Bret Jordan

Bret Jordan from Jefferies LLC inquired about the Total Care Auto (TCA) business's exposure to tariff-related parts cost inflation. He also asked for color on regional performance, particularly the drivers behind the strong Parts & Service growth in the Western stores.

Answer

SVP & CFO Michael Welch explained that TCA's exposure to parts inflation is minimal as contracts are priced with inflation in mind and labor is the largest cost component. COO Daniel Clara attributed the strong 15% growth in the Western stores to the successful integration of processes and technology over the last 12-18 months. CEO David Hult added that brand mix is often a more significant factor than geography and reiterated the resilience of the auto retail model.

Bret Jordan asked for a breakdown of parts and service growth between price (ticket) and volume (traffic) and inquired about potential short-term supply issues for German luxury brands due to tariffs.

Answer

President & CEO David Hult explained that due to weather impacts, Q1 parts and service growth was driven more by dollar increases per ticket rather than traffic, but he expects traffic to normalize in coming quarters. Regarding luxury supply, he opined that brands like Porsche and Audi likely paused shipments strategically to manage existing non-tariffed U.S. inventory while awaiting clarity, but noted that their day supply is now getting lower than desired.

Bret Jordan from Jefferies followed up on Stellantis, asking if its GPUs have now bottomed out. He also inquired about the drivers behind the strong growth in customer-pay service and whether it was fueled by promotions.

Answer

President and CEO David Hult and SVP of Operations Dan Clara both stated their opinion that Q4 likely represented the low point for Stellantis GPUs. On the topic of customer-pay service, they attributed the 13% gross profit growth to better execution, including improved vehicle inspection tools, more efficient service recommendations, strong customer retention post-warranty, and effective leadership, rather than promotional activity.

Bret Jordan asked about the sustainability of the higher repair order value for BEVs compared to ICE vehicles and sought clarity on whether the softness in the collision business is a secular or short-term trend.

Answer

President & CEO David Hult opined that the BEV service premium is sustainable for the next few years due to technology complexity but may normalize over the long term. Regarding collision, Hult acknowledged that the softness is a persistent trend throughout the year, likely driven by a higher rate of total loss claims due to advanced vehicle technology, which also impacts the wholesale parts business.

Bret Jordan from Jefferies inquired about potential softening trends in the U.S. luxury vehicle market, seeking color on demand and gross profit per unit (GPU) trends across luxury, import, and domestic segments. He also asked about the strategic reallocation of properties following the JLR exit and the breakdown of the $124 million impairment charge.

Answer

President and CEO Daryl Kenningham stated that a softening luxury trend isn't yet material enough to call, noting some inventory build but awaiting Q4 results. SVP Pete DeLongchamps confirmed strong Lexus and BMW performance, with Audi being challenging. Kenningham also confirmed that Group 1 Automotive owns the majority of the JLR real estate and is exploring reallocating properties to other brands or transitioning them to new owners. CFO Daniel McHenry clarified that $18 million of the impairment was for JLR franchise rights, which triggered a broader goodwill impairment for the entire U.K. entity, with a portion of the remaining $100 million also related to JLR.

Bret Jordan from Jefferies inquired about potential softening trends in the U.S. luxury vehicle market, seeking color on demand and gross profit per unit (GPU) trends across luxury, import, and domestic segments. He also asked about the strategic reallocation of properties following the JLR exit and the breakdown of the $124 million impairment charge.

Answer

President and CEO Daryl Kenningham stated that a softening luxury trend isn't yet material enough to call, noting some inventory build but awaiting Q4 results. SVP Pete DeLongchamps confirmed strong Lexus and BMW performance, with Audi being challenging. Kenningham also confirmed that Group 1 Automotive owns the majority of the JLR real estate and is exploring reallocating properties to other brands or transitioning them to new owners. CFO Daniel McHenry clarified that $18 million of the impairment was for JLR franchise rights, which triggered a broader goodwill impairment for the entire U.K. entity, with a portion of the remaining $100 million also related to JLR.

Bret Jordan from Jefferies LLC asked if the increase in used vehicle GPU was sustainable and questioned how much of the parts and service growth was attributable to the easy comparison from the prior year's CDK outage.

Answer

SVP Pete DeLongchamps expressed confidence that the used GPU performance is sustainable, attributing the consistent trend to the company's disciplined vehicle acquisition process. CFO Daniel McHenry quantified the impact of the prior-year CDK event, stating it negatively affected pre-tax income by approximately $12 million in the parts and service business.

Bret Jordan inquired about the drivers behind the 30% growth in warranty work, its expected duration, and the outlook for the price contribution to parts and service growth, especially considering potential tariffs.

Answer

CEO Daryl Kenningham and CFO Daniel McHenry confirmed that the warranty increase was largely driven by the Toyota Tundra engine recall and some Honda programs, which they expect to continue for some time. Kenningham noted the recent aftersales growth was roughly one-third traffic and two-thirds price, and that rising average vehicle mileage also naturally increases repair order values.

Bret Jordan asked for more color on the impact of BEV sales in the U.K., particularly how forcing them through the lower-margin fleet channel affects GPUs. He also inquired if the U.S. parts and service business is benefiting from specific warranty work like the Toyota Tundra engine replacement.

Answer

CEO Daryl Kenningham explained that U.K. fleet BEV sales are lower margin and subsidized, which pressures overall profitability. CFO Daniel McHenry added that these fleet deals also lack the typical F&I and trade-in opportunities. Regarding after-sales, Kenningham confirmed that high levels of warranty work are expected to continue providing a tailwind in 2025, which also helps drive higher-margin customer-pay business.

Bret Jordan asked for clarification on whether the mid-single-digit POS growth was in units or dollars and how much of Q3's growth was attributable to price versus volume. He also questioned the diversity of Dorman's supply chain beyond China, given the target of 30-40% China exposure by year-end, and how supply chain shifts contribute to margin benefits.

Answer

Kevin Olsen, President and CEO, confirmed that POS is always quoted in dollar terms for competitive reasons and that Q3 POS growth was very solid. He noted Dorman's non-discretionary portfolio performs well during inflation. Mr. Olsen detailed the supply chain as roughly 30-40% China, 30% U.S., and the balance from the rest of the world, emphasizing its robustness and diversification. He acknowledged that supply chain shifts have contributed to margin benefits, balancing cost with quality, value, and lead times to remain competitive.

Bret Jordan sought clarification on Dorman's mid-single-digit POS growth, asking if it represented units or dollars, and the split between price and pieces in Q3 growth. He also asked about Dorman's supply chain diversification, aiming for 30%-40% China by year-end, and how this diversity contributes to margin benefits.

Answer

Kevin Olsen, President and CEO, Dorman Products, confirmed that POS is quoted in dollar terms and unit growth is not disclosed for competitive reasons, reiterating solid POS growth. He declined to comment on customer-reported inflation figures, noting Dorman's portfolio differs significantly from more DIY-focused offerings. Regarding the supply chain, Kevin Olsen stated that Dorman's supply is roughly 30%-40% China, 30% U.S., and the balance from other regions, expressing confidence in the diversified and robust supply chain to manage tariff changes. He acknowledged that supply chain shifts have contributed to margin benefits, balancing cost, quality, value, and lead times.

Bret Jordan asked for clarification on the light-duty segment's sell-in versus sell-out (POS) performance, questioning if customers were pre-buying inventory ahead of price increases. He also inquired about the product pipeline for new-to-the-aftermarket, OE-fix, and complex electronics.

Answer

President, CEO & Director Kevin Olsen acknowledged a gap between sell-in and sell-out, attributing low single-digit POS growth to a difficult prior-year comparison, while noting sequential POS dollars were stable. He confirmed customer inventory levels remain in line with historical norms with no significant pre-buying observed. Olsen described the new product funnel as robust and increasingly composed of complex electronic components, which he views as a significant competitive advantage.

Bret Jordan from Jefferies asked for a breakdown of the drivers behind the strong Light Duty EBIT margin, the company's competitive supply chain positioning against peers regarding tariff exposure, and the expected ability to pass through tariff-related costs to customers.

Answer

CEO Kevin Olsen attributed the strong Light Duty margin primarily to a favorable new product mix and positive macro trends in the 7-14 year old vehicle cohort, declining to give a specific breakout. Regarding competitive positioning, Olsen stated that Dorman's balanced global footprint provides a competitive advantage, as the hard parts market is heavily indexed to China. He expressed confidence in their ability to offset net tariff impacts through their proven playbook, citing strategic partnerships and a non-discretionary product portfolio.

Bret Jordan from Jefferies asked about the product mix between repair and discretionary items in the Specialty Vehicles segment, the relative profitability of complex electronics, and the company's preparedness for potential future tariff changes.

Answer

CEO Kevin Olsen reported that non-discretionary repair parts now represent slightly over half of the Specialty Vehicles business, an increase since its acquisition. He explained that complex electronics, being largely new-to-the-aftermarket, carry a higher margin profile than the business average. Regarding potential tariffs, Olsen asserted that Dorman is better positioned than in 2018 due to a more diversified supply chain and an established playbook for managing such events.

Bret Jordan asked for a breakdown of same-SKU POS growth in the Light Duty segment to gauge core product traction. He also inquired about the sales cadence in the Specialty Vehicle segment, asking if an expected improvement in sell-in implies that consumer sell-through is also improving, and questioned what the sales 'sweet spot' is for these products.

Answer

CEO Kevin Olsen explained that the company does not break out same-SKU POS, but reiterated that new products are the primary driver of above-market growth. Regarding Specialty Vehicles, Olsen stated that sell-through has been flattish and the company's strategy relies on gaining share and growing non-discretionary parts rather than a market rebound. He clarified that the sales 'sweet spot' is high-volume sales occurring within the first two years of a new vehicle purchase.

Brent Jordan asked if industry supply chains create a delta in inflation expectations between O'Reilly and peers, and for a breakdown of the 10% inventory per store growth.

Answer

Brent Kirby (President, O'Reilly Automotive) explained O'Reilly's diversified global supplier base, with China exposure in the mid-20s and other countries having similar tariff rates. Brad Beckham (CEO, O'Reilly Automotive) added that O'Reilly focuses on its own negotiation and pricing power. Jeremy Fletcher (CFO, O'Reilly Automotive) clarified that inventory growth is primarily executing on inventory strategies and deploying enhancements, with price having less impact due to LIFO reporting. Brad Beckham (CEO, O'Reilly Automotive) added that it's about optimizing the tiered distribution network and stocking new DCs like Stafford, Virginia.

Brent Jordan asked if O'Reilly's 4% same-skew inflation expectation differs from peers due to supply chain or tariff exposure, and for a breakdown of the 10% inventory per store growth, distinguishing between price impact, buying ahead, and strategic unit additions for better fill rates.

Answer

President Brent Kirby explained that O'Reilly's supplier diversification, with mid-20s exposure to China and multi-sourcing from various countries, positions them well to respond to tariff changes. CEO Brad Beckham stated that O'Reilly focuses on its own operations, scale, negotiating power, and competitive pricing. CFO Jeremy Fletcher clarified that the 10% inventory growth is primarily due to executing inventory strategies and deploying incremental enhancements, with price having less impact due to LIFO reporting. Brad Beckham added that Q3 inventory growth also included stocking the new Stafford, Virginia DC.

Bret Jordan from Jefferies asked about regional performance, the impact of a peer's store closures on the West Coast, and the competitive threat from nontraditional retailers in the DIY space.

Answer

CEO Brad Beckham stated that regional performance was consistent in Q4 and that it's too early to gauge the impact of competitor store closures, noting they will be selective in pursuing that business. Regarding nontraditional competitors, Beckham and President Brent Kirby indicated they have not seen a significant impact, with strength in maintenance categories like oil and filters demonstrating the resilience of their service-and-availability model against price-focused competitors.

Bret Jordan of Jefferies inquired about O'Reilly's supply chain strategy in the Northeast and the net sales impact of recent hurricanes.

Answer

President Brent Kirby stated that while the new Virginia distribution center (DC) opens up the Mid-Atlantic, another DC will likely be needed between it and the Massachusetts facility. CEO Brad Beckham added they will expand methodically from the new DC. Regarding hurricanes, Beckham described the net impact as "pretty immaterial," estimating a 10-15 basis point headwind in Q3 but a net neutral effect across Q3 and Q4 combined.

Bret Jordan asked if AutoNation was observing any softer consumer sentiment or changes in underlying demand levels in the luxury space, similar to what a peer noted. He also inquired if the downward pressure on domestic internal combustion (ICE) gross profit per unit was brand-specific, a one-off event, or a sustained trend.

Answer

CEO Mike Manley indicated that while the luxury market is entering a quiet period, he expects a seasonal uptick in December, though it appears more muted than last year, especially in October. Regarding domestic ICE GPUs, Mike Manley stated that some pressure was 'self-inflicted' due to internal conversations about performance expectations and the balance between market share, margin, and marketing expense. He noted that domestic players generally chase volume in conjunction with dealers, leading to competitive net transaction prices and general downward pressure across the segment, with some domestics experiencing higher pressure than others. He expects the 'self-inflicted' pressure to be corrected.

Bret Jordan of Jefferies LLC questioned the after-sales business, seeking details on the mix of car count versus price and the outlook for parts inflation. He also requested an update on the AutoNation USA used-vehicle store strategy.

Answer

CEO Michael Manley explained that after-sales growth was driven by both volume and price, but the future focus will be more on increasing volume and market penetration rather than significant price hikes. On the AutoNation USA strategy, Manley stated that growth will be deliberate and methodical, with new stores being added in markets where the company already has significant density to ensure the model is additive and synergistic.

Bret Jordan requested a breakdown of after-sales growth between price and volume and asked if the mobile service initiative contributed to growth. He also inquired about the potential tariff exposure within the after-sales parts business.

Answer

CEO Mike Manley estimated the after-sales growth was roughly one-third volume and two-thirds price, with mix shift contributing to the price component. He noted mobile service contributed to gross hours sold but is not yet profitable. On parts tariffs, he broke down the business into approximately 40% captive and 60% non-captive parts, but cautioned that both categories have import exposure. He explained that passing on costs is not automatic, as higher part prices can lead to more vehicles being totaled in collision repairs.

Bret Jordan from Jefferies asked if the stabilization in used vehicle margins implies permanently lower profitability compared to historical levels due to price transparency. He also questioned whether the expected recovery in the collision business is seasonal or driven by structural improvements.

Answer

CEO Mike Manley responded that due to price transparency, he focuses on used vehicle gross profit in dollars per unit, which he expects to remain stable, rather than on percentage margins which are moderated by the market. On the collision business, he clarified the recent challenge was a lower repair rate due to more total losses, and while he expects a seasonal spring improvement, the primary company focus is on gaining market share.

Bret Jordan asked about the rooftop economics of Chinese brands (BYD, MG) in the UK, specifically if they yield similar GPUs, after-sales, and mix compared to legacy UK products, despite their potentially lower price points. He also inquired about parsing the after-sales growth rate between price and car count, and the outlook for price inflation as a comp driver in Q4.

Answer

Bryan DeBoer, President and CEO, confirmed that Chinese brands in the UK are achieving similar GPUs to mainstream brands, though BYD is a higher-priced Chinese brand. He noted that while after-sales for these new brands is limited due to low units in operation, the UK team is effectively selling used cars at high ratios (almost three to one used to new) to build profitability. For after-sales growth, DeBoer stated that slightly more than half comes from price increases, with the remainder from customer count and repair order (RO) volume. He emphasized the focus on growing RO count, particularly in softer regions like the Northeast and Northwest.

Bret Jordan asked about the rooftop economics of Chinese brands in the UK, specifically if they yield similar GPUs and after-sales mix as legacy UK products. He also inquired about the after-sales growth rate, distinguishing between price increases and incremental traffic.

Answer

Bryan DeBoer, President and CEO, confirmed that GPUs for Chinese brands in the UK are similar to mainstream brands, though after-sales are still developing due to a lack of units in operation. He highlighted the UK team's success in selling used cars, achieving a 3:1 used-to-new ratio in mainstream brands. For after-sales growth, DeBoer stated that slightly more than half comes from price increases, with the remainder from customer count and repair orders, noting that inflation continues to be a factor.

Bret Jordan asked about the expected growth in the customer-pay service business specifically from parts price inflation due to tariffs. He also inquired about the net profitability spread between Lithia's most and least profitable geographic regions.

Answer

President and CEO Bryan DeBoer projected low-to-mid-single-digit growth for customer-pay service in the near term. Regarding regional profitability, he explained that while gross profit dynamics are shifting, the Southeast and South Central regions generate approximately double the net profit to revenue compared to the Northwest and Southwest. This is largely due to a more favorable regulatory environment that allows for higher fees.

Bret Jordan asked for a breakdown of the expected improvement in used vehicles between volume and GPU, and requested an update on efficiency gains and SG&A in the U.K. operations.

Answer

An executive acknowledged disappointment in overall used vehicle performance despite strong value auto growth, stating the focus for 2025 is on driving volume. President and CEO Bryan DeBoer added that he is pleased with the U.K. progress, noting SG&A as a percentage of gross is now just over 80%, with a target of 75%. He also confirmed that the portfolio cleanup of small, non-viable businesses acquired is nearly complete.

Bret Jordan asked for details on the regional and brand-level dispersion in front-end GPUs and inquired about the breakdown between price and traffic for the growth in customer-pay service revenue.

Answer

COO Adam Chamberlain noted strong performance in the Southwest, Southeast, and Northeast, with imports and luxury brands showing resilience. CEO Bryan DeBoer added that the performance gap between regions has narrowed. On the service side, Chamberlain confirmed customer-pay revenue grew 3.6% and acknowledged that this growth was driven more by price increases, with car counts being relatively flat.

Bret Jordan inquired about the impact of the First Brands issue on GPC's factoring programs, specifically asking if there was increased risk spread pricing from banks or reduced willingness to participate in payables models. He also sought clarification on the buying behavior of independent owners, noting that their sell-out exceeded sell-in, and asked how GPC is assisting them with inventory management and what target inventory levels are being pursued. Additionally, he asked if sell-in to independents was expected to accelerate in Q4.

Answer

Bert Nappier, Executive Vice President and Chief Financial Officer, and Will Stengel, President and Chief Executive Officer, stated that the First Brands situation is isolated, and GPC's factoring programs continue to function normally with strong banking partnerships, though First Brands has been suspended from their programs. Bert Nappier explained that GPC works closely with independent owners through individualized discussions on pricing, cash flow, and product assortment, noting that inventory levels are healthy and not a cause for underperformance. He did not expect sell-in to accelerate in Q4, anticipating it to remain level with Q3, primarily due to elevated interest rates influencing owners' cautious working capital management.

Bret Jordan inquired about any increased risk spread pricing or reduced bank participation in payables models due to factoring programs and the First Brands issue. He also asked how Genuine Parts Company is assisting independent owners with inventory management and their current stock levels, and if sell-in to independents is expected to accelerate in Q4.

Answer

Executive Vice President and CFO Bert Nappier clarified that the First Brands situation is isolated, and GPC's supply chain financing programs remain strong with no unusual activity. President and CEO Will Stengel added that the commercial relationship with First Brands is solid, with active discussions for resolution. Bert Nappier explained that GPC works with independent owners on individualized discussions regarding pricing, cash flow, and product assortment, and does not expect sell-in to accelerate in Q4, attributing cautious replenishment to elevated interest rates.

Bret Jordan of Jefferies LLC inquired about the inventory levels and sell-through rates at independent NAPA stores, and also asked about the company's ability to maintain full margins on tariff-related price increases and the expected cadence of this pricing in the second half of the year.

Answer

President & CEO William Stengel confirmed that inventory positions at independent stores have improved, with a tight correlation between their purchases and sales out, which are up low single digits. EVP and CFO Bert Nappier added that while tariff cost pass-through is currently balanced and rational in the market, it is not yet a net benefit to gross margin. He expects the pricing cadence to accelerate in Q3 before leveling out in Q4.

Bret Jordan of Jefferies LLC inquired about the inventory levels and sell-through rates at independent NAPA stores, asking if they were destocking. He also followed up on the company's ability to pass through tariff-related cost increases while maintaining margins and the expected cadence of price increases in the second half of the year.

Answer

President and CEO William Stengel noted a significant improvement in independent owner inventory positions, with sell-in and sell-out rates closely correlated and sales out up low single digits, similar to company-owned stores. EVP and CFO Bert Napier confirmed they are passing through tariff costs in a balanced way, though not yet as a net benefit to gross margin. Stengel highlighted the complexity of managing this SKU-by-SKU. Napier added that the cadence of price increases will accelerate in Q3 before normalizing in Q4.

Bret Jordan inquired about the inventory levels and sell-through rates at independent NAPA stores, questioning if they were destocking. He also asked if the company is maintaining full margins on tariff-related price increases and about the expected cadence of this pricing in the second half.

Answer

President and CEO William Stengel explained that independent owner inventory positions have improved, with their purchases and sales now closely correlated. He noted their sales-out performance is up low single digits, aligning with company-owned stores. EVP and CFO Bert Napier added that while tariff-related cost increases are being passed through rationally, it is not yet a net benefit to gross margin. He described the process as highly complex and expects the pricing impact to accelerate in Q3 before leveling off in Q4.

Bret Jordan inquired about the inventory levels and fill rates at independent NAPA stores, asking if they were destocking. He also followed up on pricing, questioning if GPC could maintain full margins on tariff-related inflation and what the cadence of price increases would be in the second half of the year.

Answer

President and CEO William Stengel confirmed that independent owner inventory positions have seen a "really nice improvement" and that the correlation between their purchases and sales is the tightest it has been in years. EVP and CFO Bert Napier added that GPC is achieving a balanced pass-through on tariff-related cost increases and expects the cadence of pricing to accelerate from Q2 into Q3 before leveling off in Q4.

Bret Jordan inquired about the level of inflation experienced in Q1 across both the automotive and industrial segments and asked about the performance of the European automotive business relative to its market.

Answer

CFO Herbert Nappier stated that Q1 inflation was just under 1% for both businesses, in line with expectations, but noted SG&A inflation was higher at around 2%. CEO William Stengel added that the European automotive business is performing well, with outsized growth in NAPA-branded products and market share gains, driven by strategic cost and harmonization efforts.

Bret Jordan requested more detail on the 800-basis-point improvement in internal DC service level metrics, asking if it was off a low base. He also asked for more color on the new professional tool and equipment offering.

Answer

President and CEO William Stengel clarified the DC improvement resulted from standardizing metrics and processes across the network, not fixing a major issue. Regarding the tool offering, he explained it's a streamlining of the existing category to a more focused two-tier brand strategy to better serve professional technicians, rather than being an entirely new category.

Bret Jordan asked about regional performance dispersion in the U.S. NAPA business, excluding hurricane impacts, and requested more detail on the company's supply chain near-shoring or re-shoring initiatives.

Answer

President and CEO William Stengel stated that excluding hurricane and M&A impacts, there was no material regional performance dispersion in the U.S. NAPA business. Regarding re-shoring, he highlighted that the Motion industrial team is tracking over 150 projects through 2030, representing a potential $2.5 billion MRO spend opportunity, which is creating an attractive tailwind for the business.

Bret Jordan (Jefferies) asked about the sales cadence for tools sold off the truck, the stability of mechanic sentiment, and the potential contribution of same-SKU inflation to growth in 2026, specifically regarding pricing outlook.

Answer

CEO Nick Pinchuk stated no notable trend in off-the-truck sales due to Q3 seasonality and SFC timing, noting continued mechanic uncertainty about macro factors. He indicated that pricing contributed about 1% to growth this quarter and that future pricing would be influenced more by tariffs than general inflation, with significant price increases unlikely unless market conditions change.

Bret Jordan of Jefferies LLC asked about the weakness in the collision repair segment, questioning if it was a structural or cyclical issue. He also inquired about the outlook for the upcoming Snap-on Franchisee Conference (SFC) in Q3.

Answer

Nicholas Pinchuk, Chairman & CEO, suggested the weakness in collision repair might be cyclical, possibly due to large multi-store operators pausing investment to consolidate recent gains. For the upcoming franchisee conference, he expects attendance to be robust and similar to last year but emphasized that the event generates orders, which are directional indicators, not immediate sales.

Bret Jordan of Jefferies LLC asked whether the weakness in the collision repair equipment segment was a structural or cyclical issue and inquired about the outlook for the upcoming Snap-on Franchisee Conference (SFC).

Answer

CEO Nicholas Pinchuk suggested the weakness in the collision segment is likely cyclical, attributing it to large multi-store operators pausing investment to consolidate recent gains. For the upcoming SFC, he expects a robust event, similar to last year, but reminded that it generates orders, not immediate sales, and serves as a directional indicator for future demand.

Bret Jordan asked about Snap-on's positioning relative to potential tariffs, given its domestic manufacturing mix, and also inquired about the reasons for the relative strength in the international tools business compared to the U.S. market.

Answer

CEO Nicholas Pinchuk asserted that Snap-on is 'more insulated from import tariffs than most' due to its strategy of manufacturing in the markets where it sells. He attributed the stronger performance of the international tools business not to a different competitive landscape, but rather to lower levels of macro uncertainty compared to the U.S. and a 'snap back' from previously weaker periods in those markets.

Bret Jordan questioned whether the Tools Group's momentum stemmed from an improved product mix or a change in mechanic sentiment, and also asked for guidance on corporate expense modeling and the potential impact of the election.

Answer

CEO Nicholas Pinchuk stated that mechanic sentiment remains poor and that the momentum is a direct result of the company's successful pivot to offering attractive, quick-payback products. CFO Aldo Pagliari advised modeling 2025 corporate expenses higher than 2024 levels, as current year expenses are lower due to reduced performance-based compensation. Pinchuk declined to speculate on political outcomes.

Bret Jordan inquired about AutoZone's inflation expectations for the fiscal first quarter, noting observations from wholesale distributors (WDs) of higher prices. He asked if AutoZone's supply chain allows for lower costs to gain market share or if the company anticipates inflation exceeding 3% due to tariff tailwinds. Additionally, Jordan asked about the recent growth in discretionary categories, seeking to understand if it's driven by internal initiatives or broader consumer green shoots.

Answer

Phil Daniele, CEO and President of AutoZone, responded that inflation is likely to increase from the 'at least 3%' estimate, emphasizing the industry's disciplined approach to pricing to cover costs and maintain competitiveness. Jamere Jackson, CFO, later added that accelerated ticket growth is partly due to tariff-related cost increases, leading to industry-wide retail price adjustments. Regarding discretionary categories, Phil Daniele noted that while growth is the best since FY2023, it's too early to confirm 'green shoots,' as the lower-end consumer remains under pressure.

Bret Jordan inquired about AutoZone's inflation expectations for the fiscal first quarter, specifically if the 'at least 3%' forecast reflects a strategy to leverage their supply chain for lower costs and gain market share through pricing, or if it's primarily driven by tariff-related cost increases. He also asked about the recent growth in discretionary categories, seeking to understand if it's due to internal initiatives or broader consumer green shoots.

Answer

President and CEO Philip Daniele indicated that inflation is likely to exceed 3%, emphasizing the industry's disciplined approach to pricing to cover costs and maintain competitiveness. Regarding discretionary categories, Mr. Daniele noted that while growth is the best since FY2023, it's too early to confirm a sustained recovery, as the lower-end consumer remains under pressure.

Bret Jordan inquired about AutoZone's inflation expectations, specifically if the 'at least 3%' forecast for Q1 aligns with broader market observations, and whether the company's supply chain allows for lower costs or if tariffs are driving price increases. He also asked about the recent growth in discretionary categories, seeking to understand if it's due to internal initiatives or broader consumer green shoots.

Answer

Phil Daniele, CEO and President, indicated that inflation would likely exceed 3%, emphasizing the industry's disciplined approach to pricing to cover costs and maintain competitiveness. Regarding discretionary categories, he noted the best growth since FY2023, suggesting a potential bottoming out, but cautioned it's too early to confirm 'green shoots' given ongoing pressure on the lower-end consumer.

Bret Jordan from Jefferies LLC inquired about AutoZone's exposure to tariffs, asking for details on the primary countries of origin for imports, the mix of direct versus third-party sourcing, and how potential tariffs might affect the company's inflation outlook.

Answer

CEO Philip Daniele explained that China is the largest source of imports, though this has been reduced since 2016. He noted that the company has multiple strategies to mitigate tariff costs, including vendor negotiations, sourcing diversification, and pricing actions. He suggested that if tariff costs materialize, the average ticket growth could return to the long-term historical rate of around 3%.

Bret Jordan of Jefferies LLC asked about AutoZone's import sourcing, particularly from China, the mix of direct versus third-party imports, and how potential tariffs factor into the company's inflation outlook.

Answer

CEO Philip Daniele explained that while China is the largest source of imports, its share has been reduced since 2016. He outlined several tariff mitigation strategies, including vendor negotiations and pricing actions. Daniele confirmed that if tariff costs materialize, they would likely contribute to the average ticket growth returning to the long-term target of approximately 3%.

Bret Jordan of Jefferies inquired about the drivers of operating expense deleverage beyond store growth, specifically asking about technology investments, and questioned if there is a profitability tipping point for the expanding Mexico store base.

Answer

CFO Jamere Jackson confirmed that SG&A investments are intentionally directed towards IT to enable growth, improve speed, and enhance customer experience in both DIY and Commercial segments. He also affirmed that AutoZone is pleased with the profitability and growth prospects in Mexico, which are supported by ongoing investments in local distribution capabilities.

Bret Jordan of Jefferies inquired about the potential market share impact from a competitor's store closures on the West Coast and the sales cadence during Q1, particularly concerning weather effects.

Answer

Executive Philip Daniele stated that while competitor discounting could be a short-term headwind, the store closures represent a long-term market share opportunity. He also noted that Q1 commercial sales were weakest in the first four weeks due to hurricanes in the Southeast, but the impact of winter weather was not yet meaningful.

Bret Jordan from Jefferies asked about potential hurdles in reaccelerating Hub store growth and requested details on the sales cadence and performance differences between national accounts and independent 'up and down the street' customers.

Answer

CFO Jamere Jackson stated there are no major hurdles, as the company has rebuilt its development pipeline and has about 70 Mega-Hubs in progress toward a goal of over 200. CEO Philip Daniele explained that commercial sales were consistent through the quarter, with 'up and down the street' customers showing resilience, national accounts improving, and segments tied to car sales performing weaker.

Bret Jordan asked about the long-term impact of autonomous vehicles on crash rates and regional crash volumes. He also inquired about short-term cyclical trends in consumer insurance behavior, specifically regarding underinsurance or dropping comprehensive coverage, and potential changes in insurance company behavior or price competition.

Answer

CEO Jeff Liaw stated that information on autonomous vehicle crash rates is not superior to public data, and their current impact on Copart's auction activity is de minimis. He described consumer insurance behavior (earned car years vs. car park) as a cyclical phenomenon and acknowledged that ameliorated combined ratios for insurers could lead to more aggressive competitive behavior in the industry.

Bret Jordan asked for context on the year-over-year decline in the Copart Dealer Services (CDS) business. He also inquired about growth in Germany and whether the shift to a consignment model accelerates market penetration. Lastly, he asked about the extent of the export market for Purple Wave equipment.

Answer

Executive Leah Stearns explained that CDS volume has been volatile, consistent with a flat overall wholesale market. Executive Jeffrey Liaw added that while the CDS business is less durable than insurance, it is built on lasting relationships. Regarding Germany, Liaw clarified that while the move to consignment is positive for aligning interests, the primary growth bottleneck remains overcoming institutional inertia and historical industry practices, not the contract type. For Purple Wave, he stated that while some cross-border sales occur, the export market is meaningfully smaller than for Copart's core auto business.

Bret Jordan questioned the recent increase in G&A expenses, asking if the build-out of the specialty sales team would continue. He also asked if Copart's high market share of Florida catastrophe vehicles was due to processing speed and whether the Title Express service played a role.

Answer

CFO Leah Stearns noted that while the company will remain opportunistic, the specialty sales team headcount has already doubled and will likely be digested for a period. Executive Jeffrey Liaw confirmed that the high share of Florida CAT vehicles reflects both market presence and superior processing speed, adding that Title Express contributes by accelerating the retrieval of original titles, which is a key step in the process.

Bret Jordan requested a breakdown of organic growth versus share gains within the insurance unit volume, asked for a year-over-year comparison of catastrophe-related vehicle volumes, and inquired about the drivers of increased yard operation expenses.

Answer

Executive Jeffrey Liaw confirmed that the 6% insurance unit growth included both organic growth and share capture but did not provide a specific breakdown. He noted that catastrophe-related vehicle volume was 'trivial' in the quarter despite significant mobilization costs. Regarding yard expenses, he pointed to higher property taxes as a factor but stated that deleveraging from new yard openings is not a major distortion to results.

Bret Jordan of Jefferies inquired about potential cost savings from the revised capital structure and the extent of capital expenditures needed to upgrade the store base.

Answer

CEO Shane O'Kelly and CFO Ryan Grimsland clarified that the primary goal of the debt reorganization was to stabilize the supply chain financing program as a bridge to an investment-grade rating, with no cost savings currently implied in guidance. Regarding CapEx, Grimsland noted a significant portion of the store fleet requires upgrades over the next 3-5 years, highlighting that over 80% of HVACs and 50% of roofs were beyond their useful life.

Bret Jordan inquired about the new merchandise assortment strategy, asking for specifics on whether it favors private label or branded products and if it involves consolidating suppliers.

Answer

CEO Shane O'Kelly explained that the new assortment is driven by two main factors: analyzing the local vehicle car park rather than just past sales, and ensuring individual stores can fulfill a complete order without sourcing from other locations. This involves replacing hundreds of SKUs per store to improve store-based availability and say "yes" to customers more often.

Bret Jordan from Jefferies LLC asked for a breakdown of the increased tariff impact, which rose from $38 million to $50 million. He also sought commentary on any directional improvement in the powersports market and potential new business opportunities within the Powered Vehicles Group (PVG).

Answer

CFO Dennis Schemm detailed the new $50 million pre-mitigated tariff estimate: $25M for PVG, $15M for Marucci, and $10M for AAG. CEO Mike Dennison noted that while the powersports market shows more stability, a significant recovery is dependent on lower interest rates. He confirmed PVG is expanding by adding new brands and increasing technology content, which drives higher price points.

Bret Jordan asked about the Powered Vehicles Group (PVG), seeking to understand how much of its growth came from new motorcycle customers versus organic sales. He also asked about the seasonality of the Marucci business and its alignment with the MLB season.

Answer

CEO Mike Dennison explained that PVG's growth was driven by the new motorcycle business, which more than offset expected softness in traditional powersports and a lighter automotive quarter. Regarding Marucci, he noted that seasonality is tied more to product launch cycles for retail partners (Q3/Q4) than the start of the baseball season, though the MLB partnership helps drive brand awareness year-round.

Bret Jordan of Jefferies asked for clarification on the "positive signals" mentioned in the bike business for Q4 and Q1, questioning if there is anecdotal evidence of improving consumer sentiment. He also asked if the 2025 guidance assumes any change in interest rates.

Answer

CEO Mike Dennison clarified that the positive signals relate to a cleaner inventory situation and excitement for new, innovative products, rather than a broad consumer rebound. He noted the real test will be consumer reaction to new model year bikes in the spring. He also confirmed the guidance does not assume any macro benefit from factors like interest rate changes.

Bret Jordan questioned the structure of the Marucci MLB deal regarding financial risk, asked if the AAG inventory liquidation was specific to upfit trucks, and sought clarity on whether consumer softness was a worsening trend.

Answer

CEO Mike Dennison described the MLB agreement as having low minimum commitments and being 'all upside.' He confirmed the AAG inventory actions were '100% in the upfit side of the business,' with aftermarket components performing well. He also clarified that consumer softness was more pronounced in Q3 and is expected to persist into Q4, despite some seasonal holiday lift.

Bret Jordan from Jefferies LLC questioned if the dealer-to-dealer share gains were from vehicles new to auction or from competing platforms, and asked for more detail on the $800 average value lift generated by the 'absolute sale' feature.

Answer

CEO Peter Kelly characterized the share gain as part of a secular physical-to-digital shift, noting that OpenLane's D2D volume growth rate was double that of physical auctions in the quarter. He explained that the 'absolute sale' feature allows a seller to guarantee a sale once bidding reaches a satisfactory level. This action attracts more buyers who value certainty, creating further bidding competition and resulting in an average of $800 in additional value for the seller from the moment the feature is activated.

Bret Jordan of Jefferies asked about the delta between the 14% growth in auction fee revenue and 7% growth in gross profit, whether U.S. pricing drove share gains, and how potential tariff-driven new car price hikes might affect dealer consignment behavior.

Answer

CEO Peter Kelly clarified that a U.S. price increase from Q4 2024 contributed to the Q1 auction revenue growth, and that both volume and revenue per unit grew in the U.S. dealer-to-dealer market. On the broader market question, he explained that dealer consignment behavior is closely tied to their new car inventory levels; fuller lots lead to more wholesaling of trade-ins, while emptier lots encourage retaining used cars for retail.

Bret Jordan of Jefferies Financial Group Inc. asked about the delta between the 14% auction fee revenue growth and 7% gross profit growth, whether U.S. pricing drove share gains, and how rising used car values might affect dealer consignment behavior.

Answer

CEO Peter Kelly clarified that a U.S. price increase implemented in Q4 2024 contributed to the year-over-year auction revenue growth in Q1. He emphasized that volume growth was organic, driven by more active buyers and sellers, not price competition. Regarding dealer behavior, he suggested that consignment levels are closely tied to dealers' new car inventory levels relative to retail demand.

Asked about the competitive landscape for 2025, the specific timing of the 2022 lease origination trough for modeling purposes, and the potential impact of tariffs on consumer lease payoff behavior.

Answer

The company feels its market position is stronger than ever and is focused on its own differentiated offering to gain share. The trough for lease origination declines was in Q1/Q2 of 2022. Tariffs could increase used car values and slightly delay the decline in consumer lease payoffs but are not expected to change the long-term trend.

Bret Jordan of Jefferies LLC sought clarification on traffic and ticket trends, the net margin impact from Q1 store closures, and the financial implications of divesting 40 owned properties, including expected cash flow.

Answer

President & CEO Peter Fitzsimmons clarified that traffic was flat while ticket was up. EVP & CFO Brian D'Ambrosia explained the margin impact from closures was minor in Q1 as it only affected one month, but CEO Fitzsimmons noted the closed stores had lower gross margins, which should provide a future benefit. D'Ambrosia confirmed the 40 owned properties are not mortgaged and their sale is expected to generate positive cash flow over the next year.

Bret Jordan of Jefferies LLC asked if the economics of the ATD relationship had changed following the final earn-out payment. He also inquired about the common characteristics of the 145 stores slated for closure and sought to understand the drivers behind the recent significant improvement in sales performance.

Answer

Brian D'Ambrosia, EVP of Finance, CFO & Treasurer, stated that there were no material changes to the ATD relationship. President & CEO Peter Fitzsimmons explained that the underperforming stores selected for closure were geographically dispersed and were identified as unlikely to achieve desired profitability. He attributed the recent performance lift to favorable industry dynamics, such as consumers servicing older cars instead of buying new ones, and the initial effects of the company's new improvement plan.

Bret Jordan from Jefferies asked for a breakdown of the quarter's comparable sales growth between traffic and price. He also inquired about the status of the ATD divestiture receivable, regional performance variations, and whether the oil change market is becoming more promotional.

Answer

CEO Michael Broderick reported that traffic was down low-single digits while average selling price (ASP) was up mid-single digits. CFO Brian D'Ambrosia confirmed that $6.8 million is still owed from the ATD earnout, they expect full collection, and the business relationship remains strong. He also noted that the South outperformed the consolidated comp, while the Midwest, Northeast, and West were weaker. Michael Broderick added that Monro has become more aggressive with its own oil promotions in partnership with vendors like Valvoline.

Bret Jordan from Jefferies Financial Group Inc. asked for clarification on the average selling price (ASP) tailwind despite the mix shift to lower-priced tires, the source of price offsets, and the traffic versus price mix in October's preliminary sales.

Answer

President and CEO Michael Broderick acknowledged that the shift to Tier 3 and 4 tires pressures ASP but highlighted strong performance in batteries and alignments as positive contributors. He identified brakes as the company's biggest service category opportunity. CFO Brian D'Ambrosia added that the preliminary October comp sales figure, down 1%, was still led by price/mix but with improving traffic trends.

Bret Jordan of Jefferies LLC inquired about European competitive pricing, particularly from GSF in the UK, details on negative customer experiences, the magnitude of North American price increases, and specifics of the Synetic partnership in the UK.

Answer

President & CEO Justin Jude stated that while UK competition from GSF persists, the intense pricing pressure is slowing. He emphasized that LKQ is winning and retaining customers based on its strong value proposition. He declined to quantify the North American price increase but confirmed they are pushing price to offset tariffs, which has not hurt aftermarket volumes. Jude also clarified the Synetic partnership leverages existing infrastructure with no new CapEx required from LKQ, expanding their salvage product line in the UK.

Bret Jordan questioned how new tariffs would impact the price delta between LKQ's aftermarket parts and original equipment (OE) parts. He also asked if the price competition in Europe was primarily driven by GSF or other competitors in markets outside the U.K.

Answer

CEO Justin Jude explained that LKQ maintains a price point between pure aftermarket players and OEMs, and there is sufficient margin to adjust for tariffs while remaining competitive, especially as OEMs will likely face similar pressures. He also confirmed that the most aggressive price competition has been in the U.K., but noted that this pressure is beginning to ease.

Bret Jordan asked for the total loss rate in Q4, details on the European private label program's revenue percentage and margin benefit, and the percentage of OE collision parts in North America that originate from Mexico or Canada.

Answer

President and CEO Justin Jude did not provide a specific total loss rate but noted it rose slightly in 2024 and should moderate as used car prices stabilize. He stated that private label is about 20% of European revenue, with a goal of 30%, and typically yields a 25% higher gross margin rate. Regarding OE parts, Jude did not have a specific percentage but asserted that OEMs source a higher percentage from those countries than LKQ, suggesting a potential benefit for LKQ if tariffs are broadly applied.

Bret Jordan asked about the progress of working capital improvements, specifically how much runway remains for generating cash from this source. He also sought more detail on European competition beyond GSF in the UK and the performance dispersion across different European markets.

Answer

CFO Rick Galloway estimated that the company has another one to two years of runway for significant working capital improvements before the benefits begin to taper off in late 2026. CEO Justin Jude clarified that LKQ faces multiple competitors in every European market, not just GSF in the UK. He confirmed that the UK and Germany were the weakest markets economically, with a notable slowdown also occurring in the Benelux region.

Bret Jordan of Jefferies asked for more details on the company's third-party platform strategy, specifically regarding the margin profile on sites like Amazon and eBay and the potential for channel conflict with traditional distribution partners.

Answer

CFO Jesse Weaver described the growth on third-party platforms as "highly incremental," noting that when Amazon sales dropped off in 2023, the volume was not picked up by other channels, indicating minimal conflict. Weaver stated that while these platforms have different fee structures, the incremental nature of the sales makes it a viable growth channel. He also confirmed that the company complies with MAP pricing to support its partners who also sell on these marketplaces.

Bret Jordan from Jefferies asked about the strategy behind the Cataclean acquisition and the expansion into the chemical additives category. He also inquired if certain market segments, like modern truck, are proving more resilient amid softening consumer sentiment.

Answer

Executive Matthew Stevenson identified chemicals as a key growth opportunity, with the NOS Octane Booster being a proprietary product and the Cataclean partnership serving as a beachhead for expansion. He noted variations in performance across the portfolio, with the modern truck, safety, and motorcycle categories showing strength, while higher-ticket items are experiencing the most softness.

Bret Jordan inquired about the health of the independent speed shop channel, the cadence of end-consumer trends, and the current status of the company's SKU rationalization program.

Answer

CEO Matt Stevenson reported that the independent installer channel is stable with no notable change in store counts and that the industry is optimistic for 2025. He noted that Q3 out-the-door sales were relatively stable due to marketing support. Regarding SKUs, he clarified that the only significant rationalization occurred at the end of Q1 and no further major work is planned, with the focus now on ongoing portfolio management.

Bret Jordan asked for a breakdown of the 'rest of world' supply chain mix, whether recent industry layoffs suggest wholesale shipments will be at the low end of guidance, and if the $5 billion revenue target includes recent acquisitions.

Answer

CEO Jason Lippert identified Cambodia, Vietnam, India, and Turkey as key sourcing regions but did not provide a specific mix. He attributed industry layoffs to footprint optimization rather than a signal of weakening demand. He explicitly stated that the $5 billion organic revenue target for 2027 does not include contributions from acquisitions.

Bret Jordan from Jefferies asked about Standard Motor Products' competitive positioning regarding tariff exposure, trends in the European aftermarket, the potential for Q1 order pull-forwards, and customer receptiveness to price increases.

Answer

CEO Eric Sills stated that SMP's North American manufacturing footprint provides a structural advantage over competitors in the current tariff environment. He noted that European aftermarket trends mirror the US, with hard-failure, DIFM items outperforming. Sills clarified there was no evidence of tariff-related order pull-forwards, though some Temperature Control pre-season orders shipped earlier than last year. He expressed confidence that the company's fair and rational approach to passing through tariff costs, developed during the 2018-2019 period, will be well-received by customers.

Bret Jordan inquired about the expected contribution from the Nissens acquisition to 2025 growth, potential revenue synergies, and the dynamic between point-of-sale (POS) data and sell-in for the Temperature Control segment, including customer inventory levels and potential pre-tariff purchasing. He also asked about inflation expectations for 2025, excluding tariffs.

Answer

CFO Nathan Iles and CEO Eric Sills explained that Nissens' cost synergies will materialize over time, but revenue synergies are a longer-term prospect. Eric Sills clarified that for Vehicle Control, sell-in was slightly above flat POS due to customer inventory expansion. For Temperature Control, strong sell-in was driven by customers rebuilding inventory after a very strong season. Management confirmed they are not seeing evidence of purchasing ahead of potential tariffs and that underlying inflation, ex-tariffs, is expected to be in the low single-digit range.

Bret Jordan asked about the sales mix of low-cost RV models, whether competitors were reacting to potential tariff fallout, and what economic metrics are more important than consumer confidence for the business.

Answer

Chairman and CEO Marcus Lemonis declined to provide specific mix details for competitive reasons. He suggested that the entire industry is getting leaner in anticipation of tariffs. He identified the availability of consumer credit and overall product affordability (driven by price and interest rates) as the most critical metrics for their business, more so than general consumer confidence.

Bret Jordan asked about the strategy of being a 'market maker' in used RVs, its potential impact on margins and capital, and whether it represents a strategic shift. He also requested an update on the strategic review process for the Good Sam business.

Answer

Executives Matt Wagner and Marcus Lemonis positioned the 'market maker' role as an evolution, not a new strategy, leveraging tools like the Good Sam Valuator and their national auction platform to create liquidity and capture share from the private-party market. On the second point, Lemonis announced that the board has decided to keep the Good Sam business, citing its stability and the opportunity for its management team to expand into the auto, marine, and powersports markets.

Bret Jordan of Jefferies questioned the competitive outlook for the wholesale auction space in 2025 and asked if potential tariffs could alter the consumer payoff percentage for off-lease vehicles.

Answer

CEO Peter Kelly stated he feels OPENLANE's market positioning is stronger than ever, citing rising preference in third-party surveys and a differentiated offering that should lead to market share gains. On tariffs, he theorized that higher new vehicle prices could lead to higher used values, which might slow the decline in the consumer payoff rate but would not fundamentally change the long-term trend.

Bret Jordan inquired about the long-term potential and acquisition timing for the Powersports segment, as well as EchoPark's inventory strategy concerning vehicle age and sourcing mix for 2025.

Answer

President Jeff Dyke stated that while the Powersports opportunity is large, the company is being cautious, focusing on perfecting its operational playbook before significant expansion. CEO David Smith reiterated that Powersports is a lower priority than the core auto businesses. On EchoPark, Dyke clarified they do not need to change their 1- to 5-year-old vehicle age mix, as supply is sufficient for current stores, and noted that direct-from-consumer sourcing has increased to over 20% of the mix.

Bret Jordan inquired about the seasonality of the non-oil change revenue (NOCR) business and the valuation trends for independent quick lube operators as acquisition targets.

Answer

CEO Lori Flees explained that while some NOCR services like wipers and batteries are seasonal, most are driven by vehicle mileage (e.g., tire rotations, filters) and have limited seasonality. Regarding acquisitions, she noted that the market remains fragmented with about 4,000 independents. She stated there are no significant changes in the dynamic, and acquisitions remain a great return on capital when the location is complementary.

Bret Jordan from Jefferies asked for a more detailed breakdown of the same-store sales comp drivers (car count, price, premiumization) and questioned if there were signs of consumer trade-down or service deferral.

Answer

CFO Mary Meixelsperger reiterated that ticket drove the majority of the comp, led by non-oil change revenue, but declined to provide a more granular breakdown. CEO Lori Flees stated that the company is not seeing its existing customers deferring service or trading down. She emphasized that while macro pressures don't affect their loyal base, they can make it more challenging to acquire new customers from competing channels.

Bret Jordan asked if the Marine segment's outperformance was due to underlying market improvement or share gains, and also inquired about the impact of California's CARB legislation on the Motorhome business.

Answer

CEO Michael Happe attributed Marine performance to significant market share gains by both Barletta and Chris-Craft, not a broader industry recovery. Regarding CARB, he stated any impact is already incorporated into fiscal 2025 guidance and they are working to navigate the rules. CFO Bryan Hughes confirmed they have a compliant solution for the new Grand Design Super C.