Adam Jonas: Just a couple of questions. First, Tesla, those price cuts, I don’t remember anyone cutting price like 20%. That’s kind of a, maybe you’d agree, pretty unusual situation. And while it doesn’t necessarily compete directly with all the nameplates that you guys are selling, some of the stores, you might have a little more head to head with that type of product. I’m curious if this wasn’t already covered whether you saw any real time impact after those cuts.
Daryl Kenningham: This is Daryl. We looked at our used Teslas in inventory immediately after their announcement and we repriced. We didn’t have very many honestly. But we did reprice. And so, I would say there was an impact from that perspective, but the numbers are like less than 100 for us across the country. And then, in the segments where we do sell EVs or we sell luxury cars and there’s some cross shop between Teslas and luxury ICE vehicles, and we haven’t seen a material impact yet on that per se, but it was a bold move they made. That’s for sure. And we’re watching it every day with what they’re doing.
Adam Jonas: Just a couple of little housekeeping ones then for me. Any comments on interest expense either on the floorplan side or other interest expense, just kind of seeing where we are today versus pre-COVID and given the right environment. I’m not asking you to guide specifically, but something directional, particularly on floor plan, as you kind of get the units rebuilt with the rates kind of creeping up.
Daniel McHenry: Adam, it’s Daniel. At the moment, we have 70% of our debt swapped out. That’s fixed mortgages as well as floorplan. As the inventory continues to rebuild, we will see some increase in interest expense. But at the current rate, we see that at $0.50 of EPS per 100 bps increase in interest.
Operator: Our next question comes from Glenn Chin from Seaport Research Partners.
Glenn Chin: Just more follow-up on pricing. Understood that fourth quarter is before Tesla price cuts came in, but some third party providers suggest that ASPs continued to increase through the quarter. Can you confirm that that they continued to reach new highs through December? And then, is that a function of price, mix or both?
Daryl Kenningham: I assume you’re talking about new cars?
Glenn Chin: Correct.
Daryl Kenningham: We didn’t necessarily see an increase through the quarter on new car pricing.
Glenn Chin: Just on parts and service, margins ticked down slightly. Is that a function of mix? Sequentially.
Daryl Kenningham: I’d have to look at it more to see if parts drove some of that, which it probably did, but we can take a look at that and get back to you.
Operator: And our next question comes from John Murphy from Bank of America.
John Murphy: I just had one follow-up on leverage, Daniel. You mentioned 1.9 times as your current leverage. I’m just curious if you saw a good acquisition either in the UK, in the US where you could potentially take that up to and what kind of capacity you think you have to do, potentially a small, mid or even large acquisition?
Daniel McHenry: For us, I think what we set out is that we would be prepared to go to 3.5 times levered. Our credit facility allows us to go to 5.75. If it was a really big acquisition or something that we were really interested in doing, we would be prepared to go to 4 times, but that would be on the proviso that we would reduce that back down again to 3 or under 3 times pretty quickly.
John Murphy: But you’re comfortable with 3 €“ so you can jump to 3.5 to 4 on an acquisition, you would want to grind that back to 3, but you’re very comfortable 3, meaning there’s a turn of leverage here that’s just up for grabs, depending on €“ the best way to go.
