GPI - Earnings call transcript Q3 2017 | Group 1 Automotive, Inc.

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Operator

Good afternoon, ladies and gentlemen. Welcome to Group 1 Automotive’s 2017 Third Quarter Financial Results Conference Call. Please be advised that this call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Pete DeLongchamps, Group 1’s Vice President of Manufacture Relations, Financial Services and Public Affairs. Mr. ahead, go Please DeLongchamps.

Pete DeLongchamps

adjusted and posted earnings everyone, morning release that comparison to slide Andrew, on refer today’s call the this and welcome Group call. presentation for the related reconciliations The we have include we good you, will and to been afternoon purposes, to related results, to Thank issued website. this X’s

XXXX. historical statements to information and call, by I are begin, forward-looking safe brief Securities some of the we measures. conference make Except during harbor statements to would financial mentioned the like Private for use Reform the statements the management Litigation of about X Before of of that non-GAAP forward-looking Automotive provisions pursuant remarks made made Group are Act

other known in of risks forecasted and those from markets. available limited are Exchange past Company. Copies of may involve results to, months. conditions the unknown filings with actual both Company’s the risks XX statements but uncertainties, from Commission over are and the volume the Those risks Those future and periods filings differ Forward-looking the in associated not Securities with the Company’s risks the include, cause both to which and and SEC results. materially described are and pricing,

In discussed addition, SEC on certain under non-GAAP be financial measures, this may rules as defined call.

Please that prepared President and hand the Kenningham, U.S. all & comparisons Daryl now its Senior to non-GAAP to As John our required on Officer; of will by with are measures over and otherwise Participating Corporate Vice same to financial remarks reconciliations I such and most and applicable President Chief prior the are Operations; Earl. Officer; Company the the comparable period Rickel, Lance year stated. President Parker, any the Executive Earl SEC Financial call measures website. rules, me of President Chief in our directly GAAP our Vice note unless provides Hesterberg, Controller. today our

Earl Hesterberg

quarter X This Group $X.XX of diluted Houston good our for share Thank quarter. the net markets, morning income third XX% you, vehicle are earnings Beaumont’s operations everyone. a over strong a the new impacted share, of adjusted third UK and million of hurricane on in unit Pete, by very XX% increase and adjusted the per driven continued $XX.X increase equates an year. by per and sales increase and our Brazil. was largely last recovery in performance This

like to employees, combined directors, hurricanes employees I to Before further for matched quarterly assist to donation $XXX,XXX comments dollar relief Irma. appreciation team, make needed results, Group nearly much XXX would dollar brining to Irma. hurricanes employees our donate management affected to our victimized and about every who X partners, business Harvey our heartfelt and our by I by express and Harvey

Group kindness shown was everything. The employees overwhelming. our of everyone associated Some lost X with by

As you the had was Harvey Irma a very impact in minor which hurricane stores We business, massive hurricane comparison. on storm-related a know, dozen and had business our while X approximately Harvey. result on in But to lost Southeast hurricane third since the Irma. of XX to impact to results days of compared outages the our other due minimal quarter was power problems

This such closure a That during periods charges, is incurred negative lost Houston previously storm of Beaumont our to so during does new the and year in side hit, of summary weeks one-time ledger. normally dealerships exact, we As include Texas. pay busiest week is selling our the the million the as of of the employee one from XX.X with the profit associated of not inventory, million announced, be we’ve vehicle, things and $XX on. lost which

in our storm the ever Many highest have business used about vehicle Houston sales of week and sales over which after and have the of incredible the rates Beaumont side last the positive seen. one were three lift weeks September stores again of The not new the their but high equation a as still we doubled On period. was in impacted the new daily operation. normal XX% were that longer average more of up bit service percentage above September unit total losses. than weeks during volume in were These three three weeks for only high as the generating There vehicles in of was a delay volumes volumes ended. the

we meaningful business from the additional seeing service now However, are storm.

and increase trends weather. X%. a vehicle X%. noticeable These in UK, of And as revenues profits and markets. parts factor was UK a our new New quarter market market Another gross business third almost UK not Texas F&I same-store related used very strong results X%. a strong quarter And compares not despite third recent to sales XX% finally, in sales Central delivered profit auto unit weak Oklahoma, and by improvement limited vehicle our was the was service down retail England to our improved which to sales performance we performance both over and were by and in a That unit new grew sales vehicles our strong

our business segments. to Turning

quarter, margin XX% increased Consolidated our per X% consolidated gross unit profit trend XX,XXX the vehicle unit more increase the new was new $X,XXX. continued vehicle improvements we retailed as X% up X% vehicle profit as revenues average new with new up During $XX with price we over sales. new Total combined to of vehicle of vehicles. selling gross

Our monthly new the This and business growing UK UK XX% XX% above license mix our plate geographic X% with mix the which UK unit sales coupled reflects September change U.S., Brazil. of average strength buying. was carries

in XX% but non-storm which by better impacted strong led vehicle our from new was management sales. Houston BMW of equates of new XX% XX,XXX at represented mix represented days reflecting new to accounted a seen our our and vehicle sales. new the at for unit in significantly and which Beaumont Ford of sales supply of brand unit stood both vehicle quarter down our demand Toyota/Lexus vehicle This VW/Audi days. unit XX% markets, markets. XX second is due units, our inventory the to largely end and of XX inventory sales the also vehicle new Our U.S.

over XX,XXX During sales used increase by vehicle and increased in performance retail average UK the the retail the sent of sales. price reducing This X%, once was Company’s units X% increase more increase auction. selling average selling with a This sales by we revenues profit as quarter, vehicle focus unit decline units. Consolidated retail combined the Consolidated driven in retail used almost revenues the per X% is to increased strong of very with in gross used of used retail retail offset result retailed X% XX%. again gross by explained X% the we profit partially were number on unit. per as decline a unit channels vehicles through retail same-store

of a As strategy, our result wholesale unit used volume this decreased.

$X,XXX. vehicle historical and total maintain consistent gross used Our U.S. average. in and sales single-digit John basis, increased warranty through a profit Adjusted with same-store to increased a revenue sales total X%, consolidated after of touch X%. vehicle both our F&I increased impact wholesale a used used gross X%, gross and profit to with finance vehicle profit customer up revenue an the X% unit same-store stood XX,XXX on minute. insurance mid increased X% unit on $XX gross increase quarter XXXX. in driven favor U.S. of We up supply at adjusted will parts units, X%, F&I unit in delivered another X%. X% as collision increase, per our our weather per a and growth which of at inventory by in year-over-year profit increase is retail sales. revenue of unit day after per Total XX unit X%, by increases per guidance X% quarterly yet adjusted retail retail third combined strong

segment X% unit of same-store driven total our after Regarding a saw operations results, a geographic in X% retail in F&I vehicle increase revenue a sales increase increase our revenue X% a a in X%, unit. through by sales, and U.S. adjusted increase new

their with payment UK have new X% wait compared company the were seem retail dependent in does travel new sales before which a third of than used used vehicle is were In of This other insurance markets. for mentioned, sales customers need sales that replacement previously in and industry, the buying. of to In it the Beaumont a weakness our oil over check declined storm-impacted from down and car car recent the very settlement vehicle many quarters. strong delayed X.X%, vehicle. lift replacements. markets the our used unit down as vehicle which insurance down to improvement our Many in more Same-store some significant on offset a a year-to-date. markets, Houston used quarter were need continued the and As X% rates tempered customers sales serve

of the unit once quarter increase operations by new with same-store U.K. X.X%. Our again large up X% in outperformed a used and industry vehicle the margin vehicle sales sales

substantially in each and to Total our in the gross outperform strong to both ability management market of revenue as is a our team. growing grew and profit X%. in same-store well market in strength Our as the size grew function Thanks performance the business the strong UK segment.

profit overall our gross XXX profit, despite vehicle profit we on both XX%, percent used as luxury which to gross gross same-store efforts. as XX.X%. overall and basis. per in via focus and our weaker which gross profitability profit in we to growing In XX% generated also by local unit sales, acquisition of was quarterly our profit We We also on vehicle industry, profit points, integration continued sales points margins. currency were all by flat by than after the new SG&A as cost growth able of control, XX%, increased We significant XXX Brazil, continue the gross improved basis basis a leverage SG&A leverage a increasing increase unit same-store reflecting by a F&I same-store mix are

now go Rickel, quarter of the team be to John? local positioned our proud market future done turn advantage our over work third detail. We full of our continue well I’ll results John financial to call over to are very our recovery. take to in and CFO, the has more

John Rickel

good Thank afternoon you, Earl, and everyone.

fully adjusted quarter our net $X.X primarily increased XXXX diluted XX.X% consolidated million $X associated XXXX, exclude million. adjusted summary of share of hurricane with income $XX.X a million adjusted net of to comparable results per the basis, quarterly On million Starting $XX.X results. $X.XX. earnings or consisting charges tax For with record of impairments. increased a Harvey a after to our XX.X% of These franchise over of the directly record a results X.X million rate and quarterly third cost XXXX

adjusted For generated revenues, the was year. $X X.X% increase billion from which quarter, prior total in we a

third gross $XXX X.X% million increased Our million. or quarter adjusted from profit a the $XX.X ago to year

interest from Floorplan adjusted million expense increased gross gross basis through to decreased SG&A to of XX% profit, million, the percent rates interest interest flow to million, XX primarily prior points this to profit by is $XX.X LIBOR a also higher explained quarter. $X.X expense higher year. rates. equaled increased due which XX.X% Other by As year last or in XX.X%, $XX.X interest versus $XXX,XXX

adjusted quarter Our tax for consolidated the was effective rate XX%.

be and to XX%. XXXX rates full XXXX between tax our XX% expect and We year

Turning basis. now a segments, starting US on market to the our with same-store geographic

total X.X% $X.X vehicles, new used For an sales X.X% the billion, revenues in revenues. reflecting in X.X% quarter, to increase total adjusted a X.X% These in partially increased offset and same-store in increases were by after U.S. F&I. of decline X.X%

increases warranty, used in markets. X.X% The in of a in after in revenue customer hurricane X.X% and by increase lag vehicle collision. this impacted partially revenue X.X% in replacement wholesale decline our of parts, sales pay, in mentioned, in Earl caused consisted X.X% was demand X.X% As used

up. the along stuck revenues after week impacted out the and availability. Houston impacted repairs markets traffic hurricane Atlantic collision and car were most the in by overall due as store to of markets as rental delayed were demand Coast the of negatively business through to and Gulf loss lack customers hang and who were attending impacted of month either in of of or a Beaumont and of over in the both revenues our our property town, Also Houston September Beaumont thousands our of negatively Our were closures lack sales due of

storms. increase Total expect that estimate same-store the we by impacted This sales growth X.X% We between for $X,XXX. quarter. as sales after units through as We F&I, by guidance for full while to of the retail new and in retail for by after new increases has same-store new was the and past increased in vehicles, well. X.X% unit per U.S. over The digits increased $XX driven total X.X% rebound negatively the X.X% or gross In to a collision to and reiterate quarters profit the marks six in and fifth single profit fourth X.X% essentially volume total revenue increased gross year XXXX our prior gross year. used X.X% time a vehicle X% in X.X% increase growth revenues flat. was mid XXXX in X%, profit our our were due of same-store the driven vehicle in

Earl dependent by unit almost Beaumont As in F&I driven gross markets. mainly our by mentioned, increase energy volume Houston driven entirely the weakness adjusted more The flat. profit increase than total units per were markets, X% $XX or was which other in in X.X% was our offset retail A the retail $X,XXX. increase to and

XXX% internal business. due sales margin to after points margin gross report decreased as work, to less XX.X% Our we XX basis reconditioning which

to XX.X%, and a on for points operating X.X%. flow SG&A, the quarter. as percentage with of basis adjusted same-store constant to currency increased XX% basis. our equaled a basis U.K. XX gross segment Related metrics SG&A to Our profit, through points on change XX adjusted margins decreased a basis percent

total X.X% $XXX.X quarter, $XX.X million the revenue to million, increased or by business increases each For in segment. healthy driven

revenues increased X%. New increased used X.X%, after X.X% increased increased and XX.X%, total sales F&I vehicle

decline in our management new an portfolio brand to despite caliber of the which mentioned, growth speaks Earl X% our was local of As and vehicles team. industry

with our a Our Related basis XX.X% and our of on metrics increased to points change profit SG&A operating currency basis of XX points same-store segment and XXX acquisitions assimilate dealerships. as team our the constant margin XX percent on decreased percentage a basis. to X.X% recent as leverage continues to a scale our to basis Brazil gross

margins. XX%. tremendous As our in Earl profit gross was flat despite did used, continue of a disciplined and This to team F&I digits vehicle double increasing after generate total job our mentioned, profit to sales, be sales new where by managing gross unit we growth

improved to For the $X,XXX. quarter, margins our vehicle X% new

spending profit Our terms also XXX lease of outside SG&A our declining headcount, several for gross to points improved, and XX.X%, in as reduced a by service reduction percent driven of basis a properties. dealership renegotiated

we the of Earl As in advantage future full positioned well are take market. recovery mentioned, to this

liquidity Turning structure. consolidated to our capital and

XXX,XXX an at at offset $XX.X of million to roughly of of to September $XX.X XX,XXX As of beginning we our funds million price of at had million on the $XX.X million. These and immediately hand our represent shares $XXX.X floorplan accounts, that invested total in shares an a price We cash outstanding spent million was stock the we XX, of repurchase $XX.XX. X% bringing stock during repurchases the used $XX.XX. average another Year-to-date, common $X.X of average year. quarter have available total to repurchase of shares common of the

the increase year We to on the million pay per have program. of $XX.X second share dividends share quarter, per board-authorized remaining X.X% Also, an during $X.X share, used repurchase our of million a quarter $X.XX we third over ago.

purchase and end underlying Finally, real-estate dealerships, previously by we ownership the to leased us XX%, a real-estate of have that to would allow ownership U.S. purchased we to XX% of our U.S. in our options the increase XXXX. increasing U.S. during quarter, four place

to will pursue near assets strategically leased as continue exploration. term these over We control

schedules condition, For back to news to additional Earl. release refer presentation now the With I’ll as posted please financial detail well on of as to our it information turn additional regarding that, website. investor over our the attached

Earl Hesterberg

as dealerships franchises dealerships dealerships in we the Thanks, the Jaguar three consisting of well US million efforts, located with global dealership Fort Rover and our Texas been previously annualized and John. first expand are points Audi additional $XXX Land awarded add revenues. in Three Related Worth, of as the XX in totaling Land in have in US to corporate two development an having in also announced acquired in Jaguar our our Rover to New are quarter, as UK. Jaguar the seven seven franchise These Land network Rover Mexico. and dealerships

The revenue by other revenue we session. Beadles Beadles these in previous the $XX The billion. to months. performance the operator Also call our in and in operation the were I UK prepared acquired over question-and-answer stores. begin the will with increase very UK our terminated remarks. now XX been the Operator? the over Group based early This in the our pleased October, will and a XX SEAT million $X dealerships turn Group over early generated have which sales concludes to UK we

Operator

first comes [Operator of Instructions] Murphy The question from of John Bank America. ahead. go Please

John Murphy

question meaning people somebody previously how got to two-year is stepping ownership trying what and owned somebody first if these on replacing. you at car are is car they up what old demand I seeing it? Beaumont. up, really a some a is am A And the you’re curious scrapped tell that deep just of buyers that getting replacement understand I was they’re owned Houston and stepping and in the just replacing stepping cycle in or old who can what up six-year in owned

Earl Hesterberg

Let answer me allow to Kenningham that Daryl for you, John. to try

Daryl Kenningham

It’s with hard any replacing brand saw and most or either conclusions, John. to vehicles their we vehicles similar people type. was What consistent draw same same

if car, if generally saw car; in an brand we would an SUV a And So, that stay they replace truck, a were it lost. they or or within SUV replace the in with that truck. it they they’re with

John Murphy

Any lot on ready have waiting of that sounds new And what used it there more a sell gauge news, for that. on impact, I then, follow to sort have is is of to insurance will Okay. mean that them? you’ll up or or folks checks. both their

Daryl Kenningham

see new, subtle. those little used that of I again. some will This see bit is more but you sort will believe are Daryl side, a you

John Murphy

up. in that up F&I you reaching that asymptotic Okay. was in go And still there or PVR, as big I there is be the this question room the an you as of second might US, prices to limit it think view go have step sort average transaction going keeps also any up? And Is a then, you mean about…

Pete DeLongchamps

for it’s quarter, our terrific a F&I. in We Thank the think so have that opportunities maximized we’ve nice did John, but we increases of you question. all Pete. product penetration in

John Murphy

floor a then, Any are the vehicle what looks lastly, on just GPUs or going what reshaped what you to somewhat that bounce see activity it relative complicate and there on and going to IT commentary you And new also the of maybe have might automakers? an side. Okay. situation from incentive bit and little forward be you starting achieve will able be offset like a think kind are the forward? of

Earl Hesterberg

John, to margins just we Earl. Obviously vehicle gross of five this significantly is remind are front-end everyone, But, new last difficult quarters. predict. increased to six margins, our the

somewhat impacted We was we on of markets. a our contracting that for working have had sales concentration time, energy which necessary in been long the because because heavy

So, margin top at year and the for half of probably been a had our agenda actually or a a more.

be So, we of is demand and or have that, supply level. similar to kind able how around it’s will out not balanced go the winter. maintain the flowing now into we we’ll to Whether see as

last know concentrated that think up. made it some demand priority that get move some OEMs But making to the the half. be I the production of lined I will a in efforts has are as that forward we reduce We’ve past. think than and and and supply our bigger been you year over factor a

John Murphy

caught? rates last one I would were John, basis on directed corporate if Just tax you U.S. mean, tax get on how question, rates. the benefit

John Rickel

It very John. is significant,

can all move pay now like through any We take of we plenty where things the stuff don’t taxes. companies. Ireland the of know, you deductions and we some As tech have

fall pretty And a rate, cut taxes. XX the if profit resemblance cash was line us. the bear the a our or to will strong for there corporate XX-point basically through So, that bottom in taxes

benefit. So, have cash you’d a also nice

Operator

Nelson of Please The Stephens. ahead. Rick next from question go comes

Rick Nelson

could be hurricane might you follow up in impacts. And quantify this? on and the tracking sort of how September you and like lift I’d what saw to think if that you you on payout see October

Earl Hesterberg

see and -- is first few anything the at I don’t that mentioned weeks anything my the October, three before, we’ve or weeks will ever Yes. and three Rick, maybe like plus like never we that think I days again. there those in end script, September of of as seen

stores on more bear still depending do. would that up I new what the vehicles stores. are still probably stores sell in the XX, storm get to markets of over yesterday, Used degree; were these were stores and basically would they of them mind, probably would time that and And XX%. but vehicle expected we quarter. through in tapered October off vehicles seasonality, of XX Houston you year. to are normally on beyond isn’t And expect September they fourth Obviously, year. most up into pretty there at But, Our as I significant it’s into not we that or is the doubled And this in what November, good would have say like August used new some in our well week second But, impacted XX%, October, the that significant. as double-digit any say to lift these continue increases I well as and as big into sales. moved

Now, will from for But, this taper is where it probably think I some last now. quite off will time. it

Rick Nelson

UK bucked the what curious drivers. the industry the Also trends,

we industry. you I if mentioned still even you mix outpaced think brand the at your weighted look mix, brand but

Earl Hesterberg

be happy answer Sure. that. I to Rick, will

acquisition strong brand quite The in have company yes, in in from are are our we’re Jaguar-Land us mix. third put Ford network, pretty the and the bit. business. company. dealers recent And we -- a network, and Audi the and a UK we becoming we business most the significant power a an are our quarter emerging came emerging has exposure We And Rover good our Volkswagen The now dealerships. brand into broadening Toyota reasonably

some getting are now. we So, scale

business for each. made dozen But we a of about the good two power. acquisitions always been some us. two this have have last has We years, And over a stores

have putting I we’ve personally some November the And got clearly able employees, US particularly UK job, able of things have over think hurricane. annual we Kenningham now through Daryl outperform some by got to the revenues. billion been And lot team. Xst a you we’ve year charge there. and that how a did of that’s now, we’re pretty operating and took navigating very and I this dealerships $X last spend in I operations in So, over I like capable tell a XX time and to market. the muscle, he will X,XXX

business to can So, market And outperform there. I continue anymore. we the think it’s small a not

We have get and don’t perform those some or stores of that got we’ve well to them. rid improve

So, I quarter for that it’s don’t positive X phenomenon. a and a think is UK story very Group think one I

Rick Nelson

Thanks I F&I for that. could ask $X.X if finally, a was The question million? there for John to adjustment, add-back revenues, here. an

John Rickel

ability basically customer and we’ve in months. put to next for this Rick, When to refund. that up a into backs, probably Yes. basically get that take to something extra the see vehicle, next And has was few come we’re that to the contract or happens selling the that a for put reserve months. going reserve John. is elevated the over product we a the we’ve a That what charge amount expect up F&I represents you’re account several to

Earl Hesterberg

Rick are and we vast sure these of vehicles Hurricane Harvey make majority just to The understand that. totaled. flooded from want to

taken And going to off are so, be the they road.

customers will back. some service their degree we commission some those ability profit to have products refund the and and of the of charged So, be on would made cancel contract vehicle those have

Operator

Please KeyBanc. from comes Brett go of net ahead. Hoselton The question

Brett Hoselton

over -- early, time UK current about more little talked current thinking wanted ask I structurally, spending simply of are Brazil about -- your Brazil what’s in you on UK, and and One, two kind your you thoughts forth. so presence to bit building your out what there. a

effort are secondly, be can spend of economy, then, you pattern Brazil picking point or that What’s about it kind you thinking time? like this at and up your struggling going on in but more here holding bit? the looks are structurally, So been you a you in building it And has kind to talk out. may time there? of Are which

Earl Hesterberg

Okay.

couple comments Brazil, then me Brazil, economic try it make downsized parts a strategy core let which been weak of have downturn Let economic got that some there, parts just on talk to bad have first him strong and there. I’ll we know day and And very out. Yes, the I’ll a probably went through data the is since in to get we because the what and John, about business new the business. of the we we

We’re the the group Toyota largest and the largest country, in Brazil. are I BMW and good business in second Land Honda we retailer think Rover

So, have XX dealerships. we

dealership We have Mercedes but mention, we’re I small. should there, also too

is our headquarter revenue profit. to disproportionate size and Our operational gross

So, we would intend business. significantly a grow scale to would now more benefit from that We there. selectively

some muscle We that local incredible we’ve have we but team, brand management and there an mix we have some could great got developed, team good use more scale. amount, more

had So, is I’m going entertaining promising. going situation not I’m actually and the management stable, that much to as to although team necessarily doing always is year economic year; political some this our more situation the work true time from been next this work on it well, that; John more in has spend -- is there week Brazil. And

let color So, you to little me give on a ask that. John

John Rickel

central basically XX central Yes. cut bank basis rates, X.X%. -- their Last central that them night, so points, their their Brazilian the version to again of brings another

XXX basis XX-month about points about score, period. a in keeping you’re if reductions think of I

of is that’s under latest were control; X%. So, stimulative Inflation readings sort pretty step. a under well

The So, they appear the against also in there have declined President. and a labor to number to the actions foundation they congress has impeachment of pursue basically important place. passed have reforms also

that So, to it of through in this of kind be place term. their appears President going the end is

continue pursue some reform them stability, there for So is matters. additional to room I that think with to

local opportunities that with down a acquisition at some additional the this is it that that’s team point. there foundation why I appears we really of All scale been recovery. really the spending now laid And some need for time said, do both looking at have Earl and because

Operator

[Operator go Consumer question James comes from Instructions] Edge Please Albertine The Research. of ahead. next

Derek Glynn

questions. taking Thanks is for Derek the This Jamie. on Hi. Glynn for

and Given more days sales you go comp you detail that? guys strength service can on in lost into due drove what parts the to just that Hurricane, U.S.; some the in in

Earl Hesterberg

selling those the have on were probably we days. gain lost for to X% we [ph] about Well, a quarter track until

for So, of in if the recession. years, probably parts service we’ve had effort since and lot a many

a So, We good we summer parts did on track. service. a really going had were marketing actually and of in and lot

more So, done a have from hurricanes. point yes, probably, both time we comps on the two we the hadn’t or would missed if that

Daryl Kenningham

we’re after strength for parts a growth Yes. we day a and our a Saturdays We making emphasis seeing in also marketing customers, of but country the and on normal of lot in including and for and additional around put decent dealerships lot sales some -- that and focus saw down.

Derek Glynn

priorities secondly, just allocation that’s given free accelerate the the meaningfully Okay, made and what investments to capital mean, the is And and got it. perspective? Thanks from think here? this expand when growth time CapEx now in you’ve cash from past you are business, helpful. I

John Rickel

We to continue is we cash. think acquisitions first of use our Certainly, best target.

seen UK the We have Mexico of Rover excited in the then trigger and have in pulled that are Earl another that the in You actually big about Rover Worth, are that Jag-Land a where bought New course Beadles recently. few we We on talked added a we store acquisition we so dealers. store, only Jag-Land the two Fort Audi about.

and are best first there, acquisition all opportunistic for the look and use between to three repurchases continue dividends. we markets. in we opportunities share That’s then basically from So,

Operator

comes with next Wells The ahead. go Please from David question Fargo. Lim

David Lim

lots? accelerated fill OEMs think demand, more of additional the that or with produce the the and quickly, to do need back you Just are think the -- either in you guys inventory you do OEMs

Daryl Kenningham

is David, Daryl. this

Some some. -- yes,

in total lot brands. We we’re inventory happy happy in of a are our with and

generally, are the impact, we and Honda, opportunities specifically. happy that’s two. but or in in not them we that’s necessarily of are heavier are quite rest our tight But us. But Lexus one largest in And them Lexus are Toyota, several Honda, generally hurricane just with happy we rest with Toyota, are markets. of of We for

David Lim

Got of you. well? units And new? same-store I in And situation from hurricane you finish at hurricane the and like you ahead It sold, the of then, to What looks the versus more last can used went order units to you the look year had of the when -- for X% line the then, your impact dimensionalize have X% in so had retail about as dimensionalize? sales Can across may was U.S. the And then last also some you obviously done already. add already that sort up you year. finish it’s sort on

Earl Hesterberg

have I new in XX% at on kind X.X% recent have far in traveling new been and at off. The think That’s sales, coming been used haven’t David quarters, simplistic from vast is the markets, the impact. is, X% down new in oil-impacted sales. way quarters and up back it look same-store recent Oklahoma numbers to in these of those X.X% we we are And used. the hurricane down in Houston almost difference in vehicle majority of been particularly because and that

other and that’s England some And is positive from and New of Harvey. Houston markets, did by we the from have simplistically impact markets like So Beaumont. we little had kind driven it Hurricane a but benefit primarily

Operator

Please The ahead. next question comes Markets. from Berenberg Andrew Capital of Fung go

Andrew Fung

ex-replacement I the wanted from talk guess the hurricanes. more and Houston area I underlying a bit to little demand about

be it’s after you -- have outside should how quarters. sense that was Do a maybe about we trending down been that’s the and it thinking hurricane of the lift? XX% last of replacement temporary You how mentioned few

John Rickel

It’s kind the really separate to right hard demand. from of underlying now hurricane

Earl money coming fundamental kind whether federal the market is lot just the the the pouring stimulus we effects no it those in it you But bunch infrastructure or trend of think probably projects. what be will also like there will going the just as into changes homes longer is government forward. go basically work forward stimulus for hurricane, As underlying the We construction flood something demand it now, before. a of be that travelling not were replacement people is but also hurricane downsize of on done has replacing indicated, a money

Pete DeLongchamps

is The confidence add into might you prices saw we that than oil the plus, were there as want other XX. as kind well a thing to oil of consumer $XX when of level XX different and plummeting is stabilize what

also So, impact the in I think that’s Houston positive the community.

Andrew Fung

most are in exposed you the quick us to OEMs could a follow-up, UK? as And remind you which

Earl Hesterberg

Yes, Audi, and the BMW big UK. in certainly, three OEMs are our Ford

Operator

Sachs. The Please of go David Tamberrino comes next question Goldman from ahead.

David Tamberrino

because sense on pickup it seeing, new or faster? lower demand have further, demand mix? kind same us Is a you’ve Houston along a of more the been some those are the give can of car CUVs trucks, the up on passenger kind questions been than has crossovers of is following flooded what Just or heights it at lines of area you the that there been line

Daryl Kenningham

significant Camry. see that. car, a Accord our a see Remember we board normal the saw those We and that mix really of and coming didn’t in truck sales across as But we well change necessarily fall, some as cars SUV from out and building between are new this did mix. models

David Tamberrino

or but doesn’t And it that. on helpful. from get you dealer still is like guess kind there harder OEMs? that’s for sound to inventory it, the It you pickups offside any then, any availability up are crossovers the or of following Got I from are finding

Daryl Kenningham

our pleased where are happy are and We’re with the with inventory generally. we’re OEMs

David Tamberrino

continue you along How your Brazil cost in the there, and UK, of following -- well, to have practices of lot much lines best think and fixed to region you the talking it And leveraging taking from of your networks? putting order further about throughout the as in earlier, shared do to some improve. opportunity SG&A go kind each

Earl Hesterberg

I’ll address more lot costs that. we can don’t Brazil, think cut. have a we In I

do during downturn. We that that’s what doing a because aggressively the have during downturn been you

come Now, our gross and adding leverage profit will volume. from

headquarters. do reasons have running some And still business the I so, primarily that two say, last There is efficiency. fairly am had lean still structured one on to as don’t months integrate -- in last acquisitions the it be years. We operations. the large last within two work UK, to to we of you have room some bigger. And UK we’ve because the time, So, shared now I year would from efficiency lot XX We in work some In is support a of a need or we of the properly. are there certainly lot get to cost, those. is over of we Brazil, cost the have

and lot of working UK So, in of improvement for the middle a have cost runway that. I think we we are in on the

David Tamberrino

And sorry, might I missed US? have am in the I it.

Earl Hesterberg

as is have where always we these we I the a sales think a markets some volumes. we In contraction company do And we oil-impacted had room that because more have been because to had operation. in big US, there on

year and significantly a room equation been So, pretty cost business but to our there’s more we’ve in certainly improve working that half the for well a US, no doubt.

Operator

would remarks. turn concludes Earl Hesterberg, Executive closing back question-and-answer President for to Officer, our This I the any like over to and conference Chief session.

Earl Hesterberg

call updating our on quarter today. Thanks February. to look us We you earnings fourth joining everyone for in forward

Operator

concluded. for presentation. now Thank today’s has conference you attending The

disconnect. You may now

Group 1 Automotive (GPI) 26 Oct 172017 Q3 Earnings call transcript