Financial Data and Key Metrics Changes - The company reported record first quarter revenue of $7.6 billion, a 2% increase year-over-year [5][6] - Earnings before taxes reached $337 million, with net income at $244 million, resulting in earnings per share of $3.66, a 14% increase [6][8] - Adjusted earnings before taxes increased 5% to $310 million, and adjusted net income also rose 5% to $226 million, with adjusted earnings per share increasing 6% to $3.39 [6][8] - The company achieved a stable gross margin for the seventh consecutive quarter, with a 70 basis point improvement in adjusted selling, general and administrative expenses as a percentage of gross profit compared to the previous year [5][6] Business Line Data and Key Metrics Changes - Same store retail automotive revenue increased by 2%, with related gross profit up 3% [5][6] - Same store retail automotive service and parts revenue rose 4%, with gross profit increasing by 6% [6][10] - New automotive units delivered increased by 68% on a same store basis, while used automotive units declined by 16% on a same store basis due to strategic realignment [8][9] - Average transaction prices for new vehicles increased by 4% to $59,202, while used vehicle transaction prices rose by 12% to $37,624 [9][10] Market Data and Key Metrics Changes - Approximately 59% of revenue was generated in North America, 30% in the UK, and 9% in other international markets [7] - In the UK, new vehicle market registrations increased by 6%, with the company outperforming the market with a 9% increase in same store new units delivered [21][22] - The US market saw an 8% increase in new units sold, with leasing on new vehicles rising to 33% [13][15] Company Strategy and Development Direction - The company emphasizes diversification as a key differentiator, with a premium brand mix and investments in various markets [7][8] - The focus on inventory management and cost control is critical for sustaining profitability and efficiency [38][60] - The company is committed to maintaining a strong balance sheet and cash flow to support growth through acquisitions and shareholder returns [26][28] Management's Comments on Operating Environment and Future Outlook - Management noted that the automotive and commercial truck markets remain fluid, with ongoing tariff negotiations impacting pricing strategies [6][7] - The company is optimistic about its diversified model's ability to adapt to changing market conditions [32] - Management highlighted the importance of technician recruitment and training to support service and parts operations [41][89] Other Important Information - The company generated $283 million in cash flow from operations, with EBITDA at $400 million [27] - Capital expenditures were down $26 million year-over-year, with $82 million paid in dividends during the quarter [27][28] - The company repurchased 255,000 shares for $40 million during the quarter, with a total of 750,000 shares repurchased year-to-date [27][28] Q&A Session Summary Question: Update on the UK market and Sytner Select - Management reported a 9% increase in same store new units delivered in the UK, with improved inventory management contributing to better gross profit [36][38] Question: Impact of warranty work on customer pay - Warranty work has increased significantly, impacting customer pay growth, but management noted improvements in gross profit per technician and service absorption [41][45] Question: Price elasticity of demand amid tariff discussions - Management indicated that while price increases are expected, the premium luxury segment may absorb these changes better due to higher residual values [47][49] Question: Sustainability of SG&A costs - Management expressed confidence in maintaining flat SG&A costs as a percentage of gross profit, attributing this to effective cost control measures [59][60] Question: Opportunities in the used vehicle market - Management emphasized a focus on younger used vehicles (0-4 years old) to maintain profitability and avoid brand damage from older inventory [82][84] Question: Capacity for parts and service growth - Management confirmed that there is capacity to grow service operations, with plans to continue increasing technician headcount [88][89] Question: Tariff impact on parts and service inflation - Management acknowledged potential parts inflation due to tariffs but noted that labor costs dominate repair orders, which may mitigate the impact [93][94] Question: Outlook for new GPU trends - Management indicated that new GPU trends are stabilizing, with expectations for continued improvement in gross profit margins [99][100]

Financial Data and Key Metrics Changes - The company reported record first quarter revenue of $7.6 billion, a 2% increase year-over-year [6][7] - Earnings before taxes were $337 million, with net income of $244 million, resulting in earnings per share of $3.66, a 14% increase [7] - Adjusted earnings before taxes increased 5% to $310 million, and adjusted net income also rose 5% to $226 million, with adjusted earnings per share up 6% to $3.39 [7][29] Business Line Data and Key Metrics Changes - Same store retail automotive revenue increased by 2%, with related gross profit up 3% [6][7] - Same store retail automotive service and parts revenue rose 4%, with gross profit increasing by 6% [7] - New automotive units delivered increased by 68% on a same store basis, while used automotive units declined by 16.1% [9][10] Market Data and Key Metrics Changes - Approximately 59% of revenue was generated in North America, 30% in the UK, and 9% in other international markets [8] - In the UK, new vehicle market registrations increased by 6%, with same store new units delivered up by 9% [22][23] - In Australia, the company gained 150 basis points of market share in the on-highway market [26] Company Strategy and Development Direction - The company emphasizes diversification as a key differentiator, with a premium brand mix and investments in various markets [8] - The focus on inventory management and cost control is expected to sustain profitability [40][41] - The company is committed to maintaining a strong balance sheet and capital allocation strategy, including share repurchases and dividends [28][29] Management's Comments on Operating Environment and Future Outlook - The management noted that the automotive and commercial truck markets remain fluid, with ongoing tariff negotiations impacting pricing strategies [7][8] - The company is optimistic about its diversified model's ability to adapt to changing market conditions [34] - Management highlighted the importance of technician recruitment and training to support service operations [44][90] Other Important Information - The company generated $283 million in cash flow from operations during Q1, with EBITDA of $400 million [29] - The company repurchased 255,000 shares for $40 million during the quarter, with plans for continued opportunistic buybacks [29][30] - The dividend was increased by 54% since the end of 2023, with a current yield of approximately 3.1% [30][31] Q&A Session Summary Question: Update on the UK market and Sytner Select - Management reported a 9% increase in same store new units delivered in the UK, with improved inventory management contributing to better gross profit [39][40] Question: Impact of warranty work on customer pay in parts and service - Management acknowledged that warranty work has increased, impacting customer pay growth, but noted improvements in gross profit per technician [42][44] Question: Price elasticity of demand amid tariff discussions - Management indicated that while there may be some impact on pricing, the premium luxury segment remains resilient, with leasing options helping mitigate costs [49][50] Question: Sustainability of SG&A costs - Management expressed confidence in maintaining flat SG&A costs as a percentage of gross profit, attributing this to effective cost control measures [63][66] Question: Opportunities in the used vehicle market - Management emphasized a focus on younger used vehicles (zero to four years old) to maintain profitability and avoid brand damage [84][88] Question: Parts inflation and customer willingness to pay - Management noted that parts inflation could be influenced by tariffs, but customer willingness to pay remains strong [93][94]