declining approximately $150 sequentially per month in line with our expectations for new vehicles. Our manufacturer partners continue to replenish inventory at a steady pace, with manufacturer incentives, both lower subsidized rates and cash rebates, continue to support consumer demand across a variety of brands and models. Used GPUs came in near-decade lows while F&I GPUs were essentially unchanged. With our unprecedented acquisition growth and the expansion into adjacencies with Driveway, GreenCars, Driveway Finance Corp, Pendragon Vehicle Management, and a strategic partnership with Pinewood Technologies, our key strategic design elements are all now in place. This positions us perfectly for 2024 and beyond to focus our attentions on what we do best: execution. Our team remains acutely focused on delivering revenue growth and profitability across all business opportunities. The LAD strategy is built on our vast store network made up of the industry's most talented people, highest demand inventory, and a dense, expansive physical network. This foundation is driven by our culture that challenges our teams to operate with autonomy and respond nimbly to local market dynamics to achieve industry-leading performance. Expanding our store network and leveraging our many strategic adjacencies increases the touchpoints throughout the customer's lifecycle while also equipping our stores with the tools necessary to improve productivity, loyalty, and ultimate profitability. The LAD ecosystem is designed to expand our total addressable market and market share through omnichannel solutions and adjacencies that are there for customers wherever, whenever, and however they desire. This will drive us from approximately 1.9% market share today towards our previously stated target of 5% and, more importantly, a ratio of EPS to $1 billion of revenue of 2:1. Moving on to our financing operations, Driveway Finance Corporation, or DFC, posted another strong quarter with a smaller-than-expected loss of $2.1 million while receivables grew to $3.2 billion. The DFC team has demonstrated success navigating through the fluid interest rate environment while maturing its capital structure and liquidity position. We are excited to see this adjacency continue to mature as it looks to achieve break-even later this year while improving liquidity as we manage the pace and quality of originations. Both Chris and Chuck will be sharing further details on operational results of both vehicle and financing later in the call. At the heart of our strategy is expanding customer solutions that are simple, convenient, and transparent. Our network is being designed to be within 100 miles of consumers to provide easy and convenient delivery solutions for our customers. Over time, the leveraging of this network with our omnichannel solutions will generate more attractive and diverse impressions, more memorable experiences, better returns on capital, and a unique ecosystem that provides differentiated and deep value for our customers. We exercise patience and discipline during the fourth quarter, bringing us to $3.8 billion in annualized revenues acquired in 2023. 2024 has also started off strong, with our successful completion of the Pendragon transaction at the beginning of this month. This transaction forms a strategic partnership with Pinewood Technologies, adds a highly profitable fleet management business, both new adjacencies, and the U.K. Motors business with 160 stores across the United Kingdom and over $4 billion in total revenue. This is an exciting new chapter of diversification and growth as we round out our presence in the United Kingdom. I'd like to personally welcome all our new Pendragon associates and Pinewood partners to the Lithia family. Acquisitions are a core competency of LAD, and we remain disciplined and opportunistic as we look for creative opportunities that can improve our business. As a reminder, we target a minimum after-tax return of 15% or greater and acquire for 15%-30% of revenue or 3x-7x normalized EBITDA. To date, our acquisitions have yielded over a 95% success rate and after-tax returns of over 25%. As GPUs normalize and liquidity tightens, we expect valuations to become more realistic as well. Our robust acquisition strategy has opened up new markets and mobility verticals, creating considerably more opportunities for us in the future. However, for the foreseeable future, we are fine-tuning our targets to focus 90% of our M&A dollars to automotive in the United States. In addition, now that we have realized the scale necessary to find, fund, and operate new adjacencies, we will evaluate share repurchases with parity to acquisitions. Past practices prioritize acquisitions as more beneficial strategically than buybacks, but at our current size and scale, we are now returning to a balanced deployment of free cash flows to drive the strongest possible returns. We continue to monitor valuations of both, being patient for strong assets priced within our acquisition hurdle rates. We expect pricing to take some time to normalize and now estimate annual acquired revenues, excluding the Pendragon acquisition, in the range of $2 billion-$4 billion a year. Our near-term target of $50 billion in revenue remains within our sights, and our team is confident in our ability to achieve this while doing so in the most prudent fashion possible. Our team is experienced in executing and integrating acquisitions, and we remain committed to achieving strong returns as we build out our network. Moving on to the overall execution of our long-term strategy. Since the launch of our plan, we added important foundational adjacencies and have now acquired over $22 billion in revenue. In addition, the strategic partnership with Pinewood Technologies allows us to leverage technology to stitch together our strategic adjacencies, modernize the customer experience, and someday realize considerable cost savings in our technology stack. We are excited to begin the journey with the implementation of the Pinewood Dealer Management System, or DMS, in our U.K. operations this year. Beyond the U.K. and next year, we are excited to be part of the North American partnership with Pinewood Technologies, continuing to grow our own Driveway customer experiences and creating simple, transparent, and aligned customer and associate experiences. Shifting to our omnichannel platform, our MUVs across our digital channels were up 16%, reaching 13 million per month. Digital transactions, including Driveway, grew to nearly 38,000 in the fourth quarter, up 27% compared to last year. GreenCars, the leading sustainability vehicle education channel, continues to grow as a lead generation channel and contributed over 1 million MUVs, up 102% over last year. Sustainable vehicle sales now account for 16% of our new vehicles in Q4, up from 11% in the same period last year. With our customers at the center of our design, join me in welcoming Adam Chamberlain to the call and congratulating him on his expanding role as our Chief Customer Officer. His decades of experience and proven track record driving results will lead our continued transformation of the customer experience, combining our foundational elements to create deeper customer loyalty and increasing market share and profitability. Now that all the foundation elements of our plan are in position, attention is turned to improving margins and lowering our SG&A through a combination of growth, efficiency, diversification, and scale. These elements are now well underway, and when combined with our newest adjacencies of fleet management and a strategic technology partnership, we are well positioned for both further growth and realizing the profit potential of a more holistic lifecycle relationship with our customers. Weaving these elements together and assuming a normalized SAR and GPU environment, we now clearly see a pathway to $1 billion in revenue, ultimately generating $2 in EPS. Key factors underlying our future steady state and now totally within our control are as follows. First, continuing to improve our network by realizing the considerable revenue and profit potential within our existing stores by increasing our share of wallet through greater customer lifecycle interactions, leveraging our cost structures, personnel productivity gains, and growing each store's new, used, and after-sales market share. The result is to achieve an SG&A as a percentage of gross profit in store operations that's below 55% in a normalized GPU environment. Second, continue focusing on acquiring larger automotive stores in the higher profitability regions of the South Central, Southeast, and Midwestern United States. Combined with further growth in our digital channels, we expect to reach a blended U.S. market share of 5%. Third, financing of up to 20% of units with DFC and maturing beyond the headwinds associated with CECL reserves. As a reminder, our first adjacency DFC remains on track to achieve profitability during the latter half of this year. Next, maturing contributions from our horizontals, including fleet management, DMS software, charging infrastructure, and captive insurance. Fifth, through size and scale, we continue to drive down vendor pricing, improve corporate efficiencies to save costs, and lower borrowing costs as we path towards an investment-grade rating. Combining both store operational improvements with higher margin adjacencies and the other design advantages discussed, ultimate SG&A as a percentage of gross profit will fall below 50%. And finally, ongoing return on capital to shareholders through dividends and opportunistic share buybacks. Please refer to the LAD investor presentation for further details and reconciliations. As we approach the middle of the decade, we are well positioned to maximize our unique and unreplicable mobility ecosystem that is ready to deliver more frequent and richer customer experiences throughout the ownership lifecycle at global scale. Our strategy, combined with our experienced and focused team, will continue to expand market share, leverage our size and scale, and grow our complementary adjacencies to produce an ultimate long-term profit-to-revenue ratio of $2 of EPS. All elements of our original design are now securely in place, and we look forward to focusing all of our attentions on execution to establish new levels of performance for our industry. With that, I'd like to turn the call over to Chris. Thank you, Bryan. I'd like to begin by congratulating our 2023 Class of Lithia and Driveway Partners Group winners, better known internally as LPG. These leaders and their teams achieved the highest performance levels among their peers in 2023 with outsized market share, exceptional customer service, strategic innovation, and best-in-class execution. Our LPG group is the North Star for all of our retail locations to learn from and replicate as we continue to deliver operational excellence and attainment of profitability potential at each location. We now have 160 LPG partners, meaning over 40% of our eligible store leaders have attained this coveted status, and we look forward to all of our teams achieving LPG status in the future. Executing on our vision to build out a vast automotive ecosystem across three of the largest English-speaking countries in the world is well underway. We remain committed to our mission of growth powered by people and a high-performance culture led by entrepreneurial leadership at the local market level, which has been a differentiator in our strategy for over a decade. Empowering our teams to serve their customers and deliver best-in-class services wherever, whenever, or however they desire continues to be keys to our success. Moving on to the fourth quarter results, we continue to see resilience in the auto retail consumer as they pivot their buying needs in new and used vehicles in lockstep with OEM incentives, the recovery of new vehicle inventory, credit availability, scarcity of later model used vehicles, and the demand for after-sales as the vehicle car park continues to age. On a same-store basis, new vehicle revenues were up 10%. This was driven by unit volumes increasing 10% and nominal changes in ASPs. New vehicle GPUs, including F&I, were 6,215 per unit, down $1,510 or 20% year-over-year as we expected this and discussed throughout 2023. We anticipate the downward trend in GPUs to continue through 2024, eventually resulting in total GPUs, including F&I, at $4,500, which is near our historic levels. The main driver behind the GPU trend is driven by new vehicle SAR continuing to normalize, which is expected to end 2024 near 16 million units in the U.S. Same-store volumes are positively highlighted by large improvements in import and domestic brands, which were up 12%, while domestic volumes improved just over 4%. We're also constructive on SAR normalizing in the United Kingdom and Canada, eventually getting back to 2019 levels, which leaves 20% and 15% in expected recovery, respectively. New vehicle inventory day supplies rose to 65 days compared to 55 days at the end of Q3 and 47 days at the end of Q4 2022. Moving on to used vehicles, revenue was down 11%, and units were down 6%. ASPs continued to decline, down 5% to $28,000 versus $29,400 in the prior year. Used vehicle pricing continues to moderate in line with the recovering supply of new vehicles. Sales of certified vehicles were up nearly 2%, while our core vehicle segment, which accounts for more than half of our used vehicle sales, was down 10% as the impact of COVID production constraints is working through the supply chain. As a reminder, around 10 million vehicles were lost in production in 2020 to 2023 due to COVID-impacted factory shutdowns and supply chain issues. Value autos, which are higher mileage vehicles and generally over nine years old, were down 3%. Our top-of-funnel OEM new car status gives us significantly more access to inventory than used-only dealers, which, coupled with Driveway and our omnichannel selling arm, will continue to be a significant advantage for years to come. Used vehicle GPUs, including F&I, were $3,789, down 7% from last year and well below our historic average. Our teams are reacting to a volatile used car marketplace in response to the massive rebound in new car inventory that continues to add new vehicle supply. As the average APR in a used vehicle loan is almost 11.7%, the outlook for lower consumer borrowing rates will eventually serve as a tailwind for consumers and relief in their monthly payments. Used vehicle inventory day supply rose to 64 days compared to 58 days last quarter and 58 days in the prior year. Our after-sales business, which makes up 42% of our gross profit, rose by 3%, and gross margins were 55%. Customer pay, which accounts for 60% of the after-sales business, was up 3%, while warranty sales, which made up 30% of the business, rose by 6%. The average age and size of the vehicle car park is at record levels, and with the advancement in technology and product offerings for consumers, we can expect greater complexity and higher costs for repairs. We continue to meet this high-margin demand by finding innovative ways to attract and grow talent while offering state-of-the-art facilities for our technicians to comfortably call their professional home. Finally, adjusted SG&A as a percentage of gross profit, excluding Driveway's cost, was 62.8% versus 65.1% on a consolidated basis, which was similar to the prior year. Over the past 10 years, we have managed to extract nearly 500 basis points from our total SG&A. As we look to the future and work to find ways to gain additional leverage and benefits from our 460+ locations across the globe, we are confident in our ability to create a high-performance omnichannel network that is truly best-in-class in operating leverage. As we started, our LPG group has set the bar for our organization of what is expected, and in simple terms, moving our non-LPG to LPG performance levels has a massive impact on profitability. Specifically, moving non-LPG stores up one segment of performance will add 500-800 basis points of incremental leverage in the model. This would equate to approximately $250 million-$400 million in additional profitability or $7-$10 in EPS on today's performance and is a key to unlocking the $2 in EPS for every $1 billion in revenue that Bryan has discussed. In summary, our plan is well underway to build an international ecosystem in personal transportation that provides a variety of products and services that meet a broad set of consumers' mobility needs wherever, whenever, and however they desire. Our tenured and experienced team is set up to achieve high-performing results in a lean operating model while continuing to execute our plan that will deliver best-in-class returns to our shareholders. With that, I'd like to turn the call over to Chuck. Thanks, Chris. The financing operations segment continued to move towards profitability, narrowing our quarterly operating loss to $2.1 million, down from $4.4 million last quarter, while our portfolio ended the year at just over $3.2 billion. As we prioritized increasing yields and managing risk through our underwriting, we saw a sequential decline in origination volume to $429 million. Shifting to our operating metrics, the weighted average APR on loans originated increased to 10.3%, up 30 basis points from the prior quarter and 210 basis points from a year ago. As a captive lender sitting at the top of the funnel, we were able to achieve this without impacting credit quality. The weighted average FICO score of 734 on loans originated in the quarter was two points higher than the prior quarter, while front-end LTV was essentially flat at 95%. DFC's penetration rate during the quarter was 9%, primarily due to the negative impact on LAD's growth in retail units overseas. If we consider only retail units sold in the U.S., the only market DFC currently operates in, our penetration rate increases to 10%. Now that our yield is aligned with the market, we expect penetration will increase in 2024 and beyond as we look to scale. Our future growth has endless possibilities, including launching a new vehicle leasing product as well as exploring supporting LAD's expansion into other geographies and mobility verticals. In the fourth quarter, net interest margin increased to $33.2 million, driven by increasing portfolio APR and relatively flat funding costs. In Q4, we closed our sixth ABS offering, and we now have 86% of our portfolio funded through ABS term issuance and warehouse facilities. Later today, we are closing a very successful seventh ABS term offering. Net provision expense increased slightly from the prior quarter to $23.8 million as we saw seasonally higher charge-offs in the fourth quarter. The allowance for loan losses as a percentage of loans receivables stayed flat at 3.2%. 30-day delinquency rates increased 50 basis points from the prior quarter to 4.6%, consistent with seasonal expectations, and down 80 basis points year-over-year. This reflects strong performance from our servicing team as well as increasing our overall portfolio credit quality. As we prepare to transition from the startup period, I am very proud of all DFC has accomplished since we launched this initiative in May of 2020. DFC will quickly start to prove the financial benefits of this adjacency as well as show a clear path to realizing the full scope of DFC's contributions to Lithia and Driveway. Beyond standalone profitability, we can see how a mature DFC supports LAD's long-term objectives to reimagine the vehicle sales and ownership experience and make meaningful connections with the consumer throughout their entire vehicle ownership lifecycle. DFC has been built to be successful in the full range of market conditions, regardless of short-term volatility. We remain confident in DFC's ability to deliver long-term earnings growth to LAD and achieving our end-state financial goals with a fully scaled and seasoned portfolio. With that, I'd like to turn the call over to Tina. Thanks, Chuck, and thank you for all those joining us today. In the fourth quarter, we reported adjusted EBITDA of $400 million and nearly $1.8 billion for the full year 2023. Results in the quarter were driven by continued strength in new vehicle sales and after-sales, offset by lower new vehicle GPUs with returning supply and higher floor plan interest expense. Our focus on maturing our adjacencies resulted in improved profitability at Driveway and DFC, although early, we are well positioned to see positive contributions this year. We ended the quarter with net leverage, excluding floor plan, and debt tied to DFC of approximately 1.8x, relatively flat from the prior quarter. We continue to maintain our financial discipline even with planned growth and target leverage below 3x. During the quarter, we generated free cash flows of $242 million, an increase of 10% compared to the previous year. We define free cash flows as EBITDA adding back stock-based compensation less the following items paid in cash: interest, income taxes, CapEx, and dividends. We managed to generate another year of strong cash flows and balance with consistent capital allocation. We can preserve the quality of our balance sheet while supporting our growth initiatives and navigating various cross-currents in today's environment. Our capital allocation strategy of 65% toward acquisitions, 25% toward internal investments, which includes capital expenditures, and the balance of 10% toward shareholder return remains relatively unchanged. However, with nearly $22 billion in acquisitions completed since 2020, we are making some tactical shifts to be responsive to the market environment. As Bryan outlined earlier, we will continue to assess valuation trends and balance our M&A expectations in the near term with being opportunistic in our share repurchases. In the fourth quarter, we repurchased nearly 143,000 shares for a weighted average price of $241 per share. We have approximately 467 million available under our current authorization. We remain nimble and will look to deploy capital in ways that drive strong returns. Our vision and ability to deliver on synergies through acquisitive growth remains unchanged, and our strategy is flexible with the consistent cash flow generation of our vehicle operations business coupled with measured investments in adjacencies. The team has the necessary infrastructure and tools to drive revenues and margins toward our long-term target of achieving $2 in EPS per $1 billion in revenue and our focus on execution and digesting the acquisitions we've completed over the past few years. Our culture and business is designed to grow and deliver consistent, strong performance. Coupled with the diverse and talented members of our team, this gives us the necessary foundation to achieve our plan and to continue driving 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. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. 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 pull for questions. Our first question is from John Murphy with Bank of America. Please proceed with your question. Good morning, everybody. Bryan, I just wanted to ask a first question on Pinewood. We're hearing a lot of folks transitioning to Tekion. You're talking about Pinewood. It seems like we're finally getting this evolution or maybe revolution in DMS across the industry. As you think about the implementation of Pinewood throughout your entire platform, is this more a sort of a cost and efficiency focus change, or is this the kind of system that is going to help you leverage and get into these lifetime revenue streams and adjacencies in addition to these cost cutting? I'm just trying to understand where this is going. Hi, John. This is Bryan. Thanks for the question today. I'd start with that Pinewood system is what we would consider the top of the heap in global DMS systems, that its functionality is far and above what we see here in the United States. I think it's also imperative to point out that Pinewood's user base is the same size as Tekion today, and that's before they begin to develop additional uses and move into the largest market in the world, which is North America. So we look at it as three key elements. First and foremost, we're just a partner and the parent, so keep that in mind. This is Pinewood's business. It's a savvy business that's ready and primed to grow. So we look at their ability to grow user base outside of North America as priority number one, and they obviously look at that the same. Secondarily, we do look at the idea of it coming into the United States opens up additional user base for them as well. But for us, there's two big advantages. One is it allows us the ability to glue our multiple adjacencies together the way that we see fit and as that ecosystem begins to develop. So that's pretty crucial, knowing that the two major players in the United States are truly more of a behind-the-scenes type of functionality where really we're looking for an environment where customers and associates coexist and work to reduce productivity with our associates because the consumers typically want to do that stuff themselves. So yes on trying to glue together the ecosystem. Then lastly, if we assume a 25% inflation in the cost per user that Pinewood currently charges and apply it to our data stack today, we save about 50% on our tech stack, about 50%. It is a large cost savings while still adding greater functionality to the system. It is priority number one of why the Pendragon acquisition was so meaningful and so strategically targeted by us. And then if I could just sneak in a second question, and this has given you a little bit of a hard time even though SG&A performance has been good. In the quarter, SG&A was up about a little over $83 million and gross profit was up just shy of $52 billion. So SG&A growth is outstripping the growth in gross profit, and it was kind of a similar dynamic for the year. As we think about incremental gross over time, how should we think about sort of the flow-through of SG&A to gross incrementally? Because it seems like it's growing faster than gross is, so that's something we'd want to slow down, obviously, over time. Yeah, Johnny. It's Chris. I think the biggest impact that we have right now that we're dealing with is used cars. I mean, used car gross is right now significantly below historic levels. And right now, trying to really procure and get the core product that we need, which is kind of those three to seven-year-old vehicles, it's a firefight. The benefit we have as being a top-of-funnel new car dealer is 70% of our trades are coming in from consumers, but we still have to fill our pipeline being used car operators with vehicles that are outside of our customer channel, which creates pressure on gross. And we compensate our teams selling a lot of vehicles right now that just are lower on gross profit contributions. I think when things normalize and you go back to the overall structure that we have - and we have a slide that kind of represents kind of what our top tier is able to accomplish right now in that SG&A closer to 50% - we've got to do the work now with our operations team and move kind of the lower bucket of stores that aren't getting that kind of leverage up. That's where we really believe we can continue to maintain an outlook of getting to 55% SG&A to gross somewhere near-term, mid-term, but that's an execution opportunity for us. Thank you. Our next question is from Daniel Imbro with Stephens Inc. Please proceed with your question. Hey, guys. This is Joe Enderlin on for Daniel. Thanks for taking the questions. Hey, Joe. Hey. In the slides, it looks like you removed the timeframe from your 2025 targets. How should we be thinking about the timeframe here now, and what change in your thinking? I would start with that, obviously, we're less than a year out from the start of 2025, so we would be inferring specific guidance, and it's not typical practices of our company to provide guidance. But maybe more importantly than that, the goals that we've established for ourselves are to build an ecosystem that is unreplicable, and that foundation is now solidly built. So the idea of trying to achieve $50 billion in revenue isn't really the target. The target has now moved to be more about what can that ecosystem produce in terms of customer experiences and ultimate touchpoints throughout the lifecycle with the consumer to create $2 of EPS for every billion dollars of revenue. So the $50 billion is obviously in our sights. Unfortunately, with where the market is pricing acquisitions today and where we're trading, the acquisitions are more costly than we can buy our own stock back. So if you heard in the prepared remarks, we're looking at buybacks versus M&A at parity. And in today's environment, what we're seeing is that these single-point stores and even the smaller groups are bringing massive multiples, selling for as much as 10x-20x normalized earnings. When the lookback is a three-year lookback, that's just not something that we're going to chase. And I think as such, we're revising what our M&A targets are post-Pendragon at $2 billion-$4 billion annually, which will get you probably into the mid-$40 billion in revenue range in 2025. We can probably get there in 2025 assuming that the marketplace softens up a little bit and looks past the three years of elevated earnings from GPUs. Got it. That's super helpful. Thank you. As a follow-up, and you guys have pushed further into the U.K. market with the acquisition of Pendragon, could you maybe provide some current thoughts on the U.K. market? Poor results have come in softer than our previous expectations. Are you seeing any headwinds there in the used market, or how has that market trended in recent quarters? Yeah, Joe. It's Chris. Yeah. I mean, I think typically, kind of the issues that we are contemplating in the U.S. are also impacting the U.K. The used car market has been adjusting pretty rapidly with the new car inventory recovery. And I think fourth quarter was difficult, I think, for used cars just because you're chasing a number that's coming down. But I think there's also a lot of synergies that the U.K. stores are seeing in what we do in the U.S. and the way that we think about the different segments of vehicles and going after kind of value auto product and figuring out how to get synergies across the brand. And I think with the size of the network that we built there, lots of opportunity. The last thing is, in my prepared remarks, I mentioned that there is a larger recovery than what you're going to see in the U.S. getting back to a normalized SAR in the U.K. Hey, Joe. One incremental piece of information. Chris and I were out there for a week, what, 10, 12 days ago now. And we spent time with Neil, our operational leader both Pendragon and Jardine, as well as his key generals. It's surprising that the Pendragon group, especially Evans Halshaw, that Gary, the leader of that, they have a good grasp of the used vehicle market. And I think it's very clear that our ability to grow within that market is out there. As a side note, we ended up walking through each and every store within the 160 locations and have a pretty good strategy on how to optimize their network as well, as well as retain and motivate those people to be able to reach higher in the United Kingdom. Lastly, I would say that our growth in the United Kingdom is pretty well accomplished. We're nicely positioned in the United Kingdom with pretty close to 8% market share or something, with most of it being luxury, which is quite nice. Obviously, our attention now turns back to the United States with automotive, and 90% of our mergers and acquisitions dollars will be going to that. Got it. Thank you, guys. That's all for us. Our next question is from Rajat Gupta with JPMorgan. Please proceed with your question. Great. Thanks for taking the question. I just had a couple. Firstly, on the buyback strategy shift, in the event you end up doing more buyback versus M&A or similar amounts over the next couple of years, how much should we think you could take leverage to on the balance sheet versus 1.8x adjusted you are at today? Is that a different benchmark that you would be looking at relative to when you were doing M&A? Just curious on our thoughts there, and I have a follow-up. Thanks. Sure, Rajat. This is Bryan again. I think it's important to define that just because we put M&A and buybacks at parity doesn't mean we believe that we'll be able to do buybacks or M&A. The market will dictate both of those. We know definitively that M&A is a core competency of Lithia Motors and Driveway and that we always are able to find acquisitions. As such, even though we have the Pendragon acquisition, we have other deals in the hopper that are going to make the year-round out quite nicely, that are domestic deals in the United States with highly attractive franchises in areas that we've targeted our growth that will be there. Now, when we think about buybacks, ultimately, it is still the last thing that we want to do with our money because the only reason we would be buying back is because we believe that our share price is more valuable than what it's trading at. So that balancing act will try to give you color as to where we sit today. But today, if you noticed, we bought back $40 million or so of shares in the quarter, primarily because when acquisitions are at 10x and we can buy our shares back at 7x, we're going to buy our shares back. So the market will ultimately dictate it. So for our ideas of how to diagnose, I think we're going to stick with probably $2 billion-$4 billion in domestic. U.S. automotive growth is key, and that should get us to about 50%-70% allocation of our capital to M&A. Then you can balance out that 20% is probably the difference that falls into the buyback pool. Got it. And then on the leverage, where do you think you can take the leverage on the balance sheet to from 1.8? Could you go as high as 3x? Tina. Yeah, Rajat. This is Tina. I mean, we target being below three times leverage, which is the financial discipline we've always had. I think that will continue to hold true. It gives us space to do some constructive work, whether it's M&A or buyback, but we want to keep that disciplined balance sheet. Thanks, Rajat. Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your question. Hey. Good morning, guys. Morning, Ryan. Two on Driveway. First, in past quarters, you've given the impact or quantified it, whether it be SG&A to gross profit ratio of, say, 300 basis points or the dollars, but curious if you're willing to do that in Q4. And then secondly, how you think about the investment in Driveway and digital in 2024 and what primary KPIs you're watching either pull back or lean into marketing and customer acquisition spend there. Sure, Ryan. If you noticed in the script that we ended up blending it together with vehicle operations because that is just truly another channel that is important for us. It's important to us that the burn rate becomes something that's manageable. Our burn rate year-over-year is down about 30%-35%, with another 30%-35% expected by the end of the year. But it does create an ecosystem that we believe is the center of the Lithia and Driveway universe. Now, today, we sit with about 13 different functions that are there in the Driveway customer portal, and we intend to build that out with 118 different touchpoints throughout the lifecycle with our consumers that they can exist and coexist in both Driveway as well as our traditional store base as the ecosystem to be able to put things at people's fingertips that they need during their ownership lifecycle. And that is deep. About a quarter of those are monetizable touchpoints. The other 75% is truly it's just value ads, and that's when we talk about the deep value ads. We're looking at it from the customer perspective. So Driveway, you'll see in its separate selling channel that's one price and is home delivery, and it's convenient and transparent and so on. But you're also going to see the functionality within that website add those additional 100 or so functions to be able to provide that to all users within the Lithia and Driveway ecosystem to be able to access that and subscribe to different things and schedule their service and pay their payments in their finance company or vice versa or know what the valuations of their trade-ins are. And I think as we think about the longer-term vision, it's really Driveway as a customer-facing solution that someday will integrate with the Pinewood Solutions and help us build an ecosystem that customers are used to and believe is infectious and wants to be there a couple of times a week rather than once every 3-5 years. That's great. Thanks, Bryan. Good luck, guys. Thanks, Ryan. Our next question is from Colin Langan with Wells Fargo. Please proceed with your question. Oh, thanks for taking my questions. If it looks sequentially, it was a bigger step down in new GPU. How should we think about that trending as we go through this year? I think you noticed I think your comments said that you kind of eventually expect to get to sort of pre-crisis levels. Should that be over the next couple of quarters, or any thoughts on that pace of that? Hi, Colin. This is Bryan. So I think the easiest way to think about it, let's talk about what we believe is steady state and normalized. We think that total deal average is around 4,500, about 2,500 on the front end, and that's blended new and used, and just under $2,000 on the back end. Today, we sit at almost $1,200 above that on new, and we sit about $500 below that on used. So that balancing act will come back in. We dropped about $150 a month over the last quarter, which is a little bit accelerated rate from where we originally were looking at throughout the last year. We assumed that by now, we would be back to normalized state. Now, the other thing to keep in mind is that Q4 and Q1 are typically seasonally a little bit tougher quarters. In fact, Q4 is usually the weakest in terms of GPU. So we do have some seasonality on our side. So I would say that over the next quarter or two, we should see about a $100 drop per month. But I would say that once we get into the second half of the year, whatever's left will normalize by year-end because I think if we go through another seasonally slow period, which will be in fall of next year, it should be back to some type of normalized level. I think, as Chris mentioned, it would sure be nice to be able to be at that level so we could truly be able to see what's effectively happening within different franchises in different areas of the country, to be able to truly manage performance, whereas it's been a little tricky managing performance over the past couple of years just because GPU's been behaving so differently by manufacturer and by region. Got it. That was very clear, very helpful. On the use side, you did mention those were sort of lows. How should we think about that? Does that sort of bounce back as you get sort of the inventory realigned, or is that going to drag on through the rest of this year, or is it a short-term or a long-term sort of issue? Colin, it's interesting because you'd think with a shortage in supply, that margins would be quite stable. But I think everyone is chasing inventory, which is driving the ultimate price costs up more, which is affecting margins. And then when you go through the typical seasonality of the winter months, you typically go into that panic mode that, "I don't want to I don't want my inventories to be out of line when I hit the spring months and selling season." So typically, by the end of February, start of March, we start to see recovery in the used car market and would hope to see that in the next couple of weeks. And I don't know if Chris or Adam has any additional color on that. No, well said, Bryan. Okay. Thanks, Colin. In the interest of time, we ask that participants limit themselves to one question. Our next question is from Kate McShane with Goldman Sachs. Please proceed with your question. Good morning. This is Mark Jordan on for Kate McShane. In your slide deck, it notes that you expect same-store sales growth in low to mid-single-digit range in the near term. Can you break that out for us on how we should think about pricing and units for both new and used? I think pricing and in terms of new vehicles, we're seeing good tailwinds. This is Tina, by the way, in terms of growth with that, with the imports coming back in terms of volume. We saw strong growth in that as we hit the fourth quarter, and I think that will continue somewhat as supply continues to normalize across the different brands that we have. From a used vehicle perspective, as we've mentioned in the last couple of quarters, that's been a tougher market. And from an ASP perspective, they've been relatively high, and so sequentially, we've seen those be pretty flat as you're thinking about modeling those out. Bryan, did you have some additional commentary? I think short-term, we're looking at new in the mid- to high single-digit range. On used, we're looking to be flat year-over-year. Now, we're a little bit below that right now at the -6%, but we think with the coming selling season, we should be able to recover as we lapse those comps. Thank you. Our next question is from Chris Bottiglieri with BNP Paribas. Please proceed with your question. Hey, everybody. Thanks for taking the question. One quick clerical question and then a bigger picture question after that. But the first one is following up on the changing the slide deck. It looks like you kept the reiterated the $50-$55 in the near-term plan but then cut the estimated growth and cut operating margins, at least at the midpoint. So trying to understand if you're targeting the higher end still and you're just giving a range, or why the EPS didn't change mathematically. Chris, so I think what Chris is referencing is slide 14. It's an important new slide of the slide deck because it reconciles how we get to $2 of EPS for every $1 billion of revenue. Where we're looking short-term, why don't we take that offline? We can help you with your model and be able to achieve that. I would like to go back through what our crosswalk is to get to the $2 of EPS. It's important to know this, and everything that happens until we normalize in GPUs, yes, we're going to always be rolling up our sleeves and driving to execute and achieve the highest results. But our focus is on how to achieve and weave together the ecosystem to achieve dollars. So our stores today, the $22 billion that we purchased over the last 4 years, 3.5, 4 years, we believe between those and this existing store base should be able to produce another $0.30-$0.40 for every $1 billion of revenue. And that's coming from being in better markets, being in less regulated markets like the Southeast and the South Central, and improving the performance in the stores, meaning grow the people and incentivize them to be able to grow market share and reduce costs. Alongside that is DFC, well on its way to profitability later this year, and most importantly, through the pains of most of the CECL as well as the seasoning of the portfolio, which is quite beneficial. That's another $0.20-$0.25 per share at normalized steady state position at a 20% penetration rate. So keep that in mind. We also just added a fleet management company. Even though we have one in Canada and a little one in Detroit, this is a real fleet management company with 30,000-40,000 units under contract that they're managing, they're selling, and they're bringing back into their organization. We believe that fleet management can be another $0.10-$0.15 of lift in the long term. It's a highly profitable business. The Pinewood Vehicle Management, or PVM, is highly profitable, just like Pinewood Technologies is highly profitable. So we're not looking for additional burn rates of any kind. We're looking at how to get rid of those burn rates, and we're well on our pathway to do that. Other adjacencies, and you can see what those are listed as in the slide deck, add another 5%-10%. We believe there may be more upside in those adjacencies. We just haven't been able to put our fingers on all that, but will in the coming quarters and years. Lastly, the remaining 10% or so comes from scale advantages, i.e., cost savings on Pinewood if we're able to move to that system someday, cost of capital, moving to IG rating and saving 50-75 basis points in our overall interest costs, those type of things, as well as the possibility of buybacks, even though we don't believe that needs to be the driver to get to the $2. So keep that in mind, Chris, as we think about it. But I think that's where the executive team is focused while the operational teams are really focusing on how do they get to the $50-$55 or $60 as soon as they possibly can. Our next question is from Bret Jordan with Jefferies. Please proceed with your question. Hey, guys. Can we talk a bit more about the credit business, maybe what you're seeing year-over-year in lost reserves? I think your FICO scores have improved, and your delinquencies may be down, but obviously, a bigger loan portfolio. And then maybe, yeah, I guess really what you're seeing in the underlying consumer health. And then also on the recovery side from repos, what you're seeing in repo volumes and how those are winding up as you sell them out. Yeah, Brett, great question. This is Chuck. So first, and just sort of a general market sort of overview, we see the same things that everybody else sees, which is the consumers are under some degree of stress and that delinquency rates have either got right to or slightly above sort of pre-pandemic levels for 30-day delinquency. But I think that really goes back to sort of DFC's strategy and real power of being top-of-funnel captive finance business. And then back in 2022, first quarter, we were able to dramatically increase our credit quality over 50 points of weighted average FICO from two years ago. And that's really standing us in good stead relative to withstanding sort of some of the impacts of some of this negative noise that we're seeing in the economy. So our portfolio is performing very well. We had a recent ABS issuance in the market this quarter that should go off very well and was very well received by the marketplace. We feel that that's a big contributor to how we are managing our portfolio. To answer the second part of your question, which is the repos, our recovery rates were stressed probably the last 12-15 months with some of the industry experience of the lack of repo agents and repo and recovery being limited by the distance of which they would go to recover vehicles. We have overcome that, and our recovery rates are either at or slightly above the market rate. It's still something we watch very closely and keep an eye on, but we feel very comfortable that our recovery rates are in line with the market. Thanks for your question. Our next question is from Michael Ward with Freedom Capital. Please proceed with your question. Thanks very much. Good morning, everyone. Bryan, I think you mentioned in your comments—hi, Bryan. I think you mentioned in your comments that you saw SG&A expense as a percentage of gross going down below 50%. And I think you guys have already talked about used vehicle gross as normalizing, moving higher. What are the other components of that? Does that assume that you get a higher profitability from DFC? Is that folded in there? I assume there's some SG&A costs in there for the ramp-up of DFC. What are we looking at there? It does. We get to 55% operationally within our core businesses, which is vehicle operations. That includes Driveway, GreenCars, and all the Lithia core stores. And you have stores at that level. And you have stores at that level today, correct? We have lots of stores at that level in normalized times, lots. Wow. Okay. Remember, we purged almost 50 stores over the last, what, six, seven years that were stores that typically had SG&A of above 85%-90%. About a quarter of our stores today operate in the mid-50% range in normalized times. We believe that the network has been built with such good quality stores that we believe that's the normal. That's where our ability to execute and utilize our world-class performance management systems, like what we call our SPS, which is our core guiding document for performance management. That's how we really drive the results. It's built on the back of both market share, loyalty, as well as profitability to achieve higher performance. That is really the secret sauce of what Lithia has always been able to do and will do once again to achieve that 55%. The rest of the 5%+ is coming from higher-margin businesses like fleet management and DFC, as well as a few of the other adjacencies, and then obviously some scale advantages and cost that we expect to be able to realize in the coming years. Our next question is from David Whiston with Morningstar. Please proceed with your question. Thanks. Good morning. Could you just give your opinion on when you think leasing penetration will be back toward close to 30%? Yeah. Hey, David. It's Chris. I mean, I think it's hard to highlight when that is because we don't control kind of the incentive base that the manufacturers support us with. But it's obvious that with the buildup of inventory, especially in the domestic ranks, that contributions, whether it's in leasing or finance participation or even cash incentives, are going to be the driving factor in that. And I think throughout the back half of the year, we expect that to continue. And I think the other side of it is getting a clear line of sight on the residuals that they provide, which in this dynamic market that we've been dealing with the last couple of years with COVID and pricing and everything else, I think is on everybody's mind, but a little outside of our control, David, but we'll continue to execute in the environment that we're in. Thank you. There are no further questions at this time. I would like to hand the floor back over to Amit Marwaha for any closing comments. I want to thank everybody for joining us today. We look forward to speaking in the coming days and weeks. Have a good day. Take care. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.