Greetings, and welcome to the Asbury Automotive Group Third Quarter 2024 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Reeves, Vice President of Finance and Treasurer. Thank you, sir. You may begin.

Thanks, operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's third quarter 2024 earnings call. The press release detailing Asbury's third quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com. Participating with me today are David Hult, our President and Chief Executive Officer; Dan Clara, our Senior Vice President of Operations; and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call for questions and will be available later for any follow-up questions. Before we begin, we must remind you that the discussion during the call today is likely to contain forward-looking statements. Forward-looking statements are statements other than those which are historical in nature, which may include financial projections forecast and current expectations, each of which are subject to significant uncertainties. For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 2023, any subsequently filed quarterly reports on Form 10-Q and our earnings release issued earlier today. We expressly disclaim any responsibility to update forward-looking statements. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website. We have also posted an updated investor presentation on our website, highlighting our third quarter results. It is my pleasure to now hand the call over to our CEO, David Hult. David?

Thank you, Chris. Good morning, everyone. Welcome to our third quarter earnings call. As I look at our results and set them against some of the unique challenges we faced in the quarter, I'm really pleased with our overall performance and credit the team for their ongoing resiliency, in particular, those individuals and their families impacted by both Hurricane Helene and Milton. Operationally, we saw sequential quarterly growth in used vehicle profitability, and the pace of gross profit decline for new vehicles has started to moderate, a notable achievement given our exposure to Stellantis. Stellantis in particular continues to be a headwind for our business. To give you some context, our 20 Stellantis locations are seeing year-over-year new volume declines of 30%, with gross profit per vehicle down over 53% from Q3 of 2023. Encouragingly, however, we've recently seen them take a more aggressive stance on incentives, which we hope will begin to resolve some of the excess inventory challenges. Our SG&A as a percentage of gross profit improved quarter-over-quarter, showing that our efforts to take costs out of the business are gaining traction. And finally, our parts and service business continues to show healthy growth. For the quarter, we delivered adjusted earnings per share of $6.35, but as I mentioned at the start of the call, several unique events had a meaningful impact on our performance. Hurricane Helene affected store operations in Florida, Georgia, and South Carolina, and the extended stop sale order for certain Toyota, Lexus, and BMW models impacted volumes on some of our most profitable and in-demand vehicles. Excluding the negative effects from these two items, we estimate our adjusted earnings per share for the third quarter would have been between $6.74 and $6.78 per share. With Hurricane Helene, stores in the path of the storm closed their doors early or opened later after the storm passed. Most importantly, however, all of our team members were safe, although many incurred damage to their homes and property. Temporary store closures and reduced customer traffic in the days leading up to the storm and immediately afterward resulted in fewer new and used unit sales, along with lost business in fixed operations. All told, we estimate the impact of the storm on earnings per share to be between $0.07 and $0.09 per share. The various stop sale orders were even more impactful to our quarterly results. The Lexus TX and Toyota Grand Highlander models have been popular vehicles with healthy gross profit margins. Based on our pre-stop sale trends for these models and for our BMWs, we estimate that this resulted in nearly 1,200 fewer new units sold for the quarter. The estimated negative impact to our third quarter earnings per share was between $0.32 and $0.34 per share. As it relates to Hurricane Milton, while we're still assessing the operation and financial effects from this fourth quarter event, we believe the magnitude of the impact on our business will be greater than Hurricane Helene. The size and path of the storm placed it over a larger section of our store footprint and the damage to our dealership locations was more extensive. A higher number of stores closed for longer compared to Helene. Several locations experienced flooding, partial loss of vehicle inventories, and extended power outages. Other locations had varying degrees of wind and water damage, preventing them from reopening in a timely manner. Separate from the hurricane, we are also working to better understand the fourth quarter impact on all the various stop sale orders. This is inclusive of the ongoing stop sale for certain Toyota, Lexus, and BMW models, along with the recent Honda stop sale order for several of their more popular models. We will provide additional details during our fourth quarter earnings call. Now, for our consolidated results for the third quarter. We generated $4.2 billion in revenue, up 16% year-over-year. Had a gross profit of $718 million, up 7%, and a gross profit margin of 16.9%. Our same-store adjusted SG&A as a percentage of gross profit was 63.8% and 64.4% on an adjusted all-store basis. We delivered an adjusted operating margin of 5.6%. Our adjusted earnings per share was $6.35, and our adjusted EBITDA was $233 million. During the quarter, we repurchased nearly 400,000 shares for $89 million, bringing our year-to-date total through October 28 to approximately 830,000 shares for $183 million. In the third quarter, we divested one Chevrolet and one Honda store as part of our ongoing efforts to optimize our portfolio. And finally, in the fourth quarter, we launched our long-awaited pilot with Tekion in four stores in our shared service center. Now, before I hand the call over to Dan, I want to say thank you again to our team members for delivering another solid performance. Given our heavy presence in Florida and the Southeast, the recent storms have had major impacts on our team members and the communities in which they serve. Their dedication to getting our stores back up and running is just a small part of the overall recovery effort, and I couldn't be more proud of them. Now, Dan will discuss our operational performance.

Thank you, David, and good morning, everyone. First, I would also like to say how grateful I am of our team members. Our team members rose to the occasion through major storms to deliver the most guest-centric experience in automotive retail. Thank you. Now, moving to same-store performance year-over-year, which includes dealerships in TCA unless stated otherwise. Starting with new vehicles, same-store revenue was flat year-over-year with strong performance from Ford, Mercedes Benz, and Hyundai to name a few, offset by the challenges we saw in Stellantis plus the impact of stop sales affecting volume for certain in-demand Toyota, Lexus, and BMW models. Toyota and Lexus represent 30% of our new vehicle revenue and are great partners with terrific brands. Unfortunately, this stop sale led to a meaningful impact on our unit volume and gross profit per unit. And as it relates to Stellantis, while it is early days, we are encouraged by changes we have seen lately on incentivizing their product. New average gross profit per vehicle was $3,512 as we moderated sequential GPU decline better than we anticipated. Our same-store new day supply was 63 days at the end of September, with wide variation among brands. Turning to used vehicles. Third quarter unit volume decreased 6% year-over-year and used retail gross profit per unit was $1,566. On a quarter-over-quarter basis, used gross profit per unit slightly increased. As we mentioned in the prior quarter, we have assessed the balance of volume and gross profit. And until the pool of used vehicles gets back to more historical levels, we will prioritize unit profitability over chasing volume. We will continue to evaluate our approach and adjust to market conditions. Our same-store used day supply was 38 days at the end of the quarter. Shifting to F&I. We earned an F&I PVR of $2,111 in the quarter, our results holding in line with the second quarter of 2024. As we expected, the deferred revenue headwind of TCA contributed to nearly half of the year-over-year decrease. It was $51 of the $108 decrease in the same-store F&I PVR number year-over-year. We view this headwind to be more impactful throughout 2025 and into 2026. Michael will provide more details on these factors for TCA. In the third quarter, our total front-end yield per vehicle was $4,743, and it was encouraging to see total front-end margin stabilizing given headwinds from some brands this quarter. Moving to parts and service. As David noted, we were pleased with the progress of our parts and service business. Our same-store parts and service gross profit was up 4%, even with hurricane disruptions in several markets. For the quarter, we earned a gross profit margin of 56.8%, an expansion of 144 basis points versus prior year quarter, driven by margin increases in our customer pay operations and revenue mix. I'd like to provide further visibility on the progress being made in our fixed operations. At a store-level within the customer pay bucket this quarter, same-store customer pay service sales revenue was up 11% and same-store parts customer pay revenue was up 4%. And now shifting to our gross profit performance within fixed operations. Our largest portion and most profitable piece of the business, customer pay, generated gross profit growth of 8%. In warranty, we were up 14%. The smaller units of the business, wholesale parts and collision were down 2% and 10%, respectively. These are lower-margin profile businesses and that mix impact contributed to the overall fixed operations margin expansion. I am especially pleased with the progress and momentum of our Western stores this year, with a 22% growth in service customer pay labor gross profit year-over-year. And finally, we retailed approximately 13,000 sales through Clicklane in the quarter, a 13% increase over last year. We were especially encouraged by the performance in new units, a differentiating factor for us with approximately 6,400 units sold, a 20% increase year-over-year. Thank you, leaders and team members for helping make the car-buying experience in-store and online more transparent and easier for our guests. I will now hand the call over to Michael to discuss our financial performance.

Thank you, Dan. I want to express my gratitude to our team members for their perseverance and performance through the challenges we encountered this quarter. I will now provide a more detailed financial overview of the quarter. Overall, adjusted net income was $126 million, and adjusted EPS was $6.35 for the quarter. However, as David mentioned earlier, we estimate that our adjusted EPS for the third quarter would have ranged from $6.74 to $6.78 per share if we exclude the impact of the storm and various stop sales. The adjusted net income for the third quarter of 2024 excludes a net gain on divestitures of $3 million and losses from hail damage amounting to $2 million. Adjusted net income for the third quarter of 2023 excludes a net tax gain of $3 million from a real estate sale and $1 million in professional fees related to the acquisition of the Jim Koons Automotive Companies. The adjusted SG&A as a percentage of gross profit was 64.4%, showing a sequential improvement over the second quarter. Despite facing headwinds from certain brand performances and lower vehicle grosses, we are encouraged by our team's effort to manage costs. We expect SG&A as a percentage to be in the mid-60s for the fourth quarter, considering the expected impact from Hurricane Milton and ongoing stop sale activities. The adjusted tax rate for the quarter was 25.4%, and we project the full year adjusted tax rate to be around 25.3%. TCA generated $18 million of pre-tax income in the third quarter and $59 million year-to-date. We anticipate full-year results to fall between $70 million and $80 million on a pre-tax basis. We plan to expand TCA in the Florida and Koons markets next year and have included details on our TCA pre-tax income estimates for the next few years in the presentation posted on our website this morning. Year-to-date, we generated $487 million of adjusted operating cash flow. Excluding real estate purchases, we invested $105 million in capital expenditures year-to-date, and we expect to end the year between $180 million and $200 million. Our free cash flow was $383 million year-to-date. We concluded the quarter with $768 million of liquidity, which includes floor plan offset accounts, availability on both our used and revolving credit facility, and cash excluding the cash of Total Care Auto. Our transaction adjusted net leverage ratio was 2.9 times at the end of September, reflecting our strategic capital deployment for share buybacks during the quarter. We will continue to pursue and create opportunities through our disciplined capital allocation approach that includes share buybacks, mergers and acquisitions, and organic investments. In closing, I want to thank our team members once again for delivering strong results that support our mission to be the most guest-centric automotive retailer. This concludes our prepared remarks. We will now turn the call over to the operator to take your questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from John Murphy with Bank of America. Please proceed with your question.

Good morning, guys. It's really a good quarter in the face of a lot of adversity here. David, just first on the Stellantis impact, I mean, it sounds like in the Stellantis stores, you're starting to manage this better with some help from the factory. But as you think it's sort of the spillover to the pricing environment and the risk it's creating to new GPUs, how do you think about that? So far, it doesn't seem like it's really had any significant impact on their overall market, but just curious how you think about that.

John, I'll give you my thoughts and I'm sure Dan will jump in. A lot of it when you think about incentives, we all think of the traditional methods. In the last quarter, everyone had high day supplies to Stellantis, including our peers, and they came out with coupon incentives, which were essentially put on taking more inventory. Our stores chose not to, for the most part, take more inventory because we were already at high day supply. So, for the quarter, we were at a competitive disadvantage because a lot of our competitors that chose to take more inventory had more coupons to use. So that put pressure on our volumes and it put pressure on our margins as well. It still is impacting early in the fourth quarter with the coupon concept, but they're also engaging with other incentives that we think will help. But over the last 12 months, they've also eliminated a lot of their entry-level models, and they probably haven't been, from my perspective, building vehicles with the right content that has been able to move the product faster. They're a good company. They're going to figure it out. It's just taking them a little time with the management changes and other things that they've had. And we're unique in the sense that our size of 153 rooftops, 20 Stellantis stores, unfortunately has a material impact on our business. Dan, I don't know if there's anything you want to add to that.

Good morning, John. I want to build on what David mentioned by pointing out the new incentives we're observing. When money is allocated for better transactional pricing for guests, we're noticing a slightly improved response from them. This is helping us to sell some of the units. Additionally, last week, special interest rates were announced starting in November. As I mentioned, it's still early, but we're optimistic about the trends we're seeing.

Okay. And then just a follow-up to that on the GPU at $3,512, it's better than people have been fearing better than we were estimating. And in the face of what you just talked about on the Stellantis side, it's pretty remarkable. How do you think about this going forward? It seems like it's a little stickier in the $3,000 to $3,500 range as opposed to the $2,500 range that people ultimately think it might settle into.

Yeah. I would say, again, when you look at the peer group, you really have to break down the brand mix. 30% of our revenue is Toyota and Lexus, very low day supply. So, those are very high margins. Mercedes, obviously, had a good quarter as well. And then when you look at our segments broken down, luxury, import, domestic, luxury held up the best. And even when we were showing backwards in units with the domestic side, 100% of those units being backwards was solely Stellantis. We were up with the other brands. Dan, anything you want to add as far as the margin?

Well, I would just say too that even on the other domestics, when you look at our other domestic partners, margins are holding pretty steadily there as well. So, we're encouraged by what we're seeing there, but I think a lot of it is also our portfolio mix that is definitely contributing to what David stated of the $3,500 GPU.

And then just one last one on the parts and service. I mean, stop sales are negative short run, but probably provide a pretty good warranty parts and service bump on the other side. How do you think about that and how fast does that potential benefit come through?

Dan?

I'll begin, and David can add anything I may miss. John, we currently have several stop sales in effect, as you’re likely aware. Some of these involve fixes. Toyota and Lexus have just announced that a fix is now available for the Highlander and the TX. The warranty reimbursement rates we are seeing include some that pay for 3.1 hours, and we anticipate a favorable gross profit margin from the parts as well. The timing of parts availability, in relation to when recall notices are sent to consumers, will affect when they can come to our shops. We have the capacity to serve our customers and I expect this to start in Q4, with expectations that it will continue into Q1 of 2025 as we complete all the recalls.

I agree with Dan that we'll benefit from the warranty with Toyota and Lexus, but the recent stop sale from Honda just came out last week, and they haven't provided a fix yet. So, it's too soon to determine the impact that will have.

Great. Thank you, guys.

Thank you, John.

Our next question comes from Rajat Gupta with JPMorgan. Please proceed with your question.

Great. Good morning. Thanks for taking the questions. Just on the stop sales impact, if I look at the impact from the stop sale and the hurricane, it seems like it turned out to be much higher than maybe what some of your peers might have experienced. Was there something to do with the fact that because you were more exposed to the hurricanes, it made it harder for you to just get those fixes done and get those cars out the door late in September, or is there anything else you would flag on just the magnitude of the impact from the stop sales? And I had a follow-up on the used car business.

Rajat, I'm going to hand that to Michael, but I'll start by saying the fix for the Toyota and Lexus did not come in the third quarter. It's literally coming right now. So, even into the fourth quarter, it's at the end of October before we're starting to see it. So, we haven't even started performing the fixes yet, but we're about to. But in the third quarter, hurricane aside, there wasn't a fix and there weren't parts available to address them in true stop sale. You obviously can't sell the vehicles either.

We experienced significant impacts from the hurricane, with exposure in Florida, Atlanta, and Greenville causing business shutdowns in several markets. This led to store closures and affected our sales late in the quarter, leaving little room for recovery since the damage from the storm was minimal in those areas. As a result, we couldn't generate recovery demand. Looking ahead to the fourth quarter, there is flooding in Milton that may positively impact our sales. Our higher sales percentage of Lexus and Toyota has also affected our performance. We took the new vehicle sales and used vehicles related to those brands and adjusted our income statement accordingly. This internal gross profit from used vehicles and the associated SG&A flow through explain why our results differ from others in the market.

And, Rajat, we just took the run rate of those models prior to the stop sale and just assumed the same going through it. And in reality, it would have been higher because you're coming into that selling summer season, so to speak. So, from our perspective, we think we took a conservative approach.

Understood. That's helpful. And just on the used car business, the 6% same-store decline, I'm sure like some of that was impacted by the hurricane and also the stop sales of the stores for the trade-ins, but just curious how we should think about recovery in that business here, fourth quarter perhaps next year, especially in light of the off-lease shortages that we might start to see? And anything else you might be doing to turn around the operations there? Thanks.

Sure. I'll start and then Dan can jump in. Last quarter, I said we're still assessing whether we're going to chase volume or go back to gross profit. We decided to go back to gross profit and not chase volume. Based on the peers that have, I think, announced already, most of them, I think there was only one better than us so far, as far as being backwards in unit sales. So, we improved our margin quarter-over-quarter. We lost sales with the hurricane. We were able to maintain margin, not as much as we wanted, but I think until the pool becomes normal again with the off-lease cars and everything coming, which is still a year away, I don't think it makes sense for us to chase volume because we have expenses with every car that we sell. And from our perspective, we would rather be more conservative on the unit sales and focus more on the gross profit. Dan, any thoughts?

Yeah, Rajat, I agree with David. And just to expand on your question about what else are we doing focusing on this side of the business. We, as you all know, we make our highest margin on trade-ins and acquisitions that we do with our local customers. Really trying to stay away from auctions and what have you because the one that wins that car is the one that is holding the hand at the end of the bidding process and usually brings you a very low margin. So, we have processes in place to increase and continue to work on capturing the trades, acquiring inventory through the service department. We also have the loaner car pool that we can utilize when those cars are available to come out, and just trying to maximize our margin as we move forward. And when the availability of inventory comes back, like I stated on the call, then we will assess if it is the right time to get more aggressive on the volume side of it.

Understood. That's very clear. Thanks for all the color and good luck.

Thank you, Rajat.

Our next question comes from Jeff Lick with Stephens. Please proceed with your question.

Great. Congrats guys. That was a very impressive quarter given what you were up against this quarter. I was curious with respect to your SG&A percent of gross at 64.4%, that's the best amongst your peers. Could you talk about where you think that could go and also highlight the impact of how your test and potential rollout of Tekion may disproportionately influence this going forward?

Thank you, Jeff. Regarding SG&A, we expect the declining new vehicle PVRs to exert some pressure on that figure over the coming year. However, we believe that our initiatives with the Tekion launch, planned for rollout in 2025 and 2026, will ultimately help us reduce that number in the long run as we improve productivity among our employees and decrease the number of supplemental costs. There will be some expenses in 2025 and 2026 associated with the transition from CDK to Tekion, but these will be minimal. We anticipate seeing significant benefits starting in late 2026 into 2027 from an SG&A standpoint, and we hope to bring that percentage back down into the 50s once the rollouts are complete.

F&I gross profit per unit was $2,141, which is stronger than both our estimates and those of Wall Street. Considering your guidance indicated that the TCU or TCA would negatively impact short-term results, is that still accurate, or can we expect the $2,140 level to serve as a baseline for growth?

I will address the TCA issue and then let Dan discuss the operational aspects at the store level. In 2025 and 2026, TCA will significantly affect our overall consolidated PVR as we will experience headwinds from TCA deferrals, continuing the impact from the stores we have already launched, while also introducing our large market in Florida and the Koons market. Therefore, 2025 and 2026 will be important years from an F&I PVR perspective.

And specifically, we think the second half of '25 will be a really sizable hit into '26, and then '27 should start to become a tailwind for us, where it goes the opposite direction. Dan?

From an operational standpoint, nothing has really changed. We continue to focus on the bottom 20% of our stores, continue to train them, coach them, and make sure that we provide a great guest experience during the final process of purchasing a car.

Awesome. Well, congrats, and look forward to catching up here in a bit.

Thank you.

Our next question comes from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed with your question.

Hey, good morning, guys. Looking at Slide 14, helpful from a breakout mix standpoint of what EVs are versus ICE. Curious what the sales breakdown would be.

Dan, you get that?

Yeah, just give me a moment. Good morning, Ryan. I can provide some insights. I don't have the sales breakdown by percentage right now, but I can share some details about the GPUs. From an EV perspective, I’ll categorize by brand, starting with luxury, then moving on to imports and domestic. On the luxury side, GPUs are holding up well with BMW and Lexus. For instance, one of our partners has around a $3,500 front-end GPU, and in EVs, it's around $2,800. However, in the domestic segment, we're noticing a more significant decline in GPUs, with some even going negative in front-end EVs. Regarding imports, there's a mixed bag. For example, Nissan is relatively stable when comparing ICE to EVs, while brands like Hyundai and Honda are seeing a drop. Overall, the EVs are negatively impacting the PVR, and I’ll need to follow up with you regarding the exact sales breakdown because I don’t have that information available at the moment.

Helpful. You answered my second question. I was going to move into the GPUs and how that compared. Instead, I will ask about Hurricane impact. Have you seen any positive externalities thinking pricing, used vehicle pricing, GPUs, demand, insurance proceeds coming in, et cetera?

Yeah, we have. Go ahead, David.

Go ahead.

No, you go ahead.

Yeah. I would just say, there were certainly more vehicles lost in Milton. So, there should be some tailwind in the fourth quarter with replacement vehicles, certainly on the western side of Florida.

And from an insurance perspective, we'll have the insurance claim related to the property damage and the inventory damage that will settle pretty quickly. And as you know, BI claims with the insurance companies just take a while and so I wouldn't expect any BI recovery until mid '25 or later.

Very good. Thanks, guys.

Thank you.

Our next question comes from Bret Jordan with Jefferies. Please proceed with your question.

Hey, good morning, guys.

Good morning.

On that service slide that breaks out the repair order by powertrain, do you think that BEV premium is something that's sustainable or is this sort of working the bugs out of new technology and that will revert lower as these units get a little bit more seasoned?

Bret, this is David, and Dan can jump in. I think logically, you're correct. I think there's going to be a few more years of higher dollars on BEVs. And as you get probably closer to 2030, a lot of the kinks should get worked out as you move forward. There's just a lot of technology in these vehicles and you add wind, weather and cold, it just creates a lot of disruption. So, I think in the near-term, it's good. And when you look at the car park that's out there and the age of the car park, and one of the slides shows that we're averaging over 71,000 miles coming through our service drive. So, we're not just servicing during the warranty period, 71,000 is well above it. So, we're doing a good job at retaining them. We look at the next six to 10 years is pretty strong in parts and service between the mix of all the different products. And we still believe with the BEVs as they continue to come to market, retention numbers are only going to go up. Frequency should come down over time, but we think the dollars and margins will stay higher. Dan, anything you want to add?

No, I have nothing to add.

Okay. And then, a question on Collision. Obviously, that's been soft, I think, across for everybody. Is that something that's secular? Is there a real structural change in collision demand or is this tied to something shorter-term?

We're all puzzled by that one, Bret. Regardless of the market or state, everywhere is seeing a decrease year-over-year. There are more total losses because claims are higher and the technology in cars has increased their value. Consequently, total losses have risen year-over-year. This not only impacts our collision business but also our parts business, as we are not wholesaling as many parts since our competitors are facing similar challenges. I'm interested to see how this situation develops over time; it has been a consistent trend throughout the year. Dan?

Okay. Great. I guess question on parts and service, traffic versus ticket just as a housekeeping of that plus four, I guess how much was car count?

So Bret, this is Dan. When we examine customer pay count specifically, luxury was up 9%, imports were up 1%, and the total was up 3% in terms of customer pay count.

Great. Thank you.

You're welcome.

Thank you. Good morning. I'm wondering if negative equity is a concern for you, particularly regarding the domestic and import brands, either now or projected for 2025?

Good morning, David. This is Dan. Yes, it is. We're definitely seeing our fair share of consumers that are in a negative equity situation. And obviously, it is requiring in a lot of cases more money down as a down payment to offset some of that. So definitely a slight concern as we move forward.

Are you seeing it more with one particular customer brand set like import versus domestic?

We definitely notice this trend more with domestic brands, but I can assure you that no segment is immune. We observe it across the board, including luxury and imports, but it is more pronounced in the domestic sector of the business.

One thing I would add, credit scores have been resilient, they've held up well. Lending has been strong for us. So, we don't see any headwind at this point holding us back from being able to acquire loans for our consumers.

Okay. And on your balance sheet, your leverage ratio is near the high-end of your target range, profits that are normalizing post chip shortage. I mean, do you feel the need to pay down some debt before doing more M&A or can you go either way?

No. I mean this quarter, we saw an opportunity to use some capital for share buybacks. Therefore, we chose to buy those shares, which resulted in a slight increase in leverage. Looking ahead, we believe we can continue to use the cash we generate to manage our net leverage and will seek out opportunities as they arise.

Okay. Thank you.

Thank you.

There are no further questions at this time. I would now like to turn the floor back over to David Hult for closing comments.

David, before you close, do you mind if I jump in? I have the numbers for Ryan on the EV sales. It's between 6% to 7% of our total sales.

Okay. Thank you. So, this concludes today's call. We appreciate your participation today and look forward to discussing the fourth quarter early in '25. Have a great day. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.