Good afternoon. Welcome to the Penske Automotive Group Fourth Quarter 2023 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through February 14, 2024, on the company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Tony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead. Thank you, Brad. Good afternoon, everyone, and thank you for joining us today. As you know, a press release detailing Penske Automotive Group's fourth quarter 2023 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, our EVP and Chief Financial Officer, Rich Shearing, North American Operations, Randall Seymore, International Operations, and Tony Facione, our 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, adjusted EBITDA, adjusted earnings before taxes, adjusted income from continuing operations, adjusted earnings per share, and our leverage ratio. We have prominently presented the comparable GAAP measures and have reconciled the non-GAAP measures to the most directly comparable GAAP measures in the press release and investor presentation, which are available on our website. Our future results may vary from our expectation because of risks and uncertainties outlined in today's press release under forward-looking statements. I direct you to our SEC filings, including our Form 10-K and previously filed Form 10-Qs for additional discussion and factors that could cause future results to differ materially from expectations. I'll now turn the call over to Roger. All right, Tony, thank you, and good afternoon, everyone, and appreciate everyone joining us today. 2023 was a strong year for PAG and reflected our third best year of net income in our company's history. Our performance is driven by a resilient new car market, our premium brand mix, the performance of our retail commercial truck dealerships, and our capital allocation. During 2023, we delivered 486,000 new and used vehicles, and over 21,000 commercial trucks. We increased our revenue 6% to almost $30 billion. We generated $1.4 billion in earnings before taxes and nearly $1.1 billion of net income and earnings per share of $15.50. We continued to grow our business, announcing acquisitions of $1.3 billion in expected annualized revenue, including Rybrook in the U.K., which closed early in January 2024. We repurchased 2.8 million shares, or approximately 4% of the shares outstanding at the beginning of the year. We increased our cash dividend paid to shareholders by 53% since the end of 2022, and from $0.57 to our current dividend of $0.87. We maintained a strong balance sheet and debt to capitalization ratio of 26% and a leverage ratio of 1x. Now, let's turn our attention to the fourth quarter that we announced earlier today. Excluding a non-cash impairment charges and noted in our press release, adjusted EBT was just under $300 million at $297 million. Adjusted income from continuing operations was $231 million, and related adjusted earnings per share was $3.45. In our automotive operations, we believe demand for new vehicles remains solid and inventory availability continues to improve. We continue to take forward orders, with pre-sold activity averaging between 10% and 20% in the U.S., depending on brand and the region. The U.K. forward order book is healthy at 20,300 units. Although the order book is slightly less than last year, U.K. new vehicle registrations increased 18% in 2023, and the availability of inventory improvement compared to the same time last year. During the quarter, total automotive units delivered increased 8% to 117,000 units, which includes 8,113 agency units. Same-store retail automotive revenue increased 4%, including a 7% increase in our service and parts business. Same-store gross profit only declined 1%. Same-store retail commercial truck gross profit only declined 1%, and earnings before taxes in Q4 was a record of over $51 million. Unfortunately, our profitability was impacted by $21 million in additional interest costs, costs resulting from higher interest rates and greater inventory levels, combined with lower equity earnings from our investment in Penske Transportation Solutions. Turning to PTS, December 31, PTS managed a fleet of over 439,000 vehicles. That includes trucks, tractors, and trailers. In 2023, PTS operating revenue increased 6% and produced the third highest EBT of all time, just over $1 billion. In Q4, PTS operating revenue increased 3% to $2.7 billion. Full service lease and contract revenue increased 13%. Logistics revenue increased 5%, but our rental business declined 13%. PTS generated $177 million in net income. Our share of PTS earnings was $51 million, which declined by 48% or $48 million compared to Q4 of last year. The decline in PTS earnings over the year period was impacted by the following: A $57 million increase in interest expense from higher rates related to bond refinancings and higher outstanding debt. A $58 million decline in gain on sale of used trucks when compared to the record performance in 2022, as used truck values continued to be impacted by the lower freight demand. We sold nearly 36,000 trucks used in 2023, an increase of 60%. Rental revenue fell 13%, including 400 basis points decline in commercial utilization rates at 82%. Higher depreciation and holding costs on older vehicles we had because we're holding to replace the fleet. As we look into Q1 2024, PTS continues to be impacted by similar headwinds. We expect PTS earnings to decline at least 50% in the first quarter due to higher interest costs, a lower gain on sale of used trucks, and higher depreciation. Units on order now are at 29,000, compared to 71,000 at the start of last year, and continue to trend lower. We have nearly 18,000 units currently available for sale. In January, we sold 3,900 units, which was 27% higher than January 2023, and similar to the pace of Q4. I'd now like to turn it over to Rich Shearing. Thank you, Roger. Our Premier Truck dealership business represents 34 locations in North America and is an important part of our diversification. We have one of the largest commercial truck retailers for Daimler Trucks North America. As most of you may know, earlier last year, we expanded into the greater Winnipeg, Manitoba, market area, acquiring five new locations, representing $180 million in estimated annualized revenue. The North American Class 8 retail truck had a strong year in 2023, with a 7% increase in retail sales to 331,000 units. At the end of December, the backlog was 178,000, which compares to a backlog of 244,000 at the same time last year, and the current backlog represents approximately a five- to six-month rate of retail sales. In 2023, our business generated over 21,000 new and used truck sales, $3.7 billion in revenue, and almost $600 million in gross profit, an improvement of 7% year-over-year. Premier Truck Group had a record year, generating $225 million in EBT and more than a 6% return on sale. I'm pleased that the business produced a solid Q4 with EBT of $51 million, as Roger referenced the record, despite new unit sales for the quarter being down 13% related to later than normal deliveries in 4Q 2022 due to supply chain disruptions earlier that year. On a same-store basis, gross margin increased 140 basis points to 15.8%, and SG&A to gross profit remained well controlled at 58.8. Fixed absorption was solid at 123%. We believe commercial truck demand remains solid and will continue to drive- be driven primarily by replacement demand, and we see strength across private fleets in Class 6 and 7 medium duty as well. I would now like to turn the call over to Randall Seymore. Thanks, Rich. 2023 was also a record year for our business in Australia. As you know, we are the exclusive importer and distributor of certain heavy and medium duty trucks and buses, and a leading distributor of engines and power systems in Australia and New Zealand. We offer products in the trucking, mining, power generation, defense, marine, rail, and construction sectors, and support full parts and after-sale service through a network of branches, field service locations, and dealers across the region. In our Australia business, service and parts represents approximately 80% of all of our gross profits, so our focus on increasing units in operation is a key driver of the business. In 2023, the Australia business grew its revenue by 10%, largely due to the off-highway markets, which remain strong, particularly in the data center, energy solutions, and mining segments. In the energy solution space, we continue to lead the market in critical standby power, especially for data centers, and made significant deliveries of generators into prime power and hybrid applications. In addition, we have started to deliver large-scale battery energy storage solution systems as well. Our current order bank for energy solution delivery stands at over $500 million for 2024 and beyond. In mining, we continue to deliver repowers with the fuel-efficient MTU Series 4000 engines, and we're working with one of the world's largest miners to develop a hybrid repower solution, which will reduce fuel consumption by 20%. I would now like to turn the call over to Shelley Hulgrave. Thank you, Randall. Good afternoon, everyone. I'm pleased to report that we generated $1.1 billion in cash flow last year, and our EBITDA was nearly $1.7 billion. In 2023, we continued to maintain a disciplined and balanced approach to capital allocation, and our balance sheet remains strong, safe, and secure. At December 31, we had $96 million in cash, $529 million in vehicle equity, and $1.7 billion in availability under our credit agreements. Our approach to capital allocation balances investing for growth through capital expenditures, diversified and opportunistic acquisitions, while also returning capital to shareholders through dividends and share repurchases. Since the end of 2022, we have raised the dividend 5x from $0.57 to $0.87 per share, representing a 53% increase. We returned $189 million in dividends to shareholders last year. We also repurchased 2.8 million shares for $382 million. Total inventory was $4.3 billion, representing an increase of $800 million from the end of 2022. Floor plan debt was $3.8 billion. We had a 39-day supply of new vehicles and a 48-day supply of used. Day supply of new vehicles for premium was 42, and volume foreign was 24. At December 31, our supply of battery electric vehicles in the U.S. was 54 days for new and 50 days for used. In the U.K., our supply of battery electric vehicles was 67 days for new and 45 days for used. At the end of December, our long-term debt was $1.6 billion, essentially flat year-over-year. Approximately $1 billion of the long-term debt represents our subordinated notes, with $550 million maturing in 2025 and the other $500 million maturing in 2029. The average interest rate on these notes is 3.6%. We also have $403 million in mortgages and $182 million in other borrowings at our international subsidiaries. Debt to total capitalization improved to 26% from 28% at the end of 2022, and our leverage sits at 1x. It's important to reiterate that we have the ability to flex our leverage up to 4x on a lease adjusted basis. Therefore, we have room under our credit agreement to deploy our capital allocation strategies. Our U.S. credit agreement provides for up to $1.2 billion in revolving loans for working capital, acquisitions, capital expenditures, investments, and other corporate purposes, and was fully available at the end of December. SG&A to gross profit was 71% in the quarter and remains 700 basis points below the pre-pandemic level of 77.9% in 2019. We continue to focus our efforts on efficiencies and cost control. As part of our ongoing efforts, we continue to challenge our costs and focus on simplification, optimization, and digitization to drive further efficiency and lower cost structure. In fact, our U.S. same-store headcount remains down 11% when compared to pre-COVID headcount levels. Further, in our U.S. automotive operations, variable compensation to gross profit improved 30 basis points, and service and parts absorption improved 120 basis points when compared to Q4 last year. At this time, I will turn the call back to Roger for some final remarks. Thanks, Shelley. As Shelley mentioned, our balance sheet is strong, and we have the ability to flex our capital allocation opportunistically. We demonstrated that flexibility in January by expanding our brand footprint in the U.K. as we completed an acquisition of 16 premium brand dealerships, representing approximately $1 billion in estimated annual revenue. Our U.K. team is currently integrating these dealerships into our operations, and we are thrilled to add the Rybrook team to our business. Lastly, I'm pleased to report that Penske Automotive Group was recently named as a Fortune World's Most Admired Company for 2024 and was recently honored by Glassdoor as the Best Place to Work in 2024. Our results continue to demonstrate the benefit of our diversification across the retail, automotive, and commercial truck industries, our cost control, and disciplined capital allocation strategy. I remain confident in our model and the performance of our business. Again, thanks for joining us today, and we'll open the call up for questions. Thank you. Thank you. And ladies and gentlemen, if you do wish to ask a question, please press one and then zero on your telephone keypad. You can withdraw your question at any time by repeating that one-zero command. If using a speakerphone, please pick up the handset before pressing those numbers. Again, it's one-zero to ask a question. And we can first go to John Murphy with Bank of America. Please go ahead. Good afternoon, Roger and everybody. Just wanted to start, Roger, with a question on the state of play on EVs. I appreciate you giving us those inventory numbers, they're helpful. I just wonder if you could talk about sort of the pace of sales, the mood of consumers as they're buying or not buying these EVs, just the general environment, you know, with the automakers and what kind of capital requirements they're making you invest in, either from charging or facilities, you know, to support the sales. Just trying to get your general view of the state of play here and how much it actually matters to you if you might be able to offset that by selling hybrids and ICE vehicles if we are really stalled here on the EV front? Okay, John, let me take a shot then have Rich make a comment. But there's no question the demand for BEVs has slowed, and when you look at our business, 51% of our BEV business is in California, and of that business, 90% is leased. So right now, the OEMs, in order to push the business in the luxury side, at least, they're having to lease it and, and have a residual risk. We think the bridging strategy is certainly gonna be as hybrid, and that's been proven with what Toyota is committed to now going forward with Camry at 100%. 7% of the market was BEV, you know, obviously last year, and when we look at our day supply, we're running at about 53 days as of the end of the year. In the U.K., BEV units were really, at that point, they were much higher at 36% of the market. The BEV day supply in the U.K. is 67. So when we step back and look at it, right now in California, we can't even get chargers installed at our locations because there's not power available to obviously supply them. We see that not only on the retail car side, but also on the truck side. But those are a couple comments from me. Rich, you want to follow up? Yeah, John, I think we're at an inflection point, you know, where early on, we had, you know, customers that were early adopters, certainly went out and bought the BEVs. Those early adopters now already have them, and you're getting to the point where you're trying to convince a customer to find their, their first BEV or their last ICE. And so we, going back to what Roger said about our overall BEV sales in the U.S. being in California, you know, earlier this week, talking to our management team there, we're starting to think that that market is getting saturated. When you look across the, the balance of the country, certainly the BEV adoption percentages are at a much, much lower rate. And, and so we see that in our inventory starting to decline. With BEV inventory in the U.S., just under 1,500 units, 12% of our total inventory, that's up 34% from the end of Q3, which is indicative of the sales rate, you know, starting to slow down a little bit. That, that's very helpful. Just a second question on GPUs that have been holding in better than many people have feared, and, you know, obviously, that goes along with pricing. I'm just curious if you can talk about sort of your expectations there for pricing and new GPUs. And, you know, maybe put that in the context of, you know, how negative, you know, weight the GPUs are on EVs relative to sort of your total. Tony, you want to give us some? Sure, Roger. John, thanks for the question. So when you take a look at how our gross looked at the overall business from Q4 to Q3, so when you look at the sequential side of things, we actually did quite well. New was down $257, used was down $123, and F&I was up on a total basis. When you look at our overall business in total, we were selling somewhere around 40%-ish of the cars at MSRP. So we're very happy with that, and about 28% of the deals that we have right now are in cash. So when you look at the total variable gross profit that we generated on a sequential basis from Q3 to Q4, we were up in that $80-$90 range per unit. We're very pleased with our overall performance on the gross profit side. And Tony, just any color on how much of a weight the EVs are on that or where they're kind of landing for you on GPUs? Yeah. So they're running somewhere in the neighborhood of $5,000 or so below MSRP. Yeah, so, you know, John, Tony said 41% or 40% of our cars last year at MSRP. If you look conversely at BEVs, 83% of our BEV sales were below MSRP by more than $4,800, $5,800. And if you look at just across all the brands we represent on a, you know, weighted average, the ICE GPPU is almost $2,200 less than a comparable ICE. The discount is? Oh, GPU. GPU, yeah. And also, John, I would have to say that we have action on BEVs, probably 60,000 and below. And when you start looking at inventory above 60, EQS, EQE, 120 days, 115 days, am I correct? Correct. Yep. Our day supply, so there's no question. And we're starting to see, even in the U.K., that is another 1% discount for us on those vehicles last year or last month. Do you have any comment on it at all from internationally? Yeah, you know, in the U.K., BEV was flat year over year. In fact, it was down 10 basis points, and looking at January, it was down another 180 basis points from a market share standpoint. So look, it's a little bit different there because it's, there's the retail BEVs would be de minimis. Meanwhile, it's all through corporate fleet programs because of the tax break. So, you know, it's a little bit apples to oranges, and then you look at other parts of Europe, like Italy and Spain, and it's, you know, 4% market share because there's no government incentive. So, you know, Germany, the government incentive is finished at the end of the year, so it's gonna be interesting to see what happens there, you know, without this intervention by the government. Incredibly helpful. Thank you very much, guys. All right John. Thanks. And next, we can go to Mike Ward with Freedom Capital. Please go ahead. Hey, Mike. Hey, Roger. Good afternoon, everyone. Thank you. Hi, Mike. Starting on CarShop, you know, it wasn't long ago that everybody wanted CarShop to spin off into a separate public entity, and we've had major disruption in the market over the last few years. Does that change how you look at it structurally? How big is the advantage being part of PHG? Is it just part of the portfolio? And, you know, with this reset or this adjustment, tax adjustment, in the U.K., is this a chance to accelerate on the pedal, or is it just, you know, reconfiguring it or changing the strategy? How are you looking at it? Hey, Mike, it's Shelley. I'll take that question. You know, we had mentioned in our press release that we had an impairment related to our CarShop U.K. operations or our CarShop U.K. business. When you dig into the details and you try to establish a fair value, it became very clear that though we initially looked at these businesses separate, separate from the franchise dealerships, if you will, there's so many synergies that we've put in place over time. You know, we've moved systems, we've incorporated a lot of the same franchise F&I products and the like. So I think there's a great benefit to looking at the CarShop businesses consistent with the franchise stores. There's also a lot of sourcing opportunities and similarities there. So, you know, buying off the curb, if you will, purchasing cars from customers directly, Right ... that's had a huge benefit to us as well. So I think there's a lot of benefit. You know, certainly, those that have spun off have not always succeeded, as we've seen this year. And you know, as we look forward to the future and looked at this from a calculation standpoint, our focus isn't so much on what the used car market is doing right now, but really what's available from a new car perspective. Excuse me, and as you see the SAAR growing, we expect to see a similar used car SAAR, if you will, grow as well and have more affordable cars available for our CarShop locations. So as we look forward, then it becomes more of a partnership with the retail automotive? I think it's been for a long time, Mike. But even more... Yeah ... discharge, obviously, you know, as a technically, when they look at it, and Shelley's team, along with the auditors, look at this, so it wasn't something that, that we didn't expect. Right. You know, obviously, we reduced two locations in the U.S. this year, which had been losing money, and we have been able to sell one location, and one will move over to PTS from the standpoint from a leasing and rental location. But as far as the U.K. is concerned, you know, we think it's a valued brand, and as we go forward, you know, we'll continue to operate it. I think we had, what, $ 150 million value, and we took 27%... That's right ... as a goodwill impairment on that. Look, it's part of doing business, but... Makes sense ... I'm so glad that we didn't listen to people about spinning it off. Let me say that. Myself included. On PTS, one of the things you try to do is you, The last couple of years, again, have been highly unusual, but when you look at the growth path, particularly if you go back to 2019, 2018, and those sorts of things, there are a lot of positive changes. So even if we're down again in 2024, some of the disruption we've seen in the last two to three quarters are more market-related. And is there anything that stops this company from, once we get through 2024, get back, getting back onto a growth phase? Oh, not at all. And when you look at it right now, I think, we mentioned it earlier, you know, our lease business was up 21% and our logistic business was up 5%. Unfortunately, we'd grown our rental fleet to almost 90,000 units, and of course, as the market slowed, spot rates came down. Our utilization went down from 88% down to roughly 82%, and I think that gave us an excess supply. On top of that, a lot of those pieces were being used to support leases that we had written when we were at 70,000 units on order and couldn't get them from the manufacturers. We were using some rental units, so those have now come back as we've seen the supply start to come in. Our issue is we have approximately 18,000, 16,000-18,000 units for sale, and to get those out, that's, that's about 8,000 more than we had a year ago. We're, we're paying depreciation, interest, and maintenance on those as they sit, so we'll have to pull that stuff through, and I would say that impact will continue through the first quarter. So I would say we'd be similar as far as value and, and, and actually earnings in the first quarter, similar to what we had in Q4, based on lower rental volume both. And on the consumer side, which is our one-way business, there's less people moving because of house prices, and when they do move, it looks like the mileage is down. So that's really hit us. And then the company had $213 million, I think, roughly, of total interest cost increase in 2023. $100 million of that based on, on new debt and $100 million on refinance. So, you know, gain on sale, financing, lower revenue and rental really impacted us. But from an energy standpoint, meaning from an offense in sales, we were up in our core products. Roger and Mike, I want to... Thank you. Mike, I want to add to that, that when you look at Q4, we actually saw the year-over-year change in maintenance... Good point, yeah. ... it became more favorable to us. So maintenance at PTS... Oh, okay ... was actually down $11 million. I n the fourth quarter when you compare it to the prior year. So that means this process is working, taking the trucks out of the fleet is working, so we hope that that continues into the future. Because, you know, with the extension, Mike, of some 28,000 older units that we had to extend from, say, six to 12 months, you know, those just eat up on maintenance, number one. And number two, we don't get any margin on that extension revenue, so that had a double impact on us. Thank you very much. Really appreciate it. Thank you. Next, we can go to Daniel Imbro with Stephens Incorporated. Please go ahead. Hey, Daniel. Yeah. Hey, good afternoon, everybody. Thanks for taking our questions. Welcome. Roger, maybe I want to expand a little bit on the last topic. I think we started with CarShop there. Maybe just to expand the broader used business on the franchise side, you know, can you talk about the headwinds on that business that are weighing on same-store units, kind of close to flat this quarter? It seems like, obviously, there's demand headwinds, but you guys having historically a high lease penetration, are we starting to see more supply issues, maybe lack of lease returns coming back? And just curious, as you look at those headwinds, how that plays out through 2024. Well, look, number one, we, we know the market stabilized because as we look at our wholesale units, both in the U.K. and the U.S., we were profitable in Q4. That's point number one and point number two. I think availability, you know, one of the things that's impacted us is getting the right car at the right price. Certainly, as CarShop, we were looking to, in the U.S., it's somewhere between, say, $19,000 and $22,000. Well, those cars that we could get were almost $10,000 more from the standpoint of being able to get them to purchase and then sell them. Same thing in the U.K. Well, I think what's going on now is we're starting to see those numbers come down as, I guess, you say, deflation on used vehicles in the U.K. But more importantly, with, with leasing being down to somewhat 25% in the past two years, and we haven't had, Obviously, the lease returns have not come back, and probably even more important is in the premium side, I think we have, what, Shelley, 6,000 or 7,000 loaner cars in the premium side? That's right. Can't give you an exact number. We're returning those units anywhere from 60 to 90 to 120 days, and those are great used car units. We really didn't have those because I can tell you in our big BMW store in Crevier, in California, they're running used cars almost 12 months. So we didn't have the ability to take them out, and those would become really prime used cars. So that's going to help us as we go forward, and certainly on the overall, it gives us a chance to have, you know, more units, 7,200 units, maybe more that we could sell, that we put through the system, which is key for us. Rich, any other comment you have? No, I think, you know, the availability is. You mentioned demand versus availability, and I think the demand is still there. It's just the availability of cars with the new car SAAR being down cumulatively, almost $9.5 million in the last four years. The best source for used cars is new car purchasers on trades, and that just hasn't been there. You combine that with the low lease rates that Roger mentioned, it's certainly. It's been a challenge. And then I think we've been more disciplined as well to make sure that we're not buying cars in segment two, segment three, just to keep sales rates up because you end up with customer service issues and policy goodwill expense. Yep. That's all helpful color. Maybe if I could follow up on the commercial truck side of the house, obviously a strong full year result, but if I look at 4Q parts and service, maybe slowed a little bit more than we thought it would, Roger, or stayed lighter. Can you maybe talk through the puts and takes of what is going on there? Maybe some of it is the wholesale part side, and then same question, kind of how that plays out through 2024 and 2025 as you guys see the market developing. Yeah. I'll let Rich answer that one directly. Yeah, Daniel, you're definitely right. We did see a slowdown the second half of last year. You know, obviously, the freight was very robust. Utilization of assets was very high. You had a lot of owner-operators, single truck operators coming into the market to take advantage of those rates because they could make substantial money. They generally were getting their truck serviced at independent repair centers, and that creates big parts revenue and profit opportunities for us. So we've seen a decline in our wholesale parts sales and in our just our general retail traffic of parts sales over the counter. You look at our service shops, you know, we're still busy. We don't have the backlog of service work that we had previously, but we're still steady with the number of ROs that we're generating on a monthly basis. And then because of the freight decline and the asset utilization down, you know, you've got some carriers that would park trucks and maybe pull another truck from the fence versus having the expense of repairing it. So we're seeing some of that as well until some of that capacity tightens in the marketplace. I think, Rich, also, when you look at our fixed absorption, we're running at 120%+. Yeah, almost 130%. And I think we're utilizing tools to be more efficient. We've also been able to fill a lot of the mechanics requirements that we couldn't get during the COVID time. We're now seeing them come in, and our turnover really has been down. So I would say we've put more service trucks on the road, going out to the customers, too, which has certainly also been a benefit. So I think through our acquisitions that we'll see that we'll start to get some more traction there to putting in some of the same conditions and action plans we have in the core business. Makes sense. Well, I appreciate all the color. Best of luck, guys. All right. Thanks, Daniel. Thanks, Daniel. Just a reminder, it is one zero to ask a question. We'll go next to Rajat Gupta with JP Morgan. Hey, Rajat. Hey, great. Thanks for taking the questions. I just had one question on new GPUs and then one on F&I. Based on, you know, how things have trended over the last few months and quarters, you know, including what you may have seen in January, is the recent quarterly cadence, you know, like roughly $250-$300 of sequential declines in new GPUs, a good rule of thumb for as you progress through 2024? You know, if you could give us any color or guidance around that, would be helpful. And I have a quick follow-up on F&I. Thanks. So, Rajat, this is Tony. I'll handle that one. When you take a look at the year-over-year decline from Q4 2022 to Q4 2023, new gross was down about $956 a car. That's on a same store basis across the portfolio. And I think as I previously mentioned, when we looked at it sequentially, it was down $257, from $5,775 down to $5,518. So I think we're able to manage the gross very well. Some of it will be dependent upon how the mix might change from one period to the next, and the level of BEV sales. I think Rich made the comment that, you know, we were down over $5,000 versus MSRP on the BEV side of things. So I think we're very happy with how the new vehicle gross has performed so far, in the past 12 months. I'd make one comment, Rajat, that we're seeing internationally, you know, Ferrari and Porsche, Lamborghini, some of those big cars that are now, you know, in the $200,000-$300,000 range, people could drive them for a year and come back and trade them and be able to get into the next car. We're seeing some people saying, "Look, I'll keep my car for another year." So that's having some impact on canceled orders, where we have to resell those at a lower margin, but I wouldn't say it's dramatic, but I think it's something we should note. Because of the used vehicle declines- The used vehicle- that happened in the fourth quarter. Yeah, in the fourth quarter, yeah. Got it. That's helpful. And then on F&I, a very strong performance here in the fourth quarter, you know, [inaudible] what drove the strength there, and how should we think about, you know, sustaining these kind of, you know, F&I gross levels into 2024? Thanks. Well, Rajat, this is Tony. If you look at the fourth quarter on a same store basis, we did $1,897 a unit. That was up from $1,866, and then sequentially, it was up about $76 a unit to from $1,821 to $1,897. I think it's important to point out that when you look at the US, our overall product sales are about 68% of the total, therefore, reserves are about 32%. And then you look at some of the different penetration rates, you know, we've increased our captive penetration again. You know, leasing is up a little bit. And then when you look at some of the different programs that we're selling, like prepaid maintenance and protection products, tire and wheel, that stuff has stayed real strong for us. I think overall, our team's doing a really strong job on the F&I side of things. Those are products that we can sell to the premium lease customer, too, which is helpful. Got it. Got it. So you feel okay about, you know, sustaining these kind of like levels on a same store basis? Obviously, like, pricing might play a role there, but, like, the penetration levels, you think are sustainable at these levels into 2024? Some of it will depend upon the absolute lease level that we have, particularly in the U.S. And then we also have to look at any potential affordability concerns that customers may have with respect to extended service contracts. But I think if you look at the second half of the year, and you see any rate reduction that might happen in interest rates, so that could actually help the F&I side of the business as well, making vehicles more affordable. But it's only 32% of our revenue is coming from the actual reserves. Correct. And flats we would get on leasing. Correct. Got it. That's helpful color. Thank you and good luck. Yeah, thanks. Next, we'll go to David Whiston with Morningstar. Please go ahead. Hi, David. Thanks. Good morning, or good afternoon. Two questions, like, kind of on capital allocation front. First, on M&A, can you say what your preference would be this year on M&A in terms of would it be light vehicle, CarShop, or trucks? And on top of that, what geographic areas would be your first choice? Well, I guess, let's look at the different businesses. We are actively looking in the Premier Truck side. There's no question in Europe, we had the opportunity with Rybrook, the 16 locations. We have a number of opportunities here in the U.S. And I would say we look primarily where we already have scale, so we can consolidate our back offices, our management team. With Rybrook, you know, we looked at the business at Pendragon, and when we looked at that business in conjunction with Hedin, we had a schedule of offices that we'd have to deal with. With Rybrook, we just bought the stores and plugged them right in. So we want to look where we have the least amount of additional SG&A, and that would be a key factor. I think right now we're seeing the prices coming down to a more realistic time frame. Obviously, with, you know, $1.7 billion of capital available, you know, we've got plenty of fire power to make a big move or small moves, but again, they're going to be strategic. But you don't have a strong preference then on truck versus light vehicle, that doesn't really matter? I think we look at them one at a time. I mean, you know, it's not we don't have a goal to grow the truck at some speed or else. I want to see a minimum of $1 billion, you know, worth of new business that we would generate for 2024 on an annualized basis. That would be across the entire portfolio. Okay, and on buybacks, can you talk about how you guys are feeling about buybacks this year relative to the 2023 spending level? Well, look, I think as we've done before, we look at CapEx, we look at dividend, we look at acquisition, we look at buybacks. And I think that, you know, we certainly will look at that to continue. The board has to approve those buybacks and make recommendations to us, but at this point, you know, we would continue with our buybacks. Okay. And just one last thing on used vehicles. You, in the press release, you guys specifically called out that how pleased you were on that sequential GPU performance, Q4 versus Q3. Is it kind of a, for lack of a better word, is that like a green shoot, that maybe the worst of this is over? Are you talking on used vehicles, David? Yes. So, Randall will tell you. Randy you might want to comment about what we're seeing in the U.K., because that was one of the big headwinds, if you will. So you- Right. So as all the valuations went, you know, significantly up over 2021, 2022, and then obviously starting April last year, they were going down anywhere from 2% to 4% a month. In the fourth quarter, it was down 4%, 4%, and 2% from October, November, December. So look, it was a challenge without a doubt. You had to turn the inventory quickly, otherwise, you're, you know, you're caught with at a, at a lower number you can sell it. But as we've come into the new year in January, it's absolutely stabilized, and we're seeing that in February as well. Our gross per unit will, will definitely be up in January, you know, for the first handful of trading days. In February, the same thing. I'll make one other point. When we, when we were rightsizing the inventory, you know, we wholesaled 10,000 cars, but our wholesale, we actually made about GBP 370 per unit, which was down from GBP 400 per unit Q4 last year, so wasn't down much, you know, you think about the market going down that, the way it did. So there certainly wasn't a fire sale. But conversely to that, we, in, in late November and December, went out and acquired a bunch of used cars strategically as the market was deflated. And now as the market stabilize and hopefully goes up some, that's part of the reason we're seeing better grosses this month. So I think we were a bit advantageous there with our team. Well, look, I think then, the key thing, David, is that we were paying money for used cars that was almost, in some cases, near what they could buy a new car for. Yeah. So the amount of gross profit that was available to us from an advance rate from the finance company, remember, we finance a lot of the used cars, left us a very small margin. As the cost of sale comes down now, it's going to give us a chance. Now, we've got interest rates pushing that up on a finance deal, but I think we're going to see our margins will increase as we go forward. And I feel good about the used car business. Be able to turn the loaner cars, all these things are going to help us as we go forward, especially on the premium side. And hopefully, we'll start to get some lease returns. You talked about advantageous buying 250 cars from Mercedes, I think in last year in the fourth quarter. So these things will start to help us, that we can, we can execute on. Our average transaction price last year was over $34,000. Yeah ... a used car. That's high. What was it, you know, what it was the year before? It was flat on a year-over-year basis, roughly. So it really, when you go back, I think, to 2019, prior to the pandemic, it was $25,000. The CarShop number is coming down. Yeah. We can, we can see the sale price of CarShop. So I'm not sure exactly what it is, but I know it's coming down, and that's going to help us get back in the sweet spot. That's right. We're not competing with what I call the OEM dealership, right? Because we'll be down in this, it's a different market that we have. Yeah. Sorry, was that $34,000 at CarShop or the retail stores? That's the, that's the total consolidated... That's everybody ... number. That's everybody. If you look at CarShop, the average transaction price was just under $21,000 in the fourth quarter. Okay. Thank you very much. All right... You're welcome. David, thank you. With no further questions in queue, I'd like to turn the call back over to Mr. Penske for closing remarks. Brad, thanks. Good, good quarter. We had some headwind, obviously, but feel good about the balance of the year. Obviously, we talked about battery electric vehicles. It's going to be a big focus on us and how we deal with that as we go forward here. So thanks again. We'll talk to you next quarter. That does conclude the call for today. Thanks to your participation. You may now disconnect.