Used GPUs came in near decade lows while F&I GPUs were essentially unchanged. With our unprecedented acquisition growth and the expansion into adjacencies with Driveway, GreenCars, Driveway Finance Corp, Pendragon Vehicle Management and a strategic partnership with Pinewood Technologies, our key strategic design elements are all now in place. This positions us perfectly for 2024 and beyond to focus our attentions on what we do best, execution. Our team remains acutely focused on delivering revenue growth and profitability across all business opportunities. The LAD strategy is built on our vast store network made up of the industry's most talented people, highest demand inventory and a dense expansive physical network. This foundation is driven by our culture that challenges our teams to operate with autonomy and respond nimbly to local market dynamics to achieve industry-leading performance.

Expanding our store network and leveraging our many strategic adjacencies increases the touch points throughout the customer's life cycle while also equipping our stores with the tools necessary to improve productivity, loyalty and ultimate profitability. The LAD ecosystem is designed to expand our total addressable market and market share through omnichannel solutions and adjacencies that are there for customers wherever, whenever and however they desire. This will drive us from approximately 1.9% market share today towards our previously stated target of 5% and more importantly, a ratio of EPS to $1 billion of revenue of 2:1. Moving on to our financing operations. Driveway Finance Corporation, or DFC, posted another strong quarter with a smaller-than-expected loss of $2.1 million while receivables grew to $3.2 billion.

The DFC team has demonstrated success navigating through the fluid interest rate environment while maturing its capital structure and liquidity position. We are excited to see this adjacency continue to mature as it looks to achieve breakeven later this year while improving liquidity as we manage the pace and quality of originations. Both Chris and Chuck will be sharing further details on operational results of both vehicle and financing later in the call. At the heart of our strategy is expanding customer solutions that are simple, convenient and transparent. Our network is being designed to be within 100 miles of consumers to provide an easy and convenient delivery solutions for our customers. Over time, the leveraging of this network with our omnichannel solutions will generate more attractive and diverse impressions, more memorable experiences, better returns on capital and a unique ecosystem that provides differentiated and deep value for our customers.

We exercised patience and discipline during the fourth quarter, bringing us to $3.8 billion in annualized revenues acquired in 2023. 2024 has also started off strong with our successful completion of the Pendragon transaction at the beginning of this month. This transaction forms a strategic partnership with Pinewood Technologies, adds a highly profitable fleet management business, both new adjacencies, and the U.K. motors business with 160 stores across the United Kingdom and over $4 billion in total revenue. This is an exciting new chapter of diversification and growth as we round out our presence in the United Kingdom. I'd like to personally welcome all our new Pendragon associates and Pinewood Partners to the Lithia family. Acquisitions are a core competency of LAD, and we remain disciplined and opportunistic as we look for accretive opportunities that can improve our business.

As a reminder, we target a minimum after-tax return of 15% or greater and acquire for 15% to 30% of revenue or 3x to 7x normalized EBITDA. Life-to-date, our acquisitions have yielded over a 95% success rate and after-tax returns of over 25%. As GPUs normalize and liquidity tightens, we expect valuations to become more realistic as well. Our robust acquisition strategy has opened up new markets in mobility verticals, creating considerably more opportunities for us in the future. However, for the foreseeable future, we are fine-tuning our targets to focus 90% of our M&A dollars to automotive in the United States. In addition, now that we have realized the skills necessary to find, fund and operate new adjacencies, we will evaluate share repurchases with parity to acquisitions.

Past practices prioritized acquisitions as more beneficial strategically than buybacks, but at our current size and scale, we are now returning to a balanced deployment of free cash flows to drive the strongest possible returns. We continue to monitor valuations of both, being patient for strong assets priced within our acquisition hurdle rates. We expect pricing to take some time to normalize and now estimate annual acquired revenues, excluding the Pendragon acquisition, in the range of $2 billion to $4 billion a year. Our near-term target of $50 billion in revenue remains within our sights, and our team is confident in our ability to achieve this while doing so in the most prudent fashion possible. Our team is experienced in executing and integrating acquisitions, and we remain committed to achieving strong returns as we build out our network.

Moving on to the overall execution of our long-term strategy. Since the launch of our plan, we added important foundational adjacencies and have now acquired over $22 billion in revenue. In addition, the strategic partnership with Pinewood Technologies allows us to leverage technology to stitch together our strategic adjacencies, modernize the customer experience and someday realize considerable cost savings in our technology stack. We are excited to begin the journey with the implementation of the Pinewood Dealer Management System, or DMS, in our U.K. operations this year. Beyond the U.K. and next year, we are excited to be part of the North American partnership with Pinewood Technologies, continuing to grow our own Driveway customer experiences and creating simple, transparent and aligned customer and associate experiences.

Shifting to our omnichannel platform. Our MUVs across our digital channels were up 16%, reaching 13 million per month. Digital transactions, including Driveway, grew to nearly 38,000 in the fourth quarter, up 27% compared to last year. GreenCars, the leading sustainability vehicle education channel, continues to grow as a lead generation channel and contributed over 1 million MUVs, up 102% over last year. Sustainable vehicle sales now account for 16% of our new vehicles in Q4, up from 11% in the same period last year. With our customers at the center of our design, join me in welcoming Adam Chamberlain to the call and congratulating him on his expanding role as our Chief Customer Officer. His decades of experience and proven track record driving results will lead our continued transformation of the customer experience, combining our foundational elements to create deeper customer loyalty and increasing market share and profitability.

Now that all the foundation elements of our plan are in position, attentions turn to improving margins and lowering our SG&A through a combination of growth, efficiency, diversification and scale. These elements are now well underway. And when combined with our newest adjacencies of fleet management and a strategic technology partnership, we are well positioned for both further growth and realizing the profit potential of a more holistic life cycle relationship with our customers. Weaving these elements together and assuming a normalized SAAR and GPU environment, we now can clearly see a pathway to $1 billion in revenue, ultimately generating $2 in EPS. Key factors underlying our future steady state and now totally within our control are as follows: first, continuing to improve our network by realizing the considerable revenue and profit potential within our existing stores by increasing our share of wallet through greater customer life cycle interactions, leveraging our cost structures, personnel productivity gains and growing each store's new, used, and aftersales market share.

The result is to achieve an SG&A as a percentage of gross profit in store operations that's below 55% in a normalized GPU environment. Second, continue focusing on acquiring larger automotive stores in the higher profitability regions of the South Central, Southeast and Midwestern United States. Combined with further growth in our digital channels, we expect to reach a blended U.S. market share of 5%. Third, financing of up to 20% of units with DFC and maturing beyond the headwinds associated with CECL reserves. As a reminder, our first adjacency DFC remains on track to achieve profitability during the latter half of this year. Next, maturing contributions from our horizontals, including fleet management, DMS software, charging infrastructure and captive insurance.

Fifth, through size and scale, we continue to drive down vendor pricing, improve corporate efficiencies to save costs and lower borrowing costs as we path towards an investment-grade rating. Combining both store operational improvements with higher-margin adjacencies and the other design advantages discussed, ultimate SG&A as a percentage of gross profit will fall below 50%. And finally, ongoing return on capital to shareholders through dividends and opportunistic share buybacks. Please refer to the LAD investor presentation for further details and reconciliations. As we approach the middle of the decade, we are well positioned to maximize our unique and unreplicable mobility ecosystem that is ready to deliver more frequent and richer customer experiences throughout the ownership life cycle at global scale.

Our strategy, combined with our experienced and focused team will continue to expand market share, leverage our size and scale and grow our complementary adjacencies to produce an ultimate long-term profit to revenue ratio of $2 of EPS. All elements of our original design are now securely in place, and we look forward to focusing all of our attentions on execution to establish new levels of performance for our industry. With that, I'd like to turn the call over to Chris.

Chris Holzshu: Thank you, Bryan. I'd like to begin by congratulating our 2023 class of Lithia & Driveway Partners Group winners, better known internally as LPG. These leaders and their teams achieved the highest performance levels among their peers in 2023 with outsized market share, exceptional customer service, strategic innovation and best-in-class execution. Our LPG group is the North Star for all of our retail locations to learn from and replicate as we continue to deliver operational excellence and attainment of profitability potential at each location. We now have 160 LPG partners, meaning over 40% of our eligible store leaders have attained this coveted status, and we look forward to all of our teams achieving LPG status in the future.

Executing on our vision to build out a vast automotive ecosystem across three of the largest English-speaking countries in the world is well underway. We remain committed to our mission of Growth Powered by People and a high-performance culture led by entrepreneurial leadership at the local market level, which has been a differentiator in our strategy for over a decade. Empowering our teams to serve their customers and deliver best-in-class services wherever, whenever or however they desire continues to be keys to our success. Moving on to the fourth quarter results. We continue to see resilience in the auto retail consumer as they pivot their buying needs in new and used vehicles in lockstep with OEM incentives, the recovery of new vehicle inventory, credit availability, scarcity of later-model used vehicles and the demand for aftersales as the vehicle car bar continues to age.

On a same-store basis, new vehicle revenues were up 10%. This was driven by unit volumes increasing 10% and nominal changes in ASPs. New vehicle GPUs, including F&I, were $6,215 per unit, down $1,510 or 20% year-over-year as we expected this and discussed throughout 2023. We anticipate the downward trend in GPUs to continue through 2024, eventually resulting in total GPUs including F&I at $4,500, which is near our historic levels. The main driver behind the GPU trend is driven by new vehicle SAAR continuing to normalize, which is expected to end 2024 near 16 million units in the U.S. Same-store volumes are positively highlighted by large improvements in import and domestic brands, which were up 12%, while domestic volumes improved just over 4%.

We're also constructive on SAAR normalizing in the United Kingdom and Canada eventually getting back to 2019 levels, which leaves 20% and 15% in expected recovery, respectively. New vehicle inventory day supplies rose to 65 days compared to 55 days at the end of Q3, and 47 days at the end of Q4 2022. Moving on to used vehicles. Revenue was down 11% and units were down 6%. ASPs continued to decline, down 5% to $28,000 versus $29,400 in the prior year. Used vehicle pricing continues to moderate in line with the recovering supply of new vehicles. Sales of certified vehicles were up nearly 2%, while our core vehicle segment, which accounts for more than half of our used vehicle sales, was down 10% as the impact of COVID production constraints is working through the supply chain.

As a reminder, around 10 million vehicles were lost in production in 2020 to 2023 due to COVID-impacted factory shutdowns and supply chain issues. Value autos, which are higher-mileage vehicles and generally over nine years old, were down 3%. Our top-of-funnel OEM new car status gives us significantly more access to inventory than used-only dealers, which coupled with Driveway and our omnichannel selling arm, will continue to be a significant advantage for years to come. Used vehicle GPUs, including F&I, were $3,789, down 7% from last year and well below our historic average. Our teams are reacting to a volatile used car marketplace in response to the massive rebound in new car inventory that continues to add new vehicle supply. As the average APR and used vehicle loan is almost 11.7%, the outlook for lower consumer borrowing rates will eventually serve as a tailwind for consumers and relief in their monthly payments.

Used vehicle inventory day supply rose to 64 days compared to 58 days last quarter and 58 days in the prior year. Our aftersales business, which makes up 42% of our gross profit rose by 3% and gross margins were 55%. Customer pay, which accounts for 60% of the aftersales business was up 3%, while warranty sales, which made up 30% of the business rose by 6%. The average age and size of the vehicle car park is at record levels. And with the advancement in technology and product offerings for consumers, we can expect greater complexity and higher cost for repairs. We continue to meet this high-margin demand by finding innovative ways to attract and grow talent while offering state-of-the-art facilities for our technicians to confidently call their professional home.

Finally, adjusted SG&A as a percentage of gross profit, excluding Driveway's cost, was 62.8% versus 65.1% on a consolidated basis, which was similar to the prior year. Over the past 10 years, we have managed to extract nearly 500 basis points from our total SG&A. As we look to the future and work to find ways to gain additional leverage and benefits from our 460-plus locations across the globe, we are confident on our ability to create a high-performance omnichannel network that is truly best-in-class in operating leverage. As we started, our LPG group has set the bar for our organization of what is expected and, in simple terms, moving our non-LPG to LPG performance levels has a massive impact on profitability. Specifically, moving non-LPG stores up one segment of performance will add 500 to 800 basis points of incremental leverage in the model.

This would equate to approximately $250 million to $400 million in additional profitability or $7 to $10 in EPS on today's performance and is a key to unlocking the $2 in EPS for every $1 billion in revenue that Bryan has discussed. In summary, our plan is well underway to build an international ecosystem in personal transportation that provides a variety of products and services that meet a broad set of consumers' mobility needs wherever, whenever and however they desire. Our tenured and experienced team is set up to achieve high-performing results in a lean operating model while continuing to execute our plan that will deliver best-in-class returns to our shareholders. With that, I'd like to turn the call over to Chuck.

Chuck Lietz: Thanks, Chris. The financing operations segment continued to move towards profitability, narrowing our quarterly operating loss to $2.1 million, down from $4.4 million last quarter while our portfolio ended the year at just over $3.2 billion. As we prioritize increasing yields and managing risk through our underwriting, we saw a sequential decline in origination volume to $429 million. Shifting to our operating metrics. The weighted average APR on loans originated increased to 10.3%, up 30 basis points from the prior quarter and 210 basis points from a year ago. As a captive lender sitting at the top of the funnel, we were able to achieve this without impacting credit quality. The weighted average FICO score of 734 on loans originated in the quarter was 2 points higher than the prior quarter while front-end LTV was essentially flat at 95%.

DFC's penetration rate during the quarter was 9%, primarily due to the negative impact on LAD's growth in retail units overseas. If we consider only retail units sold in the U.S., the only market DFC currently operates in, our penetration rate increases to 10%. Now that our yield is aligned with the market, we expect penetration will increase in 2024 and beyond as we look to scale. Our future growth has endless possibilities, including launching a new vehicle leasing product as well as exploring supporting LAD's expansion into other geographies and mobility verticals. In the fourth quarter, net interest margin increased to $33.2 million, driven by increasing portfolio APR and relatively flat funding costs. In Q4, we closed our sixth ABS offering, and we now have 86% of our portfolio funded through ABS term issuance and warehouse facilities, and later today, we are closing a very successful seventh ABS term offering.

Net provision expense increased slightly from the prior quarter to $23.8 million as we saw seasonally higher charge-offs in the fourth quarter. The allowance for loan losses as a percentage of loans receivables stayed flat at 3.2%. 30-day delinquency rates increased 50 basis points from the prior quarter to 4.6%, consistent with seasonal expectations and down 80 basis points year-over-year. This reflects strong performance from our servicing team as well as increasing our overall portfolio credit quality. As we prepare to transition from the start-up period, I am very proud of all DFC has accomplished since we launched this initiative in May of 2020. DFC will quickly start to prove the financial benefits of this adjacency as well as show a clear path to realizing the full scope of DFC's contribution to Lithia & Driveway.

Beyond stand-alone profitability, we can see how a mature DFC support LAD's long-term objectives to reimagine the vehicle sales and ownership experience and make meaningful connections with the consumer throughout their entire vehicle ownership life cycle. DFC has been built to be successful in the full range of market conditions regardless of short-term volatility. We remain confident in DFC's ability to deliver long-term earnings growth to LAD and achieving our end-state financial goals with a fully scaled and seasoned portfolio. With that, I'd like to turn the call over to Tina.

Tina Miller: Thanks, Chuck, and thank you for all those joining us today. In the fourth quarter, we reported adjusted EBITDA of $400 million and nearly $1.8 billion for the full year 2023. Results in the quarter were driven by continued strength in new vehicle sales and aftersales, offset by lower new vehicle GPUs with returning supply and higher floor plan interest expense. Our focus on maturing our adjacencies resulted in improved profitability at Driveway and DFC. Although early, we are well positioned to see positive contributions this year. We ended the quarter with net leverage, excluding floor plan and debt tied to DFC, of approximately 1.8x, relatively flat from the prior quarter. We continue to maintain our financial discipline even with planned growth and target leverage below 3x.

During the quarter, we generated free cash flows of $242 million, an increase of 10% compared to the previous year. We define free cash flows as EBITDA adding back stock-based compensation plus the following items paid in cash, interest, income taxes, CapEx and dividends. We managed to generate another year of strong cash flows and balanced with consistent capital allocation, we can preserve the quality of our balance sheet while supporting our growth initiatives and navigating various cross currents in today's environment. Our capital allocation strategy of 65% toward acquisitions, 25% toward internal investments, which includes capital expenditures and the balance of 10% toward shareholder return remains relatively unchanged. However, with nearly $22 billion in acquisitions completed since 2020, we are making some tactical shifts to be responsive to the market environment.

As Bryan outlined earlier, we will continue to assess valuation trends and balance our M&A expectations in the near-term but being opportunistic in our share repurchases. In the fourth quarter, we repurchased nearly 143,000 shares for a weighted average price of $241 per share. We have approximately $467 million available under our current authorization. We remain nimble and will look to deploy capital in ways that drive strong returns. Our vision and ability to deliver on synergies through acquisitive growth remains unchanged, and our strategy is flexible with the consistent cash flow generation of our vehicle operations business, coupled with measured investments in adjacencies. The team has the necessary infrastructure and tools to drive revenues and margins toward our long-term target of achieving $2 in EPS per $1 billion in revenue and are focused on execution and divesting the acquisitions we've completed over the past few years.

Our culture and business, is designed to grow and deliver consistent strong performance. Coupled with the diverse and talented members of our team, this gives us the necessary foundation, to achieve our plan and to continue driving value for our shareholders. This concludes our prepared remarks. With that, I'll turn the call over to the audience for questions. Operator?

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