Good morning, ladies and gentlemen, and welcome to Group 1 Automotive's 2021 Third Quarter Financial Results Conference Call. After today's presentation, there will be an opportunity to ask questions. Please also be advised that today's conference call is being recorded. At this time, I'd like to turn the conference call over to Mr. Pete DeLongchamps, Group 1's Senior Vice President of Manufacturer Relations, Financial Services and Public Affairs. Please go ahead, Mr. DeLongchamps.

Good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliations related to the adjusted results we will refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturing production levels due to component shortages, conditions of markets and adverse developments in the global economy as well as the public health crises related to the COVID-19 virus, and resulting impacts on the demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission over the past 12 months. Copies of these filings are available from both the SEC and the company. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me today on the call: Earl Hesterberg, our President and Chief Executive Officer; Daryl Kenningham, our President of U.S. and Brazilian Operations; and Daniel McHenry, our Senior Vice President and Chief Financial Officer. I'll now hand the call over to Earl.

Thank you, Pete, and good morning, everyone. I'm pleased to report that for the quarter, Group 1 generated adjusted net income of $178 million. This equates to adjusted earnings per share of $9.62 per diluted share, an increase of 38% over the prior year, and an increase of 219% over the pre-pandemic third quarter of 2019. Our adjusted results exclude non-core items totaling approximately $5 million of net after-tax losses. This net amount consists primarily of a loss on debt extinguishment and acquisition costs related to the Prime transaction, partially offset by favorable legal settlements recognized during the quarter. These profit results were largely a result of strong vehicle margins that were able to more than offset unit sales declines, as well as continued growth in after-sales and impressive cost control. Consumer demand for vehicles remains extremely strong heading into the fourth quarter. We continue to sell most units almost immediately after OEM delivery. This dynamic should continue throughout the fourth quarter and potentially much further out, assuming no material change in consumer demand. As of September 30, we have 2,700 U.S. new vehicle inventory units in stock, representing an 11-day supply. Our used inventory situation is much stronger at 10,000 units and a 25-day supply. Daryl will speak more about inventory shortly. A very encouraging element of our third quarter results is the very strong continued recovery in our after-sales business. Our U.S. markets saw a 15.5% increase in after-sales revenues versus the prior year. Again, Daryl will provide more detail on our U.S. results in a moment. As with the U.S., consumer demand for vehicles in the UK is extremely strong. However, new vehicle availability is severely constrained. We have an order bank with most of our major UK brands extending into the second quarter of next year. Strong margins were able to more than offset sales declines due to inventory shortages. We are proud to report that we generated an all-time record quarterly profit in the third quarter of 2021. We believe pent-up demand built over the past several years due to both Brexit and the pandemic will help drive strong UK vehicle demand into the foreseeable future. Finally, I want to acknowledge the impressive work all of our regions have continued to do on cost control. Our U.S. adjusted SG&A as a percentage of gross profit was 57.6%. The UK was 64.6%, and Brazil came in at a record 60.9%. While there is certainly a level of transitory impact due to vehicle margins, we continue to witness very high levels of productivity that will remain after vehicle inventories normalize. To provide some color on our U.S. and Brazil second quarter performances, I'll now turn the call over to Daryl Kenningham.

Thank you, Earl. As Earl mentioned, U.S. new vehicle inventory levels finished the quarter at 2,700 units and an 11-day supply. Our September inventory receipts were the lowest of the year at approximately 6,800 units. We expect to receive roughly the same level in October and November, which we believe will be the trough. We do not have much visibility yet into 2022. But based on OEM communications, we expect production to increase over current levels at some point in the first quarter. Our team did a great job increasing vehicle margins throughout the quarter as inventory supply continues to decline. We will continue to adjust our operations as required. Our Same Store used vehicle retail unit sales improved by 15% versus the third quarter of 2020. Our team also did a great job increasing gross profit PRUs, which is a result of increased purchases directly from vehicle owners. We continue to be very aggressive, yet judicious with our used vehicle inventory sourcing strategy, which has allowed us to hold a supply relatively constant while largely avoiding public auctions. As a franchise dealer, we have a distinct advantage over used-only operators due to the numerous channels afforded us a sourcing inventory, including our service drives, lease returns, and OEM closed auctions. The most encouraging profit driver was once again our after-sales performance. Our customer pay continues to ramp up following a very strong first half of the year with 19% same-store dealership gross profit growth compared to the third quarter of 2019. This allowed us to grow same-store dealership after-sales gross profits by 9%, despite continued headwinds in warranty and collision, both of which we believe will reverse in time. We foresee after-sales continuing to ramp up over the near-term. The final major factor driving our outstanding profit performance was continued cost discipline. Our third quarter adjusted SG&A as a percentage of gross profit was 67.6%, down from 59% in the third quarter of 2020, and down from 70.5% in the pre-pandemic third quarter of 2019. A material part of the improvement is due to productivity gains, which we believe will be permanent. I would like to provide another quarterly update of AcceleRide, our digital retailing platform. AcceleRide is proving again to be a difference maker for our customers. In the third quarter, we sold 5,200 vehicles through AcceleRide, a 68% increase over last year. Since we have very little inventory, pre-selling incoming new vehicles is critical to our business and AcceleRide allows customers to finalize transactions on in-transit units and take deposits digitally. In addition to expanding our reach at in-transit inventory, AcceleRide has proven to be an exceptional way to grow our footprint. In the third quarter, 75% of AcceleRide buyers were new to Group 1. Customers clearly value the superior omni-channel experience that AcceleRide provides which gives Group 1 another avenue to grow incrementally. Of the customers who placed orders online last quarter nearly 50% uploaded a driver's license and 25% uploaded proof of insurance. An additional 36% of the orders had a completed credit application as well. We believe that giving customers control of completing any or all of the car buying process online is critical to their overall satisfaction and our ability to continue to generate incremental volumes through the platform. AcceleRide is also giving us great advantages in sourcing used vehicles. During the quarter, we purchased nearly 5,000 used vehicles from customers through AcceleRide either through trades or through individual acquisitions. That's up 30% sequentially from the second quarter. A differentiator for us is our ability to digitally pay customers through Zelle, nearly 1,000 customers out of our 5,000 total took advantage of the digital payment feature in AcceleRide. In addition to remote selling, we have increased the adoption of AcceleRide for customers in our showroom; about half of U.S. vehicles sold in the third quarter utilized AcceleRide in the everyday traditional sales process. In our view, digitizing the in-dealership experience saves everyone time, creates complete transparency, and increases professionalism. In September, we activated integrated delivery fees at 38 dealerships; preliminary results are encouraging. About 13% of customers chose delivery up front, and so far, 5% are confirming in the final steps. The average delivery distance is 164 miles, further demonstrating our ability to extend our reach with AcceleRide. We look forward to launching integrated delivery fees in more dealerships soon. AcceleRide will launch at our newly acquired dealerships in Texas and California very soon. Our AcceleRide footprint will expand significantly in the Northeast with the upcoming Prime dealership acquisitions. We expect to start rolling out AcceleRide in those dealerships in January of 2022. Turning quickly to Brazil, despite a nearly 30% decline in industry units sold versus the third quarter of 2019, our team once again did a fantastic job growing margins across all lines of business and aggressively thinning the cost structure, resulting in the lowest SG&A quarter in the region's history. For the second quarter in a row, our Brazilian teams made an all-time quarterly profit record. We continue to be well positioned to benefit from a sales rebound coming out of the pandemic. I will now turn the call over to our CFO, Daniel McHenry, to provide a balance sheet and liquidity review.

Thank you, Daryl, and good morning, everyone. As of September 30, we had $297 million of cash on hand, and another $335 million invested in our floorplan offset accounts, bringing total cash liquidity to $632 million. There was also $282 million of additional borrowing capacity on our U.S. syndicated acquisition line, bringing total immediate liquidity to $914 million. Subsequent to quarter-end, we issued $200 million of bonds as an add-on to our existing 4% notes to 2028. This debt was raised to help fund our previously announced acquisition of the Prime Automotive Group, which we expect to close in November. We also plan on raising approximately $180 million in mortgage debt to help fund the deal and provide future liquidity flexibility. We generated $234 million of adjusted operating cash flow in the third quarter and $210 million of free cash flow after backing out $24 million of capital expenditure. This brings our September year-to-date free cash flow to $522 million, which has allowed us to fund the majority of our Prime acquisition with access cash on hand. Our rent-adjusted leverage ratio, as defined by our U.S. syndicated credit facility, was reduced to 1.5 times at the end of September. On a net debt basis which considers all U.S. cash on hand, our leverage was 0.9 times at September 30. As previously announced, when considering the pending Prime acquisition, we do not expect our rent-adjusted leverage ratio to exceed 2 times, leaving plenty of flexibility for further capital deployment. Finally, related to interest expense, our quarterly floorplan interest of $4.8 million was a decrease of $3.3 million or 41% from the prior year, due to lower vehicle inventory holdings. Non-floorplan interest expense decreased $1.5 million or 10% from the prior year, primarily due to last year's bond debt refinancing. For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release, as well as the investor presentation posted on our website. I will now turn the call back over to Earl.

Thank you, Daniel. Related to our corporate development efforts, we previously announced the October acquisitions of two dealerships in the Dallas-Fort Worth Metroplex and one dealership in California. As Daniel mentioned, we expect our purchase of the Prime Group in New England to close in November. Once closed, our 2021 Total acquired revenues will equal $2.5 billion. Our balance sheet, cash flow generation, and leverage position will continue to allow for further capital deployment. We will continue to seek ways to maximize value for our shareholders as we head into 2022. This concludes our prepared remarks. I will now turn the call over to the operator to begin the question-and-answer session.

And, ladies and gentlemen, with that we'll begin today's question-and-answer session. Please press star one to ask a question. Our first question comes from Mike Ward from Benchmark. Please go ahead with your question.

Thanks. Good morning, everyone. I wonder if you could provide a bit more color on the U.S. parts and service in particular. Up 15.5% Same Store, if I'm not mistaken, that's about double the rest of the group. Where are you seeing the strength? Is that something that could continue? Where is that coming from?

Mike, this is Daryl Kenningham. We're seeing the strength across the board. It starts with our availability in our shops and our 4-day workweek that we've had in place for several years, our philosophy around customer scheduling that we want our customers to be able to schedule an appointment when it's convenient for them. Nearly 40% of our customers are scheduling appointments online these days. So we believe many more of them are reaching us than ever before. We continue to staff up and after sales, so that's what we see. We see it continuing.

So the 40% online scheduling, that's up from about 30%? Is that where it was, it was kind of running?

Yes.

And now, I'm guessing it's still being weighed down because of the lack of trade-ins and supplies. So it's holding back some of the used vehicle sales, is that correct? So we could see these double-digit type increases on the same store base continuing into 2022 and possibly through the year, is that right?

I can't tell you it'd be double digit, but we feel really good about the after-sales business.

Okay. The second thing, in the UK, you mentioned the order bank. I think, Earl, you said it was like going out into the second quarter of 2022. In order of magnitude, I assume there was a lot of deferment of some of the deliveries of the registrations in September in particular. Is that where it's coming from? Or is it, where are you seeing this?

Absolutely, Mike. Yeah. Most of our brands, when we sell a new car are going into an order bank that are in the second quarter next year. So, yeah, sales now are almost entirely dictated by deliveries of what the factory can produce. Because as you know, UK dealers don't stock new vehicles on site. The vehicle holding centers are basically empty. So it's whatever the flow is from the factory. And so the order bank is great, demand is great, and it's just how quick can they build them.

Yeah, I think on Ford's call yesterday, they talked about having orders from dealers, from direct from customers, for over 100,000 units in the U.S. Is that what you're seeing, particularly with pickup trucks in Texas?

I'll let Daryl answer that, but I believe that's directionally correct.

Yeah, that's what we're seeing, Mike. Exactly.

A good time to be a dealer. Thank you.

Yes, it is.

Our next question comes from John Murphy from Bank of America. Please go ahead with your question.

Good morning, guys. I just had a sort of similar question to Mike on what's kind of really controllable here on the used side. I mean, given that you're looking at tight inventory on the new vehicle side, probably well into next year, maybe even through the year, you're going to have access to these used trade-ins that will flow to you more directly than they will to other participants in the market. How do you think about the used vehicle business going forward? I think there is kind of this view that GPUs are way too high and they're going to come down, but they certainly might not into 2022 or through 2022. And just how do you think about balancing that volume versus the gross to maximize total profit there?

Well, we feel like in our own footprint, there is still quite a bit of volume opportunity for us to do. We also put a great deal of emphasis, even though there are fewer trade-ins, being sourced from new car sales these days, which is obvious. The big advantage we have, John, is our after-sales business is growing like crazy, which means more opportunities to buy cars from customers coming to our service drives. When you look at last quarter, 14% of our sourcing was from individuals, and some of that included service drives. So that's double from a year ago, and we continue to see opportunity there. So we don't see the lid on used cars that we see on new cars, because there are other avenues to source, and we feel like we're doing a pretty good job with that.

And, Daryl, when you think about the gross though, I mean, I would assume that you're balancing this is if you dropped the gross 5% and get a 10% improvement in volume, you might do it all-day long. Are you thinking about it that way? Or do you want the gross to travel around this $21,000 to $2,200 range, I think it was in the quarter? I mean, how do you think about that volume versus gross trade-off?

Yeah, John, this is Earl. The way we look at it is the market dictates the grosses. We have always moved our used vehicle inventory every month, whether we have 28 days or 32 days, whatever it is. The key to our volume is sourcing, which is what Daryl discussed. The market dictates the grosses. And so, we're still moving them like we always move them; obviously, a little bit quicker. But we never had much more than 32 or 33 days. And so, if you want to sell more vehicles now, you have to acquire them properly. And for every additional one you acquire, you'll get an additional retail sale.

Yeah, that's incredibly helpful. And then just lastly on the F&I, Pete always kind of promises that you're kind of reaching these asymptotic limits and there is not more opportunity. But there seems to be sort of this continuous upside in F&I. So, I mean, how much room do you think there is in F&I? What are penetration rates currently? And could there be risk as rates back up, and volumes ultimately come in, and you might start selling at lower price points for this to maybe fade. And I don't think it would be next year, but maybe fade in 2023 and beyond? I mean, how do you think about that level, the opportunity and the risk going forward?

John, I think the biggest risk we have clearly is interest rates. But when you take a look at our current business, we couldn't be more pleased with the penetration rates. Let's take a look at vehicle service contracts, maintenance; those penetration rates have all increased. We're very pleased with the spread that we have on F&I from a compliance standpoint. So, we continue to, I think, do a terrific job with our teams. There may be a little bit more upside, but we're very comfortable where we are today.

Yeah, John, this is Earl. The other point I'd make is we have learned over the last year or two that we're very comfortable now with online retailing; that's not materially changed our F&I either in terms of penetrations and such, so the online retailing is basically holds the same business model for us that the traditional model has.

Okay. I'm sorry, I'm sneaking one last one, Earl, as you mentioned that online retail, I mean, what you're hearing from the automakers is an increased focus on creating their own sort of digital overlays interaction with consumer within funnels into your dealerships, right? So it doesn't necessarily disrupt your economics or disintermediate you at all, but kind of dovetail a consumer through a branded website into your dealerships. How do you think AcceleRide will work in tandem? Or maybe compete with that, and is that create complexity? Or does that actually make things easier for you? I mean, how is that going to develop over time with your online efforts?

John, Daryl again. We've had discussions with every OEM on this issue, and we are determined not to compete with the OEMs on a digital solution. We work with them on their solutions almost to OEM; they realize that AcceleRide is an outstanding solution for customers of that brand, and because it incorporates all steps in the buying process and is generally much further ahead than the OEMs are in their own development of these tools. What I see are the OEMs letting the dealers take more of this as long as there are certain steps that meet their compliance rules. I think you'll see that evolve over the next year or two with different OEMs as well. But that's what we see. It's a very close partnership for us.

Great. All right. Thank you very much, guys.

Our next question comes from Rick Nelson from Stephens. Please go ahead with your question.

Thanks. Good morning. Congrats on another nice quarter. Earl, to ask you about the acquisition environment, there's been a slew of big deals, Prime being one of those. I'm curious, how much more is your appetite, and maybe if you could speak to multiples that you're seeing.

Yeah, sure, Rick. Yeah, there are still many deals out there; it seems that higher the prices go, the more motivates other sellers to try to get the same price. So, I think, there'll continue to be a lot of activity. In our case, we're focused on closing this one, and we'll continue to look opportunistically, because we have the financial wherewithal to continue to take action. But there are only so many of these big deals, I think, that will work out from a valuation point of view and OEM point of view. So, I think, it will continue for a while. I don't know if the potential tax changes next year will slow it down. But at the moment, I still see a lot of people trying to sell their businesses and take advantage of some of the more recent pricing. We can only do them when they're accretive, and valuation works for us. And we're very excited about Prime. When the dust settles in and we close it, we can probably provide more clarity on what we think it will do for us.

Great, thanks. I'm curious about the pro forma leverage now for Prime and the deals that have come in and how that looks relative to your goals?

So in terms of the pro forma, Rick, as we've said, we don't expect our leverage to increase above 2 times. So we see the Prime acquisition as being accretive from day 1.

Great. And just a follow-up on AcceleRide. You mentioned the F&I attachment is really good overall profitability; how that compares to an in-store sale? And how exactly do you define AcceleRide transactions – is it somebody that places an order online or somebody that enters AcceleRide and buys a car down the road, not necessarily online?

Rick, this is Daryl. We define an AcceleRide sale as somebody who starts an AcceleRide and purchases a car. There are many customers that interact with elements in AcceleRide that we don't count as a quote AcceleRide sale. Attachment rates on F&I, I think we covered fairly comfortable as well as frontend PRUs are comparable between AcceleRide and terrestrial sales.

And do AcceleRide customers pay more credit maybe or well yield buyers; are they taking delivery or in-store pickup?

So, Rick, this is Pete. There's really no differentiation. And one of the reasons and we've talked about it before, is we're using AcceleRide as a tool within the dealership. So there, as we mentioned earlier, credit applications are a big piece of the AcceleRide model. Since it's a modular type application, customers going in and doing their own credit application, so it's really helping dealership efficiency. When you look at who's using AcceleRide, there's not a big difference between credit tiers. The way we have it set up now is that regardless of the credit tier, every customer has an opportunity to get financing, whether they're a high FICO score or a low FICO score. We think that's one of the things that really differentiates our application.

Great. That's helpful, Pete. Thanks, guys, for the color, and good luck.

Thank you, Rick.

And our next question comes from David Whiston from Morningstar. Please go ahead with your question.

Thanks. Good morning. I guess, first, are you guys at all concerned about inflation continuing to be a problem in 2022, the point that consumers may not either want to buy a vehicle or stop preferring the high-end trends, they're in such high demand now?

This is Earl, David. I don't think there's any doubt that inflation is a business factor. We've been chatting with the banks about that. I don't think we can call it transitory or anything like that. But there's so much money to be lent that no one thinks it will be a massive interest rate hit in the near-term. But the costs are going to go up on everything, but the affordability of vehicles is much more dictated by retail financing and leasing. With high used car values and low interest rates, I don't see this inflation reining in vehicle sales in the foreseeable future. However, I do believe that inflation is not a joke; we are certainly seeing it, and prices of new cars could go up, which again will support used car prices.

But conversely, though, if chip supply improves, higher supply should help ease the increase in used vehicle pricing and lower residual values a little relative to 2021, right?

Well, at some point when the supply normalizes, clearly that will occur. We continue to be surprised by the duration of the supply shortage. I'm told by the top executives of our suppliers that they don't see it getting better until at least the third quarter of next year.

Yeah, I've heard that too. In the UK, I know consumers are battling petrol shortages and whatnot; does that cause people to say I'm not going to bother buying a car right now or buying electric instead?

Well, there is a more rapid shift to electric in the UK, that's a fact, David. But it seems to be driven more by taxation, particularly company car taxation. That is starting to push people from diesel into hybrid or full electric. This is a fact. So EV adoption is probably 3 to 4 times higher in the UK at the moment, that still doesn't put it much into double digits of the market. The petrol problem in the UK was primarily delivery; they don't have enough what they call lorry drivers, we call truck drivers. But, yeah, I think we're going to see a quicker EV shift. But there's absolutely no difference in the customer demand dynamic for automobiles in the UK compared to the U.S. New and used vehicle demand is very robust. Bear in mind that there was a Brexit uncertainty issue prior to the COVID retail demand depression, so there's a lot of pent-up vehicle demand in the UK.

Okay. And finally in the U.S., are you seeing any change relative to a few months ago where people – maybe a few months ago, they were willing to go ahead and take a used vehicle and they want a new or it's now there is like, 'Forget it, I'm going to wait until things improve'? Or you think the opposite, where people feel more desperate?

David, this is Daryl. Luxury customers generally will wait for a car or you see a little bit of switching in some of the volume makes, but that's generally what we see. I can't tell you it's a huge trend; generally, somebody wants a new car, they want a new car. We did see our CPO volumes bump up a little bit in the quarter, and that's probably some of that happening.

And our next question comes from Rajat Gupta from JPMorgan. Please go ahead with your question.

Great. Thanks for taking the questions. Congrats on a pretty solid quarter in very good execution here in the U.S., particularly. I want to start off with the balance sheet question; you talked about 2 times leverage, we've adjusted. How much higher can you go from here? Will you be willing to add on more leverage here in the near-term, maybe for more buyback or maybe more M&A? Just curious on the go-forward capital allocation after closing the Prime deal? And I have a follow-up. Thanks.

Yeah, sure. I think what we've always said is that we are happy to go up to 3, 3.5 times leverage for the right deal, or for the right acquisition to continue to grow the company. As and when we see such an opportunity, of course, we would be happy to add on debt to our balance sheet, and, of course, get the supplementary earnings that we would expect from such an acquisition. I'll turn over to Earl for the capital allocation part of the question.

Yeah, we're certainly continually interested in further external growth through M&A. But we strongly believe our shares are undervalued. We weren't in the repo market—the share repurchase market—in the third quarter because we had some material nonpublic information. But there is a very good possibility that we will be opportunistically in the share repurchase market, absent any near-term major acquisition opportunities. We have plenty of financial flexibility to execute both.

Understood, that's helpful color. I just wanted to follow-up on the productivity comments earlier. We continue to be surprised by the strong productivity, not just for Group 1 but for the overall sector in general. I'm curious to ask you, has your long-term or normalized assumption changed, given how strong productivity has been so far, post-COVID? You've given us like some targets earlier in the U.S., particularly, 200 to 300 basis points lower than pre-COVID. Just curious if that's changed at all. And also, in the context of just how accelerated adoption has gone up in-store, are using that more like, has that also probably increased the productivity and made you hit your targets sooner or even better, once you're back to more normal GPUs?

Well, absolutely, our viewpoints changed. Our operating assumption has changed. We've increased the productivity of our salespeople by 30%, pre-COVID versus today. There is absolutely no reason to go backwards on that; selling 13 or more units a month instead of 10. The same with our technicians; they are at least 25% more efficient. Yes, there are a variety of things that contribute to that. Daryl will probably want to comment, and certainly online business is part of that. It certainly supports being more productive. We never intend to go back to those lower efficiency levels in the future.

Earl, you covered it. AcceleRide is a great tool to drive efficiency. Some of the numbers we talked about, we see that, with half of our customers using AcceleRide for credit applications and uploading insurance and vehicle appraisals and purchases, that all enables a transaction digitally. We expect that to be ingrained in the future and add to productivity, and in our shops, more online scheduling, more support from our parts departments and continuing to press the 4-day workweek all add to productivity improvements.

Yeah, the targets you had given before, the 200 to 300 bps improvement, is that still unchanged? Or are you willing to change that number at this point, or we want to wait a little longer to see if GPUs progress?

I think that we would rather get that where GPUs normalized or we say it on a more standard flat basis. But the expectation is that for the U.S. it will be at least 300 basis points lower and for the UK, probably slightly more on an ongoing basis versus 2019 levels.

Understood. Super helpful. Thanks for all the color and good luck.

Thanks, Rajat.

And, ladies and gentlemen, with that, we'll conclude today's question-and-answer session. I'd like to turn the floor back over to Earl Hesterberg for any closing remarks.

Well, thanks to everyone for joining us today. We're looking forward to updating you on our fourth quarter earnings call. Thank you.

And, ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.