ABG - Earnings call transcript Q4 2017 | Asbury Automotive Group, Inc.

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Operator

Please standby, we're about to begin. Good day and welcome to the Asbury Automotive Group Q4 Year End 2017 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Matt Pettoni. ahead. go Please

Matt Pettoni

The and Senior good is President fourth At our Officer; and being Chief Goodman, Welcome have. Vice President Asbury asburyauto.com. President Vice and earlier us later later to Operations; our the remarks, and Officer. quarter our with Hult, Asbury's David we Thanks, was Participating the on results XXXX John and of morning, our might earnings and Group's issued questions, today. replay for for will be quarter be morning Executive for I Sean is of Financial available are Senior release call. Automotive follow-up our any detailing will fourth and open operator this available you everyone. press Hartman, posted Chief Today's today up will recorded call conclusion at questions call website

you likely the I during that Before discussion must contain we to remind begin, the is forward-looking today call statements.

statements are which to nature. forward-looking actual other those, statements from statements. suggested Forward-looking in by results subject uncertainties, and those the statements significant differ are All materially are historical may than

issued reports filings certain Form time XX-K differ, that to results update risks of please today. year on our statements. regarding ended expressly SEC earlier the release to forward-looking for We subsequently the may actual quarterly see XX-Q any cause information For time, filed the including Form disclaim our with any from to our XXXX, earnings responsibility December and

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

GAAP such my most non-GAAP we website. rules, SEC the reconciliations hand measures David financial comparable call David? pleasure the to to on to measures is over our our Hult. applicable any of It directly by required CEO, As provide

David W. Hult

everyone morning, to earnings XXXX call. And fourth welcome you, Matt. our quarter good and Thank

$X.XX, year. EPS increase achieved quarter, a adjusted of this During we XX% record over last

solid continued volume, vehicle driven and F&I service. and growth enhanced in PVR growth was by in new success sales parts Our

we capped used challenging in to Asbury. new fourth the quarter a continue off year operate for and While a solid margin environment,

Let for generated hurricanes in XXX,XXX retailed and the PVRs highlights grew billion me years growth, gross we In of per impacted touch decline on a earnings by SAAR and operating profit of F&I revenue, to a few after by of vehicles, year adjusted $X.X of over same-store grew seven major margin X% delivered parts a $X,XXX, achieved X.X% our over $X.XX. X%, and service of adjusted share XXXX.

$XX our our quarter dealership summary, In Indiana Nissan realignment, experience returned shareholders year our of year capital addition, operating represent point, acquired opened and for XXXX, drive to we record investments the completed our to customer Asbury. and a also in results and Nissan another both fourth plan we that enhance market. full our million Atlanta Chevrolet our In efficiencies. In add Cumming the in capabilities omni-channel continue

end, will As stores our to that financial we I we call business, capital we the of increased have continue now up the to through our XXXX with well-positioned that In to are over existing authorization million. share capital Sean being or always, repurchase investments will hand our acquiring our our shareholders. returns for beyond. and conclusion, $XXX discuss to I extremely Sean? success in for our believe performance. allocators, intelligent new capital in highest returning seeking To strategy

Sean D. Goodman

percentage a profit adjusted X%; increased EPS increased record margin to to by David, of by for the net compared million; you, points by by morning. highlights QX, XX% $XX.X quarter. income XX.X%; as operating adjusted our XX% same-store declined points basis quarter profit increased adjusted to by XX.X%; XX earnings gross adjusted items. exclude gross follows: XX are with The two of year $X.XX. and to the prior margin We're results basis pleased XXX basis gross as our good fourth Thank SG&A increased and points increased XXXX to fourth X.X%; to by a

stores. First, a from of of less tax of a Cuts these XXXX deferred real XXXX This XX.X% associated share received by from for total, down benefit per In legal auto adjusted $X.X estate result the million we million net impairment with of $X.XX. the per related a fourth Arkansas recently passed XQ write-down $X.XX or These earnings closing per liability non-cash by adjustment benefit adjusted our with of a decreased pre-tax $XX.X that settlements, earnings net as charge adjustments in $X.XX The discrete Note at or $XXX,XXX our the to pre-tax charge $XXX,XXX tax the the franchise income cents and before effective per offset share million associated tax of quarter. was rights for our Jobs share of $X.X $X.X $X.XX million tax stores, Tax sale excluded share, to drove than accounting after GAAP for tax tax and rate stores, earnings. $X.X Act. quarter tax a or benefits. impairments partially result quarter being million, certain million $X.X a fourth GAAP items gain

and we the a decisions business in was the to are by impacted that our expenses Expenses sized quarter of made reflection SG&A environment. positively control. that ensure culture the efficiency Our cost in were appropriately operating certain QX of for

percentage million charges, the the For achieved expenditures, XXXX, $XX we repurchased capital impact and of XX acquisitions as on stock. year and we of capital related million to transition approximately common of $XX compared million of hurricanes negative a on XXXX, to XX.X%, we SG&A points a CEO XXXX. With decrease spent gross full $XX in profit respect hailstorms, the estate of non-real despite basis deployed

off refinance stood the that X.X times at quarter, were These interest more to quarter, we During intend and times. the higher our cost our leverage ratio ratio total relatively end leverage the attractive mortgages mortgages X.X rates. at million. paid $XX we totaling at three At of net

call I make to pass Senior our to Operations, a Before some regarding operating few of Vice over comments review like the to QX Hartman, our would John more XXXX. I performance in President detail,

We of million a for XX units. XX.X declining an SAAR, are planning expectation between with business million our and

is margins for expectation and vehicle new remain be at around X%. achieved will vehicle margins used will XXXX level stable that the Our

can We experience. profit to saw reinvested in as XXXX our expect benefits the de-leveraging SAAR cancellation in to F&I PVR due F&I to in omni-channel to in be with capabilities parts we believe with QX be results. from in profit mid that gross and benefited favorable a and that the associated of full Note services single-digit with reserve line the in grow QX adjustment year that product PVR the we gross continue our We expect And being environment. range. to percentage SG&A of we expected XX% range some lower XX%, a

rates to expense Jobs rates going in floor our note continue Tax $X X% Cuts million. will impact interest of positively additional In addition, interest interest a we that in on Act our and The forward. raise, expect increase rate results an to effective plan debt approximately tax

prior down XX%, our between is XX%. For XX% XXXX, and which anticipate effective rate to rate expected of our tax from be we

consider amount this that for approximately transactions. planning we to million. are potential be that CapEx Note buyout lease financing excludes of We $XX opportunities

in available a on line, available $XX plan revolving our million $XX start we $X in million liquidity business. offset and joined floor credit have of perspective, on $XXX President Asbury a introduce $XXX available of unencumbered we I from the already value a to with John used Vice vehicle year lines, million. with now Senior also John? real million Operations. John Finally, our is accounts, million significant our in cash, making estate September to our around like would contribution Hartman, and

John S. Hartman

of team to to you Sean. our this morning. with remarks you, will XXXX. to fourth be Thank same-store quarter the excited My be I'm to pertain compared performance of and the Asbury part

up unit X%, course quarter. prior new from XXXX on at of down took SAAR the most our brands. as while during our X% X.X% basis vehicles, higher year, Margins with our QX the XX stabilized points Looking share last of than was margin new market were being we of sales

points were last XX quarter year. than However, fourth lower margins basis

New truck year sedan we imports, be vehicle midline to compared heavy where margin last versus a to notable continues in the mix. most pressure have

inventory a by X we've lower to which our days XX is supply like days, quarter, new strong day Our slightly vehicle reduced With total million. $XXX be. than was where we'd

used vehicles. to Turning

our decreased unit and In stores. the software all gross vehicle enterprise declined points used from changed X% at sales car margin basis year's of our prior Our the we used XX fourth profit X.X%. the quarter,

fully in quarter While used our on We business should the of us implementation believe new software the disruption, putting software utilized to this led will by the long-term, benefit new pressure sales. second XXXX. be the

target range Turing XX of a inventory vehicle XX-day which to supply, is our at XX million to Our is used in days $XXX F&I. days. of

Total $XXX to $XX.XX vehicle. gross F&I X% our to by gross results. $XXX increased $X,XXX. gains up help yield profit continues team drive front Our end These to by profit deliver per increased per total strong vehicle and

a Sean our to the recent was adjustment As by positively F&I reserve mentioned, quarter chargeback impacted gross fourth due in favorable profit experience.

customer We service used X% reconditioning achieved in service to vehicle revenue The by by with sales X%. and warranty pay with was and parts Turning X% a This our decrease our both by grew to service. parts increase and work lower profit parts and gross and caused business. X%.

gross grew parts the despite X% by revenue and year compared profit the year. hurricanes, full X% shutdowns XXXX, service prior the of by the and For to we to due

Looking vehicles, be parts towards focus opportunities the XXXX, and in growth F&I used our and would on service. operational

further also will our capabilities. our omni-channel investments in We

represents solid XXXX, increased saw our from online the period from deployments over increased sales example, total prior During of continued the now fourth period company-wide from investments, quarter year of and we X,XXX units and the these year prior results online business. by service by for X% XXX%

per cost above low All the advertising spend effectively was achieved vehicle. historically with of

whose at you on us We in have work Honda, to we the performance our thank last it XXXX. welcome like made We Finally, of a all hard market. for all the announce would in to I'm associates acquired possible are Honda very like field, new to Indiana excited continuous teammates dealership report for pleased record that has we Hare board. to our a to would also month

turn operator will your Operator? call the the now We over and questions. to take

Operator

question with And from we'll our Stephens. Rick Nelson first take

Rick Nelson

XXXX on guys. at Nice going you're that about to Thanks. to to ask and able benefits the reform, side, do tax does see because your going retain tax quarter, it in morning. priorities? the think, like to you and all rate change benefit be Good allocation those – capital you're you I'd

Sean D. Goodman

Sean. It's Good a of Rick. Hi, morning. reform. points tax couple on the so Rick,

by or strategy our reform company XX%, a given rate capital reduction significant change but provide our approach. tax the does our clearly tax to in to allocation Firstly, doesn't XX% reform benefit the tax

We're experience. seek So, invest in we'll to including our acquisitions we'll business continue look capital to accretive the to our customer to facilities continue to and shareholders. return and continue for omni-channel going associates, opportunities to opportunistically our value

shareholder All of this long-term with on value. a focus

As difficult retain far be of of as the to able but the answer, ability vast should to we that tax savings, the benefit savings. we somewhat do the retain believe majority to the

dealer private the these be on and numbers. focus tend smaller competitors to dealers competitors Our pre-tax of or to compensated more tend groups more and are operators

believe We the it's for operators. different tax speaking us should or for the smaller do tax benefits that the benefits better also, while generally be greater different than for private entities, we

maintain tax So, be to the we vast do savings the from expect of majority able reform. to

Rick Nelson

Okay, the new Sean. which side, Operationally, I'd like to talk the the about great. outpaced car for color, industry. Thanks

you differences, drivers the impacting provide some came the Florida, the used expectations, if you regional can there down, could push below know we there don't If for color forward? came lower discuss in example see was the there volume software, and and guess I I you – that how then as business, and were

David W. Hult

Hey, software, a of and just it's the couple Rick, with far associates the imports, and decrease new with I'll which job And to used brands We in in take first. volume the software new definitely we learning The question we sales using the did used as our the, there. had the curve market specifically the as a the the implementation. good midline disruption outperformed go, vehicles really company QX. years, so for the caused a has getting employees software on been in the a

Rick Nelson

that you're stores? software And that auto the the into rolling is

David W. Hult

Yeah. We to the auto. went It is.

Rick Nelson

Okay.

John S. Hartman

few outpaced Florida. called that just that our on in. Most We you Rick, and very your to business the about or of markets share they market gained out follow-up specifically markets did markets their point didn't. had

Rick Nelson

unit? reserve And what the then that reserve a you could side I F&I ask F&I the front if quantify you contributor (XX:XX) big was for finally, you adjustment. Can per adjustment did end to had on yield, this

Sean D. Goodman

Sure, Sean again. Rick. It's

PVR So, $XXX result a a Yeah, and PVR to than a lower reserve reserve F&I F&I if of our $XXX roughly F&I what same-store products happened is look would cancellations in on we did a at came the and overall, that you expected increase. reduction. our the PVR by in that that third basis, we third increased adjustment, attribute of on

Rick Nelson

Okay. luck. Got good and you. Hey, thanks a lot

Sean D. Goodman

you. Thank

David W. Hult

Thanks, Rick.

Operator

And Irina question we'll KeyBanc. from take our with Hodakovsky next

Irina Hodakovsky

Thank you. Good morning, everyone.

David W. Hult

morning. Good

Irina Hodakovsky

for the numbers quarter, software you vehicle of A the do first this side, question guys you XXXX? continue the pressured that to expect used second on quarter or the quarter this into the update

David W. Hult

new QX, be software. I we'll the think utilized by fully with

So fine. be expect by QX, I'd we'll

Irina Hodakovsky

this operation. on did a the you SG&A then And in we and the lot you than expected did used expense, your better despite headwinds

anticipate normalizes, should to leverage we that improve As further? SG&A

Sean D. Goodman

remarks decisions, point mentioned prepared really helped quarter. an from operating Irina, had as us yes, made of during view. we I quarter very my We some good that in a this SG&A

organization, a expect through that to what changes a conscious these a environment flow continue we margin the made well saving made tighter the the going really as – XXXX. we from and XXXX We believed we're environment in very benefits benefits we adjustments we expect In and cost data-driven XXXX. are XXXX, to we lower into cost be in reflected SAAR to

absorption. However, our we And XX% percentage – SG&A do SG&A offsetting will is, that pressure cost we've and guided from fixed some on an environment in pressure XX%. expect impact obviously the XXXX do to of the XX% SAAR this therefore, for lower reason we to expect

and insurance we're very invest area. We of after of because significant to And weather we're we're in well. is SG&A to invest increases to-date example And cost insurance, also pressure to why our pressure going of and areas that's we're area that's overall offsetting pressures we XXXX, seeing XX% pressure guided why of costs omni-channel and we've also going omni-channel in invest several our experience pleased see the in in with business where to in an continue the in in and catastrophic events certain the results XXXX. to this our a some to the therefore, XX% seeing we're seeing continue expect we're percentage cost as just investments and the

Irina Hodakovsky

adjustment the of how have you for Thank to question volume, you process volume in that period, an on One do on Understandable. detail. were training last have would exclude done used if used? estimate the you in you

David W. Hult

what better it. software I'll to a jump – in David. fair there use on. it It's software we than on really website, to feeds have is lot number. Asbury's hard not – exact it be of it would say, any one switching was, number would software, result really going the to significantly was you quantify more This been an It's be It than disruption hard be inventory would would be. would Yeah. but that. inception said kind This since it's tell just and of we winging the

Irina Hodakovsky

much. very you Thank

Operator

take question Jordan from next And with Bret Jefferies. we'll our

Bret Jordan

guys. Good Hey. morning,

David W. Hult

morning. Good

Bret Jordan

tax give discussion sounds SAAR, reform on might do could independents willing not M&A sell operators the environment like, us color benefits, the obviously, now? the or same on you more and or it mean, looks what like that the up is declining some heating smaller it I see to your maybe you

David W. Hult

that and now see opportunities seeing soon. we'll actually pretty we're to the No, about come excited it's hopeful lately that we're we've been that are and at looking fruition all – pretty currently some

This I it the not been again. I going market lot give good. it a an as and thought have of the last all. touched P&L earlier, and in So, and it it's private operating a where tax to be dealers, away this the think John in backwards. it a cap see of up more don't about lot we hands savings know bring of was issue there's profitability has is on but competitive it know their operators pretty private important it's I dealers couple cap talk the of we at been the years a pass-through will and

money to forward they're to so think opportunity I that speak. So this get back, at looking

of see this we through So, most well us. for passing

Bret Jordan

single-digit versus is service, Okay. customer the think you software Great. how much then mid used and this for a as pay on outlook that And recovery more get in normalize parts year, refurb I the of business?

John S. Hartman

is John. Well, this

and car the in You pay. the took used vehicle the X% the used lift up decline saw that but down on from side, expect sales get parts we and that continue us were to customer Expect moving forward. about sales service to in

John S. Hartman

a not last And but quarter comp, the excuse, X%. stiff to fourth was an up we're year make

a X% X% number, off still and that we're left. had coming So,

we So, feel about that. good pretty

Bret Jordan

customer majority year? this for growth the Is of Okay. still pay the

John S. Hartman

Well, that kind most recover, as very of. what as because we question clearly But down see there's it's we it the come the warranty our what a that's difficult no will of difference can pipe. main turn going volume is in make focus, work to It's control predict to car used the material well.

Bret Jordan

Okay. Great. Thank you.

Operator

question take Consumer from we'll our James Albertine Research. with next And Edge

James J. Albertine

And Great. Thank everyone. morning, good you.

David W. Hult

Good morning.

James J. Albertine

decision-making there if seeing incentives be on used late to vehicle that into you just feel we sort that's negatively, late monthly more on vehicle a be of I of nature, sales could? wanted model and the you're the in vehicle get color side vehicle we've going certified particularly the of comments may what operate. that pricing, side vehicles new may, question of or your on in of new folks which on and light something not stores new if they impacting the in used been or or pre-owned used wanted or markets getting the gap most is industry some model A on to lot understand driving any there's your to wanted ask, that I and new payment sort there the whether between basis. I might a outperformed –

John S. Hartman

Well, this is John.

lease payment way to consumer, price go price the gets point heavy. becomes late pre-owned these in come new, close and As can you the on But becomes a sales, are off especially too a to model that which from incentives vehicles the close. decision effect pre-owned get market, are if the have going difference then do they're it if it an

David W. Hult

I that... to thing only The will add

James J. Albertine

ahead. Go Yeah.

Sorry.

David W. Hult

pretty quarter, ...I mean in were fourth seen incentives the you've the steep.

up do it really you You down by that mean, And on only if of our sale $XXX. where the impact looked cars was PVR coming, margin, at year-over-year. I bumped almost our our see $XX cost off-lease have made an year-over-year,

So, like off and when these you off-lease was mix truck-car than a more have heavy and cars it a incentives coming of that before... car-truck mix it's

James J. Albertine

Sure.

David W. Hult

...your is going from the see I everything get else. and do to average sale the all value closer. cost creep incentives benefits and the in and CPO warranty the to consumers rates of up the the

don't quarter be at that think And wouldn't I our signify deterred in the used a to performance So, that'll way. any in look I concern.

James J. Albertine

there that hearing that. quarters, idiosyncrasies with saying I sound and contracted Yes, prior between you gap little is get does correctly? maybe But like and Understood. to new software am it relative fourth you're I the used quarter the a rollout, pricing what

David W. Hult

Yes.

James J. Albertine

auto if there in Okay. in on get coming you Great. consumers a operate. of what's And tranche from the then competitiveness the mark-to-market, credit credit types Thanks. stores just a a documentation Are broader which markets of the Just may and one in of an of a among final greatest any sort trying shifts if you will, from basis I to perspective? either lenders? from side, latest terms or update into me, one credit sort the requirements,

David W. Hult

at little market, the all, is small credit The issue an business. hasn't stipulations in been our I haven't the tighter, bit subprime getting the as credit are big but a seen of in a shift in availability which all as tranches. percent far a

James J. Albertine

again Thanks of Okay. best luck. Great. and

David W. Hult

Thank you.

Operator

from And we'll with question next take John Bank our Murphy of America.

John Murphy

guys. morning, Good Hi.

front like quarter I closing stay change a with it on and beyond we opportunity change obviously in it the used. strategy Q mean you, seems where your then big Just obviously of mean, I vehicle second of been there's on the and business, XXXX like to used the a there's the over away backing from get in software rate, seems huge If auto they this shoot be noise might how where are try kind there the vehicle the software the of near-term? noise really to we a some right X:X still in thinking the I thing beyond change stand ratio as strategy stores business? the the what's for used focus be from now? over, thinking you the in Is should about mean, about your in you new

David W. Hult

would can We inventory be what leased and of at X:X the we we're But whether moving import. the and that's and between XX%. drives. available think brands, extent. trade great the can There's in does, greater service the realistic to use Well, I I to domestic forward, and SAAR think the can some and the destiny saying inventory. a in luxury, that get going it's be control ratio our of coming our XX.X% is out vehicles for door and more We

So, used more when SAAR. we've vehicles, of the to than control it waiting for I our got think destiny new comes

John Murphy

say, the specific drove going changeover that advantage understand it – you So it what you is not take efficient was it to be? was old software what should forward? change the the just as the in is drive I'm to can software, is that and rationale what for trying of just as what or the

David W. Hult

Sure. something it's but the a We're not across you huge change a painful. enterprise, anytime company,

the turn than old, be But, through faster it, comfortable it confident as focused grow new volume complex once periods long data but we the naturally put our we're really software increase was data software we'll us to you what we The it is to able our of gives the turn, and far for timely is that So, time. we which the on. inventory trades. had more as and The what off wasn't get want new us. so serviceable, we're software gave driven more with

John Murphy

it. Got

portion opportunity used and is could versus does then and sort delta might also Okay. over of between that F&I growing What used, dimension new, I on if new? used used PVR a because And you PVR the the mean like opportunity time. seem component on be of it F&I

David W. Hult

It's luxury typically, side, you're per you've used bit got higher can on a on it's a good but amount when there also. little side, the be new, at the vehicle vehicle better and it looking financed

John Murphy

Got it.

characterization? much, the but it ton, that that change a So, number we it's used? better, a the So, shift not shouldn't a total shouldn't it is bit change much all that little see shift a towards fair if

David W. Hult

That's characterization, fair a yes.

John Murphy

helpful. bonuses or far individual some automakers in what And has on that kind at in their or sales the any of lastly, That's as sales the Are brands change other as general? volumes person sort change, for volume And their bonuses of Okay. plans have does then GM kind coming just achieve. the you in dealers of changed from plan seeing pay for people pay of impact and else such a or they can folks? sales of motivation anything that

David W. Hult

I'll this. best and my So, do try to address

as managers we is One entrepreneurial the on goes. decide model of and of really one as to strengths far general our be allow we our – what our that to compensation believe

and everything from well. yield front as finance just have We paid compensations total the sales what get on to end people insurance yield

is, Our the up goal our kind the which turnover because of to belief down for down. best sales the would and – way yield slow the neutralizes total it is associates, go,

certainly there for people, as welcome enjoy it. and there not, approach Any our they've As But the the can we the doing manufacturers that best we sales been associates income. and them situation incentives is like additional neutralize it's from time the changes. that, truly and to certainly receive from far swings sales watching to time-to-time, out We way total associates. the for a decades time-to-time it it from the it's yield benefit believe

John Murphy

That's Thank you very much. helpful. very

David W. Hult

Thank you.

Operator

next Stanley. our question And we'll with Sinkevicius Armintas take Morgan from

Armintas Sinkevicius

you a business, industry your of and side, up the for question. storms, results. taking are about Thank tax now used there gone thinking in you having the how about how morning. are there? coming the just volatility the the bit used we stands you talk and season it through could Where for there's Good the Maybe landscape car

John S. Hartman

The becomes I'll spring take bit the a tax bit a that. of bump in that. used cars the season. business during stronger Typically, get during little little wholesale

So as it favorable. I see

Armintas Sinkevicius

was where you did forward And the September, from quarter fourth into storms, around like that? anything Okay. demand pulled see say dynamics or the any

John S. Hartman

a was No. other was impacted car different replacement Texas from tale of tremendous of all they places I as well. The But Georgia mean replacement, now major stories. and Florida, hurricanes flooding. had standpoint, Texas really Carolina and car two South because and a the it

Specifically, there Houston benefited of area, shut time, it that different Completely and we Florida, period had business we it huge one in store story down a a for disruption, there was our dramatically. it wasn't business flooding. from but

didn't loss, we So, any have the didn't vehicle in Florida. spike sales see in so we

Armintas Sinkevicius

acquisition, that? then as is as have how financial like the And any Indianapolis far Okay. other one metrics think how the anything you to about do or much revenue coming online

Sean D. Goodman

$XXX additional the million revenue online. revenue is from Indianapolis acquisition around This coming be of should Sean. The

Armintas Sinkevicius

Got it. you. Thank Okay.

David W. Hult

Thank you.

Operator

next Research. Bottiglieri Chris And our we'll from Wolfe take with question

Chris Bottiglieri

or change fee to operators? the one-time for you're you for a on what extent does structure, wondering Wanted new how a was using for this packages. I guess, on what software at little Hi. bit it? get services side online versus I'm it Thanks be I'm I of taking question. small that how of trying some to pay some dealers dig this wondering used in is favoring to the analytical do the is large technological

David W. Hult

to the referring You're tax savings?

Chris Bottiglieri

like, how for used aggregate? scheduling it basis I'm is you're services that – you're parts rolling No, is like out, stuff software software is Like the the unit fee? costing and you the a per new yeah in talking out, rolling or one-time it is what online no, online of fixed some – about how

John S. Hartman

at can best exactly. that know it addressing the I'll do don't I hit but I'll that, I

based can through coming that experience trying based more we – possible, to us think you see our customers do. really them, of the done, most the in were create research learned appointments, we for lower online see as be phones. experience can the our can we talk service and And online it. we better strong expenses what our at experience. much more all those our benefits, with in is in when done appointments really in absorbed for to as online on benefits a the we've for And the about quarter increases we've We've we've on SG&A get for online numbers, We're that costs what we're customers. we are the what we You what – significant can of SG&A, we're or fourth do the traditional all more online our seeing efficient

additional there's there it's or additional go. online it's expense, which but we're traffic much some traffic we're So, moving more so is we absorbing expenses those additional expense, is to, that as not and the where

So, see material. expense the increases you not are can

Chris Bottiglieri

Yeah.

on And Okay. I rising a had question rates.

quantify takes, you versus your the the you rates metrics rising and plan mean a rates? business? plan like when then rates sales, lease more of any will maybe to F&I And rising Is there assistance generally related how two, that's own, historically, for what see speaking, contextualize just affect walk penetration, through does expense. puts can that can floor other floor offset You some help you us

David W. Hult

from upon you in. think then can the So, standpoint, From Sean month. to I'll term, jump point anywhere about $XX jump $XX a basis XXX on a it's increase, if depending and PVR

won't not feel it's We that in significant. not material, impact So it's any sense.

happening. up see points, that Now, going but that change, XXX would basis XXX points, we starts don't if it basis

dramatic, point so – payment So sales, is that but we do we car difference in slowing would XXX affecting because the low. be not the it don't increase our basis see see

Sean D. Goodman

our a a add to is floating expense. other Yeah, the debt corresponding on our our expense on so interest floor only debt the would expense. would floor interest from impact no that plan there point – plan be of will is there But corporate be and thing impact other there our therefore, is on than no that I view, impact interest fixed, is

Chris Bottiglieri

Yeah. And is the all rate then is to that that separate? or plan the completely at floor assistance, tied environment

Sean D. Goodman

was quite plan what – I the the that Sorry, didn't it? floor incentives, was get

Chris Bottiglieri

income floor follow-up the No, item. No, plan – expense I'll assistance on.

Sean D. Goodman

sorry. I'm

Sorry, can that? repeat you

Chris Bottiglieri

offset all just expense? is the I that plan is tied any to rates, Yeah. the – the kind was of assistance, there to interest floor

David W. Hult

haven't manufacturers the assistance. their of So increased plan mostly floor – most

be increase of move Some the to interest do us. bit. with speaking, a the increase But rate incremental generally rate on most in or little passed will

Chris Bottiglieri

Okay. you. Thank

David W. Hult

Yeah.

Operator

back KeyBanc. with Hodakovsky go we'll And to Irina

Irina Hodakovsky

turnover? I items Yeah, do maybe track program on versus to vehicle used type couple how your software. inventory data follow-up turnover you improve does inventory question this guys improve you have one? old If a for from a you the highlight of the tracking, key could of the Thanks. What you're

John S. Hartman

market biggest be supply used, to it difference day aging track buckets. is The the where on more we used

move we a in we will vehicle to aggressively abundance know So, we of vehicle, need now price more if them has supply vehicle supply, low and day the a look turn a a that at can that that We market. appropriately day quicker. market it versus it high and there's it to quicker if has price market

data is much So the more fine-tuned.

David W. Hult

XX-day look software The was really and other – time today add significant I'll this what's to meaning appraising old happening real that, more vehicle, it's a back. the from increase the data, is it and week

Irina Hodakovsky

with likely, invested for lower you. in the acquisitions, your rate and more you, evaluation then Got strategic meet. on And capital the terms makes questions of probably approval process two return easier to is targeted stores tax the

things has or let's can to, direction the equal, us you're all say, be beneficial of overall you negative positive changed to what on the update So, in the outlook, market, stores inventory for ago? months six seeing but anything the acquisitions this would in sale,

David W. Hult

than realistic for ago. I the say pricing XX days in And I the I'll last in Asbury. all more months months. XX Generally, is we've would speak was, the more – than deals can seeing We're say, becoming it – do seen speak last is six

Irina Hodakovsky

Okay. you. And question for the then last

time detailed driving this this change? provided What the is past in You've around. more than guidance

Sean D. Goodman

want question, we – I is, just understand I more question the the what's guidance is the sure make provided change, to is that correct? Sorry, detailed driving

Irina Hodakovsky

the transparency – at it of hoping vehicle I driving What the Right. is you're investment to fact a you involved, guidance. what's but top little the forecast? whenever from more same market? there's wondering that with at with improving new the a the time risk right, of the guidance just providing bit change we're you're achieve mean, the community, are increasing I'm

Sean D. Goodman

can community. the to we're key looking trying XXXX with the that business transparent really see we're we And in we in We're just metrics driving be be going where just as and investment as as to towards that the transparent XXXX. to with

Irina Hodakovsky

you, you. gentlemen. that. appreciate Thank Thank We

David W. Hult

you. Thank

David W. Hult

today. We day. in a discussion. This participation call everyone's concludes today's appreciate the Have great

Operator

Thank today's And concludes call. that participation. your you for

disconnect. now may You

Asbury Automotive (ABG) 6 Feb 182017 Q4 Earnings call transcript