ABG - Earnings call transcript Q3 2018 | Asbury Automotive Group, Inc.

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Operator

Good day and welcome to the Asbury Automotive Group third quarter earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Matt Pettoni. Sir, please go ahead sir.

Matt Pettoni

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

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

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

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

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

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

David Hult

to morning our earnings Welcome quarter good and everyone. Matt Thanks third call. XXXX

the results are We pleased the quarter. for with

XX%. by profit increased XX.X%. basis SG&A a we record to income Some more retail of sales $X.XX. reduced highlights EPS And from We as adjusted than total achieved gross unit points by operations We of follows. grew XX%. by percentage XXX are as We

remainder the plan unchanged. Our of the remains year for

deployed the we Year-to-date, adjusted towards intelligently and $XX XX, expectations. million our cars, through which We of $XXX while that this in acquisitions includes and we will buybacks control, and Asbury the highest approximately expense on over into and parts risk million The integrated completed model used million returns. with overall the operating focus to three $XX is deploy have business can capital performance F&I specifically well have service, aspects we line of capital acquisitions. management, to on continue year continuing on October share that

and our omnichannel strong Our this we investments hand achieved to performance more can moments. Sean? seen now will John over provide are few record financial will yielding in performance. benefits results the the be the in call to discuss quarter. a I Sean details that

Sean Goodman

and with to would the not operations did morning Florence David I our notable in intensity of programs our to Hurricane we some good readiness emergency Florence, Carolina good you due like fortune, the and start Virginia. any everyone. property Thank on and impact some damage. North have Despite on color of

our North any we consolidated and our stores results adversely see was on results. Carolina to and overall were on significant not While expect Virginia effect QX do impacted, not our upside the

XXX and for Hurricanes QX material. recognition. impact is not we accounting ASC revenue This year, the was reminder a As implemented quarter by Irma The standard this XXXX in impacted Harvey.

XXXX. of than points There last expense with So profit adjusted adjusted profit Revenue than regarding XX by gross margin issued improved for to increased earnings of of share overall, year a by QX a adjusted XXXX share third per XXX(m) net compared guidance to XX% quarter, no percentage recently gross margin $X.XX $XX.X increased XXX the $X.XX. increased of Internal points third of to per quarter basis record was million and was higher points a non-core of the XX% our X.X% income XX.X% the by associated for XX%, to of Section XX.X%, X%, tax income basis revenue XX Net increased prior operating lower by year, as gross basis year, was by Code. SG&A the adjustments. IRS' In was last

Our of from down effective quarter in XX% third XXXX. the the tax XXXX, of for XX.X% third was quarter rate

year's tax million to This continue be to XX% basis on managed We achieve track to expect the in expenses XX%. XXX costs which of insurance continued rate last gross percentage We during be basis the SG&A despite benefited omnichannel of a a employee was XX.X%, SG&A year, a associated included to excess the than to is are full-year in we points months this costs and between year. which of last this successfully gross with compared year. the SG&A and XXX reduction prior SG&A year. CEO point as investments $XX for transition ending quarter September better our nine profit. as is when experience relatively that certain percentage Note from in charges favorable profit XX

below a times slightly As our be to a strong for gross At SG&A expect thanks percentage stood net cash operating our end the result as of of generation. and full-year. this to our in now ratio our quarter, profit year, ratio times, leverage flow X.X the and at X.X SG&A success leverage solid expenses results the XX% of total we managing at

leverage of attractive our to capitalize believe allows QX While we times the our opportunities a leverage that into unexpected the while of is range deployment three X.X ratio capital below at economic end cycle. taking to consideration X.X future us targeted times,

largely parts business is that we effectively well As by worth us believe and costs of noting our relatively to about of economic profit that XX% positions it's stable We the our our generated the manage costs weather business gross and service structure think headwinds. segment almost this cycle, and economic are variable. SG&A

how million posted shares we morning the total some year show months presentation the leverage. to first repurchased nine to own think bringing for further of Our as million. information this QX, in investor share our $XX repurchases $XX about the We of

million additional Now, million, of since our shares to at approximately an own year. outstanding quarter, the the beginning representing the end for X% we of $XX total $XX our repurchased of shares, of this have the bringing this year third opportunistically

available over opportunities. also looking productivity at and remaining increased floor interest has million fixed attractive been same Our plan million. cash, plan perspective, $XX to prior hand $XXX are lines to authorization detail. $XXX $X days the on share that year, million through now our excess floating available acquisition by the like also in performance Despite used floor and call million From repurchase a inventory interest we in floor year, to more rate rate. John has in million a is I debt LIBOR last reminder would our by revolving to the all quarter A our increased as expense plan offset debt the walk real increases we million have the we of credit driven ended $XXX rate. million vehicle on over in an $X.X $XXX line, us incumbent accounts, while estate operating available liquidity John? with of other the

John Hartman

our Thank you Sean. the XXXX. remarks of will compared quarter same-store to performance My pertain third to

driven lower new we for Looking for on the were quarter points was In vehicles, $XX sales grow lower able are last imports, Overall, at while basis by our margin SAAR X% volume retail environment, unit characterized lower margins. focus last X%. by points was new X.X%, million new quarter which our down of SAAR below which than XX strong XX basis and retail quarter. lower This or year, relatively SAAR than car last growth this the to X% was was year. we

brands, missing In down we were addition, thereby underperformed margins certain in to because for some targets. aggressive domestic declined money. incentive due imports Domestic margins incentive

Our vehicle was million. total new inventory $XXX

days. XX supply remained quarter days Our flat prior at year from

vehicles. Turning to used

We year. are we used the very sales able were that basis to to by unit X% increasing XXX resulting in prior new increase our pleased used ratio from points vehicle

car margin drive up quarter X.X% results. enterprise deployment prior omnichannel from both initiatives XX our profit year. of and The gross was software helped us Our points of and these the successful basis last used

vehicle inventory used which of million days supply is Our is the year. at a with XX prior consistent $XXX

Turning to F&I.

increased Total deliver continues decreasing gross strong X%, slightly results. profit to per with F&I to gross profit by team $X,XXX. Our vehicle

Turning service. to and parts

our achieved X% increased X% warranty to profit customer and pay. decline an X% gross caused in like was The Our increased to prior a increase increase update of service a the give omnichannel our parts X%. take moment you would of to to This with and initiatives. despite improved service and I within compared an sales by quarter. work year vehicle revenue used parts some on in reconditioning X% the progress

to Our the onboard our program we in centralized within over XX% during year-over-year. schedule the stores by sales digital supports Stores quarter brand remaining XX% currently team ahead participating certified digital next increased months. are of XX stores the this of sales and

is which vehicle our PUSHSTART in of online tool units. over quarter, Our X,XXX total sales sales approximately X% retail handled the

up service of to our digital utilizing the traffic to prior XX% from scheduling continue year the and XXX,XXX. online and grow were for record quarter, all-time tool We the parts service appointments an

class growth about support express excited conclusion, to been that the our our field in in to we discipline. we performance. have like capabilities pleased are produce our In able to invest appreciation our our we while omnichannel continued building in We maintaining our best to all driven teammates and omnichannel center are SG&A and who

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

Operator

[Operator Instructions].

Nelson from first Stephens. Rick comes with Our question

Rick Nelson

a Good same-store like cars follow-up pretty used Thanks. and by outpaced morning. on the market I new margin. would Both sales. quarter. Nice to overall significant

or weakness And there? discuss would any helpful. regional could strength commentary, regional you be If of drivers areas the

John Hartman

Rick, this have focused and a I this our our had Basically really year software the and we it grabbed we vehicles and Hi. good real on is using teams John. knows have used focus it. on think

used really the that's think car. I helped So on

market and the On bit look And being Florida the locally What lift from the SAAR. we were markets, little last try new focus just vehicle the is, ahead at to on have of really down year-over-year we competition we we which new how did is the year. locally competition control there. car side, beating the can't some a

David Hult

stores there's The that, to connection strong two are teams are that team the digital on, there add here would with and I both our the omnichannel we between really from working in piece Rick. well. connecting producing Yes.

generating more are We traffic.

finding at and that's are we converting are only and we with the so. future. We are rate so of doing XX% excited a And in company efficiencies the higher about

Rick Nelson

Yes. Thanks color. for that

that $XX timeline are to going that in investment leverage Just Any expect million spoke that of leverage omnichannel. you of? to now, you starting investments? those sort you fact you are to when follow-up Or on

David Hult

Yes.

We are expensed for much the pretty with mostly year. that

so believe, very from comp, we better. of seeing continue get that somewhat will our and are the XX% with we do with pleased we perspective on SG&A an only We benefits think perspective the to to unit it, have results We leverage seen a far. and we are

Rick Nelson

looks unit, little And it that Okay. per like bit. up a F&I backed

that push your as speak and to could expectations you we If forward?

David Hult

used our points Rick, of that retail, do with I to XXX no. has mix in basis we think have increasing vehicle the some and versus

we range us pretty for F&I. slightly the and finance I drop penetrations saw had maintaining we So a of in while, that have F&I just performance see some solid but

Rick Nelson

about Okay. if allocation And the I ask finally capital acquisition could and environment.

think of within that influencing the interesting are chart do leverage? range the I PowerPoint, leverage some for you a there your in new normal those you too. factors chart Where of cite, is we pretty think with is band the targeted that

Sean Goodman

Rick, It's Hi Sean. Good morning.

range quarter times quarter. the our of in was the X.X So leverage strong the I third end X.X and the It results stated, very as acquisitions. and our times at equilibrium show that leverage reflects reflects three charts the to also of

opportunities positions bought us fourth the It have that beginning do see And didn't of the you that the the acquisitions we very we in buybacks we million in quarter. quarter third done at share and So back any for shares. the in well $XX of future.

third and the around price first weeks share was $XX has the of quarter $XX. during our average average price been Our around the share fourth three quarter during

meets at time. average are we week And a we in just about at is each in that by are profile characteristics capability of the so at of three think an slide project. lower do back would risk the look given that's that period return have itself exciting return. quarter. we the $XX return project share risk if indication and as leverage of provide shares they just that we in acquisitions project And well, characteristics and our we if our looking I have And the right bought in in that that also there that standalone to of on ratio that the the million us the then invest the price, presentation of period beginning And

Rick Nelson

Thanks a and Great. lot Okay. good luck.

John Hartman

you. Thank

David Hult

Rick. you Thank

Operator

Thank you.

question comes from Our with Bret Jordan next Jefferies.

Bret Jordan

Good Hi. guys. morning

David Hult

morning. Good

Bret Jordan

seeing incentives as In and sort about volatility the we that incentives talked prepared saw you moderating? aggressive of that are the side remarks, Could around import on well? seeing whether we you impacting second not about Or quarter the are still cadence or you the margins. of the talk if

David Hult

answer best aggressive we around have drives say, what I down. Yes. try is, that and are manufacturers have imports, can't to incentive chase chasing that midline margins some pretty really will everybody the got to volume can. I back the The you the going okay, is And we that you some happens incentives. which margin because dial

see a coming forward. don't the I So cadence difference in

John Hartman

will When that. think everything our far you also you to about imports, geographical are midline located. where as I as is

We and in in are further is predominate sit to very compared which then a pushed very store markets, high-volume margin might the midline and down the imports intense Midwest. lot competitive, an imports have we metro midline of which import

Bret Jordan

you far growth out, is higher you particular you But used doing demand service? volume? anything programs are out that ordinary? pay decelerating? as as in Okay. changing, running there on I see to or quarter SAAR ago, could that of you for And in talk cadence to accelerating the then strength ramping X% is on discounting. Or customer that the progressed, did guess there the you as service, just are drive run are Years customer the question,

David Hult

get software important Yes. us is of helped moving that from areas the can out. was car consumer because through years where that organization them such point opportunity in meaning cycle say, the how where I system quickly clearly time identify and of ago, new an the our you our some deflection, a to about factor would two-and-a-half implemented we how was, really was

with we That very never attention benefits customer And tires. focus We changed. of We communicate software and are starting and competitive to very our very brakes, are we it. comfortable on getting and with see are how we now that the has batteries a It's space. on them. focused

really now, so communicating the we selling needed that from text text safety and work. more work that's on and perspective NPIs a focusing than through more way digital texting So via anything, are email, and and customers to specifically focusing on item

that than has certainly opportunities but because think a see even frustrating at been little to that. So X% it grow steady I gets times we more

Bret Jordan

closure On this feeling, didn't one you maybe question. or a anything what Okay. have get I the Great. And you. hurricane basis, guess year-over-year guess, it Thank last cost impact, did final you comparable I do the that you store days year year?

Sean Goodman

and When in call, Harvey year. earnings we we that. Hurricane Irma, had hurricanes, year's impact announce announced last of our So we the did last

four to I while Carolina store missed Virginia, year, that think it hurricanes. those was two maybe about and overall for on around this North X,XXX closures results. cars was not Carolina, in two in North we the Virginia Carolina consolidated hurricane we sales did have impacted days there about material out a quarter, South on we in selling due of The and days and had impact the

Bret Jordan

Thank Great. Okay. you.

David Hult

you. Thank

Operator

Thank you.

with Albertine comes next Consumer Jamie Edge. from question Our

Jamie Albertine

Great. the Thank morning and and you congratulations. for good taking question

David Hult

you. Thank

Jamie Albertine

if domestic, understand but luxury, had saw basis, on regional imports ask, the up, it a and you to per opposite. up, for gross you profit units could, unit and we wanted I was if I

for actually So GPUs your year-over-year there any regions domestic, within were portfolio higher were import while where worked higher? and units

John Hartman

was James, It a up We board. bit pretty the were gross in little in across consistent, units. down and

we didn't regionally, fluctuation in unit a no So big, volume. see

Jamie Albertine

it. Got

on are then technicians. nothing And isolated is So question have second specific I any industrywide, impacts there. regions Great. to

and trade Or more You seeing now, technicians service in aftermarket of out that the have the I now? straight been for think opportunity sourcing talking technicians. about terms from Is a best is schools nature? for you coming of several of it it shortage years, competitors? right parts Where

David Hult

from the we will the anywhere. but technicians take trade schools, to out try them of take We

multiple retain got attract we going and try our headcount. We on look at have tech every to week. something to It's programs

that have of to really We headcount. it's the got But that's get just a easier. tech fixed challenge, lot to upside not forward just and in moving increase need any keep our we going

Jamie Albertine

peers? Or few the sourcing are pretty recently more past it's it say like to quarters? over feel steady you you from Would been does

David Hult

been I pretty think it's steady.

Jamie Albertine

then question on last And Okay. digital.

to slide out share You Auto would could it's of on you spend now, if third presentation. leads to on would for you versus I the parties, usage third-party? your or your like be you a third quarter wanted terms And internal willing understand have of names great delineate be so are generated any or break right whether things if share are where favoring Trader in forth, willing to there CarGurus you Thanks. or that? advertising

David Hult

changed. hasn't mix our say, would I Yes.

We value parties of And We other spend. tough we and constantly naturally those main our question tremendous third-party connect markets. in at own are And look our conversion third dollars we selective. and those are for we what other leads very But making a others answer look some content stronger to efficient weaker getting for it. then are and are in conversion. in is We rate. over ad we the our and higher a then own tweaking every month. are focus But at relationships. it with third-party. building are our and or we we the because it's markets adjustments to our And look that driving weaker markets money But direct at stronger have traffic

Jamie Albertine

quarter a follow-up generated internal I how and us leads breakdown So versus to over as give a third-party last can or trended that's of two? you the that past question, guess

David Hult

Yes.

at certainly our We have this never but continues grow couldn't a comfortable And rate. we steady that third-party doing helpful, it now. really before not do without it and isn't real But we shared partners. are to

Jamie Albertine

and luck. again Thanks of Understood. best

David Hult

Thank you.

Operator

you. Thank

Bank comes America, Murphy with John from question next Our of

John Murphy

Good morning guys.

but a bit little in more certain on are on bit industry pricing some a they sounds that taking an sort mean disciplined are getting sounds heavier issue or issue right just little you I across now? and it are Is mix and of little a had bit in markets because an the competitive sort offsides Just having They pricing. for market? action they of of that is they of the incentives. that imports, are incentives are board, having the like on a is product it follow-up the the this Or like have wrong of on a sedans?

David Hult

of it's little I me, to both. mean, a

competitive a grab think I the to manufacturer wants it's action share. where

ago, a to will said around because incentives these the again, number or out. it's all is local I not business. decide, chase So get of couple can't And the minutes while put stair-step into I losing and it up am it going they volume when related other objectives, aggressive difficult you chasing you have you you wind competition

you online. kind the So game of get-go go the and to get from on that get to into

John Hartman

But imports are a Nissan you Toyota but becoming, competitive of trucks high-volume very think you and know, those and are when not them lot space. Honda trucks, baked those segments, a margin CRVs, also about Rogues, RAVX, as in into

John Murphy

seeing point, are them? of that and you mid-crossovers as five at like the on this competitive the years saw So are some just of sedans you environment the small ago, far sort as those and actually, margin getting become you crossovers to essentially three

David Hult

Absolutely.

John Hartman

Absolutely.

John Murphy

after? you outside that you thinking just about of Then more the traditional sort something is privates about attractive are second should get of am be that to going see that some the deploying of things sounded sort question. talked we getting more normal curious, realistic bounds expectation acquisitions you is there is going capital. around a opportunities where might that be I valuation? Okay. attractive of the like Sean, an for and in Or there deploy capital it channels to

David Hult

and to the their grow a group seen a people even decades, gets XXXX on a and and the the XXXX dealers public in I over The three weren't the times. or business or they was last were with private doing of the paid to Yes. high and this valuations multiple best group, in expecting have obtaining have benefit they been cyclicality optimistic whether grow little bumpy David. this wanted the market that bit were years to themselves. like more almost optimistic would be This even from tough bad the when is what it, it of XX say, very I times I and over

we at as bit rates. acquire SAAR so And if bit We things up or great opportunity see a little little choppy realistic a to the it this were lucky. backs gets

as Our we only our tell is people. everyone, differentiator,

people great and we a We have of them. have lot

accretive that shareholders grow for the add and excited So our and about we values to at right are really opportunity. becomes

John Murphy

guys wisdom, to attractive in to new bit slowdown business? the contrary the of opportunity very Sort popular actually vehicle a you a a be SAAR of grow for

David Hult

Agreed.

John Murphy

better Okay. That's thinking lastly, And one you a just this to that you can with is better less good to XX% bit this then your fantastic XX% years. are performance, you Is it's of little than about will just that at? over rate get cost? SG&A take more anything do leverage? the operate there regardless levels, talking Or hands-down as on room time year. just almost about close as and Or of think

David Hult

I am getting over John. my a skis, little

see So a can't what we today. XXXX, doing the with But answer today. going XXXX our we I be what like, by we see efficient opportunities going picture that I more do on model what where with will business do we with dealership is look to at to and paint have omnichannel, that

John Murphy

high be it over the that's XXs to of There might we think on context low of about old going shouldn't school a confines sort So sea time? of change XXs. the in here whole

David Hult

Yes.

years with it's think you will I definitely see industry few around years lot I compensation. but SG&A, a a out, out, specifically couple maybe change think a of

John Murphy

you helpful. Thank much Very so Great. guys. Okay.

David Hult

John. you Thank

Operator

Thank you.

Our Sinkevicius Stanley. next with from question Armintas comes Morgan

Armintas Sinkevicius

it to the sales, for regards mostly morning. a Thank -- and of vehicle the share market there Good coming lot it taking is like import from seems new was you channel. question. With

to just or the if lines industry curious drawing think any or trying there across manufacturers were here? conclusions about Just specific

David Hult

Well, manufacturers And the of of Honda and segment segment. are sales, XX% driving if at mean our you percent in side, Nissan, I Toyota. your import sales import that volume on we basically our look the from are

Armintas Sinkevicius

back those you segments? couldn't volume taking share dial it on on As find the did Okay. taking so push you in make share But you volume, yourself vehicles? mentioned, and in then you those was

David Hult

We that. in did. your Two, can then inventory you the and service benefit to used the is, And income of retail grows, F&I vehicles. you obviously parts you the the on UIO used-car your one, you get future. feeding volume are know as feed And business

So it's benefits share. all when you get

Armintas Sinkevicius

with running car well, view are sales record sales? of what's used for think market your pace we how Do used strong the used then has And as trended industry the this October car on year? to-date? And Okay. car you

David Hult

October. is times kind the it's a but think expected of the I October used-car what moving as Typically, for used car new solid market X.X market is about SAAR is, forward. vehicle

Armintas Sinkevicius

then And you that are something Okay. M&A is environment, waiting and attractive today the something as potentially there looking you on or just as it you acquisition at evaluating come? about for is they talk are opportunities,

David Hult

can as way. as answer will best this I I

During had a I been looking the have where XXXX, we we of week at year haven't think don't acquisition. an

fair looking things it's to So say now. at we are

are but potential we excited anything the else, together. and are on they working to complex are about some things like very We put

So we are hopeful.

Armintas Sinkevicius

type think you about something of acquisitions would or And Okay. tuck-in large-scale?

David Hult

assimilate to is I think is both. in other are revenue you you into revenue business It and going me, the to you about understand organization fold are market haven't need have. into more been you how operates your than before, really and a buying to the you that really it When than well and depends. the how what you think buying, will answer important that

mesh great isn't work company together. revenue a well if for buying necessarily doesn't a thing Sometimes or

broken are it that they time a a brand Is them. look good fit surely and good name. are for want to really you think you for is in and as on well your there of them opportunities, because scale us we they tuck-ins also dealer us look can have how focused we advantage for up very take markets at come the and to we operate. tend But tuck-ins partner. to Tuck-in and with win-win those support So stores

Armintas Sinkevicius

Great. you much. Okay. Thank so

David Hult

Thank you.

Operator

Thank you.

comes question Chris next Research. Wolfe Bottiglieri with Our from

Chris Bottiglieri

one gross insurance. taking A terms you quantify unit, the or SG&A guess Did of that? of all in first was how my Hi. contextualize want questions. you benefit follow-ups. Thanks per for at couple that the much however to I on of to the

Sean Goodman

is are We didn't some This our benefits what I is have claims experience year that. and and SG&A. of we specifically But we workers' than quantified but and here last thinking medical Sean. that seeing that comp impact not our certainly were am quantify insurance about the lower helped

Chris Bottiglieri

you. Got

just So that that persist, one-time not that's or you a like accrual would something think true-up?

Sean Goodman

for quarter it's terms year. a variation one-off think this of I in the versus last

We stable to the to expect quarter it relative in fourth more be last year.

versus one-off it's the this in last more quarter. So a year, be it but should stable fourth benefit quarter

Chris Bottiglieri

you. Got

tremendous system the used Okay. And QX. in changeover, then pretty obviously growth

and do the You have very unit contextualize outwards, in what maybe headwind how for a right environment? frame think much depending think you and a on last easy compare projecting was QX. there the Is macro now underlying that about way of us just to year same-store sales growth is

David Hult

if using it of change to starting certain system you and software, like you you are new. I anytime think are it, scratch change, to or kind people a going when used back it's

really time are business doesn't. used some to you for But that the manage using did. tools to that It So I think it to took changed. it. day underlying that business the Not every people get

the quarters are of some and So I that seeing or the getting saw used the think after uptick traction where you of of and the taking sales. you advantage three to in four this software employees using

John Hartman

or inning also add point. in last third think it. really would I in are gear full wasn't probably the still I fourth year And piece with that we at this omnichannel our that

is So that to and as forward software efficiency continues and going combination garner our field to mature of getting great well. as used grow, that that the to team really going results in the

Chris Bottiglieri

do think in or that something the you where don't markets like markets unit How compared those used In you place? you. where it the Got the XX% was I have comps like that. have to have omnichannel,

David Hult

answer what So this and we it I noticing way, rates. conversion will much higher are

mentioned I increase XX% think in John his script a year-over-year.

You can kind the total running as at of XX% for have been company a see, quarter. we

those converting higher are rate higher at with stores. a we closing those at So XX% rate, a of

Chris Bottiglieri

you. Got

you question. a to Or picture either we the think so incremental big vehicle profits The last How forward? going where or one just there down direction you used years metric unit. have think seven running, private gross you in is making just finally, for gross per F&I, SG&A like think $X,XXX Is are frame been bottom? then could is it bottom, way dealer profitability? And Okay. approaching there profits no about of much really money do this

David Hult

a more stores answer It's matters have saturation say, as tough was than would your really number ago, new tough pretty others of far really competitive are to it year And The I margins. thought where We rooftops. there of we located markets geographically positive one car are some stabilizing. that. as because

midline are great predominantly SG&A. demonstrating tough right are a which and We now. high thing we operating margins is import, And

to the negative at expenses model and focusing can is, the the new margin well how generate of be control me, car the same on of takeaway time. just So regardless this efficient, income

So that growth. regardless of confidence can it lends of and our destiny as to where us a lot we goes our control

Chris Bottiglieri

for sense. you. makes the you Got That time. Thank

David Hult

you. Thank

Operator

Thank you.

David question comes from with Whiston Our Morningstar. next

David Whiston

more actually just a exit not increasing balanced and trying have point you applicable and of just your it business, to conversely, we wanted ever and domestic think the portfolio given this smaller anymore ever be I is about franchises? to wondering, maybe more there is the that's morning. play are a Basically am you your I Good do to guess where incentive would but with brand discussion. continue to there Thanks. I would say, a domestics ever a probably exposure? going Or point part game those

David Hult

cyclical. because I can portfolio will then diversifying all are Clearly, in. and answer the main is jump focus, our John brands

what rooftop have. you There like domestic and you brands you question we our to want no the where about positioned count. in So country really would to think grow is are

appreciated. good think domestic quality Our We much make are domestic partners. with partners our make we They money products.

So with would we our like to certainly domestics. grow

John Hartman

Yes.

I and there, when got the think that you them. a grab to incentive it's competitive go have targets drop business

David Hult

because there targets have this that times David, the these said doesn't make gone are into change we we month sense. monthly,

We are chase to it. going not

So we don't.

David Whiston

what's math, the when now. on in average, some rates affordability which But a Other a are pushing bips $XXX plus rise harder new on than do in good very a the about that, that's Okay. of more market completely is or in XXX and interest car either on $XX some question monthly month is these the press into is and maybe generally are consumers now attention way increase out people the payment their credits like is if perhaps the payment. hit just not going $XX, a On getting getting used? I it's

David Hult

the customers have new the rates has we consumer side. headwind, feeling to on are not where up affecting yet bit really we cost good is a slightly a the seen haven't upticked little supply done days us a of carrying lending. shifting while managing point volume used. to interest The But our rates, We The have year-over-year. the costing interest the it's or from job rates inventory but really gone

David Whiston

Thanks. Okay.

David Hult

Thank Thank much. your appreciate discussion. on today's day. today. a you. participation call the you very We Have great This concludes

Operator

teleconference. and Thank concludes gentlemen, you. this Ladies today's

disconnect. now may You

Asbury Automotive (ABG) 23 Oct 182018 Q3 Earnings call transcript