AutoNation, Inc.

Good morning. My name is Denise and I will be your conference operator today. At this time, I'd like to welcome everyone to the AutoNation first quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. I would now like to call over to Rob Cortero, Vice President of Investor Relations. You may begin your conference.

Thank you. Good morning and welcome to AutoNation's first quarter 2021 conference call and webcast. Please ensure that your lines are muted until the operator announces your turn to ask a question. Leading our call today will be Mike Jackson, our Chief Executive Officer, and Joe Lauer, our Chief Financial Officer. Following their remarks, we will open up the call for questions. I will be available by phone following the call to address any additional questions that you may have. Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call, including any statements regarding our anticipated financial results and objectives, constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks that may cause our actual results or performance to differ materially from such forward-looking statements. Additional discussions of factors that could cause our actual results to differ materially are contained in our press release issued earlier today and in our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. And now I'll turn the call over to Audit Nation's Chief Executive Officer, Mike Jackson.

Good morning, and thank you for joining us. Today, we reported all-time record quarter results with adjusted EPS from continuing operations of $2.79, an increase of 207% compared to last year. These outstanding results were driven by strong performance in new, used, and customer financial services and disciplined expense management. Demand continues to exceed supply for new vehicles, and we expect this to continue through 2021, in part due to the production disruption. More importantly, low interest rates and consumer preference for vehicle ownership versus ride sharing and public transportation are supporting demand. We expect our shipments from the manufacturers to double in the second quarter compared to the prior year. AutoNation's same-store new vehicle units were up 22% year-over-year and up 12% compared to 2019. We remain focused on our pre-owned vehicle procurement strategy. Nearly 90% of our pre-owned vehicles retailed in the first quarter were self-sourced, meaning we acquired through trade-ins, lease returns, will-buy-your-car or service loaners, and avoided auctions. Acquiring vehicles at the right price, speed to the front line, a fair one-price environment, and leading digital capabilities are a winning formula for our customers, which shows in our results. AutoNation's same-store pre-owned units were up 28% year-over-year and 20% compared to 2019. We continue to leverage our digital capabilities to drive cost reductions and increase efficiency. Tools like Customer 360 which has over 10 million active customer records, enable us to provide a truly comprehensive and personal experience for our customers, which leads to higher close rates and increased vehicle sales. These efforts allowed us to deliver adjusted SG&A as a percent of gross profit of 62.7% in the first quarter of 2021, which represents a 1,120 basis point improvement compared to the first quarter of 2020. Our target is to operate at or below 65% SG&A as a percentage gross profit for 2021. We are committed to our business growth strategy through investment in our existing franchise business, expansion of AutoNation USA, and future acquisitions. We are on track to open five new AutoNation USA stores in 2021 and 12 additional new stores in 2022. Our target is to have over 130 AutoNation U.S. states stores in operation from coast to coast by the end of 2026. Today, we announced that we signed an agreement to acquire 11 stores and one collision center for Peacock Automotive Group in Hilton Head and Columbia, South Carolina, and Savannah, Georgia, representing approximately $380 million in annual revenue. The brands acquired are Porsche, Jag, Land Rover, Audi, Subaru, Chrysler, Dodge, Jeep, Ram, Volkswagen, and Hyundai. This acquisition will increase AutoNation's footprint from coast to coast to over 325 locations and is set to close in the summer. We have set the target to sell 1 million combined new and pre-owned vehicles annually. AutoNation remains committed to delivering value to our shareholders which includes opportunistic share repurchase. During the quarter, we bought back 3.8 million shares, or 5% of our shares outstanding. I will now turn the call over to Joe Lauer, our Chief Financial Officer.