ABG - Earnings call transcript Q4 2019 | Asbury Automotive Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Asbury Automotive Group Q4 and Year-End 2019 Earnings Call. Today’s conference is being recorded.

At this time, it is now my pleasure to turn today‘s call over to Mr. Matt Pettoni. Please go ahead, sir.

Matthew Pettoni

morning, good and operator, everyone. Thanks, Automotive Welcome call. quarter earnings fourth 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 fourth website and release was quarter

David are Vice Executive of Senior our President of Finance Vice President Operations; and and today Officer; us and Clara, Dan with Hult, Participating our Treasurer. our President Chief Matt Pettoni,

will for be our of we open questions, remarks, follow-up and up you I later At have. the conclusion questions available the will any for call might

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

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

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

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

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

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

David Hult

the of recently, the this ran for business he and knowledge passion him manager, general serve-and-leader role. I’d our years. earnings and for to has Vice with Asbury. for Thanks, obvious started his to of to past Operations over all good President up XXXX Dan way choice VP was makes Dan us, then fourth mentality, call. cars, by career like Operations, selling He following held a Dan’s Clara. and welcoming Matt, morning, vision successfully our XX positions he then market his Welcome new of everyone. start of his Asbury quarter the our worked Senior most our for

We revenue achieved $X.XX, from gross growth Now in turning by to quarter of performance prior X%. our fourth XX% was record and year-end of year. driven This of X%; adjusted results. growth profit EPS the quarter up

X% and grew X%. quarter, also bring our down gross parts XX were and new profit by by service able grew we Since insurance finance and our days. last vehicle inventory We to

in gross X.X%, to XX% earnings as by gross grew XXXX decreased SG&A front grew Asbury points adjusted vehicles, operating $X.XX. a environment. grew $X,XXX, a profit over and end to an slightly profit of record serviced service percent of X% and basis margin a to parts SAAR million generated retailed was per $X.X We a year over share X%, our XXX,XXX yield vehicle adjusted record of We down revenue, billion of by vehicles, XX.X%. XX for achieved X per by

During XXXX, in we most our industry. continued being out company guest-centric the building vision the of automotive

of in to continue We omnichannel part guest-centric invest a model. which retail are foundation key the to a initiatives, develop our

believe will at continue SG&A We our growth same our associates to maintaining we level year. enhance last benefits front-line employees. also industry-leading We ratio our in that long-term the invest as while potential, implemented to approximately

our business, We and invested our During XX we and of our shareholders. seeking million million our stores business. integrated stores. highest our in risk-adjusted X continued to repurchased allocation, acquiring of capital through XXXX, capital balanced shares, We returning investments strategy we also and existing $XX returns in acquired new

Now XXXX. turning to

complement their Chrysler and the is this a are are in store Colorado by members. management to Subaru expand perfect This store, led Dodge store. market. brands a Jeep a We solid Ram performing footprint our and in excited well acquiring by our to These team

and successfully population We what moderate in environment, market attracted to following we its the business, market, approach been our cost similar the to due to friendly growing methodically business build plan a executed demographics. long of attractive in presence Indianapolis. to out Colorado We’ve doing

quarter, In to plan are and our In our dealership addition our divest store X Ford, platform Mississippi divesting X stores, to acquisitions, and Atlanta. Nissan we X this portfolio. to in optimize continue Chevrolet. we X Nissan total, will our we X dealerships, Toyota Late

finally, Place are on March. still And close Park late the of we track acquisition to in

portfolio transaction As geographic we revenue Asbury’s XX% attractive transform mentioned in from our increase XX% will market revenue derived brands. the derived of of from to overall December, mix to and approximately Texas luxury this

We Place delivering to passion The become best, for to that shareholder and best Place national drive bring automotive Park guest will combining achieving our what guest-centric Park experience. believe what it’ll the closer most of does significant with retailer. members value, exceptional does team brand us vision known professionalism and built a Asbury

of After and completion delever, by to are our of Place acquisition, the in Park XXXX we capital allocation the to successful end year. focus the will be be around times main X.X the targeting

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

Matthew Pettoni

XX.X% David. the Thanks, prior gross X%, basis quarter, by increased gross fourth margin compared revenue XX X%, points by was of increased than higher year profit to Overall, last year.

X% of percentage by $X.XX. Adjusted to profit to adjusted increased gross basis XX operating points margin X.X%. EPS points income increased increased operations increased basis XX.X%. from a as Adjusted and to XX% by XX SG&A

million for settlement diluted a million or $X.XX share. legal impairments pretax $X.X per or per adjusted pretax or XXXX for gain of was the or charges right right diluted for $X.X a pretax income million and adjusted a estate-related a franchise for share, share. $X.XX per for $X.XX Net for from charge charge franchise for the per diluted quarter fourth fourth charge of income real share was $X.X Net diluted $X.XX impairments pretax quarter $X.X a XXXX million

by $X.XX. was per quarter alone impacted brand this brand. approximately earnings This impacted performance single midline Our a share by import negatively

our not per incurred we QX in These associated in numbers. XXXX, $X.XX addition, with related and approximately adjusted transaction Place Park accounting of fees. In to costs legal mainly the share were

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

a to the shares during was gross the points quarter transaction. quarter, of year. preparing Place Looking as basis we for our profit did as an deployed, at Park percentage SG&A was repurchase focus of capital any not increase XX.X%, the With on for XX over last expenses. respect

Our remaining stands at million. authorization $XX repurchase share

In stores. X.X total $XX and and our business through estate capital stood our acquisitions, leverage and million X.X existing to ratio our we quarter. XXXX, net ratio leverage in our in returned expenditures we last invested at the share stood with new million of real line activity, buyback through end acquired at shareholders times six quarter, At leverage the $XX times,

quarter, expense inventory levels in the lower a year plan Our decrease floor interest interest driven over by decreased $X.X by and rates. million prior

million From million the on plan $XXX million vehicle in perspective, available line, million quarter available ended a liquidity we floor $XXX accounts, with $XXX in credit offset our used available and on $X our lines. cash, revolving

to to regarding the make comments a Dan, XXXX, pass expectations over transaction. I few I Place call would excluding for our Park the like Before

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

front our range. profit vehicle pressure offset by to end with on grow any we service per in believe continue and yield We remain F&I. to the gross vehicle can that parts mid-single-digit stable expect We margins being

our in the This SG&A with spending, percentage SG&A as investing reflects balanced disciplined in to range of approach profit a expect to while XX% future. to gross We be of XX%. our

to between in XXXX XX% We expect XX%. our be and rate tax

approximately purchases real of potential We opportunities million. transactions. for excludes financing lease and $XX consider that planning CapEx This estate are amount buyout we

to Turning XXXX approximately Park expect acquire to We Colorado agreement $XXX and Dodge Jeep and divestitures, acquired XXXX the an we to generate our January store Chrysler store this market acquisitions late in in a revenues. million annualized Place. Ram in signed

to and $X.X We in generate it expect annualized March late close XXXX revenues. billion approximately in

in it agreement We Atlanta generated market March expect to close our generated approximately XXXX. revenues. These close an expect approximately million agreement annualized We XXXX. all the and signed to in X it million divest signed to This $XX in in Nissan $XXX in store February to Mississippi dealership and annualized an divest revenue. stores dealerships

million. Excluding by divestitures these and expect annualized to acquisitions Park revenue decrease we Place, $XXX

decrease QX We If you acquisitions will make by company. in believe stronger include annualized a divestitures Asbury acquisitions million. the $XXX these approximately strategically revenue made XXXX, and expect to we two

to assuming the XXXX of approximately is to of Park impact March accretive acquisition The of expected per to $X excluding costs. by transaction Place, $X.XX, an share onetime close, earnings end be

onetime costs are expect These $XX the to consulting-related financing related mainly fees. costs transaction to We acquisition but include million. million to be legal, also $XX other related, approximately outside and audit

a from operations The Park of financing Place existing arrangements. facilities, and transaction be expected flow Asbury’s cash committed funded to credit is through combination

Asbury has to closing. prior replace to secured expects it with permanent financing, financing which committed

line $XXX $XXX our signed from amendment On facilities. $XXX and our agreement $X,XXX Friday, increase This million billion our from billion million to facility. revolver we vehicle It senior from floor $XXX credit [ph], increase to to used million. our upsizes will million increase to $XXX new an plan

delever. main Our focus to XXXX in will be

ratio net X.X leverage around expect We XXXX. to end the our of times be by

I operating that, to the call detail. through in over hand With our walk performance Dan us to Dan? will more

Dan Clara

compared remarks fourth quarter performance Thanks, Matt. same-store pertain to to XXXX. the our My of will

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

X% gross vehicle from year was period. new down the profit Our prior

the Our was the margin from new rate gross decreased unit flat X%, year. prior and sales X.X%,

period. able were per prior unit, $XX vehicle gross from our profit we year new to However, the grow

to but one luxury experienced some and brand. saw PVRs, due pressure We in strong growth mainly both imports, in domestic

brands luxury prior saw period. to strong $X,XXX, up new year and growth X% Our $XXX up from PVRs with the units

X in inventory, our vehicle XX, down days held prior for million day supply new $XXX was inventory from the was total and year. excluding Our sale,

was prior Used up profit vehicles. used up Unit XX% to prior retail Turning sales the from X% the period. gross were versus year. year

year. margin increases profit $XXX F&I profit reconditioning profit remember gross was as Though car used down, gross vehicle as is well important to gross in represents parts gross from and volume last per drives business. growth of also it service $X,XXX, of Our profit down that unit our a per X.X%

on and showing our Relations we Please the long-term trends growth approximately reconditioning gross gross profit generate presentation, used of profit front-end average, of unit, F&I per vehicle. vehicle vehicle profit per per overall the the profit gross sold. used per the in On includes a gross This vehicle. vehicle $X,XXX see Investor our used

inventory days year. excludes This held inventory XX-day supply, prior is from X vehicle down $XXX in the sale. for used Our of million at

by new, per increased profit. to profit vehicle increased prior we look the which Note gross to by profit used when Turning front-end year of This the Total profit F&I gross F&I. gross at that of from and total combines our gross quarter. our $X,XXX talent yield, we professionalism $XX and and think vehicle, X% team. per demonstrates F&I the

trend. sold. This $X,XXX. our is quarter over This was up of $X up presentation profit to for since the IR provides true historical the Please front-end The yield vehicle $XXX view see our the per best XXXX. in

service. and parts to Turning

and profit warranty. increased gross parts a was X% increase in with and reconditioning achieved revenue service X% customer X%. Our increase a increase and in a This pay, increased in X% X%

omnichannel have now Since And this initiative. in growth. strong our seen investing strategy, on we an update

Our time online of for the total quarter. PUSHSTART in sales sales now represents first XX% the retail

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

great implementing to store appreciate make transparency Carolina. speed pilot our of continue reviews, We the customers on dealership in transaction. at and our Based future progress North of the

less hundred minutes. transactions several time, with minutes, in several completed completed have XX as as in little more We XX

from we operations, to keys when service our cycle from when cycle time fixed we in And We calculate accept by back. able guests to them we XX%. hand time decrease been the have

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

team on As health experience, leave. beginning to impact equity free day premium vacation an favorable week, that paid the together put a retention. the guest members grants. care a This our education for both package industry-leading previously we’ve enhanced associates, frontline announced, and our XXXX, package grants, and for frontline have of is tenure including impact extend recruiting at maternity their benefits work X time benefits continuing

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

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

Operator

Thank [Operator Inc. Our Stephens question will Instructions] first be Rick you. from Nelson with

Rick Nelson

or about you’re And David would investments should be you, those ask SG&A wholesale about To thinking into deployed, And acquisition? gross, morning. Good the Place? incorporating the Place Park we think to how omnichannel in how Park Matt, XXXX? Thanks.

Matthew Pettoni

is Sure, Matt. Rick. This

XX% to For Asbury’s SG&A, year. we’re XX% to guiding for the

both if of acquisition it’s Place, not the to when next combine better, luxury of XX ours, With X for to be very them. we would dealerships, their we Park over being year to years expect SG&A that similar the

back Naturally, for they of the develop us take to with really what to the in but best offices large over it’ll the next those combined SG&A begin what ours we little apply a due first the while the to year, bring year all do and stores. the as to expect would and as do, two best synergies or fact than luxury we together, get two and the of they’re that companies we and be we incorporate better incorporate

David Hult

bit Rick, initiative, your that’s about SG&A. And touch XXXX, steady investments on be without omnichannel will which in just to Matt. grow and absorb it additional, probably Yes, continuing question to made same our a little and will noticing in our

enhance XXXX excited in quarter with increases software our We the even new And further. coming we’re to seeing in in our material numbers and made it. some partners fourth it with developments

Rick Nelson

acquisition in your The that to I’m curious Place? with now appetite prior acquisition in was into Park works coming the fold? for that. you Great. the Denver, something about Place Park had that And Thanks

David Hult

Sure. in it’s folks. Colorado It criteria, great one-store Again, think tuck folks well It’s We nice conversations similar a started a was acquisition. in. with We similar the the timing. run, fits Park the our Place time in as it return. same to

it doing - ratio really didn’t a anything standpoint really do acquisition. from And leverage the

So accretive nice and forward with deal a it market. thought for we our move was it

Rick Nelson

doing deals that Place? And additional your for with appetite Park like

David Hult

but we’ll I and XXXX leverage for focus I really and debt. much hard opportunities. Colorado Yes. comfort see that, that the say down after main would our paying looking don’t soon at is our think in back is focus be Certainly, XXXX, costs our to and the our for you’ll down delevering zone. ratio market getting getting looking

Rick Nelson

are divestiture All side, the And if right. those Thanks profitable, were for are a speak gain? at stores multiple? you that. sold on they could to and And the

David Hult

lower I than would purchased we best is, what Colorado multiple the for. stores The the a Mississippi way stores it sold Sure. we phrase at

are. We a been So the long-tenured our is the Mississippi standpoint at team that averages to deal professionally think our made been have looked it’s the deal market as And we level But for a mates what great to us. that from of we there. sense our manage haven’t good to returns company lot difficult shareholders.

for the more be an our was we’ll - cap to to us have opportunity it actually that to reinvest be us all are stronger the private We sell think we this for with better where probably that dealer in it will a company, areas success for divestitures. with will believe and accretive

get had capital And the it now. more to with The was a It with it’s lately. Nissan things areas. back associates and were to store circumstance well-performing sense store with economic just on in differently brand. opportunity due going an we Atlanta to not CapEx brand a it a felt in there, while do better right and our when we the the that take out were big made and of Nothing been investment in different incentives has deployed

Rick Nelson

Great. Okay.

could at targets? this Nissan there compensating a that. out quarter. you, way Any Is the the I to in if changes remains any $X.XX, at you they’re headwind ask light called Finally, to dealers on hit tunnel? follow-up

David Hult

every coming. ups have Every dealer downs products bright their it have I’m they’ll and manufacturer -- figure don’t their it in now. cycles. like see They’ll good I out. sure right people. they They’re has

overall our looked So of portfolio. We standpoint a at eventually, from figure they’ll out. it it

sense And in brand, X to months, the then in dealerships. maybe made the XX of we divest. were we’ve and last too really, divested heavily this invested Nissan more And

Rick Nelson

lot Great. luck. good Thanks a and

David Hult

Thank you, Rick.

Operator

Thank you.

Bank from of John question Murphy Our will America. be with next

John Murphy

morning, Good guys.

question. you volume a profitability did pressure to I quarter. from a remaining on pretty job is obviously, the market perspective new it in although alluding mean, and you’re Just first okay, good the a under of kind vehicle

is. at bucket can used those growing in you more how you how you focused businesses? grow and think business As curious And service structurally, look parts potentially the go that there age if age the how old room about or and really bucket on, we much the just you’re wait to I’m think

David Hult

I’ve dealer sell. before, would service this John, do for of tackling said at when that United best think car they retains XX% that average is David. I’ll less work the the - one. States about tell and this than you my the in you, I every

on So growing direct much double-digit is the growth question out The add the potential there? It’s staff speak. is, aren’t there’s rates upside across to so industry the business, capacity market your at a impact why logical you of huge. The if very of competitive are that at Technicians a you a to premium. space. technicians have amount

able our we’ve be we’re from that I and with our communicate ago, software the years you, would more a to tell few implemented standpoint, customers. transparent

We’re service done their work, pay texting to them NPIs their way. and their their bill handle bills, that them service that and link texting are things a

we we’re future. really faster, and up for think we’re more So the set transparent,

mid-single-digit could there’s tremendous going. body, potential And So dealer going I actually we I’ll numbers OEM you, see electrification would which is the own tell numbers And at my I out where personal keep retention then growing opinion, you up. the give there. for service or years.

you’re higher normal think incremental to comes push the to in, up the get then I the retention really electrification and for the dealer - you’re lift, going it’s going body. as So even to going

So it’s I think great.

from is going in to for Most cars to lot your are purchase you’re only to in when when cars side, a customers be so vehicles. dealers down And trading comes dip pre-owned sole purchase SAAR compressed. have pre-owned speak, their acquiring the On their your or vehicles. you vehicles margins inventory, get more

pre-owned. say, would it’s on -- that’s on the with trying and that buying on more And connect focused acquisition trade an acquire mainly the standpoint right not or to from focused kind customers buying they’re we’re to whether I really lever directly now, very We’re in. this their of

Operator

you. Thank

from Our Jefferies. next will Bret with Jordan be question

Mark Jordan

on Mark This Bret. Thinking driving growth? about used some for in by that retail Can growth talk Jordan what you about is the quarter, performed well segment strong is during the Good morning. highlighted units.

David Hult

David, been, half This and say, there’s I selling more we’ve Yes. pre-owned underperformed is on of and have in And in really Mark. tell should lot as as focused focused would vehicles. quarter. the weren’t a I first you, been it the fourth the year, would we more on we to

You finance to aging, when wholesale about dollars, also a losses, think lot reconditioning inventory dollars, doing it. - there’s

came we’re that through growth really vehicles. So - it about, most CPO what that proud

buying out not we’re So of a lot cars.

just OEM from internally, getting of keeping our partners. cars lot a We’re lot a

in Our were on alone, basis, a CPO quarter same-store the XX%. sales up

we’re XX% CPO. So up overall, but XX% on

CPO a So guests we option our And same these a can as the we see differentiator to that something we’re going products. really to take it’s also advantage and value for and that CPO of. us between think offer independents continue

Mark Jordan

And Great. Okay. would the used volumes, those GPU that of quarter? the speaking the be main driver CPO erosion retail of during

David Hult

bit Yes, I some say, focus no. to of say, more the necessarily, I our volume. increase little it’s a would brands not a with would of

And volume takes their sometimes, of for used put PVR. you dollars little one, they peer our from in car our top generally, hit. the when group group, PVR to and Again, bit we peer I believe, increase think of the at be a that tend a much, I margin, except reconditioning

F&I that margin, around you to overall better. $X,XXX, reconditioning again, based what profit we think think service about is upon car healthy us parts when So also But a we’re be look dollars used dollars. a that is maintaining pretty we in of peers the on And an at healthy. still certainly could our and

Mark Jordan

Thank you great. much. Okay, very

David Hult

you. Thank

Operator

Thank you.

will Sinkevicius be Morgan next Armintas question with Stanley. Our from

Armintas Sinkevicius

question. for taking you the Thank Great.

were For the quite strong. side, new GPUs vehicle

something in really of? continues should thinking strength luxury mix is it Nissan tailwind, a just be be a Was as headwind. to GPU? luxury mentioned that else towards new Or we there the drove that You

David Hult

$XXX in car in We up bit or a our well. a start believe the as domestic I PVR a quarter. little in over $XXX domestic was car

a So for - of little definitely that traded we in we backwards were volume, PVR. had domestic but bit

But $XXX the pressure So midline was to import. was be us significant. up to

Armintas Sinkevicius

about incentives - forward? going are just then be a the it the And thinking Or today? on structured discipline? they to during was are just And Okay. more how how quarter

Dan Clara

month some morning, quite those of provided bit changed of the I incentives from This pretty midline little year. Armintas. more that previous bit some OEMs. Dan incentives overall, a saw is Clara. down And But imports, seems we from Good of January, of consistent. for the the being quarter it The a think

Armintas Sinkevicius

Okay.

David Hult

volume, we’ve to Specifically, good the not and on our of margin work them side, had the and volume - decisions chase different made our things of but which and with really the some most out we increased fairly CSI capture to there, again, brands were that some not PVR. domestic it chase things. on of was money, tied incentives able around other to to And more

Armintas Sinkevicius

thinking parts order through customer versus into the and on to takes? growth? walk about reconditioning us the you get single year, next then pay growth are can puts that in services, to bridge of mid-single-digit And and to mid some How versus warranty we digit

David Hult

pay a say, I number Yes. and CP. how in between say, to is growth would days But to predict. going months in a difficult little flow. would customer out. I very is travel all of X% It’s the upon pans depending will it Warranty month seasonal ebb XX% and and

see So we basis to a it it from look then and where at up. ends tend flat

warranty. internal perspective, in, the from fourth the hard which internals, baked you’re looking but at like - really us single get gets digits. to all off we’re kind year-over-year And low direction, either of gross in quarter, us Sometimes a growing to in way it’s mid-single predict digits profit

Armintas Sinkevicius

appreciated. much Okay,

David Hult

you. Thank

Operator

you. Thank

Wolfe Our will Research. from be Bottiglieri with next Chris question

Jake Moser

is Moser the Hey. Chris. Jake question. for Thanks for taking This on

David Hult

Hey, Jake.

Jake Moser

row. PUSHSTART kind So math, for a looked few units in X% a of it by around had our stalled like quarters of

So to XX%. that jumped

David Hult

Correct.

Jake Moser

talk Can about you impressive. you there? might adoption reaccelerate what done differently have Pretty to

David Hult

marketplace to took And we the it. a I place the this a volume The or traffic was The large. do is on tool that would mentioned is growing. conversion. dealer loan conversion single ago, group two first the I is, you Yes. biggest tell change created quarter in we’re and what’s the

rocket comes customer aware like felt application application online. the a There mortgage they of. a traditional the a at back this experience car may It the to submit point, others But like credit over to consumer. basically, The has that get I’m dealer as lead. dealership, it’s to not be and

We’ve created with the lenders a that large have. marketplace we loan

when consumer from filling rates them credit what the right is within online, they’re lenders, to terms XX and that seeing they’ll everything. application So and for seconds, XX the back out do

conversion has transparency helped really that our rate. So

Jake Moser

Got you. I’m and this helpful. following talked sales That’s does adoption sales? new used about And how just compare the sure then not up. if unit past, but in you’ve between unit PUSHSTART

David Hult

it’s So interesting.

a haven’t was pre-owned beginning, it on We the low lately. was would opposite. about lot When a end of was In it just talked we launched and new expectation a side. be it of the tool, our majority the There the portion commodity, a What are fast-moving, through than are would larger new of I and actually flipped, just It’s smaller opposite, pre-owned percent cars. new the car. where was it they now low-margin cars, the used. sales in call, coming

Jake Moser

really right, interesting. All Thank you.

Operator

Thank you.

Our question Group. from Capital will Sigdahl Ryan be Craig-Hallum with next

Ryan Sigdahl

on quarter. good Hey, guys. the Congrats

us. from couple a Just

ratio mentioned leverage of leverage of kind pro you your be? what will the forma Park transaction have be after one, the that what QX in will Place, So gross

Matthew Pettoni

This is times. be should X Matt. around right It

Ryan Sigdahl

pickup several secondly, the are off store? those progress home trends the kind I omnichannel, piggybacking guess, then that. just Great. on in how quarters? of delivery then you have what last of percent And What And seen, kind of over trends versus

David Hult

doing transaction complex. what the much. moved comes are to pickup, but is running It’s really where kind online, folks hasn’t It were really And opposite we of not close expected down cars delivery. to XX% these it the still

in the vehicles. want come to meet they service to the where buying their want service to parts I area people want They location to it going they the they’re the people, they’re meet to think from. and

I to all for there’s go It mean professionally. takes And cars. they delivery their a in much know, nowadays, over professional so we technology want that go car through really to as while well. someone a

Ryan Sigdahl

just follow-up on X that. And

the team kind is tell? to for everyone service early customers from any retention omnichannel whatnot. too else as it the and Is of mentioned PUSHSTART for You and meet parts or different the

David Hult

where trending markets a But little less area, I’ll it’s secondary maybe the trending transient lower. tell. a geographic early a little it’s bit and honest, too for about a with to if to higher. bit it’s do same, It’s little living. but more it’s bit area the higher, not It’s more the areas, transient And be they’re

Ryan Sigdahl

me. Great. luck. Thanks, guys. That’s it Good from

David Hult

Thank you.

Operator

you. Thank

question will Rajat be Our next from with Gupta JPMorgan.

Rajat Gupta

my Thanks on for quarter. your as and questions on And the appointment congrats well. Dan, taking Congrats,

Dan Clara

you. Thank

Rajat Gupta

on that operations. Just following announced back Nissan wanted U.S. might be they recently Nissan question earlier. to up the start their off scaling just

You a announced could divestitures. the of the on front? store you Do couple near term, in expect think we just more Nissan

that, And further not? any then for Thanks. a following on times, X.X year divestitures I on the leverage does anticipate for the And that up or target have just follow-up.

David Hult

Sure. If bring we difficult very please the miss it predict back. anything, to It’s Rajat, future.

in to what’s the strongest to to look way and give job what’s the to to stronger Our is our our company capital deploy best going at be going balance future. what’s the returns for shareholders strategically, and,

Place, the company what Denver, in predict in think doing can future. overall, but Mississippi, certainly the the Atlanta make truly Asbury divestitures Park acquisition stronger of we’re one no in We a

coming. product. with behind good They’re timing others a manufacturer. a is Nissan They a product good new just cycle that the little make bit

change new comes, sure some a back. to XX get their teams product when they’ll the last spring They’ve in months. year management So I’m over had

I that is think I’m there play lot they’ll out, I’m get figure come a them. and factors of sure track. they’ll on back into for sure it But

groups, for company at seemed it peer brand. and this you the way to the move good And are with be mix, a make higher stores, the what’s us we percentage-wise our strategically product. going bit little the seems time. us. make across we with the a look luxury, it’s just with that change And very quality the best with when large, floated having they Because, to for a the now. on opportunity to right This again, It’s most profitable sense

Matthew Pettoni

leverage, we’ll mainly And free the through get the Rajat, be the off end we’ll flow cash is start so X.X of times. generation, times X about year. Matt. to this Concerning to at by able down

majority paying the to flow around our that Because believe to to high-quality go divestitures. right such to of by be of down no buying will be we end we’re the free assets, debt, which cash get And big. year. will generation able the down going So is very X.X

Rajat Gupta

And of $X.XX of in a about you to the how that, the headwind saw fourth lapping just we’ll think on the should quarter, little we that it. next assuming that before term? you quarters margins the Nissan, start couple Got for I continue import in bit mean, near the just the in get

David Hult

Yes.

incentives find I we know We So don’t in our now, what in we they clue to February have you at they’re see anything about tell would are see January, what when changing. don’t materially beginning February. think can we perspective, out right certainly don’t about from the you it, be going a from the March. I what of and

I’m and at makes to come something point couldn’t with that some that is. they’ll in up the tell you sure just going when sense get back. volume again get However, time, profitability I

Rajat Gupta

on bridge any about on Got color vehicles. you’ve parts seem color F&I? mean on services it. little on how pretty puts and volumes that I Thanks. I think new talked given and should these in we side, healthy. a earnings XXXX And and you’ve used then just the takes, about mean vehicle

mean from used side, like, broad Thanks. I And overall then even [ph] how to XXXX to ratio mean, gross perspective, profit the we on out? a trying I should an turn vehicle earnings expect overall just get

Matthew Pettoni

Rajat, Matt. this is

slightly XXXX about look margins up. able the our been F&I that, it the at think what than that trying margins. growth to thinking our yield we’ve is new growth of with what Typically, offset is couple outperformed to guided car strong be we’ve and for our pullback, years been in we’ve guidance, front-end to F&I, the So used of has to more but it really we way really really seen is about it and because over way we’ve the and seen past that’s it we’re

We reconditioning going actually see you all takes a vehicle XXXX. to And XXXX look really good the a way IR the our and because put slide new about deck to really interesting in all up we yield the really back is in. from it’s at that the way added interesting PVRs XXXX, that front-end

really That’s the work gross up to from reconditioning $X,XXX. to adds to see about profit. our can So way gone trade-in you about all how $X,XXX that

our the refocus front-end look think - yield, about front-end it at to margins trying on and we’re we’re to we on yield. to guiding to up really way So about a the

David Hult

that generally operations, is and much control David, and new we parts cars used we and would speaking say, service, I F&I believe about can Rajat, this not so cars.

also We today, the incremental for hopeful we solid it we have that on should XXXX. lift and very a believe some XXXX, based we’re see way

Rajat Gupta

so much. luck. good you Great, Thank

David Hult

Thank you.

Operator

Thank you.

Benjamin next from question SunTrust. Our be with will Stephanie

Stephanie Benjamin

used the and wanted for Thanks for little spending the morning. anything. environment bit. bit good back on or just Maybe question. could Hi, competition a any stepped about circle a ad the you filling of I up speak to kind need

It’s continues up used the to market. nicely. hold think consumer I a nice vehicle

growth to you you to Any just talk So of as continue helpful. or competition you’re how about look investments kind XXXX, in plan that have maybe standpoint. would to nice that Thanks. seeing that be

Dan Clara

that standpoint, competitive used market feel The Stephanie. it’s think from car morning, to the is there do a opportunity it’s This drastically. is Dan changed We that Good still I grow. -- don’t Clara.

some of we’re we bottom in stores. what and that’s we business, the can that we have in believe performers, focusing those on. improvement achieve As any And

seems perspective, pretty healthy. credit their that a credit From

lenders getting on for secondary very, at looking on very is or are We But it stricter a overall, providing healthy. bit, little but very, very little potentially your STIFs asking market.

Matthew Pettoni

follow-up, as X% a is and just between XX% business. of sub-prime overall And our our

Stephanie Benjamin

just finding the bit really the a capabilities with this that’s And picking gain starting share they is your you of that going those your much I from No, more more business online? are the standpoint your an as kind peers ability to seeing of and - this so much the of and ties Great. online helpful. of Are on a back that consumers -- used, just to well, transparency investment you used - and then guess as moving up? of and price are online, so players more lot

If the engines? Are kind more sure in search seen changed that’s last make to there popping or of anything you if Thanks. having status invest you’re quo year? you’ve the up in if it’s to

Dan Clara

one credit dollars for of tell this year-over-year. markets it’s values a would that’s where strengths it’s and are traffic way a the that used kind market prices to And have cost We completely From And spent. is for I we’re our what car are. you our new. lowest car per the generally and growing has Sure. department. them. of the marketing been in information. a pricing, dictate Everyone what The perspective years few to ad similar

is department To make can much the and areas: - the in look there’s us, with make growing X don’t it’s be see finance return. the on to margin not return look And it at we car. just money We car, there we where is we the capital. invested again, not make So investing what just the kind are with car. service going growing how it’s where that to a volume, about sure think We this a the selling we thoughtfully of but we upfront? it’s can what and

marketing efficient certainly growing, - is continues to what essentially traffic is our it’s it that’s very But and our naturally, very wasn’t spending would of it, if we traffic very generates be proud we’re strong, the And because business. more - it’s dollars grow.

Stephanie Benjamin

right. Thank helpful. you very much. All so All

Dan Clara

Thank you.

Operator

Thank you.

question next from Bank Murphy John Our with America. of will be

John Murphy

line my earlier. apologize, dropped I

quick two follow-ups. Just

both don’t you I insight in plan floor you’re just could floor First, if have the about XXXX. on discussed give in some plus curious I’m benefit. a of guys plan if you from inventory XXXX, us the sizing thinking opportunity as how rate there know

Matthew Pettoni

getting expect LIBOR year were at a job really about expense the nice beginning do to able high. our at do plan talked mainly And half down. of the We see is as in We really to Matt. this the inventory was earlier, decreased. we the it rates back John, to our floor year, decrease the of

into in that would of inventory next to rates we So lower two-pronged nice and expect decrease XXXX. a see it the the benefit into tailwind be should year so levels

John Murphy

other helpful. That’s just then And question. one Okay.

But mean gross that dollar covered You the average selling? what it and on about you’re used the used that of revenue talked on and may recon this, past. recon, I sales, the is in we’ve vehicles the vehicle have you’re on getting

David Hult

about runs high can in again, it anywhere But perspective XXXX XXX%. and be differences at brands, generally the margin XXX of because a gross low from to we - a XXXX. from recognize can literally and It XXXX to a John, that

John Murphy

something do Or that would And might vehicles be or you an you bit it. that? an opportunity, Got going about maybe that roughly reasonably there consistent get less as forward? how think opportunity, think be older you be maybe do would into little of a

David Hult

wise, complexity all. see time, the Again, car the we at changing a No, XX age of that I on that bit cars. little is increase don’t may actually over know over average dollars the It the number all of years.

of - So a good work. fair the a that anything amount needs - old

So I don’t that see changing.

John Murphy

Thank very much. you Great.

David Hult

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

Operator

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

disconnect. You may now

Asbury Automotive (ABG) 3 Feb 202019 Q4 Earnings call transcript