Michael Ward: Okay. So the operating cash flow number we see is from a seasonal standpoint and then from the floor point standpoint is going to be lower than we thought when the Q comes out later today. But all things being equal, it’s normal course of operations.
Joe Lower: It’s definitely normal course. And you can see that in the $236 million it does include the tax payments, right, that’s buried in the operating cash flows. So I think pretty clearly, when you look at what’s reported from cash from ops and you look at new and used floor plan, I think you’ll pretty quickly get to the $236 million number.
Michael Ward: Okay. And then just one last thing on the off lease. I think we’re anniversaried up with three-year type period with COVID where you probably have no vehicles coming back off lease or very little. Was that one of the things that contributed to the — when you look at the retail on the used side underperforming the overall market?
Mike Manley: Yes. There were a couple of things that happened. Firstly, to your point, there weren’t many vehicles that were put on lease. And then secondly, because of the appreciation of used vehicles, many customers for one of two reasons, were buying their own vehicle off the end of the lease, either because they didn’t want to step into the market and one is the market to mitigate from a price point of view. Or secondly, they did want to step into the market and then see if they could maximize their margin on their own vehicle. I think some of those things are now dissipating, and we will see. But the reality is there is that shortfall that in the marketplace of those vehicles now age one to three, four years old. And you’ve seen all of the retailers step up their activity to outsource those vehicles to fill the hole.
And I think we’ve done a great job in Q2, and that will continue to be a focus. It does come with some incremental cost from a marketing and development perspective. But I think that is an investment well worth making. And as I said, as you get through in the summer months, who knows what’s going to happen, we touched on a potential headwind in terms of the negotiations. We want to make sure that we have things that we can turn to and sell effectively. So it’s always a balance.
Operator: Our next question comes from Colin Langan from Wells Fargo. Colin, your line is now open. Please go ahead.
Colin Langan: Just wanted to follow up on the commentary you mentioned. SG&A was impacted by investments in technology and new business initiatives. Any sizing of the impact? And is that sort of in the go-forward rate? Or is that more of a onetime sort of cost?
Joe Lower: Yes. As I mentioned — and we just had this kind of earlier question on the nature of it, it is people, it’s technology, it’s capability, it’s business. As we’ve indicated previously, it’s 100 to 200 basis points as a percentage of gross. And this quarter, it was about 150 basis points as a percentage of growth. And that’s — we track it that way and we’ll tack it that way going forward.
Colin Langan: Got it. All right. I appreciate it. Sorry I missed that. And then in the past, you’ve talked about AutoNation…
Joe Lower: And just to be fair — I was just going to say, just to be clear, we anticipate that spend will continue. We’re going to continue to invest in the business. What I did — referenced earlier and I referenced in my comments was the one element of SG&A that was higher than anticipated going forward was advertising. That was 75 basis points or so higher than you would expect from us on a going-forward basis, really associated with some of the unique things we did in the quarter. And that I would not expect to continue at that level going forward.
