David Hult: I’ll start with it and then Michael can jump in. Michael referenced in the script that we had $2.7 million in cost from an acquisition that didn’t materialize. I’ve said it for many quarters. We’re very focused on our assets and our portfolio of stores that we have. And we’re always trying to maximize our opportunities in acquiring things that are accretive to our platform and divesting of stores that might not necessarily be performing at the highest level. The divestiture of the North Carolina stores was partly due to the anticipation of the new acquisition coming on and making sure we maintained our balance of cash flow and kept our leverage proper. When that didn’t materialize, we had already been under contract to sell the North Carolina stores.
Michael Welch: It leaves us with a lot of capacity, so $1.5 billion liquidity and a very low leverage ratio. So we have plenty of capacity if acquisitions materialize this year to deploy that capital or if per share buyback. So leaves us in a good place for 2023 for capital deployment.
Operator: Our next question comes from the line of John Murphy with Bank of America.
John Murphy: Maybe just to follow-up on the GPU question, David. And I know this is a little bit unfair but also kind of fair because it’s important. How do you see new vehicle GPUs progressing as we go through the course of this year and where might they ultimately land? And sort of as a corollary to that, how much of the variable compensation you pay to your sales folks is linked to that dollar gross, meaning there’s kind of a natural reduction in SG&A as that gross comes down over time?
David Hult: So John, it’s complicated, right? I mean, every year no one’s predicted the year coming. Well, there’s been a lot of unique things going on. But what I’ll tell you, in the fourth quarter, one of our domestic brands, the day supply, I would say, got back to close to normal levels. And the gross margins with that brand were significantly higher than what they were in 2019. So we have confidence that our margins will be significantly higher in €˜23 than they were in €˜19. But certainly, you can tell it’s fallen off from prior year results. So we think it’ll be healthy. We think it’ll be well above €˜19. But it’s really going to be a story of how each particular brand comes back and when they come back. But because of a SAR below $15 million and all the things I’ve stated, we think it’s going to be a pretty good year for new car margins.
Michael Welch: And John, on the SG&A side. You’re right, a lot of the commission, a lot of the pay in the stores is tied to the gross profit is generated, and so there’s a natural kind of fall off in the SG&A to match up with that fall off in any gross profit decline.
David Hult: The other thing I’ll add, John and you’re talking about new but I’ll bring up used as well. It cost us X number of dollars to do a transaction. So to chase volume with lower growth really deteriorates or hurts your SG&A. So we’re very thoughtful about not necessarily chasing volume but really looking at each one of these cars as an asset and trying to get a fair return for it while not letting aging catch up to us.
