Financial Data and Key Metrics Changes - The company achieved record revenues of $9.2 billion in Q4, contributing to a full-year revenue of $37.6 billion, which is a 4% increase from 2024 [5] - Adjusted diluted EPS for Q4 was $6.74, with a full-year adjusted EPS of $33.46, reflecting a 16% increase from 2024 [5] - Adjusted EBITDA for Q4 was $364.1 million, an 8.9% decrease year-over-year, primarily due to lower net income [23] Business Line Data and Key Metrics Changes - New vehicle revenue declined by 6.6% due to an 8.3% unit decline, with new vehicle GPU at $27.66, down $300 year-over-year [8] - Used retail performance showed a 6.1% revenue increase, driven by 4.7% unit growth, with used GPU at $1,575, down $151 year-over-year [8] - After-sales revenue grew by 10.9%, with gross profit up 9.8% and a gross margin of 57.3% [10] Market Data and Key Metrics Changes - In the UK, same-store gross profit increased by 10% despite challenging market conditions, with adjusted pre-tax income up 53% for the full year compared to 2024 [11] - North American penetration for Driveway Finance Corporation (DFC) reached 15% for the quarter, up 650 basis points [22] Company Strategy and Development Direction - The company is focused on maximizing shareholder returns through disciplined capital deployment, including share repurchases and strategic acquisitions [13] - The strategy includes growing after-sales profitability, expanding DFC penetration, and improving operational efficiencies [14] - The company aims for a long-term target of $2 of EPS per $1 billion of revenue, emphasizing the importance of increasing market share and optimizing capital structure [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging environment with margin compression and SG&A de-leverage impacting earnings [18] - The company is optimistic about future growth, expecting compounding earnings growth in 2026 as industry conditions normalize [15] - Management highlighted the importance of improving market share and volume to enhance profitability [19] Other Important Information - The company repurchased 3.8% of its shares in Q4 and 11.4% of its shares in 2025, indicating a commitment to returning capital to shareholders [24] - The partnership with Pinewood AI is expected to enhance operational efficiency and customer experience [12] Q&A Session Summary Question: How much of the after-sales growth is tied to extended service contracts? - Management indicated that retention levels are slightly up year-over-year, with service contract penetration at 37% and lifetime oil at just under 20% [30] Question: Will the focus on returning cash to shareholders shift in the coming years? - Management stated that as long as the stock price remains undervalued, share repurchases will continue to be prioritized [33] Question: What drove the higher SG&A as a percentage of gross profit in Q4? - Management noted that weaker sales in December led to increased SG&A, as marketing budgets were pushed without the expected sales materializing [38] Question: What are the trends in the used vehicle market? - Management observed that the used vehicle market is beginning to strengthen, with a focus on affordability and inventory turnover [87] Question: Are there plans to offer Chinese brands in the U.S.? - Management confirmed ongoing relationships with Chinese manufacturers in the UK but expressed caution about entering the U.S. market due to the lack of established service and parts business [90]