Good afternoon. Welcome to the Penske Automotive Group first quarter 2022 earnings conference call. Today's call is being recorded and will be available for replay approximately one hour after the completion through May 4th, 2022, on the company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead. Thank you, Lori. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's record first quarter 2022 financial results was issued this morning and is posted on our website, along with a presentation designed to assist you in understanding the company's results. As always, I'm available by email or phone for any follow-up questions you may have. Joining me for today's call are Roger Penske, our Chair and CEO, Shelley Hulgrave, Chief Financial Officer, and Tony Facione, Vice President and Corporate Controller. Our discussion today may include forward-looking statements about our operations, earnings potential, outlook, future events, growth plans, liquidity, and assessment of business conditions. We may also discuss certain non-GAAP financial measures, such as earnings before interest, taxes, depreciation, and amortization, or EBITDA, and our leverage ratio. We have prominently presented the comparable GAAP measures and have reconciled the non-GAAP measures in this morning's press release and investor presentation, which are available on our website for the most directly comparable GAAP measures. Our actual results may vary because of risks and uncertainties outlined in today's press release, which may cause the actual results to differ materially from expectations. I direct you to our SEC filings, including our Form 10-K, for additional discussion and factors that could cause results to differ materially. At this time, I'd now like to turn the call over to Roger Penske. Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report all-time record quarterly results for the first quarter as earnings before taxes, net income, and earnings per share more than doubled when compared to the first quarter of 2021. Our revenue increased 21% to $7 billion. Income before taxes increased 101% to $498 million. Our net income from continuing operations increased 102% to $368 million. Our earnings per share increased 111% to $4.76. We repurchased 1.9 million shares of common stock for $184 million year to date, and we added approximately $665 million in annualized revenue. Over the last 12 months, we've completed acquisitions or opened new dealership points that represent approximately $1.9 billion in annualized revenue. Our strong Q1 results really came from all segments of our business. Retail automotive and commercial truck same-store revenue improved 11% and 47% respectively, coupled with record earnings from Penske Transportation Solutions. Earnings before taxes increased 93% from retail auto, 113% from North American commercial truck retail, 75% from Penske Australia, and 121% from Penske Transportation Solutions. Let's look at our retail automotive operations on a same-store basis comparing Q1 2022 with Q1 2021. Unit sales continue to be impacted by supply shortages and declined 1% during the quarter. New declined 13%. However, used increased 8%. Our revenue increased 11%, and our gross profit increased 27%, including a 200 basis point increase in our gross margin. Our variable gross profit per unit increased 38% to $6,026 from $4,355. Demand remains strong across our retail automotive dealerships, with most allocations of new vehicle being pre-sold before they arrive at the dealership. Put that in perspective, at the end of March, we had 2,500 new units in stock in the U.S., and 14,900 new units a year ago March in 2021. In the U.K., we had 3,200 vehicles in stock in March 2022 and had 8,350 units in stock at the end of 2021 in March. Just to put it in perspective, Honda, we had 216 units in stock versus 3,700 units, and with Toyota, only had 188 units versus 2,500 units. You can see the impact of supply. As we look out over the next nine to 12 months, we expect the supply shortages of new vehicles to continue. I think unit grosses will remain strong and the recovery of service and parts will continue. Looking at CarShop during the first quarter, CarShop unit sales increased 71% to 19,500 units. Our revenue improved 113% to $516 million. Same-store unit increased 54% and our revenue increased 89%. Same-store variable gross profit per unit retail was flat at $2,200. The supply shortages of new vehicles continue to impact the affordability of used vehicles. Wholesale prices continue to rise. However, retail prices are not necessarily rising at the same pace, impacting our margin. In some cases, the price of a one to three-year-old used vehicle is near or at or above the price of a comparable new vehicle. As we look forward to the future, we remain optimistic about the CarShop model. We will continue to grow CarShop based on the ability to procure affordable vehicles, which may impact our goal of retailing 150,000 units by the end of 2023, obviously, reflecting our current market conditions. Turning to our retail commercial truck dealership business, we continue to expand our commercial truck operations, adding four new locations at $150 million in revenue during the first quarter. We now operate 41 commercial truck locations in North America, and during the first quarter, unit sales increased 78%, revenue was up 82%, and gross profit was up 77%. On a same-store basis, revenue increased 47%, including a 26% increase in service and parts. Service and parts represented 59% of the total gross profit and covered 130% of our fixed costs in the first quarter. Earnings before taxes increased 113% to $58 million. Approximately 75%-80% of our new unit sales are Class 8 commercial trucks, and that market remains strong. In fact, our entire allocation of Class 8 product for 2022 is sold out. The Class 8 commercial truck backlog is 251,000 units as of March 31st and represents 12 months of sales. Let me now turn to Penske Transportation Solutions. We own 28.9% of PTS, which provides us with equity income, cash distribution, and cash savings. PTS currently operates a fleet of more than 373,000 vehicles, up 38,000 units from the end of March last year. PTS produced a record quarter driven by strong performance across all product lines. Revenue increased 22% to $3.1 billion, and profit increased 121% to $410 million. As a result, our equity earnings increased 121% to $119 million year to date. We've received $45 million in cash distributions. At this point, I'd like to turn the call over to Shelley, our Chief Financial Officer. Thank you, Roger. Good afternoon, everyone. Our capital allocation strategy continues to leave our balance sheet in great shape. At March 31st, we had $170 million in cash and over $1.3 billion in liquidity. Year to date through April 26, we spent $184.1 million on repurchasing 1.9 million shares. Our existing repurchase authorization has 46.3 million remaining. We also paid $36 million in dividends. In total, we've returned $220 million to shareholders so far this year and over $650 million since the beginning of 2021. We also spent $150 million on growth through CapEx and acquisitions. All of this was funded with cash flow from operations. When looking at our future capital allocation, we maintain a disciplined approach that focuses on opportunistic acquisitions and investments across both our retail automotive and commercial truck businesses, capital expenditures to support growth, delivering a strong dividend to our shareholders, share repurchases, especially in light of elevated valuations of current acquisition opportunities in the retail automotive market, and reducing debt where possible. At the end of March, our long-term debt was $1.46 billion, consisting of $1 billion of subordinated notes, which mature between 2025 and 2029, $327 million in mortgages, $22 million under the U.K. revolver, and $57 million in other items. Debt to total capitalization was 26.2% and leverage sits at 0.7x. At the end of March 2022, total inventory was $3.1 billion, which is down $158 million from March 31st, 2021. We have a 16-day supply of new vehicles with Premium at 18 days and volume foreign at five days. We continue to sell into our future new vehicle pipeline to support our customers, maximize inventory turn, and minimize our inventory costs. We expect the current supply challenges, coupled with strong demand, to keep our new vehicle supply at low but manageable levels for at least the next nine to 12 months. Used vehicle inventory is in good shape with a 41-day supply. At this time, I will turn the call back over to Roger. Thank you, Shelley. Turning to sustainability, our ESG initiatives are an important part of our strategy and values. As many of you know, we published our inaugural ESG report in the fall of last year, which lays out many of our activities to date. We focus on diversity and inclusion in our workforce. In addition to our general employee training, we also use small groups to train employees on the importance of diversity across our business. We're proud to be above the NADA average for a diverse and inclusive workforce. In addition, we have a task force in place to drive our future efforts on sustainability and decarbonization. We're committed to electrification and are working with our OEM partners to build infrastructure to support the sale and service of electric vehicles throughout their life cycle. To date, we've installed over 1,100 charging stations across our network. However, to put electrification in perspective, in the first quarter, we sold 6,700 electrified vehicles in the U.S., including 646 pure battery units, which represent approximately 2% of new vehicle units. While in the U.K., we sold 1,400 BEV units, 1,360 hybrids, where electrification is supported by lower taxes and government incentives. That was 22% of our sales in the U.K. Moving on to our digital initiatives, our omni-channel strategy focuses on customer lifestyle and continues to evolve with the changing landscape. Online reputation management remains critically important and focused as we strive to exceed expectations of our customers. We focus on providing flexible buying options that allow customers to proceed at their own pace in buying their next vehicle or servicing their existing one. For sales, we continue to enhance our digital retailing strategy by embracing our OEM partner initiatives. We are currently supporting programs for BMW, MINI, Porsche, Toyota, and Lexus, Honda, Lincoln, and Nissan. The OEM initiatives offer some advantages versus an in-house solution. They enable a Buy Online function from OEM sites, which is particularly important for new vehicle orders while inventory is low. They also integrate with a captive finance company for online credit approvals, rates and programs, et cetera. We also remain focused on a fully integrated end-to-end digital transaction system to execute online orders for CarShop in the U.S. through our partnership with Cox Automotive. In the U.K., we have a proprietary system that supports digital retailing for our franchise operations and CarShop. In Q1, we generated over 5,000 transactions at approximately 2,300 sales, which reflected 5% of our market. On the service side, we continue to encourage online appointments and payments to improve efficiency. Online payments have increased 22% when compared to Q1 last year and 90% when compared to Q1 of 2020. Online BDC appointments increased 18% to 441,000 when compared to Q1 of 2020. Before closing, as many of you know, providing a superior customer experience and exceeding expectation is an important part of our Penske culture. I'd like to congratulate the 11 Penske Auto Group dealerships that were recognized as a CARFAX 100 dealer for achieving superior star ratings of at least 4.9. In closing, I remain confident about the opportunities I see across our diversified enterprise, driven by our strong balance sheet, capital allocation priorities, and mostly our human capital. Thank you for joining us on the call today and for your confidence in PAG. At this time, I'll turn it over to the operator for questions. Thank you. Thank you. At this time, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Again, to ask a question, please press star one. Our first question comes from the line of John Murphy of Bank of America. Your line is open. Good afternoon, Roger. Hey, John. Wanted to ask a first question on cap allocation. I mean, given the buybacks and the acquisitions that you've made on an LTM basis, it seems like, you know, you've got at least a 12% bump EPS structurally going forward. You know, you've been reasonably aggressive there, although the balance sheet is in more conservative shape, if you will, relative to some of your peers. Some of your peers have gotten a little bit more aggressive on redeploying capital and leveraging the balance sheet to simply. Do you think there's a greater opportunity to maybe get more aggressive over time? Or do you think we're at the point in the business cycle that, you know, that this prudence is something that you'll maintain in the near term? Just trying to understand, you know, sort of your view of redeploying capital and how aggressive you may or may not get. Well, let's talk about capital allocation and maybe share buyback. At the present time, I think we announced today in our earnings that we've repurchased 1.9 million shares for the entire period of 2021. We've repurchased $3.1 billion. I think that with that kind of trajectory, it would look like we'll continue to at that pace going forward. I would say part of the capital allocation certainly would be share buyback. From the standpoint of acquisitions, we feel good about it. We're not gonna chase these high multiples as we've seen in the marketplace. I think that at the moment, as we add up what we've done to date, we're at $665 million, and it's a mix between auto retail and truck. We would continue that. We obviously are in the position to meet the CapEx requirements by the manufacturers. We have a couple open points which we've been awarded, which we're building new locations. Again, the annual dividend or the quarterly dividend would be a focus. I think we're to this point reviewing several opportunities from a new opportunity to buy them in the marketplace as far as acquisitions. That would both be domestically and internationally and both in the truck and in the retail auto side. That would be pretty much. We're gonna watch valuations at the moment with Ukraine and with all the issues we have today, the continued supply chain disruption. I think that was a focus we had over the last 24 months. You can see that all of our acquisitions and dividends and share repurchases during the quarter were done by operating cash flow with no debt increase. You know, we're gonna watch our balance sheet here and see what happens, I guess, what world impact we might have. Overall, I feel good where we are. Got it. That's helpful. Interested in a second question. I mean, SG&A was very strong, you know, in the quarter. I'm just curious, you know, how we should think about that going forward, and how much of that may be able to be retained as maybe gross has come under a little bit of pressure or maybe not going forward. I mean, how should we think about SG&A to gross or even just the dollar number there? I think if you look at the last two quarters, we've been around $800 million. On a same- store basis, actually, we were down sequentially about $10 million, if I'm correct. You know, that's positive. You know, we're still getting the benefit of the employee reduction we did back you know at COVID time, we were down approximately 9%-10% on a same- store basis. We continue to follow that. We've learned through technology to a certain point. Also from a productivity perspective, our technicians, we're giving them more tools. I think we picked our better sales people who picked up the units per salesperson, maybe from 9% or 10% to now 12%- 13%, which is key. Obviously, when you look at our costs, it's primarily people cost because you got the variable, you know, going up because of the grosses and of the business. I think that at the end of the day, the compensation is up for their management because of the profitability. Just lastly, I mean, we're hearing these rumblings of some potential weakness in the consumer, particularly, you know, for companies like CarMax. I'm just curious in CarShop or in your dealerships if you're hearing or seeing anything like that, or is it a question of price? It just seems like a weird statement given that, you know, what appears to be an extreme supply-demand imbalance in favor of demand being much higher than supply. Just curious what your thoughts are there. John, you know, one thing I think that, you know, we have to do. We're a different business than CarMax or Carvana and some of these used car retailers, because number one, we've got a large parts and service business which covers 60%-70% of our fixed costs. We also have OEMs that we're tied to, which give us an area of market that we operate in. They provide us with all the umbrella advertising to drive customers, both new and used, you know, to our stores. Then we have the relationship with the captive finance companies. The lease returns that are coming in give us in the future when the cars are available, additional used. Looking at that, taking that as a base to work from, you know, we've got a short supply of new cars, you know, which is driving used car prices up. Certainly our acquisitions have been very tough at the moment. When you think about just looking at CarShop in the U.S. and the U.K. In the U.S., our cost of sales is up $8,500. In the U.K., it's up GBP 4,400. When you add that on to the existing number, it's really pricing us on the used side up into almost new car numbers. Then there is some affordability issues there, which obviously are gonna have some impact on margin. From an overall standpoint, the demand is strong. You know, we're selling into our pipeline from the standpoint of our new car business. Sequentially, you know, our units, you know, are up from 101,000 units to 114,000 units if you look at Q4 to Q1. We're not seeing it at the moment that we're having any impacts negatively at this point. Great. Thank you very much, Roger. Yeah, great, John. Thanks. Thank you. Our next question is from Stephanie Moore from Truist Securities. Your line is open. Stephanie, hi. Hi, good afternoon. I hope we could touch a little bit on the new vehicle industry environment and maybe what you're hearing from your OEMs in terms of, I think, the key topics we're always looking for is, you know, production, you know, incentives, and also I think there's been a little bit of, you know, conversations around, you know, pricing and spread between OEMs and the MSRPs at dealers. Maybe if you could just give us a little bit of a pulse of how you view the relationship between the OEMs and the dealers are, you know, as we start this year. Well, number one, the OEMs are not raising our costs without giving us the opportunity to have a corresponding increase in MSRP. That's point number one. Now, obviously, there are different discounts that we get based on performance. You have a basic discount maybe of 15%, but to earn that, you have to have your CSI, you have to have your market share. So some people might not get the full discount because of performance, and that's store by store, certainly, OEM by OEM. But if you look today where we're gonna be in Q2, from a vehicle availability, we're seeing from Mercedes-Benz perspective, an increase of about 10%. I would think that would be what we would have as you go through Q2 into Q3. We're flat at Honda Acura. China's shutdown is impacting that allocation, obviously. We look at Toyota and Lexus to be slightly higher in Q1 based on the information we have from the OEM. Certainly from a Porsche perspective, we've been impacted, and the market's been impacted because of the fire in that one ship. We lost 66 Porsches and I think 33 Audis. There was a second ship that had rough water where we lost another 33. That is a personal impact we have for our company, but it's a better supply than we've had in the past, but it's all pre-sold. Audi will have a better allocation in Q2 than they had in Q1. JLR will be flat and BMW will be flat with Q1. I don't see anything, if we say we're gonna be stronger, I think you're gonna have a slight increase with some of the manufacturers. I did my homework on this, hoping I might get a question, but you can see that the market is gonna take time to recover. In fact, I talked to one of the OEMs at the end of the quarter, and they said, "Normally, we have 250,000 units in dealer inventory at the end of the quarter. This year, we had 25,000 units." It's 10 x higher than the 25,000 units. You can see that it's gonna take time to meet the current requirements, which were sold out down the pipeline, and then try to build any sort of inventory. I think the OEMs have learned the benefits of lower inventory, and I think that they'll hopefully keep that, you know, as a major mission plan, and we're not gonna end up with excess inventory and have to discount and add incentives. So overall, I think we're gonna see some of the same here through the next quarter. Great. No, that's helpful. Then maybe if you could touch a little bit on the Penske Transportation Solutions JV. Just what you're seeing from the overall health of that business. There's been some tones about just seeing, you know, slightly moderating freight rates in the beginning of the year. How you view the health of the business and kind of the opportunity this year on leasing, rental, and some of the logistics on that side. Well, I think the analysts are saying the experts are saying that freight will be up 3% during 2022. Now, what that does to spot rates, I don't know. I think the biggest issue that most of the carriers have is drivers right now. You know, we're certainly not seeing any slowdown in rental units, you know, on the PTS side. From an overall standpoint, you know, our truck leasing rental logistics business, you know, had a terrific quarter. From the standpoint of, you know, their revenue, they were up 22% to $3 billion, and their profitability was $418 million, up over 120%. Again, very strong from the standpoint of utilization. It might be interesting to note, we grew our revenue by 22%. If you look a year ago, our debt was down $300 million. What we've been able to do, you know, by prudent use of our equipment and selling off our units, instead of having 10,000 or 11,000 units up for sale, we're down to about 3,000 units, and that's taken the interest and depreciation off our costs and given us that cash that we can use to purchase new trucks. Balance sheet's in good shape. You know, we're investment grade as you probably know. We have about 64,000 units on order right now. To me, it's gonna be take some time to catch up. We had 62,000 rental units on rent at certain days over the last 30 days in our commercial, our consumer business. You know, that's been driven by high profit, record pricing. This is the one-way and local business. I think overall, when you look at the business, it's never been stronger. Vehicles on rent, obviously up utilization. Consumer logistics rental was up 8%. We did have the benefit of the strong used truck market, so probably we wouldn't expect quarter by quarter going forward that we'd see quite our percentage was probably up about $20 million-$25 million this quarter on gain on sale that they had because of the strong used market. Perfect. Just a housekeeping question for me, Shelley. Could you remind us what the free cash flow generation was in the first quarter? Yeah, certainly. Cash from operations was just under $400 million. We paid $36 million in dividends, and then we talked about the share repurchase, $119 million within the quarter. Not a huge debt pay down there, about $10 million, Stephanie. Very strong. Expect the same out of Q2. As Roger mentioned, we've received $45 million in cash distributions from PTS, and we'll get about $105 million overall within the quarter. CapEx was what? About $56 million? Oh, yep. Thank you. CapEx was $56 million. I think that still gives you the pieces you need there, Stephanie. Excellent. I can do that math. All right. Well, thanks everybody. Appreciate it. Thanks. All right. Great. Thank you. Our next question comes from the line of Mike Ward from Benchmark Company. Your line is open. Thanks very much. Mike. Shelley, could you remind me how the formula works for PTS for the cash? The formula? Sure. It's a 50% dividend. We receive that on a quarter lag. Okay. With the first one, Q4,coming in April and otherwise it's a quarter lag. We receive those May, August, and November for the preceding quarter. Okay. It was $165 million- Last year. ... last year. That's right. Roger, you know, we're kind of in this unprecedented time with the inventory and everything else, but the flip side of that is you have better visibility on orders, and I would assume if somebody's pre-ordering a vehicle, the price portion of that transaction is resolved. Is that correct? Well, when we're pre-ordering, you know, obviously, they take our orders in the factory, and we don't have a price change. We do get a price change on trucks. If we order a new truck and it's not built, they typically can change the price on us. On the heavy duty side, that's been the current business practice by the OEM. But from a new car customer, you know, selling down the pipeline, they're able to pre-order, and we get a fixed margin, a full margin on that typically, and he gets the components, or I guess the options would be a better word, of what he wants. Today, when he goes in a lot, looks at a new vehicle, sometimes he buys more than he needs and it's less. Now one thing that's happening, and some of the OEMs have done this, that vehicles that we're getting shipped might have a lower MSRP for only one reason. That's because they've left out certain options which they can't provide because of the chip shortage. Okay. On the transaction with a customer that comes into the retail auto, the price is determined when they order that vehicle. You- Right. There might be some trade-ins- Right. ... or whatever else, add-ons. You- Well, you have to always look at the value of the trade, which could move up or down. Right. Right. That could go up or down. Right. As you look at our finance income, we've got two components. We got the finance piece and we got the product. Now, you know, we would sell GAP, we can sell tire and wheel. There's a number of things that we sell. Ultimately, the customer would possibly pay more for that. I think that the after-sale opportunity where we would sell a prepaid maintenance is typically something that's a great product we sell to the customer. Basically, you know, they have a one payment and they're on their way. All right. Am I thinking about it the right way? There's at least over the next six to nine months as some of these orders turn into deliveries, there's less risk on the growth side of new vehicle retail on just the gross margin part of it than there has been historically. That's a great point because obviously, you know, we are selling into the pipeline at full margin, there's no question. That's gonna help us sustain this margin, you know, as we go forward. I think that's, you know, obviously something both in the U.S. and the U.K. that we're seeing now. Right. In just my own personal experiences, I think it enhances the relationship with your customer at the dealer level. The business is transforming. Well, the customer orders a car he wants, it's sticky. Interesting on the lease side- Right. ... because, you know, on our Premium side, 55% of our customers are leasing. What we're doing now is we're extending leases, and when we extend offer the customer an opportunity to extend is basically we can have that car back now. We then order the new car for him. We- Right. ... we will probably end up with less people moving from us to maybe a lease of another competitive vehicle. That's been very, very positive with the customers. Again, from a customer experience standpoint, it makes a big difference because they know that they'll have a car what they want, and the lease price obviously is set at the time that we do that order that new car. Fantastic. Thank you. Thank you very much for your time. Appreciate it, Roger. Thanks, Mike. Take care. Thank you. Our next question is from Daniel Imbro of Stephens Inc. Your line is open. Yeah. Hey, good afternoon, Roger, and congrats on the quarter. Thanks. Roger, I wanna follow up on Stephanie's question on the OEMs. You know, how do they feel about the consolidation going on across the industry? I mean, do they realize the benefit of having maybe fewer larger dealer groups? Have there been any discussions or have you heard any discussions around changing or increasing the framework agreements to allow for larger scale M&A as all of you guys grow? Well, you know, we signed up for framework agreements probably, but ten years ago, there were some with some, like Honda. Lexus had it. We've lived with those over time. Now, they are getting more active now when you look at BMW and other these manufacturers are coming in now with probably not as much to try to curtail the growth, but more to be sure that the dealerships that you already have, you know, are meeting the CSI requirements and the CI and the market performance. That's what they're looking at before they would allow you to grow. That probably is the biggest issue today. I don't think they're saying no. In fact, if you're a good dealer and you've got a good track record, and you're in a market that, they limit you to the number in a particular market, so, you're not the only dealer in the marketplace. I think other than that, you know, they're very appreciated when we come to them with an opportunity because they know we got the capital, we've got a track record, we've got a management team that many of them know. I've seen. Well, you've seen the growth just in the publics, and they've been approved with big acquisitions. Now, in some cases, you might have a market where you have to sell something off, but I think that is easy. I mean, we made a move from Lexus in [Elberon], New Jersey to buying the two Lexus stores in Austin, and we had to divest the two to get two more. Obviously, I looked at the Jersey market versus the Austin market and felt on a longer-term basis it would be a better opportunity for the company. Those would be my comments. Got it. That's helpful. One on the open points you guys are opening, Roger. I think historically that helps you get more allocations at first to maybe get the stores up and running. One, I guess, is that true? Two, for how long do you get better inventory allocations at those new open points? On an open point, you know, they have a plan that says this is the planning potential for a point, let's say it's 1,500. What they will do is preload you with those cars, you know, when you open, and you'll get those for about, I think, probably about 90 to maybe 180 days, but then you're on a run rate based on your history. It works out well. I think after spending $15 million-$20 million on a facility, you certainly need, you know, the cars to start the business. I don't think it's not. It's fair. I think that it's certainly good for future allocation because you continue to meet the requirements of the planning potential, and they give you the cars or trucks to be able to meet that early on. It's up to you to drive it and then maintain it. Got it. One last one for me on the parts and service on the commercial truck side. You know, if we did go through a broader, you know, freight recession or pullback on the industrial side, you know, could parts and service still organically grow and comp positively through that? Or what have you seen through past industrial cycles on that part of the commercial truck business? I would say the parts and service would grow because people would not be buying new vehicles. We see that in our own truck leasing fleet. We run past a certain point of mileage, our maintenance costs go up. That would always be an opportunity for the Freightliner dealer for us to give us more parts and service. I think at the end of the day, it's very positive for us if there is, because we'll have more parts. We saw that during the last recession. I think we saw parts and service be pretty steady and solid. Got it. Thanks so much for all the color, and best of luck, guys. Yeah, thanks. Thank you. Our next question is from Rajat Gupta of JP Morgan. Your line is open. Rajat, hi. Hey, Roger. Hey, thanks for taking the question. Just had a question on parts and services on the automotive side. Could you give us a sense of, you know, how the different segments did in the quarter? You know, how should we think about, you know, just the outlook for the rest of the year, given the trends you're seeing so far, you know, in 1Q and also like, you know, in April? Thanks. Ask me the question again. Unfortunately, I didn't get it, so I wanna be sure I try to give you a right answer. Sorry. Just within parts and services, you know, the different components within that, you know, customer pay, warranty, et cetera, you know, how those did in the first quarter? Just how should we think about the progression, you know, through the rest of the year? Well, I would say we're seeing more miles driven, there's no question, because the masks, you know, the country's opened up, which is driving more mileage, which will drive more parts and service. I see that being key. Our repair orders were up 13% in the U.S. and up 11% in the U.K., and our body shop was up 22%. Customer pay was up, warranty was down. Now one thing that had some impact on our PAG margin because we have a fixed margin on warranty and on customer labor, we haven't negotiated because you have different age vehicles coming in. And that obviously drove a slight reduction in our total margin, but still very strong at 59%. Our effective labor rate went up, and this is a good one. Our effective labor rate went up about 8% in the U.S. during the first quarter if you compare it to a year ago. Got it. In terms of like just the outlook for the rest of the year, any visibility we can get in terms of how the progress should be for the business? Well, I mean, overall the overall PAG business you're saying are parts and service? Just the parts and services on the retail automotive. I'm sorry, I think it's gonna go up. I don't see it going down for sure. The only thing will be if the parts supply, which we have had some impact on parts supply because of supply chain, and that could have some impact on slowing it down. The other, which I didn't really mention, it came as a thought here now, is our loaner cars and the ability to offer you a loaner car, because a lot of people don't want to come in for service if they don't have loaner cars. All of us have reduced our loaner cars because of availability of new cars to put into that service. In fact, we've used some used cars. That might have some ability to dumb down, you know, the strength of the business. I'm not sure it's gonna be major because people will wait. It puts the customer out. If you have a critical issue, we're gonna try to take care of you on the day. You know, overall, I think we're in really pretty good shape. Miles driven is recovering, but it's still lower than pre-pandemic. There's no question about that. I think it's positive. Got it. Just a follow-up on PTS. You know, could you give us an update on, you know, where the utilization rates are? What they were in the first quarter, you know, and how do you expect that to trend, you know, this year, you know, maybe into next year? Maybe if you could give us an update on just the fleet size and what your plans are, you know, for the next couple of years in terms of where you'd like to get in terms of, you know, just the long-term fleet size for PTS. Well, I think that we went up 38,000 units. You know, my goal, obviously, by 2025, would be to be at 500,000 units. If we can grow now, it would certainly be based on availability and the amount of signing we're doing when you look at on the full service lease side, you know, that business was up 8% during the first quarter, and contract maintenance was up 14%. You know, that's very positive. We still see with the requirement in transportation across the country, our commercial rental is as strong as it's ever been, and that was up 55%. We see that continuing to grow. We're held back a little bit because of supply of vehicles right now, so we'll add to those fleets as those rental fleets as we go forward, which will make a difference. Our logistics business grew at about 8%. When you look at the balance of the business, the one-way continues to be strong, and we get good pricing. Our full service is up, our contract maintenance, and we continue to add probably 15-16 locations a year new along with the. When we go in, we can take over the customer's locations, and that gives us a chance to add another shop with a captive shop, we call that, with a customer. I think in Q1, we benefited by a higher gain on sale. PAG prospectively got about $25 million, and I think it would be lower in Q2 and Q3 going forward because we've really reduced the vehicles available for sales, I said earlier, from about 12,000 to 3,000. I don't think we'll quite see that gain, but overall, the business should be strong. Got it. Great. Thanks for the color, and good luck. Yeah. Thank you. Thank you. Our next question is from David Whiston of Morningstar. Your line is open. Hey, David. Hey, Roger. Hey, everyone. First on equity income. If I remember right, normally Q1 is the weakest quarter for equity income, but this year obviously outstanding growth of about 116%. So just curious if you are expecting Q1 to not be the weakest quarter this year? Well, I think, you know, we'll have from an equity income perspective when you start looking at PTS, you know, when we get into the July, August, September, because of the one-way business will drive that probably higher, and we continue. We'll have some impact, as I just mentioned with Rajat, that we had in the gain on sale. But I see it being equal here as we go forward, other than the gain on sale, you know, for the rest of the year. I feel good about it. Okay. I'm sorry, how much was that gain on sale? The gain on sale for PAG was up about $25 million. Am I right, Tony? Year over year over year. Year-over-year. I wouldn't expect that every quarter, 'cause we had vehicles we wanted to run in rental, there was such a demand at the end of Q4, we decided to run those vehicles through Q4, took them out in Q1 and sold those, and that's why we had the bigger gain. Okay. On CarShop, the disclosure about the self-sourcing by region was helpful. The U.K. is the lowest there at 39%. How many can you think that can get over time? Repeat that again. You're talking about just on CarShop, David? Yes. Slide 30. You broke up there. Sorry, you broke up. Go ahead. You there? Yeah. Sorry. The slide 30. Yeah, you're looking at the sourcing coming out of what we're self-sourcing on used vehicles in the different markets. Yeah, we think that the U.K. is continuing to trend positive. If you look at j ust the traditional franchise business in the U.K., they increased in the quarter on a year-over-year basis from 18% to 25% in terms of purchases direct from the consumer. I think they've got a team of buyers working on this, and we would expect that to continue. On the CarShop side in the U.K., they're not sourcing nearly as many vehicles from consumers as we are in the U.S. What we would see happen there is that over time, they would use the Sytner auction as more of a direction to help gain and get more cars. That's been somewhat limiting right now because of the cars and trades coming off of either out of fleet or trades coming in from the overall business. We do expect those to improve over time. Okay, thanks. Just finally, I think it was slide 16, talks about your retail automotive brand mix. BMW is a little more than double than Toyota, 25% versus 11%. BMW is obviously a great brand, but over time, do you wanna try and narrow that gap, or are you pretty much capped on the Audi, Toyota side, so you can't? No, when you take Audi and you add Porsche to it and Bentley and the other, we're probably, you know, getting close to 20% with them. I think that we have no limits with anyone. I think the BMW is driven because we have the majority. We have double-digit market share with BMW in the U.K., which probably drives that a little bit higher. We don't quite have that kind of number here in the U.S., but it is our number one brand, and we've been strong with MINI right from the beginning. There's no limit. In fact, we just made acquisition of three stores, BMW stores in the last 30 days in the U.K. You know, we'd expect more, and as we go through the rest of the year, we have some other possibilities in the pipeline. Okay, thanks, everyone. Thank you. You're welcome, David. Thank you. There are no further questions at this time. I will turn the call over back to Mr. Penske for closing comments. Thank you, everyone. We had a great quarter. Appreciate the support, and our team's ready to take on Q2. We'll talk to you next quarter. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.