ABG - Earnings call transcript Q1 2020 | Asbury Automotive Group, Inc.

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Operator

Good day, and welcome to the Asbury Automotive Group Q1 2020 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Matt Pettoni. Please go ahead, sir.

Matt Pettoni

morning, good and operator, everyone. Thanks, Automotive Welcome Call. Quarter Earnings First 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 dealing our this issued on asburyauto.com. press is morning at first website and release was quarter

the David are the we Vice Executive of Senior be our President of Finance up Vice conclusion President Operations; remarks, and call and today Officer; us might and open any and Clara, At Dan have. of questions, with our I will later Hult, available Participating our follow-up Treasurer. our President you Chief for questions Matt Pettoni, will for

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

nature, contemplated relating the projections our and the Forward-looking and than statements and of statements impact financial are as about other on those in performance duration to including our and those financial expectations COVID-XX historical growth. the pandemic are well business markets as statements products, which

All the forward-looking from differ suppliers, business the impacts significant potential our actual statements industry us, statements, including and suggested partners. and to from our and those materially customers, are pandemic by on subject COVID-XX vendors results may uncertainties,

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

forward-looking to expressly We disclaim responsibility statements. update any

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

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

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

David Hult

Welcome everyone. XXXX our off morning, strong. very earnings call. Good quarter The quarter started Matt. first Thanks, to

pacing was company our February, well. extremely and January For

Here profit increased XX%. revenue X%. On X%. XX% results. EPS Gross increased revenue Total increased adjusted basis, XX%. Gross same-store are increased increased and profit a total the

increased retail vehicle percentage Finance gross increased profit as XX%. Parts insurance gross gross X%. vehicle gross and Used increased profit basis and profit X%. a profit New points. profit X%, gross SG&A increased XXX service decreased of and

well business half first Our all through very the of the way performed March.

we this progress in strategy, implementing have will made. provide omnichannel on Dan which business very update our and time, an During we successful are the

As Mississippi in work stores, we we late business close continued executing strategy, one Atlanta our a completed Ford in market, Chevrolet and our one two divested included Nissan We Place which Park Nissan and exited financing Toyota, store. store the acquisition March. and integration the to one

Chrysler to Jeep Denver, Dodge store Ram we We a where also continue in acquired grow.

These transactions Though the second significantly impacted are quarter and shareholder April. March half with in value. create by strategy pandemic the our our managing in great, our most operations to off into of COVID-XX continued line started the were of the assets

business As salaries to this decline, Park business inevitable decisively the reducing the benefits. we we and acted Place slowdown. Unfortunately, fortify included furloughing employees saw our acquisition, for to and prepare canceling

vendors. This most and our certain approximately million reductions significant We by totals also to for rightsize April. expenses, business acted of discounts our expense capital reducing $XX in expenditures negotiate deferring with fast

and Turning started service the out to for the April. approximately declined very slow Same-store with between business sales XX% the month. month off in revenue XX% We and XX%.

and However, XX% options sales to service. evaluate the Because will in last over each XX% we our will economic the and we our during believe pandemic on decisions April. April about week of and duration impact as cannot appropriate real-time make in time. business continue and this XX% resulting business, May the challenging predict off and grow being incrementally our week improved We parts in

to out comment, safety the have in while inspiring of preserving say our great the the attitudes, you company. guests the to been our watch manner. guest people. our deliver It financial teams One resilience a ensure to of field final find of impressed safe in serve are I just priorities ways our want how positive our strength guests tough to and top health am Our and teammates. experience employees I has with times, and during find

Thank you hand call Matt very I the performance. discuss over all much to teammates. to will our to financial our now Matt?

Matt Pettoni

Thank you, David.

of to marked year prior year. by SG&A profit by per XX as X%, $X.XX. adjusted gross gross XX.X% decreased gross than quarter to percent earnings increased basis points first of The points by with XXX basis higher quarter, XX.X%. profit X%, the revenue performance share first Overall, margin decreased last a of was compared

XX XX% share, sale diluted impairment per loss Park debt vacant costs termination of quarter by income diluted divestitures a share. first legal of $XXX,XXX income of and Adjusted for of per or the adjusted loss X.X%. a rights basis a decreased operating pretax of gain was million of $X.XX $X.XX share, franchise to or dealership diluted Adjusted and on per or decreased share, adjusted by $XX EPS for $XXX,XXX the Place $X.XX diluted following million XXXX gain decreased points gain on or or extinguishment share per property diluted margin diluted on Net the of a million or $XX.X from items, $X.XX per operations $XX.X XX%. $XX.X share, of on settlement million $X.XX a $X.XX per

first $X.XX XXXX write-off the asset for adjusted share. quarter was diluted fixed for per income a million Net $X.X of of or

excess XXXX. divesting XX.X% the the quarter our in awards. relating XXXX Our the in rate compared XX.X% primarily share-based for was tax benefit first effective effective of rate quarter of tax of of first was The to decrease to an tax result

was interest quarter, SG&A related an solid as basis very on by felt $X.X year was expense to COVID-XX we plan the over decrease LIBOR decreased primarily the total by the over prior rate. XX.X%, pandemic. million in gross gross of the profit Floor driven the XXX considering the points a quarter of pressure year. last for This percentage a increase performance expenses. at Looking profit

store in late Denver market in Dodge we January With capital acquired respect Chrysler XXXX. deployed, to the a Jeep Ram

to XXXX. approximately Atlanta the February annualized Mississippi This this a expect divested divested We million we in generated in million March store annual $XXX in We market in five in our in revenue, all XXXX. stores store dealership environment. revenues approximately generate normal and Nissan $XX

These a expense. After XXXX. due X.X% the and dealerships raised maturities $XXX now In early senior XXXX. financing February, for note million million Place million million, revenue. acquisition, approximately annualized X% $XXX in the in senior X.XX% million we approximately that million, generated extend refinanced for was $X in outstanding, Place the and in to the $XXX our we in able notes due and due we $XXX our interest We save a were annual X note bonds acquisition, Park designated repaying have $XXX Park XXXX

pandemic entire after. liquidity vehicle and the COVID-XX we financial accounts We floor million spread, we line $XXX with maximizing have we used our ample As cash in made quarter started $XXX revolver to $XX mid-March acquisition the used $XXX strength. ended focused be cash, and million the tough million manage From available on through offset line. million plan ensure decision and draw approached Place our million Park the on a our in the our to and this and perspective, to opportunistic cancel pandemic available $XXX

us. ratio to allow the on to us to X.X apply leverage times once estate. our mortgage through $XX financial a believe We very million end have total us gives loan facility the leverage capitalize at on paycheck stood actions $XXX net the million and and of stood These company a recession that quarter, healthy unencumbered manage approximately and maturities is did a our liquidity and times. our for as through debt capital a of we million our behind extension deployment draw available in the ratio position. we protection X.X addition, opportunities pandemic program. And put At In real strength $XXX the result, attractive at future of our a not the of

now like would us to the Dan? to walk call I through performance more over to operating Dan detail. in our hand

Dan Clara

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

at new vehicles. Looking

we lower unit XX% decreased Overall, XX.X at the SAAR, flat prior on down for margin SAAR from period. below year the last In new units year, our retail also for SAAR at sales was was quarter XX% While X%. quarter. X.X%, the retail car was new this or environment, focus million which

margins import prior the from flat were period, While year up significantly. domestic were margins

inventory new the our end approximately inventory we new drop $XXX from to able and day total our of our supply year. prior was vehicle car from March, million the March $XXX was April, days At million, up XX were In XXXX. XXX,

been While the run for because may supply these OEM down, a believe day shut seem levels low the season. factories could high, we summer selling into have we

down and represents profit X%, used of basis which QX prior Gross $X,XXX. XX vehicles. XX from period the vehicle to was Turning a points is basis margin from XXXX, up per gross points profit

to While to good our sales able grosses. And from decreased X% by used increase strong with two were XX.X%. unit we pacing vehicle first months our points for we prior of to basis used new XXX year, the the were the ratio year,

the of sales. our impacted government COVID-XX several However, our stores in shelter-in-place at March, the and mandates negatively closures

Our which used million, supply. vehicle inventory ended $XXX represents a XX-day March at

enabled prices to valuations markets maximize impacted from to our being auction inventory. to the inventory severely value us the drop move During vehicle put the made vehicles pandemic a dropped, April, a major impacted. used market to declines. in When actions $X These decision place used plan April. We experienced in car less of markets we used million by

F&I. Turning to

results. profit decreased vehicle sales due team to deliver volume F&I Total strong continues decrease. to the gross X% Our by

quarter. vehicle our think over sold. new, year. the vehicle about yield, yield by profit $X,XXX past profit the of which This view year stable from remained per yield gross front-end increased $XX quarter, and true best gross has F&I front-end Note used the look to vehicle from the increased per we $X,XXX that our our per front-end we per last first combined gross When decade. total profit. provides to However, prior profit the $X,XXX at vehicle, In

Turning to service. parts and

profit and parts service revenue X%. and Our X% gross decreased decreased

by technicians we A impacted income of protect was our during pandemic. this B made decision to the the profit gross Our and

significantly service also of down volume was because by weeks to COVID-XX impacted shut test. highest Our two several up business of stores parts being for our and positive

We both I measures the each and to implemented experience. did Finally, COVID-XX of approximately level We our approach and different market because pandemic the X,XXX our responses to A furlough our We used update guests. We had on ensure a has all key to in dealership markets. store like orders and any a We safety in employees decline each of technicians. took not experienced new of market-based employees. in inventory and to and governmental B furloughed CDC-recommended shelter-in-place operational safety an each health would some business. provide

March, in XX%, for we on on putting Based that a several consumer pickups. a absence. However, demand, focus while customer have advertising and of leave reduced we transactions asked personal online our

the used We and quarterly appointments drop online vendor inventory to $XXX expense this We on per action grew We expense held $XX line on in pricing. focused service every auctions. us and advertising car quarter, to our back reviewed avoid For the helped our per our X% P&L relocated reducing vehicle quarter. vehicle.

and the March, first quarter. up We online also January to year-over-year. XX% car used PUSHSTART for XX% represented up sales. were They And our in were sales February, in However, grow PUSHSTART were of we our sales. able X%

center field time. members would store best-in-class I express also and to all I joined appreciation from that to continue tough to support this opportunity our team quarter. welcome new the to conclusion, like during CDJR this the performance our Elway take John to Asbury want produce teammates our In who in this

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

Operator

with you. Nelson Rick our we’ll Instructions] question take first Thank Stephens. from And [Operator

Rick Nelson

morning. Good Thanks,

David Hult

morning. Good

Rick Nelson

some your [Indiscernible] how consumer of address maybe behavior? consumer that efforts to change you see changing digital in post-COVID, behavior

David Hult

business. dealing in far being XX% David. shelter transactions, private place. found and as We’ve of Rick. a think at Sure, of at traffic every pickup with delivery each roughly doing is online. as peers rhythm experiencing This of and our I’m with our a And one We sales nice are a of home. and and states of retailers, we’re home, like mandates delivered our and we’ve we’re the sure counties lot and been the about lot

May. excited increased in We’re business we’ve we’re the April, experiencing that that and incremental increase continue into that seen to

sit little predict the when adapt to it. to is handle a about It’s bringing whether the and today, our look we business. virus difficult to it’s happens. here changes that of we very us as feel made future the back forward model wants what we business for the positive comes we’re we how and of an very business – So pace around to good a business. But and certainly the us. The for the flexible back going opportunity And employees bit

Rick Nelson

Place? of with acquisitions some potential So and showing about with now to point? you do them there think signs business reengage Park the at improvement how David, Is some

David Hult

the Place a thought it a we – and was deal heck It Park was acquisition, for deal an Sure. of happen. be going us, to but transformational things

we’re other coin, may the and probably cash net we’ve side that had, sitting on leverage lot of On be ever. the a it ratio lowest of

very opportunistic. So we’re

need activity is bit. some we see a there. little There think to I dust the out settle

We’re I cash people. and being have comment position operationally, the certainly But acquisitive sitting Park we feel like from to very we’re the want talking when be to Place on ability don’t right to flexible transaction. and come. a the where opportunities we

Rick Nelson

with that any cuts business cost takeout considered that made, And those can shifting cost likely you digital? to of you. would dollar Got you more permanent put in and terms be those

David Hult

of When plan in company was XX expense to cut We and days beyond, the the not in more we We bone. cut wanted success not is into strength this our early believe came We build needed. to made take for kept Sure. people. have choices. We what knowing our and than April, more we we and the could could more place. to have going

we our manage cut normal the we – actually managed as B that guaranteed it Because quarter have how had folks you the manage folks the level have expenses guaranteed better could position typical them basically everyone’s furlough just any that we been didn’t took our SG&A, furloughed didn’t we commission technicians we we in our and shown we technicians. to, recession. the the how off of well in that So, history and we needed we would had we A and pay, And cash and expense a plans. the furlough,

come going to business this temporary. believe back. that eventually, was to And was the We be going

stability Most or much to employed there in about compensation expense need it. expense April. and of to same and through time. over teammates of want at out the our keeping them $XX with personnel-related. million that lever other not taking by show That we So month value was the is that how them of we if do care took We in the half we of expense them

at to We metrics starting have, back. us all folks peers, communicate back. to see sure we with to be we strong of achieved, we bring that and we people that consistently, I’m we’ve The we’ll will the when when have were our And certainly furloughed, bring other like one that people them time. back hopeful day we all those metrics bring dictate them

Rick Nelson

Is opened The a markets the parts sales up, as to you down down markets being XX%. how those spoke are that service last unit have and have weeks up, I there in that being XX%, performing? opened difference know

David Hult

a we’re seen that days And few question, over no market. incremental far. we remarks stated very the there’s we’ve certainly again, performing difference see There’s so but only we’re increase what being Yes. optimistic April, the XX% in May, a a in well. They’re March we into

the that doesn’t be in we’re resurgence. hopeful So back and it can we seeing. what virus in contained, we’re come But hope

communications supportive Our us, incentives can what OEM appreciative do the it they they of partner to just with very partners assist shows and us. we’re how that. to and are conversations have a valued of And and been in seeing

at looking May. opportunistic we’re So

Rick Nelson

Okay. and good luck. Thanks

David Hult

you. Thank

Operator

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

John Murphy

in demand for supporting and around situation particularly odd that may actually inventory be the how just about be one pricing – around guys. expect seems depending of inventory vehicle your or new but the how Good might you’re used months, be potentially Because to inventory protecting at and the potential moment, down, developing whether comments context of the just morning, here – up summer of into GPU. GPUs? like the shortage there it the running, even about follow-up vehicle in thinking curious actually to there and shortages view supports I some made production wanted running gets an I’m an on on you everybody

So commentary? thoughts your that around you what just do by trying get that, to meant

Dan Clara

to car vehicle in supply plants I then close shutdown business from some the day this referenced the with Dan. the in of back the new specifically, and we standpoint models. our we’re could earlier, our seeing And domestic John, is a what increase, as some some our of a in into OEMs of luxury continues different of supply to lower by and run day

the day model-by-model we it talking And not on much at pricing. how new as to And and supply, pricing through the we also on as out as market-based car implement fallen to that. used The Specifically we pricing, a our point, your are make basis. we decisions continue bottom market-based based look pricing. managing has and

continue market will again once strategy and day on continue supply adjusting we So pricing. based our market-based and executing

David Hult

drop real sustainable. specifically the late would every April. I the to because a point a And add what coming wasn’t inventory out back market auctions, it week. used, the took in March this was in I around decision at in Each a And nervous early didn’t get at fire I and inventory didn’t that in to time, strong losses week week that, is to I not they’re that that And at a valuations dramatic auctions knee-jerk that, extremely significantly needed. – to sale we think since, reaction made and blow and really suffer that large wasn’t or want think was

supply values didn’t because take feel looking thought got and we see and we lucky back, much, little need loss day back and the the dropping a that bit they’ve it’d we it just our turn well. is come the So high, come to but didn’t we

in to it inventory had to state from move to a state potential inventory of place faster. lot the the a where depending turn to moved shelter also market We upon

John Murphy

kind the like are fashion be of in how And helping vein, like other bit ultimately, sort of helpful. inventory sales. out help any you with will for – then you here. carry moment? wouldn’t longer. Okay. said carried That’s fire be a It in it necessarily sounds little same get from this inventory assistance just automakers But kind also and the of the you at on floor automakers What plan incredibly

Dan Clara

is John, this again. Dan

support have the to assistance. go And in as have through David’s really from industry we our appreciate support. their the earlier, plan point what they for comments OEMs back floor seen done pandemic. and We we And

John Murphy

specific going – there But XX example are can XX Is being of anything side? Okay. floor floor assistance specific XX any you days, days, extended days? mean plan is is on I they the plan, give there assistance on kind

David Hult

They’ve to all a relates going given They’ve been coming additional up their helpful they and and see extremely of been great time that. floor increased we’re what they’ve and through been X% days assistance. They’ve financing. also partnership, it as It’s plan incentives with supportive.

John Murphy

then just And Okay. on... lastly

David Hult

it. other are lot other well. A and paid thing, The the always – is which eliminated I the John, thing hitting money, extremely tied mention certain very targets. helpful They’ve just the of didn’t to big essentially targets as monies out those

John Murphy

great and parts lastly service. on Okay. detail. That’s then just And

was of using or pre-COVID One capital constraints the techs.

them provide and up profitable trade B furloughed, and schools career to to Given and be them service, more with on well? C A rebound everything few in some a get that’s you going just to another pretty other techs few with of for send you potentially as hopefully, parking you be them, on the may to months, think available path it right that eventually time have a hire techs now, trained to or in the could or you over and/or if side, folks them techs curious would I’m the weeks get

David Hult

through in industry I tell time, Sure. downturns. haven’t have I’ll the been a many long you, been I

techs B a employees and get development board. technicians so opportunity opportunity a your for we’re downturn word in to Downturns You never hiring techs. stronger It’s not has and and of some at last about out waste. the you looking actually the to in That techs, get to your career the they gotten good on that really heard and a and order in were days great serve good and within our to level we’ve lot training for doing really techs. build processes been the XX prolong house a let what focus go better A on come and do. markets, and you what Guaranteeing pay add organization

We But the part People going into back again. been driving each tell hopeful know the banging we starting other to the pent-up And The that the highways, into down around of a in bit. come bang collision driving there’s service That you cars. I that demand. be already cars will we’re know and Atlanta, here us. can putting business slowing they’re is some place, off and come each shelter will back comes as have it back. in with eventually, aren’t business and little the other they’re to not for

we’re about that. So excited

might happy received and have to that value technicians bring not the work necessarily these now pay by been even our them, We’re has techs. on we And them. though well for

John Murphy

XX%? year-over-year is sort then of And sort where of point manned could fourth in I mean one just there’s handle mean, of any might is might you limitations handle think question capacity level service up basis running XX%, what not I that. handle a let’s in and sort quarter? start meaning, reasonable work XX%, think that you of on the you or parts say mean, is you to on what and think the massive you of quick recovery, can being... government on into some pent-up do about last you there third capacity I to terms on

David Hult

number top XX% fair comment, Sure, end down It’s it times off always hit I be the do circumstance. the be come? month and in and April. at upon XX% that about get parts brands would that’s that in an worrying as efficient business you store-by-store I as service we a all back now, XX% decision and terms. react. the upon additional there’s say, And parts in at May staffing once But area normal how XX% of by handle we’re right depending could on April. XX% again, without Over parts would how now, or of be staff John. But services, absorbed. if starting far would does the the say right was depends and And again, over it backwards, than easily quick, issues. bringing it could and It support made service the And and better market ended the

John Murphy

year. That’s Thank very very much. good you

David Hult

you. Thank

Operator

Then with we’ll take next Jordan our Bret question from Jefferies.

Bret Jordan

morning guys. Good

David Hult

morning. Good

Bret Jordan

In and the the, I independent market is guess, the garage allow sort you franchised the the here? abruptness would operators either of do closings, hit will for most share there think of even enough shock, or magnitude stay dealers open? that will quick be recovery or store the any used real Or that independent stores is gains

David Hult

is only in Bret, car They’re of values. plan tough starting the govern that’s floor to floor cars to their and the on plan really I the dealers really know independent This a rely A March. ability predict. for lot used XX% advancing of buy those David. lines lot independents of lenders

down of upon this. determine how kind across our had well. and like lifetimes the something we’ve they’ll was it. regarding going how market obviously, be to positioned to we’ll deal this, that a as into So well never like able else, capital in depending And virus brought come someone weather Like this with anyone

folks It’s to that hard issues, independents to someone go imagine talk that comment difficult very some going or imagine It’s days look it’s like. some on hard to to week really wouldn’t it’s predict run next I what XX a from out. number. or days but couldn’t and to XX capital into some wouldn’t now So

Bret Jordan

And a then I Okay. guess follow-up.

bit number – that something be is not Your and bit $XX comment April, million you about taking Is guess, a of permanent that reduction, a personnel. overhead? a I it or would Or that half out half as not expense of reductions that? in was much just sustained said as expense over so something in a

David Hult

period time. about I’ll large expense talk it. for vendor of our lot halves was with partners both The a negotiated Yes. a of it discounts non-personnel side, of

So lot that come a will expense of back.

gone of will of personnel like of scale now, lot of income we how did. paid give that through else, them business We stability of than back, The our the this. of it, stay preserve anything value But deeper else, some and and to not Some some come to much chose will them we anything because because a comes back. we steady expense a right have side, could wanted teammates like out. show incrementally the the check we it them and

There was right thing our an incremental from the back. paying would time, we’re that than period was this expense percentage do because in more standpoint, and a out in because for bringing a realize we’re we of doing for teammates to eventually come

So worked far, out for us. that’s well

the We a compensation this do position make well. as cash adjustments could to if in those We’re But slower being great for reason, certainly, able to on ended a some side recovery. thing up be that. very prolonged certainly and a much

Bret Jordan

you. Thank Great.

Operator

take one your Sigdahl And Mr. Please our question. with next Sigdahl please question go And we’ll with Ryan Craig-Hallum. moment. from ahead

Ryan Sigdahl

hear Can me? Hello. you

David Hult

Yes.

Ryan Sigdahl

Okay.

Sorry about that, guys.

market the either do share your omnichannel one technology-savvy about talk amongst you shelter-in-place take competitors? business, amid dealer you Just has you Can that think quantitatively of your for me. less or some guys restrictions? qualitatively helped And

Dan Clara

This and morning. strategy, technology do and on the believe Dan. for like give months Yes, And – up advantage. to February. were continue is is increase our in it competitive both mentioned omnichannel Good of that us XX% in first – I I XX% a we the in two January year,

healthy to and entire activity trend March, the moved very once even as to – online X%, of hit, April And see month of translating that XXXX, month starting the the we and pandemic the the into in that continue is increase. As we’ve we increased of May well. QX continued to

David Hult

XX% in our a to us. And month in record been I hovering XX% of range. sales the is would used We’ve just X% a follow-up. for car

we’re that. So excited about

four it’s from working flexible don’t on ago, And for years a good with about to that our invest we really we better go software a be to want in to came also And we’ve and perspective, been four software there the if Something along. we hardware cost. this partners. we – did outs to think, decided our was product years. Because a ability XX-day investment transition capital from all

partners. So with we work

We utilize ideas and in anyone our partner we their and our share that’s together cash with ideas, interested.

with We’re been. an can our we – XXX% partner. we solely sales We’ve focused like a new think We a anyone on creating created where else, there. pretty think further have we’ve competitors. And we than shop We completed. online, we good relationship tool transaction go actually out entire another

about excited the we’re future. So

in at product that We’re working on the more. been execution pretty space developing so we hard And think far. good we’ve

Ryan Sigdahl

Just you elaborate on partner able one new quick follow-up. who to Are that is?

David Hult

I transaction superior want piece right We a they a see us compare space. marketplace trade-in because partnered is has company, is I They’ve ourselves one our used large extremely down today. really than can that bit out line. that plateaued it’s from other little take that we the anyone’s say has now. pathway one We better Carvana online in but we such that there’s solid to ours well there done company OEMs, years very great. and a which another competitive a say we’ve and to of to four marketplace peers for I’ll been aggressive offer don’t standpoint further And like transaction. in is for online the financing would – to of what a the feel with

the to looking we’re those enhancing the forward So this to areas online entire and getting partner documents and more working complete transaction. of with

yet, there it’s focus yet. get our but sole there. one’s there really not to No We’re

Ryan Sigdahl

All over there. Good from right. turn luck I’ll it Thanks guys.

David Hult

Thank you.

Operator

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

Armintas Sinkevicius

demographic? what seen sequential us who the period? sales are it’s geographic and during far, cars Just you’ve on give as had the buying we can some or we’ve whether here about improvement what into of that so think May, shelter-in-place the this drivers And color seen week-over-week you’ve you

Dan Clara

Dan. is This

coming seeing by We’re in, the customer incentives there. are OEMs the that base driven the out putting

a provides into As quite see, driving a if bit you is X% can it a vehicle. upgrade few that a opportunity quite to new offering and an there’s to consumers for traffic of

David Hult

The across is and on incentives it I no think There’s Lending out there. board. we’re that great. which lending, tightening is seeing the are X% available. other

looking opportunistic. are people I be think to

all incentives. an interesting right think deal. really trucks very just just import luxury driven now. It’s the demand brands, just by strong a are not not there’s deal. mainly it’s I the with But not It’s domestic So and pent-up Clearly, it’s deal. some the

Armintas Sinkevicius

Got What What what the are done? coming to sales. resilient seeing? leave are it. of and in getting you drivers you you your If on don’t get the type more then And that’s there? to service? work been Or why are home, parts car than people are your need side, services really

David Hult

Sure.

are sheltering push home brand. lot is saying it I’m really – I I the We’re off car, people by a pent-up demand, the say varies the obviously at that But would can driving not there’s of there service.

warranty We’re doing right now. work

And delivery. We but are consumer typical of, communicating, grassroots. locally the work. is customer of some in that, you over doing the have with a if kind marketing XX% will, that we’re And pay A that’s pickup average, pickup stores lot of the we lot that on of gorilla in doing direct delivery. are XX%

shelters the additional guests traditional the with the and But our from as communicate markets service. will to and for them work up. offer them that warranty really of just up, here open be is well. be to maintenance open board But wane everything to – and so and to sure items across trying a as speak, opportunistic I’m level we’re So it

Armintas Sinkevicius

Thank Okay. the taking you Got it. for questions.

Operator

Rajat next Morgan. Gupta with And we’ll question take from JP our

Rajat Gupta

to my morning. the previous taking Hi, I just question. of Thanks follow-up for questions. couple a good on wanted

sense opportunity service what a the of or on Could for you up the You sales unit it be are talked like transaction, economics seeing side online you about a are there. us the the bit been online give I doing perspective? looking that going well? gross have and forward How per be should trending profit what SG&A specifically, as a both from And on like you And have versus year historically? follow-up. side the a

David Hult

Sure. this I by I’ll for something, if you back And come start let sales know. please with finish the around then is and with service. me and miss way,

sales online. On are the between transacted of new car X% an sales pre-virus, and on side, average we’re our month, XX%

of it handled online, the XX% XX% our completely most showroom. is business is That Now of to in X% comes online. transacted but

took that So place.

number that grew into a went bit growing. grew than that into XX%, same XX% in larger little to And March, we and incrementally In this, used to range. that it As was April. started X% cars it

come higher and XX% think a down maybe will off or right I open it as But bit little now, level depending a up. upon brand. it’s bit little probably shelters the the

far is opportunity As see margins the we same the of online area transaction an and PVRs Currently, as if margins, this us. for we do as place took inside.

F&I by been I’ll experience a of opportunities numbers you, focus tell our generated on ours We’re is online. And a are that of for that F&I big creating is growth working while. online. always better for good But the a one we’ve surprised that

but about yet, there we’re opportunistic not the We’re future.

standpoint, XX% online. also and business and for as text handled via mostly pre-virus, and between far paying with our via transactions them was consumers their as service their text of our And XX% a From for as NPIs we online well. communicate scheduled

between of and was but stores Some company, we’re of service for the business online north were XX% us. and XX%, whole the parts generated XX%

the naturally into to dropped choosing went we back. starting we’re way – to a business online we percent on week, bit progressive incrementally this off numbers because as that’s little a fell the communicate grow were overall with As basis. store, of this, dropped and our as employment the of appointment our the But in customers,

answered didn’t, all sure So back. your I come questions. I’m I please not if If

Rajat Gupta

the would just we in a and shift from from be permanent That you I a base. higher perspective, of free-gated there was if the economics downturn. very SG&A, or the your helpful. cost Would would like with look post just like looks how to terms headcount? manage just cost see like volume perspective, like to like current unit somewhat of sales structure But the Or towards your online overall like to be able channels there a here. mean, throughput headcount structure kind of could just that were trying – it understand

SG&A So going does Or not is gross case? change forward? that that to profile like the permanently your

David Hult

flatter differently, ago, but and to our it set thing looks the we’re So, be. model – to and be build efficient, would for return, to store be different, year the of not creates the the transactions different, over and better acts future, calling started one we more going you I teammate tell dealership guests. less that And of and to dealership online. that can say on a potential the expense. the can we shows to online, in be it’s levels model transparency we’re basically you started going a really in a have It and as seeing the future. what impact that’s that experience That And quite SG&A it’s normal creates a an service. have to most wheel transactions COGS it’s our it experience organization what do you in are COVID difficult new sales certainly In honestly, a better the both more compensated with our to you is well. focused for environment, with tremendous and a dealership the

Rajat Gupta

lot. Got it. Thanks And That sense. makes good a luck.

David Hult

you. Thank

Operator

we’ll Stephanie from our And take Benjamin question with next SunTrust.

Stephanie Benjamin

afternoon. good Hi,

David Hult

Hello.

Stephanie Benjamin

vehicle of across from know just driven lot color to some any OEMs out new you used April that specifically wanted used would talk seeing consumers? just can for values, and incentives gratitude more trends the from kind about throughout in consumers improving you you’re seeing between business. Just the I up May towards there vehicles? A the everything demand on the support them. follow by improving helpful. of that Are business. I be great some called But of you some and trends

David Hult

to Dan. and it it start I’ll flip

are for option And out be strong, consumer. is to the a incentives but certified and I the consumer-driven used value right and The is great incentives think bit a car a always business for higher We’re demand by deals. little there. used pre-owner healthy that in opinion. the CPO my really appreciates is driven new that’s now, that going would market than a I proposition say

if it. strong don’t we So feel I think to know comment. you about I want Dan, pretty

Dan Clara

would I little option that as preowned demand, incentives so financing. a the said of seeing echo a well. is of side again, the consumer about because for David, gravitating what But new special the the just towards more you just potentially and certify great business the

Stephanie Benjamin

Thank Great. all And I have. you. that’s

David Hult

Thank you, Stephanie.

David Hult

look concludes speaking to appreciate discussion. This forward July. participation, Have the today’s and end day. you We great a with we at of your

Asbury Automotive (ABG) 8 May 202020 Q1 Earnings call transcript