Good morning and welcome to the Sonic Automotive Q1 2025 Earnings Conference Call. This conference call is being recorded today, Thursday, 24 April 2025. Presentation materials which accompany management's discussion on the conference call can be accessed at the company's website at ir.sonicautomotive.com. At this time, I would like to refer to the safe harbor statement under the Private Securities and Litigation Reform Act of 1995. During this conference call, management may discuss financial projections, information, or expectations about the company's products or market, or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties are detailed in the company's filings with the Securities and Exchange Commission. In addition, management may discuss certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Please refer to the non-GAAP reconciliation tables in the company's current report on Form 8-K filed with the Securities and Exchange Commission earlier today. I would now like to introduce Mr. David Smith, Chairman and Chief Executive Officer of Sonic Automotive. Mr. Smith, you may begin your conference. Thank you very much. Good morning, everyone. Welcome to the Sonic Automotive Q1 2025 Earnings Call. As you said, I'm David Smith, the company's Chairman and CEO. Joining me on today's call is our President, Jeff Dyke, our CFO, Heath Byrd, and our Vice President of Investor Relations, Mr. Danny Wieland. We would like to open the call by sincerely thanking our amazing teammates for continuing to deliver a world-class guest experience for our customers. We believe our strong relationships with our teammates, our manufacturer and lending partners, and our guests are key to our future success. I would like to thank them all for their support and loyalty to the Sonic Automotive team. Turning now to our Q1 results, GAAP EPS was $2.04 per share. Excluding the effect of certain items, as detailed in our press release this morning, adjusted EPS was $1.48 per share, a 9% increase year-over-year. Q1 consolidated total revenues were a Q1 record of 8% year-over-year, while consolidated gross profit grew 6% and consolidated adjusted EBITDA increased 7%. Moving to our franchised dealership segment results, in the Q1, we generated Q1 record franchise revenues of $3.1 billion, up 9% year-over-year. This revenue growth was driven by an 11% increase in new retail volume and a 6% increase in fixed operations revenues. Q1 results benefited from an increase in new vehicle sales in the final days of the quarter, which we expect was the result of customers buying in advance of tariffs that went into effect on April 2. Our fixed operations gross profit and F&I gross profit also set Q1 records, up 7% and 9% year-over-year, respectively. Same store new vehicle GPU was $3,089, down sequentially from the Q4 due to our luxury brand mix and in line with our guidance given on our last call. On the used vehicle side of the franchise business, same store used vehicle volume decreased 2% year-over-year, driven by lower levels of late model used vehicles and consumer affordability challenges. Same store used GPU increased sequentially to $1,555 per unit. Our F&I performance continues to be a strength, with same store franchised F&I GPU of $2,442 in the Q1, up 1% sequentially and 4% year-over-year. The continued stability in F&I at these levels supports our view that F&I per unit will remain structurally higher than pre-pandemic levels, even in a challenging consumer affordability environment. Our parts and service, or fixed operations business, remained strong with a 7% increase in same store fixed operations gross profit in the Q1. This strong growth was driven in part by higher levels of warranty repairs, combined with the effects of the increase in technician headcount we achieved in 2024. Turning now to the EchoPark segment, Q1 segment income was an all-time quarterly record, $10.3 million, and adjusted EBITDA was an all-time quarterly record of $15.8 million, up 116% year-over-year. For the Q1, we reported EchoPark revenues of $560 million, flat year-over-year, and all-time record quarterly EchoPark gross profit of $64 million, up 21% from the prior year. EchoPark segment retail unit sales volume for the quarter was approximately 18,800 units, up 5% year-over-year. On the same market basis, which excludes closed stores, EchoPark revenue was up 3%. Gross profit was up 19%, and retail unit sales volume increased 7% year-over-year. EchoPark segment total gross profit per unit was an all-time quarterly record of $3,411 per unit, up $456 per unit year-over-year, rebounding from the temporary GPU pressure we faced in the Q4, as we indicated on our previous earnings call. We continue to believe that our data-driven centralized inventory management strategy is a key differentiator for EchoPark, which should help to minimize disruptions from market volatility in the short term while maximizing EchoPark's long-term growth potential. When combined with the strategic adjustments we've made to our EchoPark business model, we believe we are well positioned to resume disciplined long-term growth for EchoPark once used vehicle market conditions sufficiently improve. Turning now to our Power sports segment, we generated record Q1 revenues of $34.4 million, Q1 gross profit of $8.5 million, and a segment adjusted EBITDA loss of $700,000, which was in line with our expectations for a seasonally light Q1. We are beginning to see the benefits of our investment in modernizing the Power sports business, and we remain focused on identifying operational synergies within our current network before deploying capital to expand our Power sports footprint. Finally, turning to our balance sheet, we ended the quarter with $947 million in available liquidity, including $430 million in combined cash and floor plan deposits on hand. We continue to maintain a disciplined balance sheet approach with the ability to deploy capital to grow strategically as market conditions evolve. Additionally, I'm pleased to report today that our board of directors approved a quarterly cash dividend of $0.35 per share payable on July 15th, 2025, to all stockholders of record on June 13th, 2025. As you can see on page 13 in the investor presentation we released this morning, we have updated or withdrawn certain items in our previous financial guidance for 2025. In light of uncertainty around the effects that the tariffs are expected to have on the automotive industry, we are working closely with our manufacturer partners to understand the tariff impact and our manufacturer production and pricing decisions and the resulting impact that tariffs may have on vehicle affordability and consumer demand. Despite these challenges, our team remains focused on near-term execution and adapting to ongoing changes in the automotive retail environment and macroeconomic backdrop while making strategic decisions to maximize long-term returns. Furthermore, we remain confident that we have the right strategy and the right people and the right culture to continue to grow our business and create long-term value for our stockholders. This concludes our opening remarks, and we look forward to answering any questions you may have. Thank you. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the Star keys. One moment, please, while we pull for questions. Our first question comes from the line of John Murphy with Bank of America. Please proceed with your question. Good morning, guys. Good morning. I just wanted to ask a first question around sort of the obvious on tariffs and just maybe from three specific angles, if you could comment as best you know right now. First, what kind of commentary are you getting from your factory partners? Second, as you think about the pull forward in March and early April, what you're seeing outside of your stores, maybe inside of your stores on pricing of GPUs, because it doesn't seem like you've necessarily taken advantage of stuff there yet, but there's certainly stories of other folks. Third, what kind of impact do you think the uncertainty has around M&A activity and pricing? It's Jeff, John. From a manufacturer's perspective, this is the all balls in the air right now. No one really knows. Parts are coming in from out of the country on American-made cars. For us, it's just steady as she goes. We had a great Q1. We think we're going to have a great Q2. We believe, based on conversation with the manufacturers over the next 90 days, that things will settle down. Is there going to be a price increase? Maybe, but we don't see it as being a 25% price increase. We've had price increases before, and we've faced a lot tougher situations than this. The industry is Teflon, from my perspective. We'll battle our way through this. We just are not watching the news. We're putting our head down. We're going to work. We're very focused on executing our playbooks, our processes, and we think those results showed up in the Q1. We will see what happens in the coming months ahead. I am not, and our team is not too concerned that we will not have solid resolution over the next 90 days or so. I think the manufacturers will end up participating if the tariffs come along in some sort of cost-cutting measure to help with MSRP pricing. Maybe the dealers and the consumers have to participate a little bit. Not sure yet. Hopefully, the governments will come along and get a hold of this. At the end of the day, it is not some massive concerns. In terms of M&A, it has not really made a huge difference at this point. We have got a lot of discussions going on. Certainly, it has come up. If anything, maybe we're buying a little bit of time just to kind of see what happens over the next 90 days before we finalize some transactions. No big changes there from our perspective. John, this is David. I think one thing to mention about pricing, because I think you alluded to it, is that some dealers out there are, I think, taking advantage of the situation and taking advantage of customers. We are definitely not doing that. We have the highest guest satisfaction we have ever had, and we want to keep it that way. We are doing more market pricing and not gouging our customers. I appreciate the balanced view. Maybe just one quick second one on fixed ops. I know you guys were a little slow on headcount hiring last year. Just curious if there's any update there and what kind of opportunity you think there is to ramp up that hiring process and really bring the same store sales a lot higher. Yeah, that's Jeff. Look, at the end of the day, since last March, we've hired 345 incremental technicians in the organization, and that's made a huge difference for us in terms of fixed ops. We will continue to hire as we grow through the year. We've got capacity with open stalls and bays for those technicians that we're hiring. It's been a huge focus for us, as you know, since the end of the Q1 last year when we sort of put our stake in the ground and changed our culture and our fixed operations departments to focus on bringing in more technicians as a part of our culture and driving our gross. I think the results have proven that in the last four or five quarters. We have had a number of stores where we have opportunistically grown our service. We are building new stalls, adding stalls. There is definitely opportunity to grow. Agree. I'm saying, as a quick reminder on that, John, we added about a third of those headcount in the last two months of last year. We are still really trying to get those newly hired or newer hired technicians to full productivity. There is still some runway there. Right now, with the additional warranty and recall activity we are seeing, there is a lot of volume running through the service lanes. As we go forward and get those technicians fully productive, we will be better able to balance the customer pay and warranty side of the business as long as these warranty tailwinds persist. Super helpful. Just one follow-up on that. I mean, as you think about the opportunity, is a lot of it volume or because you're in the high-class, you have the high-class problem of too much demand that we might see door rates inch up a bit? I mean, we're looking at our door rates on a quarterly basis, John. That's something that's been ongoing forever. No, the demand, the volume is there. There's just plenty of volume from a fixed perspective, and we're taking advantage of that. There are more techs to be hired. Our culture's taken over. We're not having to push so hard to hire techs. The culture's taken over, and our teams are out bringing in techs, and they see the results. It's made a big, big difference. Again, that's been a year in the making of really changing our store-level culture from a fixed operations perspective to get us to where we are. As David and Danny said, there's a lot of upside there. Yeah, John, fair to say volume and price, right, opportunity? Yes. Yeah. Just add one point, John. Speaking of tariff impact, service is one of those areas where we can pass that along to the consumer. That is another opportunity. We think if there are tariff issues, people are making a buy versus a repair decision that can help that, and we can pass along the tariff increase to the consumer. Love the whole team tagging in there. I appreciate all the answers. Thank you, guys. Yes, sir. Thank you. Our next question comes from the line of Brett Jordan with Jefferies. Please proceed with your question. Hey, good morning, guys. This is Patrick Buckley on for Brett. Thanks for taking our questions. Morning. Morning. On the use side, could you talk a bit more about what the GPU trajectory looks like from here? I guess with Q1 above the 25 outlook, when should we start modeling in contraction and what's driving that? I mean, it's just sort of an unknown right now based on what's going on with the tariffs. If nothing changes and things are steady as she goes, I mean, the margins that you saw in the Q1 should hold true on the franchise side throughout the end of the year. EchoPark's margins are growing. We're buying a larger percentage of our cars off the street. We've moved from 20-25% up to 30% to as high as 35% of the cars now on a weekly basis coming from street purchases. That's making a big difference in our front margins, and that really helped out in March of the Q1, and it's carrying over into April. That's a change for us. Front-end margins are improving there, and we expect that to continue. Great. Thank you. I guess on BEVs, have you seen any changes year to date with the current administration and just a little shake-up as far as mandates? I guess what's the current outlook there on inventory versus demand? Yes. It's dropping. We have less supply. Yeah, I mean, everything positive there. I mean, the thing is that now inventory levels are beginning to get closer to matching what consumer demand is, and that's where it should be. You're saying inventory. The demand is lining up with. With the inventory levels, right? We are applauding that. We are having to carry less inventory that does not turn as fast. We think the manufacturers are coming around, and that is the new administration that is supporting that, and that is a big applause from this team. You could see in the front-end GPUs, we had a headwind of around $350, and the full year of 2024 is down to $200 in Q1. Aligning that inventory to demand is helping reduce that headwind in EV GPUs. We think some of our manufacturer partners are doing a great job with offering vehicles where it's really, speaking of customer demand, the customer gets to select their drivetrain. That strategy is a great strategy. If they want an electric vehicle, they can choose an electric one, or if they want an ICE, they can choose that. We like that strategy. Great. That's all from us. Thanks, guys. Thank you. Thank you. Our next question comes from the line of Jeff Lick with Stephens Inc. Please proceed with your question. Good morning, gentlemen. Thanks for taking our question. First one is, I wonder if you could break down the warranty work, service and parts work a little bit as it relates to warranty customer pay. I know you're getting into it a little bit, but just what the metrics were in terms of warranty growth as it relates to the comp and customer pay. Yeah, about 40% warranty growth in the Q1 versus 2-3% customer pay growth. That's not a mix we like at all. It's an adjustment that we're making. We need to a lot more focus on getting our CP customers through the lanes and pushing the warranty work out a little bit. Those are adjustments that you'll see us make in the Q2. That's just too big of a differentiator in the mix between warranty and customer pay for our liking. There's a lot of warranty work out there that can't be helped, but we need to adjust in terms of that mix coming through our lanes. We think it's a great sign of our team. You may want to mention that, that they already highlighted and noticed that. It wasn't like that was just noticed this year. Yeah, the team towards the end of the Q1 was saying, "Look, this is just not the mix of revenue coming through the service drive is not the mix we like. We need to start making some adjustments, and those adjustments are being made." We have got the technician headcount now to handle that, and that is growing. Put all that together, and we think we can pivot pretty quickly in how that mix is coming through the service drive in the Q2. Is there evidence, or do you have ways to track kind of the occurrence of crowding out customer pay because of the warranty? I mean, do you see yourself even inadvertently turning away customer pay jobs in favor of warranty? Not intentionally, but it's common sense. I mean, if you've got that much warranty coming through, it's easier work. It's higher margin. Everybody's taking the licks at that. It's not the right way to run the shop. You need to load the shop differently. We know that just a lot of warranty hit us all at the same time. A service writer can take a warranty job in. A technician can flip it and get another one real quick because there's another one standing in line. We're not doing the additional service requests and the things, I think, from a playbook perspective that we should do. We've got to slow down and execute at a higher level. It's great to have the warranty work. It certainly played a big role in our quarter from a fixed perspective. We can do a better job in making sure that we're balancing customer pay and fix the right way, customer pay and warranty the right way, and loading the shop appropriately, and we're making those changes. Yeah, and I would say it's more of, rather than saying turning customers away, it's more of scheduling properly. Just a quick one on EchoPark, and this is kind of just a hypothetical. If you think about a tariff scenario where, let's just say, the SAAR does go down, pick your number, a million units, a million and a half, because prices rise. Obviously, that's going to come at the franchise dealers. There will be less trade-ins where franchise dealers tend to get more of their supply through trade-ins. I'm just curious. I could see either way how this could affect EchoPark. Obviously, EchoPark is—the whole premise is it's a value proposition. When you think about the puts and takes of all the different dynamics in terms of less stuff going through the auction lane and whatnot, do you guys view a tariff scenario as beneficial to EchoPark, or would it be a headwind? We've seen this video before, right? I mean, we played this out in 2021 and 2022 with COVID, and we're prepared for it. That's why you're seeing us buy a lot more cars off the street. We think we can push that up even higher, maybe the 40-45% level. That's just turning knobs. We are really in shape for something like this where I would say that we were not when COVID hit. It could have been a headwind if this was 2020, but we don't look at it like that now. We're very prepared and just had an amazing Q1 with EchoPark. We look to have another one in the Q2, April showing up that way. Prices at the auctions are already up over $1,000 a car from what we're seeing in buying, but margins are continuing to grow. Volume's solid. I don't see it being a big problem. Also, if you think about it, we've noticed that, especially in our mature markets, as you may have heard on our previous call, our EchoPark stores have the number one Reputation.com score in the industry. We are seeing a lot of repeat customers, their friends and family coming to EchoPark. Those people, as you've seen, our gross is going up. People are identifying EchoPark and saying, "We want to go there and buy a car," just choosing to go there first. We are seeing that in our numbers. I think that our team will adapt. If prices go up, I still think that customers will pay for that amazing guest experience. Not just the sourcing. Obviously, sourcing can go up, but if your demand goes up and your value proposition goes up, even your prices could go up, but your value proposition relative to the alternative could actually widen. That's what I was trying to get at is this. 100%. We saw that at the end of March, and we're seeing it in April. We're still going to be higher in the marketplace. Even if our prices are $1,000 higher, everybody else is going to be a lot higher, including our own franchise stores. It's just the difference in the model. We really have that dialed in, in particular around the inventory management. They supply how fast we're moving inventory through the system, 20-22, 23 days supply on lot. We're turning those cars in 12 days just as fast as they can go. The inventory is not sitting. If you [audio distortion]can turn inventory as fast as it does, that's who's going to win. We have that out there. We've had great education. We've had a lot of education over the decades. We're going with COVID. We're really prepared for this. [audio distortion]We think we need to grow between what we saw in 2021 through 2023 versus what you may see in these car prices. The flattened vehicle system is so tight in the days supply for the truck. The pricing was so good at auction that actually had the change on the retail side where the renting holds in because these car prices are not necessarily ahead of EchoPark, particularly when you think about what we're doing. These are not as functional as we think. That much smaller score in the Q1 and performance improved. They were actually performing quickly than we anticipated. That's part of the performance we saw in the Q1. Plus, we were a lot smarter and more nimble than we were even 24, 36 months ago. 415 cars on rooftop in March. Every store profitable, and the big EchoPark stores among the most profitable that we had in the company. We have got it dialed in, and now the question is, can we get inventory to stabilize a little bit? Because once we do that, we can start opening some stores, and we are hopeful that towards the end of the year or the beginning of next year, we can start announcing, "Hey, we are going to bring a strategy that shows you how we are going to grow the footprint of EchoPark. It is worth mentioning that our new EchoPark store in Houston, for example, we have gotten, speaking of things we have learned, as we opened that store, and I think. November? I mean, it went off very efficiently. We've got a mature team in there, and they did 400-plus cars in their second month. Yeah, and have been profitable since day one, which is just a great sign. Awesome. Thank you very much, and best of luck in Q2. Thanks so much. Thank you. Take care. Bye-bye. Thank you. Our next question comes from the line of Rajat Gupta with JP Morgan. Please proceed with your question. All right. right. Great. Sorry, I have just one more follow-up on EchoPark here. The Q1 result, obviously, pretty strong here. It looks like you did take up your full-year guidance, but maybe it seems a bit conservative in context of how strong the Q1 was. It looks like you feel good about the EchoPark retail GPU, the F&I, and you maintained your unit guidance. I'm curious, why isn't the guidance higher than the range you provided based on the Q1 start? Is there some motivation here? We need to take the guidance up further. Sorry, I think there might be some issues with my line, but I'll try again. Wait, wait. We wait. We heard your question. Oh, you did? Okay. Great. Can you hear us? Can you hear us? you hear us? It broke up in the response, but I can check the transcript. Maybe it's on my line, but I'm not sure if others have got it. If you want to repeat the answer, that's fine. That's no problem. I just had one on SG&A. That's no problem. You sound like our board of directors yesterday in our board meeting asking the exact same questions. Look, the tariffs are playing a role in our forecast there. We can get more aggressive if things play out the way we think they are going to from a tariff perspective and they turn positive. We need to be conservative there, Raj, so we do not get out ahead of ourselves if things do get tighter from a used car pricing perspective. Further adjustments as we get into announcing the Q2 if things play out the way we think from a tariff perspective. Understood. Understood. That's helpful. Just on SG&A, one of the things we've noticed in your print and some of the peers that have reported, we did see a little more deleveraging in the Q1 than maybe at least what I had been expecting and maybe some other investors might have been expecting. Some of your peers talked about some weather headwinds in January, February, a couple of lower selling days that might have caused that. I was curious if there's anything you would want to call out on the SG&A if the leverage was in line with their expectations or was it worse or better. Also, just have there been any pay plan or commission-type adjustments within the workforce that's maybe driving the SG&A higher and which could be more sticky? Just wanting to unpack all of this a little bit if possible. That's all I had. Thanks. I could just mention that at our, this is David, from our kickoff to the year, we had a big focus on SG&A and expenses and throughout the company and our annual meeting. We think that that's taking effect as you see it in the numbers. Yeah, I was just going to mention there are a few things that are Q1 one-times. We had some compensation that was just for the Q1 that would be driving that up. There is nothing that is material. There have not been any changes to pay plans that would have caused that. It is really just your Q1 things that we clean up in the Q1, such as payroll taxes are higher, etc., nothing systematic that is going to be going through the next three quarters and through the year. Understood. That's helpful clarification. Thanks a lot and good luck. Maybe one final point on that. We reaffirmed our full-year consolidated company SG&A target in the low 70 range. There are going to be some puts and takes as to what comes from the franchise and what comes from EchoPark as we go through the year. Obviously, depending on how the tariff situation plays out on demand and volume, volume is a big driver of sales compensation, the variable compensation piece. Overall, we're still in line with what we anticipated for the year through the first three months. Yeah, and I think this is Heath. I think it's interesting to point out that this quarter, EchoPark's SG&A's percent of gross was lower than the franchise. That just shows you as the volume and the gross increases, you have more money that flows to the bottom line quicker because of the fixed expense structure that we have at EchoPark. Got it. Got it. That makes sense. Thanks for flagging that. All right. Great. Thanks again and good luck. Thank you, Rajat. Thank you. Thank you. Our next question comes from the line of Daniela Haigian with Morgan Stanley. Please proceed with your question. Hi, thanks. One more on EchoPark, and apologies if you answered this earlier. I also had some connection issues, but you mentioned anticipating an increase in used pricing, uplift to demand as a result of tariffs. With newer used vehicle supply still tight, even with the mitigating factors like diversifying your sourcing and off-lease incrementally improving the next year or so, do you see opportunity moving into older used vehicles to meet some affordability concerns as well? I mean, we did that during COVID, Daniela. This is Jeff. We did it during COVID. It's a small percentage. It's 10-15% of the overall volume, maybe even less at times. Sure, we would flex that way if we need to. We haven't seen a need to do that yet. Remember, we reduced the number of stores that we had, so we're down to 17 EchoPark stores. We can buy enough inventory to support those stores both off the street and trades and through the auction lanes. I'm not too concerned about getting inventory. We'll watch pricing and adjust the mix accordingly. If we need to, no question, we can increase the percentage of 5, 6, 7, 8, 9, 10-year-old vehicles. It just adds complexity to the business when you do that. Recon times take longer. There's just a lot of complexities, and we try to stay away from that because complexity is not part of the EchoPark model. But it's certainly something that we have the capability of doing, and we did during the COVID years. I hear you. Thanks. Thank you. Thank you. Our next question comes from the line of Michael Ward with Citi Research. Please proceed with your question. Michael? Michael, are you there? Your line is currently off. Sorry about that. Yeah, am I good? You're good. Yeah. Yeah. Sorry about that. One thing we haven't touched on is that if we get these price increases for tariffs, you get a corresponding increase in the residual values of vehicles coming off lease, particularly at the luxury end, the import luxury end. How fast do those residual values adjust? I mean. They will adjust quickly, Michael, but we're still dealing with the lack of lease returns from lack of lease sales in the previous year. That was my next question. Yeah. Do you have any line of sight on that? When does that start to turn the other way? Next year, you'll start to see. Next year. Yeah, an adjustment, but not in this calendar year, no way. If anything, some of those vehicles coming off lease this year, the lower supply, you'll get a pretty big increase in the residual. That should help on the CPO side and off-site or trade-ins. It can. Yes, it can. Okay. To help mitigate. Okay. All right. One last thing on EchoPark. You kind of alluded to that the timing of considering reopening some of the locations could be at the end of the year. If you do, it sounds like your showroom traffic has picked up. Certainly, your costs are in line and some of the other things. If necessary, can that be accelerated, or are you still just going to wait and see before you turn the keys back on? Yeah. I can tell you that our team is, as Jeff mentioned earlier, we've learned a lot from the pandemic and how to open stores and when to open stores. I think you're going to see that in the future quarters that if our performance continues the way it did in this quarter, you're going to see us opening some stores. We found that we can very efficiently open them, like the one in Stafford, for example, which, by the way, was that particular location. Jeff Dyke was a general manager at that location back in the day. First GM job. Wow. It was great. Once we acquired that location, from the time we did to opening was a very short period of time, and it was off to the races, as I mentioned earlier in the call. Within a couple of months, we're selling over 400 cars out of that location. Once we get ramped up and get going again, you're going to see we're able to do it very quickly. This is Jeff. We have obviously properties, facilities that we own that are ready to go, things that we can go pull the trigger on. There needs to be some stability here. Yeah. Do you notice when it? Yeah, God. It's just we were laughing the other day. It's just keep throwing it at us. We're a tough one. We can handle anything. This is tariffs? What the hell? Who cares? I mean, we'll just keep throwing it at you. Yeah, that's right. Old hands in autos. It is honestly an important message, I think, for the street and our team to understand we have got a lot of leather on our skins. We have been through this before. We have seen a lot of curveballs thrown at us. It would be nice to have a year or two of just straight, let's go sell some cars and service some cars and have some great guest experience and build the great technologies. We will deal with it. We seem to always find the rows here in the garden. We will do that again with this little gig that we are facing. We will see. It is going to be a fun year. We are going to sell a lot of cars. EchoPark is going to do great, but a few bumps in the road, so to speak. Our EchoPark Chief Operating Officer, Tim Keen, is not here with us today because his daughter's getting married this weekend. We can tell you that Tim has been on the road looking at potential locations recently that we're really excited about. We will have more on that in the future. Sounds like you planned it out properly back when you made those decisions. We did it then. Yeah. It'll give you the flexibility. Thank you. Thanks, Mike. Thanks. Thank you. As a reminder, if anyone has any questions, you may press star one on your telephone keypad to join the queue and ask a question. Our next question comes from the line of Chris Pierce with Needham & Company. Please proceed with your question. Hey, good morning, everyone. Morning. Morning. Can you just walk me through? I think the question was asked earlier on used vehicle GPU. I just want to make sure I understand the assumptions when I look at Q1, recent history, and then the guidance. Is it that because prices might go up and you still want to move units, yourselves in the industry will take a lower GPU, or is there something I'm missing? I just want to make sure I understand the puts and takes there. Meaning GPU or margin percentage from a franchise perspective? Dollar GPU. Yeah. A dollar GPU from a franchise perspective, that's something crazy happens with the tariffs. We ought to be in the same ballpark that we're in now. I think we're at $1,500 and something. That's kind of we've been operating for years now in the $1,400-$1,600 range. And somewhere in that $1,500 range, we're going to be from a franchise perspective. I don't see that really changing. I do see EchoPark's front-end margin getting better historically because of the percentage of cars that we're buying off the street and we're trading for versus the percentage of cars the mix is changing that we're getting from the auction. That's now a 70/30 mix, a 65/35 mix. It was an 80/20 mix. Just by definition, if you're buying cars off the street, you're going to have better margin. Yeah. This is Heath. One thing to add, I think the disconnect here is one of the big issues is you have seasonality. As we go through the years, I mean, through the quarters, you're going to have certain quarters that are historically lower. You're going to end up, like we said, between that 1,300 and 1,500 range. Okay. Lastly, one on EchoPark F&I per retail vehicle. If I look at the number this quarter and then look at the guidance, I mean, is there seasonality based on the type of customer you see in the Q1 that takes a higher percentage of warranty or pays a higher interest rate so you can sell off the loan at a higher amount? I just want to understand because it looks like the per vehicle number comes down through the rest of the year to get to the guidance at EchoPark. Yeah. Honestly, we're probably being conservative there. We're executing at a really high level from a warranty penetration perspective. We've done some cost work on what we're paying for warranties and managing that better. That's flowing in other products. Those are flowing to the bottom line. Our F&I performance is just stronger. I would project that it's going to continue to be stronger. Okay. Just to clarify that, you're saying that you're seeing price advantages from your third-party warranty providers, and that's flowing through? We're seeing price advantages from moves that we've made with our third-party warranty providers. That's flowing through the bottom line. Yes. Okay. Okay. Perfect. That's everything for me. Again, it's also important to emphasize again that our team, our EchoPark team, is delivering the number one guest experience in the industry. There's no doubt that that's reflecting in the numbers. Perfect. Thank you. Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to David Smith for closing remarks. Thank you, everyone. We'll speak with you next quarter. Have a great day. Thank you. Thank you. This concludes today's conference. You may disconnect your lines. We thank you for your participation. Have a great day.