ABG - Earnings call transcript Q3 2019 | Asbury Automotive Group, Inc.

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Operator

Good day and welcome to the Asbury Automotive Group, Q3 2019 Earnings Conference Call. Today’s call is being recorded.

And now, at this time I'd like to turn the call over to Matt Pettoni. Please go ahead.

Matt Pettoni

Thanks operator and good morning everyone. Group’s XXXX Automotive call. Asbury to third earnings quarter Welcome be recorded replay Today’s being will available call is and for later today. The results was is Asbury’s third this detailing website and our posted press morning on www.asburyauto.com. issued release earlier at quarter

call conclusion our will President with Executive for and available Officer. and up Vice of Chief Officer; Participating Goodman open Sean the Senior Chief Operations; our Financial have. President and follow-up I David of Hartman, our and today we will are for President later us the questions our Hult, remarks, John might Senior you questions At Vice be any

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

Forward-looking statements are other those statements nature. than which in historical are

subject may to actual by are those suggested and uncertainties differ statements. from statements results the significant forward-looking materially All

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

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

SEC applicable the non-GAAP financial most reconciliations rules, measures by required website. of As to on measure directly provide we any our such comparable GAAP

the to CEO, our hand over David call to pleasure David? my is It Hult.

David Hult

gross quarter X%. our was adjusted Matt This from earnings Thanks revenue prior EPS X% everyone. of up third We by XXXX $X.XX, the achieved driven growth morning to Welcome third and of and call. record quarter good profit year.

inventory our gross and within our front our increasing yield able is F&I by range. gross which vehicle grow days, end service bring profit X%, by grow parts levels XX total We're to targeted our by profit new down and

strong of these quarter, business store a characterized market stores new store Both expanded and a in tenured quality we and by profile, and Subaru acquiring loyal footprint acquiring processes. in by team, by Toyota customer high the Indianapolis entered Denver. During our base performance we and a are solid sound

We're excited Denver. to market in entering new be a

been and and to business cost demographics. its to moderate population business growing of We this market attracted attractive doing friendly have long due environment,

Subaru, Colorado. in the approach ideal anchor happens in Indianapolis. Shaw the also have build the plan following what similar we our Mike Subaru to In we number We found market executed successfully store. to brand a to in two be presence

market. will these in are great We Asbury excited we the opportunities acquisitions for that the return Denver two generate from the growth about and

process progress continue This make great technology centric consumer and guest quarter we an leverage experience. implementing to to a enhanced procedures create that highly

a Carolina consistently to in – At of to transparency. our as see excuse we're our store level views guest pilot me, to react exceptionally and North service see we're consumer favorable excited excited

focused on forefront driven we improvement in that the process believe While being at and success is of by change management. are innovation effective we our industry, well-designed

in out of plan our driven XXXX. start improvements stores first rolling thoughtfully additional to quarter We to process the technology

attractive yield in are unrivaled guest We creating our will experience returns. that an investments confident centric

well to Before for speak thank with. been entire end, and service to chapter. great and I the a next for want organization and work I pleasure contributions on Asbury. I wishing valuable to his he a Sean partner him embarks his He's as

performance. to over call the hand now Sean discuss will to I our financial

Sean Goodman

third last higher good X%, margin XX revenue than of by to the prior morning gross our X%, Overall, points and quarter David you XX.X% basis year. profit gross increased by increased everyone. was Thank compared

and per operations to X.X%, by by profit percentage basis increased $X.XX. a of as SG&A share X% XX earnings adjusted by X% XXX margin to income points basis increased to gross decreased operating XX.X%, from points increased

XXXX $XXX,XXX $X.XX of Tax approximately reminder third no we to the per the adjusted XXXX. There XXXX, share. discreet item quarter of Act a in an or for QX adjustments related As were tax for

the impacted hurricane the Dorian. in were stores threat of Florida our some quarter of During by

the not However, effect results. was materials financial to our

performance import where considerably available results the a below earning midline was last year. brand Our significantly manufacturer incentives however single despite impacted this by were quarter

impacted This $X.XX. brand per share alone for by negatively earnings quarter the approximately

Our XX% effective for XX.X% the of tax XXXX. was the quarter rate quarter third to compared in

packages Looking increase was increase our associates, year. frontline XXX provided basis credits percentage reduced OEM was at enhanced a over advertising expenses, driven last and of gross continued for SG&A by profit This initiatives. omnichannel in of points quarter as the an the XX.X%, benefits investment our to

of XX% at profit spent and during we $XX with our shares $XX in our authorization year guidance expenditures capital a With XX%. full million. $X our on share SG&A repurchase as gross As line respect year is the quarter repurchasing our million of stands million XX.X% to-date and to deployed, stock, remaining common percentage between expected, of capital

share estate $XXX through to-date, new shareholders year activity $XX have existing expenditures acquisitions, annualized the of $XX real acquisition This million. we we to in have capital six million invested total with of completed revenue and million business and buyback returned stores through our

profile, deployment store, for focus value In performance earnings the creation, dynamics, assess acquisitions of of of the the store making for we stability operating opportunities we achieving case decisions more. each quality much on capital with market individually of the When return. the the brand, and highest consideration risk-adjusted customer

an a turnaround store base, luxury have customer when return service and import a with we business. we parts and underperforming a for higher a then hurdle investment example, acquiring a margin high rate loyal acquiring of store would solid an significant As

well net attracted future that at X.X capital times capitalize the At our structure We our positions our expected on total to quarter, deployment capital of end believe stood us opportunistically the ratio opportunities. X.X times. ratio leverage leverage at and

and expense September new an credit a points basis $XXX,XXX interest in plan inventory by decrease the used rate by floor our prior increased our rate floor Our basis floor in are levels. by effective driven [ph] plan plan in year interest points. Note, result XX on XXth interest facility XX new that over increased

million the credit million $XX available million $X our perspective, line, available our on floor and $XXX liquidities of million $XXX cash, lines million facilities. in with offset on used a in mortgage revolving $XXX available plan undrawn quarter account, we vehicle From ended

In my closing, continued sincere take their and support to and my at opportunity future. appreciation It to has for David very express want in the during wish and this of team an Asbury. I thanks to and all everyone the time be I Board to success part the this been best honor exceptional

over to I'll operating that, call us the through detail. in With more to walk performance hand the John

John Hartman

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

million last year was and quarter. flat was versus at retail Looking down units or X% for for new SAAR quarter vehicles, XX.X the SAAR the of

Our experienced XX profit new margin midline rate unit pressure the was luxury from our grow year. however sales able We brands. X.X%, decreased brands, import to down domestic points our were were gross across prior margin margins flat in X% we and the and basis

We able will once are pleased strength that to we F&I. overall the offset again by margin in pressure

was Our and new the was supply days vehicle totally day XX from XX million our prior inventory down $XXX quarter.

year. of the sales X% Turning last to unit from used rate top growth up prior an year on vehicles; were X%

of represents Our gross $X,XXX of X.X% year. a profit $XXX profit down last vehicle per gross from margin

as used also per profit that gross car F&I Though service increase growth it reconditioning remember volume drive important unit business. was is to as and gross our parts down, well profit

XX days the million used $XXX inventory is days quarter. a prior vehicle supply, up three from at Our of

with F&I gross we increased front vehicle the X% yield gross quarter. at Total $X,XXX $XXX F&I. per our end about per to prior gross vehicle, best vehicle Note, year from when profit the F&I true increased by and used total Turning per provides we us profit or look think gross This X% to profit profit by the and sold. combines of new, that view which profit.

end over from our $X,XXX front quarter, increased year. yield third remained last vehicle total past $X,XXX has front the the stable end per In This yield to decade.

gross and parts This our increased warranty. in revenue X%. service; a service XX% with profit a and and and parts in to customer increase increased achieved X% pay was increase X% Turning

X% initiatives; were PUSHSTART the an prior And online our year. our on update omni-channel sales now up from

the and tool year. service we scheduling We continue traffic online reached and our from a digital service this utilizing of record XX% prior to grow XXX,XXX up appointments quarter, parts

our our is important In of strategy, addition success part an to our omnichannel people. continued

this beginning together our As workweek, to equity package enhanced extended time vacation subsidized we paid year have medical frontline This previously continuing benefits a at put recruiting for associates plans, an retention. announced and industry-leading on leave. favorable both benefits including of and maternity grants, four-day the education impact is package grants,

our opportunity teammates express to and to conclusion, like all our to and in in performance. appreciation who like to Colorado. our to Indiana continue support In welcome the also teammates I all would center, produce field take best-in-class would new both this I

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

Operator

Thank of And first you. Stephens. [Operator from Instructions]. hear Nelson we'll Rick

Rick Nelson

morning, Good Thanks. guys.

David Hult

Rick. morning, Good

Rick Nelson

same-store and the driver keep unit that if about market down vehicle, was looks domestic declined what of on pace asking who XX%, could Someone comment brand the like X%, the there? overall with you new the didn't

John Hartman

is increase maintain certainly and increase on and the to is pleased, stores focus our in to and the this volume PVR domestic the business Rick, the able on the scenario This address John. and first. Sure. were domestic of domestic We we I'll we will X% were our we margin. improve. want

as really down the the far we the midline one volume, to X% in segment. as actually far of took was we us or four It being where brands three down, outperformed As underperformed which imports as market. brand that

Rick Nelson

brand? that GPU? lagging erosion the we also for saw that that at was And Was responsible margin

John Hartman

This It is was. David.

Rick Nelson

stores, what are reinvigorate, I some sold with that? guess, your I know to brand you thoughts about here David, that the strategies

David Hult

to time and these and control. We're trying best impact of the we right with where have the this our Yes. has We day the brands best with can to on a material of opportunistic be more than and manufacturing, We we do parts cyclical. F&I percentage use to brand are can this Over we in can one. end we're at But our the service, a franchisee it. it doing sold to of efforts peers now. high it do offset any we're

Rick Nelson

on PVR, year, what growth drive that to is really $XXX that compared to $XXX the last brands On or up. that's rate? Is advertising stepped focused specific

David Hult

I'd bit it. this of year. of small a a credits from say, piece less it's little there's One; manufacturer a couple That's over year things. last the

at once. it piece to not Bill more a acquisitions when kind of and shock. that in most just lot aggressive We over go see than so kind number time in core transition improvements and acquisitions then we advertising to and of through down, were it it Group, we all more will you of other The to in phase They company. took the you'll back of related culture too is if a the is coming a new dollars, Estes do moment it time spending a is

Rick Nelson

volume drive that's of of the to And cars causing speak if the used and to sourcing are could auction? car, auction or at vehicles you more at you margin erosion some competitiveness sourcing

John Hartman

Hey, this is John Rick, again.

total year. Our about auction our It's Rick high. X.X XX% use with about still small vehicle times company, to especially trade back purchases margin per – comp -- happy really the a a turn quarter on growth versus our the run margin to as We get certainly inventory focus is focus the we this on retail sales. keep keep last were of to we the We percent. What month.

all as out stock big when cars the have have in to in you can we and sales. you cars have a run XXX now to we auction retail go XX you a have that weekend with to sell tend vehicles – The to purchases. guys and and for XX you expect and backfill So try XXX stock, XXX you issue quick if

steady said, we've to being more less it the getting on really on too. to of with trying having last fluctuations. we flow keep pre-owned margin the We're focused going and volume back That inventory were the quarter. happy focus So,

David Hult

sales too, CPO certifying I add, with the XX% were up those for and quarter on vehicles. we're bit cost those there's would more CPO Rick, also focused little and involved a our

Rick Nelson

the anything shift And with those I guess just the getting on brand, brand? to pressures there is the horizon back problematic to

David Hult

we be really how to can capital strong positioned All now. great seeking brand Rick to And Asbury I our right we a certainly operators. point this that And that's mix. always at allocated is, is better can and we're our focus say have and job

Rick Nelson

you. guys. Good Thanks Got luck.

David Hult

Rick. you, Thank

Operator

we'll John Next Murphy hear of Bank America. from of

John Murphy

if import misunderstood one comments about to Sean. I brand $X.XX When follow-up may was right? guys. with, per step I'm issues and midline you just of morning Good you correct? said have volume rebates I this didn't this were you're getting there come to Because understand share is the hit, a want having or I want the through. on apologize or misheard talking that this just that I rebates stair

John Hartman

$X.XX, incentive reduced related in it was incentives, Yes, primarily available John. a to and the was decline so manufacturer The impact EPS dollars.

David Hult

that clarify money the total further, prior it but to than XX% was just we was almost was that all by John, that available OEM, available less obtained about amount year.

John Murphy

that mid something or program advance. in Okay. That quarter was that? like known was And the in mid a change month not or

John Hartman

No. notified after it quarter were of the We right started.

John Murphy

a second quite end the gross $X, and the front when up a helping think PVR Then obviously about out bit Okay. F&I there. question, you is being

extended also Just curious if sort have And individual have you give that and -- can PVR F&I stuff how engage of us for think range might far highest you a what contracts service on of penetration that like help. us you the vehicle sort and like a of a roughly? you

penetration there's absolute increase as well? potential a trying where if also this number Just understand and And go? potential can to

John Hartman

is This John. John.

still I think F&I. in there's opportunity plenty of

this we've up and think average. the of focus the of about them before. We getting bottom on kind talked half I to organization

as as penetration overall far VSC still there's us penetration So on PVR, grow. I and to opportunity for product, think

John Murphy

really Okay. of are it like recon. XX% recon and there. the of driving revenue something recon drive service and vehicle? sort that really think that else revenue profit -- and $XXXX I it parts about of we profits recon through lastly, profit parts bigger your mean, service looks slide If used that $XX doing about I quarter. you about looks think of unit I per chunk -- as there? like or it's $XXXX If about gross about run it million that, use just and And in was parts you on number apply revenue use, on you're I for in $XXXX, revenue say is service then recon probably should the in all there to in your average Is is What and going

David Hult

around per tell lot reconditioning. vehicle a that you hovers that brand, It'll number to a it lower $XXXX $XXXX the would but I on So, is vary car. by than typically a

XXXX about understand look We So we -- at look point, front used car that and think margin. at to if end dollars. naturally you a your way we we the then selling it the F&I that recognize

John Murphy

I'm profit a sorry. revenue that's to XX%, of that. way and should Is think that XX% And gross number recon, we it? the a fair assume roughly about

David Hult

a number, I John miss John. sorry, I'm That's revenue number. number. a profit That's the profit a revenue gross not word. gross

John Murphy

sale fully So, GP XXXX looked on recon printing guys the if parts we are GP in all on you to vehicle side and within and the loaded for about another a used on XXXX vehicle, and XX.XX service? for

David Hult

That's correct.

John Murphy

you very That's much Right. helpful. guys. Okay. Thank very

John Hartman

you. Thank

David Hult

Thank you.

Operator

Bret Jefferies. from of Next, we'll hear Jordan

Bret Jordan

Hey, good morning guys.

David Hult

Hey, Bret.

Bret Jordan

how warranty at about you the are expect bit growth Or I warranty Could a looking we that we little guess, pretty particular recalls? significant to continue? this long talk might growth

John Hartman

of some still Bret. in nothing still some This stores. is the recalls There's Takata are out going now running There right major is John, out.

out So and type little warranty on. as There's that there's recall. of nothing thing things, far major reprogramming as going right still lot of now that's

John Murphy

F&I of and GAAP a sell Okay. a correlation on sort between lower consumer F&I at don't or you question further a get And that and is FICO products loan big can And there picture, a then the spend? just upstream? end or insurance scores either longer term negative

John Hartman

I'll and just tell go you for talk scores as a the lower I second. prime would credit sub

by what Your products can are the very and sell lender, them to F&I offer you governed dollars much right not. down

sales. higher would score actually opportunity goes have the I So more for as product you say FICO

John Murphy

Okay, great. you. Thank

Operator

Sinkevicious Next, from Stanley. we'll Armintas Morgan hear from

Armintas Sinkevicious

question. Thank Great. the you taking for

of second an were level a year elevated ago. we versus thinking the about had inventory here, quarter As quarter

see walk surprised in sales. you I'm vehicles not new sales? same-store to through on You through work to that can the the it dynamic and impact the me supply come the Maybe day same-store down. inventory

John Hartman

hard worked to bring our back our new targeted inventory We the range. quarter on vehicle to trying

we higher stores moved of had inventory day day Some a the with internally, supply supply. a moved that we so that the stores lower it to was

Armintas Sinkevicious

how that's day lower we get shifting which is essentially And inventory supply, the around?

David Hult

twice also a once with It's again your manufacturers these month. allocations David. is or This doing you're

about of And How is different It's different offerings satisfy lineups back. these in but then amount model have very truck to model order there's of you different many are. are? scaling trucks. obviously looking you and difficult inventory do at when of number, package overall side. there and of to package The have but everyone, within hundreds it's And -- how to there to inventories. can spare domestic sampling try ways have lineups especially supply, the day So you realize a you think a these width an you're the many the hit

really key be trucks. packaging to time So, its you're about sure how spend and the thoughtful you make to those moving

moving side market upon and what trucks that far was As little based comment with on market bit domestic the John's and inventory a the as around as a certain shifts trucks need. that equipped more how has are

Armintas Sinkevicious

we Okay. we're quarter the And environment for here the the specific third with brand, challenges here thinking the think then fourth about how as do about from incentive quarter? the

John Hartman

say, in would that call with are that as same brand. the because quarter third in and Quite relates we I position material our rate last We're today service with particular about was were think our we honestly, and Yes. it we out, omnichannel. as over you we to quarter. happy our actually parts number. a When we're investment in X% incentives did where it what year pretty that used a additional with very climate and F&I, growth the

can drive noise had that a days on hurricane. the hurricane those know impact. was was media five up. in the lot going The it but There of hit, you Then didn't of quarter. how the We

everyone the were open and around hurricane. for focused a on days. was the were because of Our And few actually they then no business there couple was stores days shut

on lot a the quarter. And honestly did. in we we're going was quite generate we stayed happy focused to it So, what

Armintas Sinkevicious

answers. Okay. Appreciate the

John Hartman

you. Thank

Operator

Next, we'll from Chris hear Wolfe Research. Bottiglieri of

Chris Bottiglieri

to exposure impact X% lot you've that And X% seems making or I context mean, matter? Was difficult, more of helpful? relatively be progress are Carvana Any growth your on that, there was comparison seeing from that are of any for impressive thoughts where Florida, omnichannel given CarMax, you that. on question Hi. you kind overtime. and Quick quarter with even just been Atlanta will push any to this is PUSHSTART, growth, like there pretty for then low

David Hult

Sure. and you, be sales. report new with new do that get product, able market think over pretty transaction the to getting new. new, half I of We really strong quarter long hanging this than online, And last else half out. kind as quarter. the know perception a started as market This off enhancing more first now, dealers the what over is it's I lenders to everyone I It's full when used my to use entry what you David. more that that's for to car tell would year we've had online. we're don't more initially But the tip because product. far fruit is seen increase been we've you this leading the come sales

So having lenders it enhance we'll think we that online, availability of further.

day right a social consumers it. security where We out aren't It's exit difficult challenge tool of piece activity tremendous in But that are and this a most application age there. information and to to have on they're number their amount online. their convince put point tremendous a credit amount the consumer a putting personal using the converting now around for the

Chris Bottiglieri

understand it a given what's I'm that that flat as sure, up I CP warranty confidence the then growth like, bit not next should you how into year, makes warranty and programming, robustly on metric warranty continue. That just get like warranty like compares for related, more And sense. SAAR follow-up driving grow been maybe the one has doesn't has question you have if been This slightly. on elaborate could could the just QX little difficult seem you. as much into has. Got

would helpful? to be Just want of kind your if get that thoughts on sustainability

John Hartman

many amounts. Sure. this for more I And were brands past having large small it's dollar say dramatic would brands certain year recalls there recalls. in had years of about that

as programming years lot this I I vehicles difficult very, that mean, very has to issues up gets in come retail. and in better technology a for there's XX up. think us. me these of errors in come It's

hardest It's difficult going of very warranty One to to the things is say. what to is like year. predict look next

down expect it Some year, of brands up. to this that the are be we

that we Some are up, brands down. of expect be the to it

it's very So difficult. really

new I models. little bit guess is a of cadence around a

far thinking adjusts see As to it. have that. potentially think that New you into small months. tend some warranty how throughout to is model ahead flat go issues going every with or But be come then as to that the Year we might looking And we

Chris Bottiglieri

you. you. Got Thank

Operator

next JP with Gupta Rajat Morgan has question. our

Rajat Gupta

Hi. question. Thanks for taking my

quarter. in know question about SG&A first being a little than second the higher had a had Just up on the the talked half. pick half I you

cited had as omnichannel You reasons. one investment the of

cited more also one there? credits within rate onetime this should is as OEM base advertising is investments? I follow have reduced something run you then help You this of in Or And forward? we step And expect a Can on going up. up what's that major going of elaborate reasons. the the a

David Hult

is anticipated as SG&A of This can start the We half year. clean going last the up. couple We foreshadowed it up. the quarters I'll Sean second then and in David.

of to and what investment coming acquisition cadence were that is And where of late. wasn't little OEM across do the is was credit ended up board all expected bit it ones. we of wasn't kind in spending our Estes material. up. Bill OEM. impact. and we So, knew being for the an We to The understood we certain used omnichannel. they only with end There the had what going And It to we on a was

So increase. the anything it to. to John, expecting quarters in foreshadowing you want of purpose prior again that was

John Hartman

the related foreshadowed as items That be we've last providing of quarter. was Yes. one Anything our that I'd we the the packages are half frontline of associates. that add expenses benefits to timing to in enhanced that is higher just second to is will other the

with much XX.X%. XX%. SG&A our to year and very date It's of between line Our expectation in XX% is

expect to And continue the for so full XXXX. year we that

Rajat Gupta

the Just talked about to in in Got is it. believe XX% XX% And you've of ballpark you mean, to going think about XX% or historically. range in that or I like to it like a of to to go XXXX of you've would a think anywhere level beginning like from forward? know, been I be the that forward going kind or year I is about could good kind XX%, here?

David Hult

Sure.

we've guidance year the started initiatives. a the our So And you the XX% that SG&A beginning those of sure as investments the between additional through can statement. lot XX% and actually omnichannel the was we've year, in income really on relating line our the flow to making appreciate additional I'm been investments of

Our lower resulted are and initiatives SG&A initially this omnichannel primarily the we the lower. that in benefits some expenses that's SG&A expenses better will results SG&A on and our expected, than from because of year driven actually be that's than our line

do. I XX% to term. there increase believe spend efficiency processes. of XX% term that I is the in that sort range? But we that SG&A our I think and I are below opportunities as enhance a But reasonable expectation outlook long the think long initiatives enhanced omnichannel to of our term Do medium a is

Rajat Gupta

a Is it terms attractive And M&A market amount like is still What helpful. there? Looks multiple. on given capital seeing thoughts is? about on of a of so space seeing bit potential Thanks. you're stock price you're play there? there little thoughts then take That's to the where towards decent out some on pretty any buyback in sheet in updated still any out then balance to allocation. what your the there as And leverage, well on opportunity out

David Hult

a there. David. of is This acquisitions activity out with There's amount Sure. tremendous

are Some stronger brands holding the and well. of brands multiples their luxury

brands more Some multiples struggling right now the come good. pretty down of that have

our is our a and opportunity enter the and we'll potential think figure for quarter our is certainly every approach our what I approach return and into opportunistic be that presents going shareholders way. for quarter high where

believe harder buy in it. growth something much thoughtfully do it's run to very but stores, and easy to We adding

make good to most want for really a it’s sure the portfolio we our acquisition balances company So that importantly long-term well. out it and

Rajat Gupta

on buyback thoughts focus the any M&A the And near this at it. on or the more term is Got point? in

David Hult

Yes. more the the saying ends will are that I as and we we attractive That's quarter that see what lever our that than simply certainly by answer an opportunities acquisition. pull. would as

Sean Goodman

approach look just for Then as that, I'll to have capital quarter. add at that said. and opportunistic balanced It's are to our hard numbers David one allocation to we Yes. a we

to for at on acquisitions over it's for fourth quarter more return see opportunities last create on spent look year spent highest year where little bit in we look share buybacks, the on have of This the is You numbers period can for shareholders. to buyback. a $XX the example, over a you we've time we but really and risk-adjusted based the opportunity

Rajat Gupta

Make very sense. Thank you much.

David Hult

Thank you.

Operator

Next, SunTrust. we'll hear from Stephanie Benjamin of

Stephanie Benjamin

digital know investments on out it's Hi, and and some deck it can that slide the on or investments the provide now the to granularity building making. really next whether a capabilities, I focus good that on that on a And even suite on you if morning. I things? sales further your financing even as side was Thanks. little we in can you're out bit hoping may what move we your expect if of be is or what you could right of you're little focusing maybe called into broad bit talk you past omnichannel in the quarter be XXXX? more a

David Hult

of and half and the its software year. towards the investment I cost second human have technologies capital bit where in up half different in would really we'll the probably This of several neutralize categories. and it's investment. I in a been of is Its people, in this biggest first first software the would positions, so half year. next expense David. the second the there It's in be adding will year ramping positions, say, little of half say, changing the investments Its year

approach the and with parts doing. online So service we that we're have

online have of closer. goal We but car deal the completing there which not we're a we're yet, XXX% getting online

two not the and And the very experience within seamless. peace into guest they're have melt we different how then processes dealership two so and they're that the one,

integration. store script to we're when So was North I referred And focused on that point in very Carolina. that my that

omnichannel going to So it transactions, it we're the level, its of in an And where see guest a going potential the on then we're We creating a knowledge an bit. those kind out bringing but where experience SG&A but strong been into rolling from tighten that's at to working we enterprise eventually make opportunity to little that's start it seamless. standpoint, and store up XXXX.

Stephanie Benjamin

all that's Great. I color. appreciate really I Thank And the had. you.

David Hult

Thank you.

Operator

Morningstar Next, Equity Whiston Research. we'll hear David of from

David Whiston

morning. Good Thanks.

ratio, of same-store what supply, turning talk on that you more XXX a Is about questions bps, from awfully was increase really little just that away people driving is large can lot that First new, used-to-new that omnichannel? more?

John Hartman

is This John.

used obviously part towards touched new the And had was currently. vehicle is were the that heavily our so the saw more of really on You PUSHSTART David it. and online up, that used sales vehicle

David Whiston

Okay.

brand? not monthly just quarters pressure basely for my On point flexible it's import midline others. what these the stair at targets, the than maybe you -- or at the take point more brands, types an And are obviously years automakers how say for and from a to steps and of some you worth many all particular is it issue it's question time does some

John Hartman

parts not we worth be brands think our been control can several and you is about, saying can that more import midline think are F&I the confusing base market. years as that, this. not couple But exacerbated, when well. believe strong a we new Having service business And units it’s this bit with a opportunities parts, hopefully said used and and I the of we control are for has car service, and very little it.

prone one really to midline other to it service. the weaker variable we're than also little imports parts and side be of a that bit midline happens its today the release the on One when import, the

odd exacerbated in both So way you're getting on ends.

of it with it's traditionally customers, to feeling not You incentives some and on then competitors. robust as new the their and service parts

David Whiston

Okay.

fact Finally expanding its the interest just Do ever market in interested you're been have there? car strategic you not given a question, the broader country. in largest California in always in

David Hult

of expense part contract we acquisition, SAAR expand never costs adjust business you know, well the an is a and There's and look at and it land in You when a to standpoint can markets from Dealerships environment. never. can big friendly say a – well.

your expenses. adjust can fixed You

on goal environment our don't real ourselves we with up weather times a that. heavy and debt we always markets be that a expenses is fix or in to laden estate heavy can like tax meeting and So down some

we larger California that So is in, there's sure. other great markets. Asbury create business a think returns But to state to opportunities do in better for I'm

David Whiston

guys. Thanks Okay.

John Hartman

Thank you.

David Hult

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

Asbury Automotive (ABG) 22 Oct 192019 Q3 Earnings call transcript