Group 1 Automotive, Inc.

Good morning, ladies and gentlemen, and welcome to Group 1 Automotive's third quarter 2024 financial results conference call. Please be advised that this call is being recorded. I would now like to turn the floor over to Mr. Pete DeLongshaw, Group 1 Senior Vice President, Manufacturing Relations and Financial Services. Please go ahead, Mr. DeLongshaw.

Thank you, Jamie. Good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results we will refer to on this call for comparison purposes have been posted to the Group 1 website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's action results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufactured production levels due to component shortages, conditions of markets, successful integration of acquisitions, and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call, Darrell Kenningham, our President and Chief Executive Officer, and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd now like to hand the call over to Darrell. Thank you, Pete.

Good morning, everyone. Thanks to our great teams in the US and the UK, we were pleased with our performance in the quarter. I'll start with our UK business. During the quarter, we closed on the previously announced Inchcape retail transaction, adding $2.7 billion in revenue from 54 dealerships in key hubs such as the Midlands, the Northwest of England, and Wales. In a separate transaction, we also acquired four additional Mercedes-Benz dealerships north of London. We recently closed on a large BMW store in Lincoln, England. We are encouraged by the pace of integration of these new dealerships in our portfolio. The brand and geographic mix are outstanding and give us significant scale and reach that will improve our SG&A leverage. Because of our size now in the UK, we've been able to significantly strengthen our relationships with great brands like BMW, Volkswagen, Audi, Porsche, Mercedes-Benz, Toyota, Land Rover, and Ford. A close relationship with our OEM partners based on performance and commitment is critical to our growth focus. On October 1st, Mark Rabin joined us as CEO of Group One UK. Mark brings with him deep industry and public company knowledge in the UK market. He's both operationally and financially sound. Mark has already appointed his leadership team comprised of both legacy Group 1 leaders and Inchcape retail leaders. We now have the strongest leadership team we've ever had in our UK business. We are also working on bringing the rest of the organizations together and hope to have that substantially finished by the end of 2024. It's a big task to integrate this many stores and two corporate organizations that quickly. But we believe it's important and we believe integration is a strength at Group One. In his upcoming comments, Daniel McHenry will give several specific examples of the integration activities and their expected benefits. Based on what we've seen after 80 days of ownership, we have more confidence today that the Edgecape retail acquisition will be a significant contributor to Group 1 and our shareholders. Turning to the U.S., there were slight continuing impacts from the CDK outage on our third quarter operations. There were some business impact on our largest market, Houston, from Hurricane Beryl in July, as some stores were without power for up to a week. We felt some moderate impact from Helene in late September. We don't believe there was any impact from Milton since it didn't hit until October the 5th. In the third quarter, we saw record new and used vehicle units delivered. Our F&I business performed well, and our new vehicle gross profits held up well. And our U.S. adjusted SG&A leverage was excellent at 64.3%. Our U.S. same-store service business grew a little over 8%, which we consider quite good, coming off of double-digit increases each of the last three year-over-year quarters in customer pay. Our U.K. same-store service business grew over 13% in local currency in the third quarter. We continue to view after-sales as a way to differentiate Group 1. We believe it is the most under-invested area of our business, and for a number of reasons, we believe there is tremendous opportunity for growth well into the future. We continue to be successful adding and retaining technicians, adding eight more technicians in the US this year, and we are putting even more focus into this. As an example of our commitment, we know that employee engagement scores are higher and turnover is lower in workshops with air conditioning. We are well underway with a capital program to install air conditioning in nearly 90% of our shops in the United States, up from just over 55% when we began the project. We expect to be substantially finished with this project by the end of 2025. While we are focused on retaining and hiring technicians, we believe we have a long way to go before we reach the limits of our facility capacity. We still have over 400 empty stalls in our U.S. store. However, to make what we feel is an important point, we do not view stall count as a limiter in growing our technician staffing. Estimate to this is that one third of our U.S. stores have more technicians on staff than we have stalls. To be more specific, Those nearly 50 stores have 19% more technicians than stalls. So we believe we can continue to add technicians far into the future without physical facility limitations. And one last word on our after sales business. Over one third of our customers who come into our stores for warranty work also have some CP work done. So as long as we continue to see some of these large recalls and warranty campaigns from major brands, we expect that incremental warranty work is a bit of a tailwind on CP. While we regularly evaluate other business adjacencies, we continue to believe in this environment, the best use of our shareholders' capital is investing in new vehicle franchise dealerships. We believe that entering other business adjacencies limits our returns, but it also dilutes our focus. And fundamentally, we don't believe we should be in any business that potentially competes with our OEM partners. As a result of this focus, our performance on our acquisition eligibility criteria is quite strong across nearly all of our OEMs. That allows us to engage in acquisition discussions on nearly any brand with the confidence that we will be approved. The brands we've grown with just this year, like Lexus, Honda, Mercedes-Benz, BMW, Toyota, Porsche, Land Rover, and Audi are all examples of our ability to acquire outstanding brands in desirable markets because we perform well on the OEM eligibility metrics. We view those relationships, rooted in performance, as critical to our success. Another important element of our capital allocation strategy is share buybacks. We continue to balance acquisitions and dispositions with repurchasing our shares. This year, we've bought back another 3.4% of the company for $138 million. We've repurchased 24% of our stock in the past 33 months. In the months ahead, should we believe repurchasing our stock is a better option to return capital to shareholders, we will certainly pursue that aggressively. Now I'll turn the call over to our CFO, Daniel McHenry, for an operating and financial overview. Daniel?