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 the quarter was $6.74, with a full-year adjusted EPS of $33.46, reflecting a 16% increase from 2024 [5][7] - 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][10] - 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 U.K., 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 selective M&A [13][24] - Strategic acquisitions remain a core pillar, with a target of $2-$4 billion in acquired revenue annually [16] - The company aims to improve operational efficiency and customer experiences through technology investments, including AI-powered solutions [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment is challenging, with year-over-year earnings pressure from margin compression and SG&A de-leverage [18] - The company is optimistic about future growth, expecting compounding earnings growth in 2026 as industry conditions normalize [15][25] - Management emphasized the importance of growing market share and volume to drive profitability [19] Other Important Information - The company repurchased 3.8% of its shares in Q4 and 11.4% of its shares in 2025 at an average price of $314 [23][24] - DFC reported a financing operations income of $23 million in Q4, bringing full-year income to $75 million, an increase of $67 million from the prior year [21] Q&A Session Summary Question: What is the growth tied to extended service contracts in after-sales? - Management indicated that retention levels are slightly up year-over-year, with service contract penetration at 37% [28][30] Question: Will the cash return strategy change in the coming years? - Management stated that if stock prices increase relative to acquisitions, it may shift, but currently, share repurchases are prioritized due to attractive valuations [31] Question: What drove the higher SG&A as a percentage of GP in Q4? - Management explained that weaker sales in December led to increased SG&A, as marketing budgets were pushed without the expected sales materializing [36][38] Question: What are the trends in the used vehicle market? - Management noted that trends in the used vehicle market are similar to Q4, with expectations for improvement as the market strengthens [84][86] Question: Are there plans to offer Chinese brands in the U.S.? - Management mentioned ongoing relationships with Chinese manufacturers in the U.K. but expressed caution about entering the U.S. market due to the lack of existing units in operation [89][90]