Welcome to the CarLotz 2Q 2021 earnings call. At this time, all participants' lines are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Susan Lewis, VP of Investor Relations. Thank you. Please go ahead. Thank you. Good evening, everyone. With me on the call is Michael Bor, Co-Founder and Chief Executive Officer of CarLotz, and Tom Stoltz, Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release. If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplemental financial information in our press release. Now, I would like to turn the call over to Michael Bor, Co-Founder and Chief Executive Officer of CarLotz. Thank you, Susan. Good afternoon, everyone, and thank you for joining us to discuss our Q2 2021 results. As you'll hear, we are very pleased with our Q2 results. Having met our unit guidance, significantly outperformed our GPU guidance, achieved record gross profit, launched our new web experience, and to date, we have opened eight new hubs while announcing an additional six hubs. It has been a challenging year from a macro industry perspective, but certainly an exciting and busy year from a company growth perspective. Over the last six months since we became a public company, we have doubled our number of hub locations, hired experienced talent across the company, and began executing on major technology and marketing initiatives that we believe will support significant growth and scale. All this being said, we continue to experience disruption in the wholesale markets that is impacting our ability to effectively source the most desirable cars from both commercial accounts and auctions. After Tom discusses second quarter results, I'll give more color about the current macro environment, what actions we are taking to further accelerate our unit sales, and finally, our continued confidence in our long-term consignment business model. Tom? Thank you, Mike. For full details regarding our financial results, please refer to our press release available in the investor relations section of our website. As Mike mentioned, we are pleased with the results for the second quarter, achieving strong unit revenue and gross profit growth. Revenues were $50.8 million, an increase of 92% versus last year. Retail unit sales were 2,009, increasing 46% versus last year. Additionally, for the year-to-date period, revenue increased to 107% and unit sales grew 61% as compared to the same six-month period in 2020. Our revenue growth for the quarter was driven by increases in our retail unit sales, a 29% increase in our average selling price due to both changes in inventory mix year-over-year and overall price increases in the used car market. Importantly, a nearly 100% increase in finance and insurance revenue driven by a combination of increased penetration in pricing of products and services on units sold. Gross profit increased 108% sequentially over last quarter and 53% year-over-year to $4.2 million. Retail GPU increased 84% sequentially over last quarter and 17% year-over-year to $2,175. Retail GPU benefited from a significant increase in F&I penetration and an increase in front-end profits on owned vehicles. Total Q2 SG&A expenses, excluding stock compensation and depreciation, were $19.4 million compared to $3.1 million in the same period last year, and $18.9 million in Q1. The higher Q2 SG&A costs relative to last year were driven by hiring management and support staff to execute our growth strategy, in addition to incremental technology and marketing investments, which began in Q1 2021. In total, our net loss for the second quarter was $7.2 million compared to a loss of $200,000 during last year's Q2, and a loss of $15 million in the first quarter of this year. Adjusted EBITDA was a loss of $15.2 million compared to a loss of $300,000 last year in Q2, and a loss of $16.9 million in the first quarter of this year. Turning to our balance sheet. We ended the second quarter with cash and marketable securities of $259 million, which provides us meaningful flexibility going forward. Additionally, during the second quarter, our floor plan credit facility with Ally was increased to $40 million. Regarding our outlook. For us to predict volumes and profitability in our business, we need to have a clear view into our supply of vehicles. Our clients have historically been able to predict their remarketing volumes, in part based on new vehicle delivery schedules. We currently lack the appropriate visibility needed to predict the timing of when our supply chain will return to normal. Therefore, we believe it is appropriate to withdraw guidance at this time. Mike will further discuss the macro environment that led to this difficult decision. Given the uncertainties in the marketplace, we have determined that this is the appropriate course of action. To further illustrate this dynamic, in the beginning of Q2, our inventory primarily was consigned, but over the course of Q2, due to these industry conditions and the pause in our relationship with our largest corporate consignment partner, our mix shifted to about 80% owned inventory, with a substantial portion purchased at auction. Due to the nature of owned inventory versus consigned inventory, combined with seasonal pricing depreciation, we expect this new mix will apply pressure to gross profit for the balance of the year. In addition, while our new hubs performed well at the beginning of the year, when we were selling predominantly consigned inventory, the group of new hubs as a whole are not ramping units as quickly as we originally expected, also resulting in gross profit pressure. As a result, qualitatively, while we continue to see unit growth in Q3 over Q2, we have seen gross profit compression in Q3 to date, which we expect to continue through the end of the year due to the issues that Mike will elaborate on shortly. Looking ahead to the second half of the year, despite our near-term lack of visibility, we plan to continue to make the strategic and tactical investments necessary to further establish the base from which we expect to scale into a nationwide vehicle consignment and sales marketplace in the long term. I'll now turn the call over to Mike to discuss how we are operating in light of this current environment. Thank you, Tom. While we're very pleased with the Q2 results that we delivered in light of the macro sourcing disruptions that we have seen this year, it's important that we further articulate these headwinds. First, I'll discuss the supply chain issues we are facing and why they are uniquely disruptive to our business model. Second, I'll address the specific actions we're taking to mitigate the disruption. Third, I'll talk about the investments we are making to ensure the long-term growth and success of the business. With respect to our supply chain, starting in late Q1 and into Q2, the broadly discussed chip shortage, which decreased the availability of new cars, and the increase in wholesale prices resulted in fewer used cars being available through our commercial clients. In light of rapidly increasing wholesale prices in relation to retail prices, the consignment service offering became less appealing to our retail remarketing clients. Our largest corporate consignment partner's decision in May to pause consignments further exacerbated these challenges. Additionally, and similarly to our peers, sourcing attractive inventory at reasonable prices from wholesale auctions and other competitive sources became unusually challenging. We performed well in Q2 with this competitively sourced inventory as pricing was on an unprecedented rise. As we begin to see prices peak and begin to recede, we have seen a more challenging profitability environment in the third quarter to date compared to second quarter, which we expect to continue until the market normalizes. Our consignment inventory, due to the fee structures we utilize with our accounts, provides us more predictable profitability than owning inventory. It's frankly the reason why we believe so strongly in our business model and are excited for the market to return to normal and our clients to increase their consignments. Carrying less desirable auction-sourced inventory at higher acquisition costs is impacting the performance of our new hubs. While our first two hub openings performed well in their first 90 days, we are experiencing lower than anticipated sell-throughs, in part due to the sourcing mix, younger age, and higher selling price of inventory with which we have had to stock all of our hubs. With eight new openings year to date and several more coming up, we are reliant on our new hub performance to achieve our growth long term. What have we done about this disruption? To get inventory to appropriate levels, we did two things. First, we began sourcing much more heavily from competitive channels. Even though we were able to increase our available inventory into June, the overall balance of our inventory is now much more heavily weighted towards competitively sourced and owned inventory than we anticipated and prefer. Second, we're attempting to grow our consumer sourcing, which we believe will have a positive impact on mix and profitability. Growing consumer sourcing is a continuing and longer-term initiative, which will take time to materialize, though we are seeing promising early results. Outside of what we're doing to address the short-term impact of the industry, what are we doing to ensure the long-term growth and success of the business? One, we've grown and continue to grow our geographic footprint and our team. Two, we're investing heavily in building our brand through our new marketing campaign. Three, we are significantly upgrading our technology. Four, we are taking actions to continue to improve our unit profitability. Five, we are growing our relationships with some of the top corporate consignors in the industry, so that when the market returns to normal, we expect to have more access than we have ever had to consigned inventory. Let me discuss each of these initiatives. First, we have and continue to set the groundwork for a much larger national presence than we previously had, which we plan to take advantage of as the market returns to normal. We have so far opened eight new hubs this year in some of the most attractive markets across the country, doubling the number of locations in which we operate, and more than doubling our inventory and processing capacity. We have also announced six additional new hubs so far on our way to our goal for the year of adding 14-16 hubs. We believe that continuing to build out our national infrastructure will put us in a strong position to take advantage of our unique business model when industry conditions normalize. Second, we have very recently launched our first-ever major brand campaign designed to increase our brand awareness and introduce many people to the concept of vehicle consignment. The campaign highlights that our guests are not buying used or consigning because they're cheap. They're doing so because they are smart, proud, independent, and pragmatic. In addition to building brand awareness and driving unit sales, we believe it will support new hub launches and provide sustained support in key legacy markets. We believe this campaign will have a greater and more effective reach than our previous marketing initiatives. Look for the campaign across social, digital, radio, and television. Third, we're driving technology initiatives that will facilitate sales by making the vehicle buying process, whether in-hub or online, as easy as possible. During the second quarter, we brought our website infrastructure in-house, which we believe will give us improved operational control and stability, the enhanced ability to identify and adapt to the specific needs of our guests, and the ability to experiment with and test new features. We also believe that the launch of our new website and the development of the mobile app will further enable our guests to buy outside of our direct markets. Fourth, we continue to focus on profitability. As we mentioned, we've increased F&I revenue by nearly 100% year-over-year this quarter, and we continue to seek new ways to be cost-effective and timely with our processing center operations. Fifth, we continue to build strong relationships with our corporate consignment partners and expect them to ramp up their retail remarketing efforts as market conditions sufficiently normalize. In fact, our corporate consignment partner who paused our relationship in May, has recently expressed an interest in restarting our relationship. We have started seeing small volumes of inventory from this account, but it's still too early to tell how significant the relationship will be to our overall sourcing. With respect to some of our other top accounts, we are seeing early signs of more consignment volumes coming back. Again, we don't anticipate seeing meaningful inflows of consignments from these accounts until they increase their deliveries of new vehicles from the manufacturers. In closing, our experiences over the last several months have only made me more enthusiastic about our consignment business model. Asset-light, and with lower inventory risk and greater profit predictability. We fully believe that the retail wholesale pricing relationship will return to normal, and our clients will eventually receive their anticipated volumes of new cars from the OEMs. In the meantime, we believe that our investments in 2021 put us in a favorable position with the right infrastructure and human resources in place to take advantage of the consignment market when it re-accelerates. To reiterate, we continue to have confidence in our long-term consignment strategy and value proposition. We have not seen any long-term structural changes in the market that would prevent us from eventually returning to our desired consignment model mix. We believe that our relationships with our corporate sourcing partners are strong. We are also growing our consumer consignment operations, investing in our brand awareness, and significantly growing our hub network while also enhancing our technology. We are optimistic about the long-term success of our business model as we navigate through what we believe is a short-term disruption. I want to reinforce that I couldn't be prouder of how the team has navigated through this challenging quarter and delivered strong unit, revenue, gross profit, and retail GPU growth. We will continue to focus on strengthening our foundations for the future while making tactical changes and investments to operate efficiently in this current environment. We'll now take your questions. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. First question comes from the line of Sharon Zackfia of William Blair. Hi, good afternoon. I guess there was a lot in there to talk about. I guess, just given that there's an industry-wide dynamic that you're facing right now, how are you able to sound so certain that the stresses you're seeing are kind of almost all externally related, as opposed to maybe some internal stress related to the pace of growth? I'm referring to the new hub openings and the sell-through. Yeah. Thanks, Sharon, for the question. Yeah, the key industry-related events that we've seen over the course of the year related to COVID are the lack of new cars being delivered to our clients. This is a big one. It has dramatically reduced the number of consignments that are coming from these accounts because they don't have the new cars to replace their old cars with. The rapidly increasing wholesale prices that we're beginning to see the end of. These are two events that, in my history in this industry, we have never seen anything close to it. They're having a meaningful impact on our ability to source the types of vehicles we like to sell and the predictability of the profitability that we like to see with what we do sell. Just as an example, our inventory today is at a meaningfully higher price, not just related to the increase in wholesale prices and retail prices, but also due to mix shifts in the types of inventory that we're getting from the auction versus the types of inventory that we were regularly getting from our accounts. As an example, probably 30%, 40% plus of our inventory used to be in that under $15,000 range, and it's now about 10%. That is inventory, obviously, that turns the fastest. We're pretty confident that these macro industry trends that are fairly uniquely impacting us are a huge part of the stresses we're seeing. I guess a kind of a follow-up to that. You mentioned consumer sourcing, and I've heard the radio ads, at least in Chicago. Can you talk about how that's ramping? I know that would be a longer-term trajectory, but any kind of metrics there might be helpful. I guess secondarily, we're really not hearing from other publicly-traded companies that they're kind of having consumer balk at the price points that are out there. Why do you think CarLotz sees that maybe more than some of the others that we're aware of? Did you say consumers balk? Is that what you said? Yeah, I think you were mentioning higher prices as being one of the issues. Yeah. New hub ramps. It doesn't appear with any of the other companies that have reported thus far that they are seeing consumer resistance to the prices, if that makes sense? Yeah. Maybe my point wasn't clear enough. The volume of vehicles that we're selling that are in the $30,000, $40,000, $50,000 range versus what our average has been since we started CarLotz is much higher. As you can imagine, the number of people that can afford a $40,000 or $50,000 car is far fewer than the number of people who can afford and are looking for a $10,000- $15,000 car. Our average over the last several years has been in the really low teens to high teens. Over the course of this year, it's pushed up meaningfully from there as a result of the types of inventory we're getting. Now, we are selling a lot more higher-priced inventory than we've ever sold in the past, and we believe we're building a good brand for that type of vehicle. The sell-through rates that have always kind of gone into our model and how we've predicted the business have been based on sell-through rates of our average inventory, which has been in the teens, not the 20s. It's less that consumers are balking at price points. It's that this is a new type of inventory that we're selling, and it comes at a different sell-through than the averages that we've seen over the course of the company's history. Okay. That's fair. On the consumer sourcing, do you have any kind of recent metrics on the uptick there? We have increased marketing, as you mentioned, both for consumer sourcing through consignment and through consumer sourcing through buying. We have seen a meaningful uptick off of a small base. Consumer sourcing dropped when the wholesale prices were ramping up dramatically, and consumers found that they could get very hefty prices from dealers. The consignment offering, just like it was with our corporate consignment accounts, became temporarily less enticing due to the kind of shift in wholesale prices as compared to retail. As we're seeing that revert to normal trends, we're seeing significant improvements in consumer sourcing. It's really kind of structurally, we're seeing the improvements based on the wholesale retail pricing gap, but also we're turning on our marketing muscle, specifically to that group. We're seeing very good early results in those efforts. Last question. Have you considered kind of pausing or delaying some of the hub openings, just given the external environment is challenging? We haven't yet. It's obviously very difficult to predict when OEMs will begin to deliver, when the pricing environment will return to normal. It's not hard to predict that it will happen. We predict that it will go back to normal. We just don't have a good idea of when. What we do know is that having hubs covering more of the country, being able to reach more guests, more sellers, more buyers, is what will drive the growth of this business going forward. We still believe strongly in our ability to grow this business with really at the bottom of the pyramid with new hubs being developed. Okay. Thank you. Thank you, Sharon. Next question comes from the line of Gary Prestopino of Barrington Research. Good afternoon. Hey, Gary. Couple of questions here. The average selling days, how much have they increased for you, given that you're selling cars at higher price points and then taking probably a relatively high depreciation hit if the average selling days are increasing? Yeah, I don't believe that. Yeah. We don't really disclose that, but I would say as we went through the quarter, early Q2, we actually had sold down on inventories at the end of the first quarter. We were actually trying to source more inventory. Our sell-throughs were actually accelerated during the first part of Q2. Towards the end of Q2, as we got more fully inventoried, that sell-through slowed some. It was probably more pronounced in some of the new hubs, at that time, just because it was difficult to get the full mix of inventory that we were looking for. In those new hubs, we were relying solely on auction buys at that point for the new hubs. Right. All right. Well, the fact of the matter is that the prices are starting to come down a little bit, right, at retail. If your average days to sale are increasing and you've had to go out and pay up for inventory, you're definitely going to have a margin squeeze there. You're talking about pricing. How much has that come down, though, over the last couple of weeks or so from where it was maybe two months ago at retail? Yeah. It's difficult to give you a number on that because it does depend on price point and type of vehicle and location and all of that. What we do know is that we will likely face GPU pressure heading into the last half of the year. I think part of that is seasonal. Typically, this time of year, you do see some pressures. Right. Into Q4. Fortunately, we have done a phenomenal job on the back end with F&I growth, nearly 100% quarter-over-quarter. It doesn't solve all problems, but it really is helpful as we start seeing more front-end pressure, we have the back end that's growing to support overall GPU. As the OEMs eventually start ramping up production, how much of a lag do you think there's going to be from at the time that production starts ramping up, say sequentially, we go up for 12 months? How much of a lag before it starts really benefiting your business and gets you back to where you could be with the consignment model versus purchasing the bulk of your cars as you are doing now? Yeah, that's a great question, Gary. I think in quarters past or in calls past, we've taken an attempt at guessing. Yeah. We've not been right on that. In reality, they are going to ramp up manufacturing. They are going to distribute. There are several channels through which they have to distribute. The dealers, the rental businesses, our clients, et cetera. What order they do that in and the volumes that they do that in is still a mystery. I'll tell you that months ago, when we were polling our clients on when they thought they would begin to get deliveries, they were pointing towards early summer, late spring. Yeah. That clearly hasn't happened. They're one step closer to the supply chain than we are. The best we can do is talk to our clients and get their best guess as to when deliveries will resume. Even they're kind of throwing their hands up in terms of guessing. Just last question. You've used $70 million of cash the first six months of the year. Are we going to see a cash burn similar to that for the next six months? Yeah, I think you're pulling the number from the cash flow statement from operations. There is an offset to that with the floor plan and financing. You see a build of inventory of $36 million, I think, in the six months ended. Right. There's also a build of $29 million in the floor plan, that offsets a good part of that $70 million. That being said, we are seeing about a $20 million cash burn from operations in the first two quarters of the year, we've had some CapEx of about $10 million as well. That's what we've seen for the first half, it probably would be something comparable to that, over the last half of this year. Okay. Thank you. Thanks, Gary. Next question comes from the line of Karen Short of Barclays. Hi. Thanks very much. I'm wondering a couple questions. First, can you give us a sense of what ASP is now versus historical, and where you think it may settle out by the time we're at kind of the end of the calendar year? ASP. Yeah. ASP has gone up. I don't know the exact number for the quarter, but it's gone up meaningfully. At this point or within the last couple years, we were in the low teens. I think, by the end of 2020 and into 2021, we were in the high teens, and we've gone over 20, meaningfully over 20. Right. Obviously, part of that is just the rise in prices of cars. If we were selling the exact same car, my guess is we would have gone from the low teens to the high teens. We're not selling the exact same car. We're selling a higher priced car. As we go forward, where we expect it to settle is we do think wholesale prices will come down a bit, although that will probably take a while, or it might not come down as quickly as it went up, or in total as much as it went up. We will probably continue to sell the higher priced cars that we've been selling. I think we've started to build a good following for buyers of cars at that price point. We will certainly, as the consignment volume comes back, we certainly do expect to see a lot more vehicles in the lower price point, the sub-20s. That will likely bring our ASP down, which frankly, we're looking forward to. Those lower ASP cars we've seen sell through at a much brisker pace than the higher ASP cars. Yeah. Particularly on consignment, when we're more on a flat fee program, we really want to turn cars quickly, and the ASP is not as important to us in terms of overall gross profit. No, I understand that. It's just a question of where the overall landscape is that is relevant for you. Okay, my second question just on that is could you just elaborate a little bit on how the conversations are actually progressing and what the conversations are with your corporate partner, who I guess, Michael, you indicated was looking to resume the relationship? Yeah. You'll recall in May, they decided to pause the relationship because they were seeing tremendous increases in wholesale pricing that would give them very quick opportunity to sell at very attractive prices, which we understood. We did anticipate that when that wholesale/retail spread began to revert to kind of normal, that we would get a call from them. Within the last couple weeks, they reached out proactively and said, "We'd like to start sending you cars again." We started taking small handfuls of cars over the last couple weeks. It's still very early in the restarting the relationship, but we're seeing good vehicles coming in. We're excited to be working with them. Okay. Just my last question is, the new hub, back to a prior question, I guess given that you're less able to consign and you've indicated in the past that new hubs are obviously much more reliant on that versus used vehicles from consumers, why wouldn't you take a pause in the new hub opening until the landscape kind of reaches a better equilibrium? Yeah. There's several reasons. One is there's a little bit of a runway to getting these hubs open, finding the locations, negotiating leases, getting them set up. Really the hubs for this year are for the most part planned and ready to go, and even trickling into 2022. That's kind of operationally why, but structurally is, unless we or anyone believes that OEM production will not return to the levels that it was at before the supply chain disruption, or that wholesale prices and retail prices will not revert to a gap that is consistent with historical norms, our growth is still predicated on reaching more of the country with our offering. That happens through these new hubs that we're opening. We still remain very confident in what we've driven in this business over the last 10 years. It's unfortunate that we're experiencing this industry issue right now. We're excited to kind of get back to what we've seen for the eight, nine years before COVID, where our consignment offering was very attractive to these companies that were getting new cars in and having old cars that they needed to get rid of. Okay. That's helpful. Thank you. Thanks, Karen. Again to ask a question, please press star then the number one on your telephone keypad. Next question comes from the line of Emmanuel Rosner of Deutsche Bank. Yeah, hi. Good evening, everybody. Hi, Emmanuel. How are you? Good, good. First question, you're mentioning sort of like these two industry trends as large headwind, the lack of new cars being delivered to clients, and also the increased wholesale pricing. What would you say is the larger factor in terms of impact on your business? When you speak to your typical consignment partner, do you find that they are just not selling cars at all because they can't get new ones? Or do you find that they are selling cars, but they're doing it through different channels? The reason I'm thinking about it is obviously no one can predict how it sort of unfolds going forward, but coming at it from the automotive side, I definitely have a view around when automakers production could sort of normalize, but the wholesale pricing still seems to be able to see at pretty high levels. Just curious which one is most impactful, if you're able to tell. Yeah. Hard to tell exactly, but I would say that the lack of inventory is the key driver. With one of our top accounts with whom we met recently, they have added resources to work on our relationship. We are getting the opportunity several times a day to look at the few units they do have to sell, but the lists of units that they do have to sell is a tiny fraction of what it would be if they were seeing meaningful deliveries of new cars that they can then send out to their clients. Our relationships with Our top clients are very strong. We have a strong and growing team of account management and people that work with our top corporate accounts. Everybody's just frankly frustrated that these new cars haven't shown up yet, and they're really eagerly anticipating the arrival of them so they can flip their fleet and kind of reduce the age of their fleet. That's a key one. On the pricing, and we've said this in previous calls, the pricing going up is the problem, not the price being high. Now that we're seeing the pricing level off and begin to recede, we do anticipate that the gap between wholesale and retail will return. That should be, and it will be, we believe, the smaller portion of the issue, and eventually it won't be an issue when the wholesale and retail price gap returns, and it's visible to our clients who are trying to consign cars. Okay. Is there a timeline you're thinking of for that specific piece? Not the OEM piece, but the gap between wholesale and retail, sort of reaching a level where it makes sense for your traditional partners to steer more units towards consignment? Yeah. I mean, just that we are seeing the beginnings of it. It's very difficult. We haven't predicted the end of these structural changes very well in the past, so we'll just let you know. Yeah. Beginning to see some positive tailwinds there. Okay. Conversely then, so while some of these issues are still ongoing and you're sort of shifting a little bit the sourcing to competitively sourced vehicles, I guess how well structured a position are you to be able to execute these well? Do you have the team to do that? Do you have the balance sheet? Are you actually able to run a good business if that goes on for multiple quarters? How should we think about that? Yeah. One of the great things about the transaction we executed earlier in the year is it provided us a tremendous amount of capital, especially as compared to how much capital we've ever had in the history of this business. With $259 million at the end of the quarter in cash on the balance sheet, and we've done a tremendous amount of hiring of very talented, experienced teammates who are getting the job done, who are opening these new hubs. We're staffing them up quickly. Processing centers are getting ramped up. We're building relationships with new accounts, strengthening relationships with our existing accounts, kind of doing what we need to do to be prepared for when the volumes of inventory come back and basically the overall market normalizes. Yeah. No, I'm actually curious about before that happens. Like the intermediary period between now and until conditions normalize. Should we look at those quarters of business as sort of suboptimal quarters because of the way things are sourced? Do you actually have ways to make this a decent business in the meantime? Yeah. Well, that's a good question. We are not accustomed to having to source as much of our inventory from auction as we are right now. We built a very experienced team that is sourcing meaningful quantities of inventory at auction. As evidenced in Q2, they've done a great job of selling a lot of vehicles at good GPUs. As we head into the third and fourth quarter, like we mentioned, we do think GPU will be challenged. It is a different type of inventory than we've sold in the past. Like anything that's been new to us, it's taken a little bit of time to get experience in it, and then we've become good at it. We are not throwing our hands up and saying we give up until consignment volumes come back. We're working really hard to be professionals and successful at selling all kinds of inventory at new hubs and old hubs, at any price point. Some of that takes a little bit of time to gain experience. Understood. Thank you. Thank you. I am showing no further questions at this time. I would now like to turn the conference back to Mr. Michael Bor. Please go ahead. Thank you. Thanks to everyone who dialed in today. As I said earlier, while we are experiencing some disruption during this unusual market, we remain confident in our long-term consignment strategy and believe we are creating the foundation to scale this business when the market returns to normal. We're driving growth in a very volatile and complicated market, and we're looking forward to the back half of the year as we continue to open hubs, ramp newly opened hubs, and invest in strategic marketing and technology to drive results. We look forward to speaking with you again soon. Thanks, and have a nice evening. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.