Financial Data and Key Metrics Changes - Adjusted net income from continuing operations improved by 12.4% in the second quarter, with EPS increasing by 17.5% on the same basis [5] - Quarterly record revenues reached $5.7 billion, with gross profit at $936 million and adjusted diluted earnings per share from continuing operations at $11.52 [21] - New vehicle units sold increased by 4.66% on an as-reported basis, reflecting strong demand and operational execution [22] Business Line Data and Key Metrics Changes - U.S. new car sales were up 6% on a same-store basis, with parts and service revenues increasing by 11.7% to 12.8% [6][22] - Used vehicle revenues were the third highest on record, with a volume increase of 2.73% to 3.9% on an as-reported basis [22] - Aftersales gross profit increased by 14.3%, with customer pay revenue up 13.6% and warranty revenue up 31.9% [7][24] Market Data and Key Metrics Changes - The U.K. business showed a 96.9% to 109.6% increase in revenues and gross profit year-over-year, with used vehicles, parts and service, and F&I growing by 16% and 12% to 28.7% respectively [27] - Same-store retail used vehicle units sold in the U.K. increased over 8% year-over-year, while gross profit per unit remained relatively flat [27] Company Strategy and Development Direction - The company is focusing on improving productivity and operational efficiency, with plans to invest in technology and process improvements [19][30] - Continued investment in the aftersales business is seen as a significant opportunity, with a goal to increase customer pay and warranty revenues [8][12] - The company is balancing acquisitions and share repurchases, having acquired three dealerships in the quarter [17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution moving forward due to pressures from car prices and rising interest rates affecting consumer demand [13] - The U.K. market faces macroeconomic challenges, but the company is confident in its long-term growth potential [14][16] - Management anticipates that most retailers who can drive scale and productivity will be the winners in the future [18] Other Important Information - The company has deferred certain capital expenditure projects and is reevaluating discretionary spending in light of the competitive environment [13] - The U.K. government announced subsidies for BEV vehicles, which may positively impact sales [14] Q&A Session Summary Question: How did new car GPUs progress through the quarter? - Management indicated that GPUs were strong throughout the quarter without significant spikes due to inventory changes [34][40] Question: Clarification on U.K. cost targets? - The increase in cost targets was primarily due to government-imposed increases and additional headcount reductions [36][37] Question: Sustainability of parts and service growth in the U.K.? - Management believes there is room for further growth in customer pay and plans to increase car count with more technicians [41][42] Question: Key factors for aftersales growth in the next few years? - The focus will be on reaching deeper into the owner base of older vehicles to increase market share [46][48] Question: Impact of BEV mandates on gross profit? - BEV volume is primarily going into corporate fleets, which affects retail margins [60][61] Question: Acquisition environment and opportunities? - Management noted that while the year has been quiet, there are signs of increased activity in the acquisition space [64] Question: How do lease returns affect future traffic? - Management indicated that predicting lease returns is difficult, but they are taking as many off-lease vehicles as possible [72][74] Question: U.K. SG&A costs and integration efforts? - The increase in SG&A costs was attributed to national insurance changes and ongoing integration efforts [82] Question: Confidence in customer pay growth offsetting warranty slowdowns? - Management expressed confidence in customer pay growth, although it may not fully offset warranty declines [85]