Asbury Automotive (ABG) 28 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Matt Pettoni	Vice President of Finance & Treasurer
David Hult	President & Chief Executive Officer
Dan Clara	Senior Vice President of Operations
PJ Guido	Chief Financial Officer
Rick Nelson	Stephens
John Murphy	Bank of America
Ryan Sigdahl	Craig-Hallum Capital Group
Armintas Sinkevicius	Morgan Stanley
Rajat Gupta	JPMorgan
Stephanie Benjamin	SunTrust
Bret Jordan	Jefferies
David Whiston	Morningstar

Call transcript

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Operator

Good day, everyone, and thank you for standing by. Welcome to the Asbury Automotive Group Second Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Matt Pettoni. sir. ahead, go Please,

Matt Pettoni

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

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

contemplated from and including suggested industry markets forward-looking subject materially are significant by and customers, suppliers, those on expectations pandemic nature, Forward-looking our All to as products, the statements historical financial and and and partners. actual the the are differ may the business are well statements and uncertainties statements, COVID-XX from potential results in our our of impact which performance, to statements as than pandemic financial relating statements growth. our those business impact projections the about those including other duration on COVID-XX us, and vendors

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

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

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

David Hult

margin Welcome achieved results, second In everyone. due the and to delivered morning, XX.X% able strength good SAAR We $X.XX, our challenging Plus, to operating our record to of through COVID-XX up and American of second control SG&A cost percentage and the and X.X%. year. at earnings quarter Matt, and EPS low adjusted as where record quarter we an home, million sheltered model, of call. prior XX% profit measures quarter to X% our a dropped the Thanks, XX.X despite of pandemic, were a achieve gross environment. we the business volatile record of over

sequentially During our new each we volume used with May saw profit higher the and improved per vehicle. in and June, quarter, week significantly

deliver gross year. of keeping month up our and in We their ending as also results. work, to rebound and profit around record were as in June, I'm the well service saw our the their of business for pickup proud teammates delivery dealership laser with our flat the extremely prior hard focus parts our guests. safe we Because for able stepping business,

improve dealer quarter our flex were vehicle the structure addition, able environment, macro model. rationalize new cost results. In strength down, proved the we to lower these the of inventory to significantly due to franchise volume the and deliver record With margins

launched their we XX% complete to result our guests second In also the performance of strong of vehicle pioneering purchase the over ago. four is quarter, years our online. Our omnichannel strategy used chose

and on focused come these further While omnichannel we later to the are are results, this we building enhance our tools to pleased guest experience, refining with more year.

and the performance Park allowed terms flexible Place more highly current business more acquisition us to reengage that pleased and our strategic on under also We environment and navigate favorable financing are pricing. model the

acquisition the late close on in are track August. to We

our Looking towards automotive and becoming main delever goals most the while tools, our guest-centric are retailer. working to build out forward, continue omni-channel to

of their Thank hand and I to this Dan? operating to our for want adapting results the I new all Finally, commitment, to our perseverance, our now thank you happen, teammates to call will performance. of because world. during discuss pandemic. over Dan your passion These

Dan Clara

My David, pertain you, the good remarks quarter Thank and to same-store of to morning, second performance everyone. our will compared XXXX.

vehicles. new at Looking

quarter. at or year for period. units, car, At we the XX.X total prior period. last SAAR, Overall, gross per XX% of SAAR While or the on XX%. All for the lower quarter XX% was vehicle store were profit focus from sales retail was decreased environment, retail $XXX significantly our $XXX year, new below the new margins June, million XX% inventory In down million. end this which unit was vehicle was segment the up from per up year prior new our

year. Our day was low, XX from are down levels These supply days the temporary XX, OEM factory prior shutdowns. of because

through summer season. the However, supply day gradually increase we selling expect the to

vehicles. to used Turning

XX with inventory ratio used X.X%, represents per gross $X,XXX. prior points up X,XXX almost were from profit to able our basis points. was opportunistic period Our being we of to by gross on basis margin the a new focused vehicle and We profit our increase

$X The is increased profit used of business million. We our second our aspect wholesale wholesale. car over gross

days XX million, the supply, year. a vehicle $XXX from ended day Our used inventory down seven which June represents at prior

F&I. to Turning

to growth In vehicle to per sustainable car of consistent record from $XXX increased delivered quarter, $X,XXX of front-end strong year second and the in $XX yield all-time an increase per prior F&I the our $X,XXX. an quarter. Our

parts turning Finally, and to service.

and were the parts our June. we of in decreased Although, recover and in the quarter, to month revenue service were flat able

addition, web income to by now remind protect discuss from service margin call our profit to which center, to our performance. that, best-in-class million. and I gross devices. appointments you take In the mobile to the was our like during scheduled parts continue produce this like customer would made PJ in cost I we technicians opportunity impacted and and of this PJ? express to who appreciation will were teammates financial all $X to field over to to of approximately would our our pandemic, I performance. decision XX% the support our the hand

PJ Guido

and Dan, good Overall, I which to by our environment. to for for revenue would gross decreased by year by achievement provide per the driven last proactive and XX%, Gross some COVID-XX. the compared like you, last company great profit of decreased and management XX profit financial to XX% margin and an marked in highlights second volatile on quarter Thank macro a to basis XX.X%, by focus driven the quarter, compared everyone. impact inventory unprecedented expanded gross our by unit. morning, points year, of

as as we reductions gross XX.X% the of by and across decreased percent cost XXX measures instituted the and a on basis points P&L, saw gained profit advertising, down business. to control well other efficiencies Moving personnel as SG&A on expense

to our Although, we percentage profit the remains in year back the as high of somewhere operating environment full mid uncertain gross expect XXXX. SG&A the the XXs to of a in the year, be half for

divestiture resulted legal manage prior for Adjusted actions an XXXX points and XX increase control XXXX the was of on margin increased a for gain the $XXX,XXX quarter and of $X.X income income second share operating the or per per X% settlement period. gain $XX.X expense diluted gross of or an share. or a Our adjusted quarter versus estate. for million in share million adjusted $X.XX to by Net for quarter was year X.X%. per EPS Net the $X.XX second $X.XX profit basis gain diluted diluted the for sale adjusted to store on real

quarter, the to XXXX for rate was prior second spent With XX.X% approximately effective improvements to Floor by decrease compared in decreased and $XX quarter the million XXXX. of quarter of expense $X.X deployed, investments the we the the Our for year and over driven XX.X% inventory million interest quarter by the reduction on second primarily LIBOR tax capital other in for the plan the rate. quarter. respect in store

a in million position on accounts of and we million strong in cash, plan approximately $XXX floor our available $XXX $XX remains sheet used ended balance quarter with liquidity comprised available million the line. and vehicle million in Our of offset $XXX very

the have we target value estate approximately us provided flexibility X.X and with of This stood unencumbered capacity at stores. with the strong Place fair liquidity, of our ratio X.X to a million. leverage well our leverage the addition $XXX In end times. Park quarter, times, real of At below the to also the market net acquire

allow will that our leverage accretive us nature get and flow anticipate we target growth XX close proactively portfolio our Park to three times within Place combined to next debt cash we quarter, organic the back on manage will believe we increase deal with Asbury's Although, months. and of leverage as of the acquisition, the

In deleveraging. ensure capital thank across success. to allocation of our our closing, balance commitment like sheet, who flexible also tirelessly quarters to result would the this business, a during will a strong our next have for time be challenging several focus primary As worked I teams the long-term to and our

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

Operator

go [Operator you. And Thank Rick to first Instructions] Stephens. Nelson with we'll

Rick Nelson

lean you high Hi, car the see time good GPUs? how your long days you new is the think that. side. evidenced those for follow-up can inventory frame quite in the how maintain that's morning. across especially industry to And the GPUs, with you Wanted inventory supply, on Curious, normalizing

David Hult

We're to really today, see normalize. to mid-September the and think Rick. it Related would we'll morning, we coming be I certainly it it's with But the here starting say, the varies that's as to starts demand sit Good in in normalization out of before brand. and But the currently certainly that inventory. This get we by to supply is there August. September, in vehicles David. newly, will get start dramatically is we believe it them before I way

would similar just with predictions. vehicle is we to difficult and in better. as used June get to is think this relates give maybe with tell But and July a too It's We little any and a less margin to but and we August when bit see to strong we probably to different we being very what see July the being and point. world pandemic on little unknown is, the September June. and predict. as out where a I what's going probably the July maybe be at Volume is everything June. than we little same little are, similar. guidance it making bit side, far On and tougher about anticipate don't July you August bit bit normally a the

Rick Nelson

Yes.

follow-up didn't XX% in that know get a the June. But structural XXs. near-term sustained high or it to that profit, mind here that XX% guys gross if you anything there's mid- curious GPUs? you're have of kind high I'm with plans SG&A guiding ratio to especially the that was why in over I spending with As to increased

PJ Guido

it's Rick, Yes. PJ.

a as regards When just reference quick whole. quarter to were So level with we new the forward. we align SG&A first on to need rightsize set very saw going the that think to business I environment the pandemic to and with the we hit,

-- regards going to So the And up lot that is primarily advertising I do don't going set gained expense expense a expect coming -- in although us to do We on headcount current as and We action we increases. and structural efficiencies. think that the operate environment. of we with in see normalizes as forward. environment that sustainable as have see volume back forward

to the which to But even historic XX.X% back some achievement. things as mid-XXs expect below environment is in SG&A in again So expense or we normalize. is achieve do in the creep an this still

Rick Nelson

outlook sequentially if get seeing on think do And were in here on finally, we mid-single-digit when it. you I ask you there service can for could Got pre-pandemic? your you growth that back improvement parts and June. track, to the Curious Okay. used nice

David Hult

pay collision. would at numbers you we David, and remember when show to a is parts what's when Collision really look know I is customer us -- delay our report our business, This includes we we service many do. and big collision. customer for But Sure. of pay and sell when the I we hit there's peers taken don't have Rick. that in

the on and less service, in sales okay then With took there's when people accidents. forward. April down really for was and their actually collision So hit road less collusion been May driving shut

this we're Parts would year. XX% I service, about in of So still collision would bit collision a roughly is at lagging June is further kind I in July has with but -- say behind. prior like And growth similar, some and areas, back of collision. in been little point say some

really with service go talk just I service increase, a and collision, month mid-single-digit parts service expect I when today, season each about happen virus fall and I happens would incremental and and little flip going what I'm could unknown as and going in thing, we're it the and to to expect go going now to kind I parts parts specifically incremental each forward. So hits forward collision. The exclude see flu can't of us But we surge that bit the the one about service. really and we here what's is to parts but the say when fall. in week sit increases. growth unsure and

Rick Nelson

I Great. just Okay. If one add question. could more

to relates you've to got of we've seen virus lot the it exposure outbreak, As Florida. the and a

time outbreak? since could you recent If comment trends there the

David Hult

say you will so always actually would material and in country. the I Americans extremely still then on Florida for about impact we Texas what's at us. for and I it's our healthy for fairly Florida see long. I is think in operates again What you a our horrible seeing in in the the concept. Florida news business. We're I is business going think it business. about horrific all I and don't on our news hear hold that say them shelter that us. place still not well can about to

Rick Nelson

Great. Thanks good and luck.

David Hult

Thank you.

Operator

Murphy we'll America. go to with Next, of Bank John

John Murphy

groups on the some are done acquisition you've question are morning, aggressive in that ask other stock on there's consolidation in this, that selling as just and some the just of more currently at. deals acquisitions. look market Place a guys. Good is -- obviously the industry, done, private being want far with the valuation at the above of your I Park I'm you because to first the getting

tune just in good are attractive consider Board on that. had very some private more to you the did flip be But that potential so the you business would large a another the private group for or deal So public open up? on. be you side, I came mean, obviously, deals with selling that the understand have a I might we mean, if that something of would valuation to the either that to, is going or

David Hult

a John, something I years daily not you, in in can people about there's would think I of consolidation over in it's vibe about national lot and on big tell a -- we that's -- branding. get market growth know basis. the how the I

there's this is dealer every that with there's franchise these of remember to agreements have We and that agreement that. brands single a then business. And framework one on

that change, materially I the until don't consolidation questioning. might So be see those documents massive you

John Murphy

getting even the in I the that helpful. actually would very of above That's X% think Okay. mean, Is significantly you national a franchise laws framework statement or agreements the somebody prohibit roughly? that and market something that range. fair

David Hult

unfair framework it's speak agreement. framework brand -- me of exists, to are how an rooftops there that would dealer agreement you, And what limitations beyond many I your I you say you once you and in framework or so to multiple start a having Well, acquire agreements But for reads. within everyone's tell any a have season those period. annual can would

A significant company and to And with So work are be test true stores a take would for of there. a overnight buy to amount and a some manufacturers the lot of documentations agreement happen framework there's to make out would B that involved. XX-plus what's a a it that of company

John Murphy

Got it.

normalization then Okay. there to amount a quarter. sounds do you around but -- very you helpful. Obviously of over That's hold expect second the some like performance SG&A. decent on in And just it, the time. question a was It

is simply much an As come if omnichannel I lower saying ramping a opportunity structurally or is you've the over up, and effort as online? the quarter on of you're it I your that a sales you SG&A mean, at the omnichannel I dollars sale new particularly in lot as done you're or SG&A look efforts online there that think you that used on doing stressed guess leverage down time. could used.

David Hult

transaction Absolutely. on we're transaction. been the a We of years. about very the our not just focused pre-owned. a not And holding car of the it it. we're no the quoted complete reserving question And that's not holding or very appointments a -- of and There's on on what XX% deal. the reserving that We're car, the we've on We're of focused online, not processing working proud over online, shows transacting. that XX% piece number

launch believe that we but looking to -- will We in forward higher get us we're the will us have of that think year, it more hopefully a hopefully get second this later tools half we to plateau.

So heads at efficient very down better we focusing focused we and do do. at keeping our and really what more in just on getting what

quarter showed. of SG&A Our in the proud that. discipline We're in

our gave they're that Some cost there now. will quarter, of of the discounts back in, third that us leap in partners not vendor some

come thoughts back is. headcount are disciplined We're disciplined ad dollars to our But keeping on those naturally it the on in. keeping where going So we're down.

in we're space the I if space. in of one think not lowest the the lowest the

So efficiency. I we're showing think

point we efficient highway we're in on But chase feel we really we're foot once -- in a we trying what put think the at I right bit. to can where like a volume then now do. the more we're little get the we'll gas

John Murphy

SG&A And opportunity as I that far mean, the could XX%, low as and to is the go when you how something gross aggressive just too as that like be? to online, or could be is omnichannel if that

David Hult

lower touch couldn't than more really that there's me I fair say, to transactions. that over smiling. for to I'm say be SG&A It opportunity an it's with unfair time number. to online would Yeah,

John Murphy

of because except this for And lot been maybe a Okay. has the miraculously the just as on market demand underlying lastly, vehicles what that's pricing undeniably it that just new a in how strong one aren't showing incredible to what lot defies used seems of think was means just curious about that I'm just factors pricing to what just vehicle that understand up I'm to in strong strong. is then utilities means? you used sort sell. the here the vehicle it's trying travel business, your like interpretation it your of keystone used

David Hult

I Again, perfect down out cars a had a demand of still there's in and said think things storm almost We and and the purchase with XX is of July. Yes. lot to average of event shutting it, early years. manufacturers there I with a age ownership tapping the

it but didn't was we And more do hindsight, thought the vehicles wrong? some market. growth. what wholesale of think But and dropped we say in I strong March, a on real. get you really still market you is quarter to August company, more buying things just I a the do. lot of we to business call got you any XXXX You did have stay inventory, natural did anticipate the could aggressive not have tell used. every pre-owned pent-up We kind normal. do after right? chose cars I'll anything, smart won't didn't is What demand. we when a I'd been any in today the In be The normal of and something any conservative different. September and I one loss the quarter. in wrong we're because take our Labor year, that's manage slowdown at in there's Day. would

So it's really tough in September. could September slow there be to predict but natural what comes, that

John Murphy

very Thank Okay. helpful. much. That's Great. very you

David Hult

you. Thank

Operator

Craig-Hallum next to Capital Sigdahl Ryan go We'll with Group.

Ryan Sigdahl

for Thanks my morning. questions. taking Good

both and do to industry human you digital, Just digital resources shifts Park Place as capabilities rapidly as online? Park the it how versus integration Place relates of financial about towards the think and allocating

David Hult

a Yes. of of and lot have in companies, Ryan them This a of are And the I'll lucky it's the of a great difficult. extremely tell us people you been a but what deal great this I'll lot besides fun revenue. integrating I've This X,XXX that are is lot lot to going acquisitions. do, acquisitions a people work that. attracts be obvious is employees have. also and of David, to years systems most but address the they done to of there, for XX is lot stores

we from DMSs right to a so career, the haven't find down company we You much operationally align haven't it my in both or software. softwares won't use, I to seen that where where HR we

and a one. our size see high it's We strength learn think fairly that. we a feel and excited strength digital we a of is large even as the they to learn we're the side. and chipping away can side and the integration get them us that though We very service this their on lot So from at level acquisition a done start is easy digital can from delivering

Ryan Sigdahl

One helpful. for me. one That's other

dealer a nationwide it it digital Is your peers there? its rolling out brand unified ultimately PUSHSTART of of it's national one brand? is you think rollout brand? Asbury initiatives. kind about guys So positioning you your do for Where How see digital, the announced do a in the

David Hult

or Automotive sales. pre-owned city. at study I framework would pre-owned the branding about side is on when where purchased Yes. miles out small would you in like any the purchase doing agreements. of side restrictions vehicle, they dealer as journey if think a the nationally, to and I'll was else that. studies back dealer Mercedes say, you And where agreements the go I'm have to people car look But I where within that our live. do. are I And restrictions all it what no I on degree you on that service XX%. buyer used of good new their vehicle it market the XX have CPO can can XX% market can tell to restrictions there sales pretty vehicle Cox and car and we and out new XXXX everything in We on I some where

see well. as the our have So digital the deliveries of feel And to as vehicles at facilities look see to business. like the we omnichannel way we as a we we expense enough brick-and-mortar do an it facilitate and highway is, we approach

value we'll after have there branding So, at within the We and go our potential local we it. look unlimited through rooftops. names think are market

your as radius are our private we well. cars the preowned of our that When cars after country. they for and see all XX% on them. like within all side, But a just Just six-mile looking sell within business we the like go still certain peers, people is business over done

SG&A -- true is needed. the high-efficiency not acquire see can through make transparent from And the brick-and-mortar good and fast likely to your when I online. it can't and the in you truly the We consumer that. there's online. It's business think all XXX% think you're doing savings more and how not complete transaction results is garner online we So, for

Ryan Sigdahl

Great. That's Good me it for guys. luck.

David Hult

Thank you.

Operator

Sinkevicius Next Morgan Stanley. with Armintas we'll go to

Armintas Sinkevicius

appreciate up Notice regards how that here import the also your Great. Maybe GPU And a incentives environment quite was question. import talk through the the the you and to July? been here. I have luxury with could trending bit brands. then about domestic quarter and into

Dan Clara

take Yes, good Dan. is morning. This I'll question. the other

saw and So, goes all made segments decision improvement that from across nice that address the one be a Again demand. supply not -- I'll the shutdowns OEM to have you. luxury to we yes, standpoint, we same a that of hard the smart first. just standpoint. right that conscious luxury. cars and and let now back an From the are what because cars similar situation to replace retail with of import We experienced

when go scheme COVID domestic things it supported have OEMs others. effective affected to shutdown. incentives prior some believe -- but again and shutdowns. the had good that another key There a everybody the domestic partner the pandemic. And of -- down the was very than another also through they by factory to were factory more player a you grand very And the seen I with in have We was

it that decision where unit good in environment So, decisions of holding even day and a product an come limitation again you making conscious the down we is smart to tough you of supply when the made to down retailed. just that it more to the replace to goes a

David Hult

I'd thing to color that. on only The add put

on in important core and partnership want well in to to and midline as for just value And them. they us many execute you as us pandemic to margin that. our we secondary in Asbury. you're bit that. them value are to unit I really our much imports. very But relates We a One tell our supported on and principles you're little for markets more you're of Hopefully conscious to competitive. is gross They very so a OEMs. most we It with import when in with the through the a growth. decision our per a not chase profit of not what's we're would you on going well higher us know and especially focus We're midline when want we're franchisee. markets be naturally it extremely when ways to thankful was metro

the So, a we're results for focus just focus for volume was with margin. but pleased it import not the midline quarter, our to on really very chase and

Armintas Sinkevicius

What's the And of your has opening? mentioned the decrease there? increase sales keep COVID about trended you digital Okay. that framework. Does remained that the How XX% to from involved flat? been trend

David Hult

Sure. Number it moves but around around a little was XX%. bit essentially pre-COVID,

So, XX%. up to jumped it

Armintas Sinkevicius

as jurisdiction? people been obviously has Okay. been how cars that and restrictions dealerships curbside have there sell you've have than And are able been looking pickup to since there by able in to more options just and delivery

David Hult

The could in time, any it yet. yet. It hasn't certainly but at really moved number hasn't Sure. point

Armintas Sinkevicius

thank for questions. Well, the Great. taking you Okay.

David Hult

Thank you.

Operator

with Next, we'll go to JPMorgan. Rajat Gupta

Rajat Gupta

good and morning, taking everyone, thanks question. Hi, my for

omnichannel offering. follow-up a the had Just on

steps parts working what improve be would Can you mind do to Thanks. the that have your I bottlenecks just that sense you you in talked want enhance prepared you're You remarks of think you're Any of on you kind in give to more of there? us any going follow-up. have on, going a offering that how further. that or to forward? focused specific a on And

David Hult

half apply and preannounce the in elements didn't And of don't the has the you second their it. space. rates the Sure, in David. could from No instantly were will basically there the of When out back first certain a it's the transaction we launched approvals logo to loan what exist. at large we it, you lenders year and Raj. online with This point we marketplace, were online. because you this got space that currently would we have last were. announced that the automotive We is tell competitive launch this the I tools one year, what

I to our to nature I things anticipate it competitive don't there'll we be but about want of yet. space, the come, but talk October. in it just So talking of anticipate change, because more could about

Rajat Gupta

just to what you Got metrics it. yet, but into how it's know We that. here the across has Park July look Place. performed could the that group Got in sense on lines? from quarter we're And us closed business within same-store any give just different it. second seeing I the forward and not that

David Hult

to still been had. much statement most performing Sure. a little information. guess personal bit that Respectively, his he's very really could very certainly disclose privately and make was held and ever in holding month the I the and month don't But into he's well of Their over business I his up for It want June well. July it's of as profitable it's general transitioning stores XX way years. too well are

Rajat Gupta

you part, in decision Got maybe of to auction bit a or earlier more think it. I more was prices might off unconscious are on Thanks. conscious to your more or of a mentioned dynamic, or maybe just because high, that sourcing curious decision to vehicles? on so hold as -- July saw a of an question just that that expensive versus industry little volumes. terms June slowing of Rick's And is that of Was an

David Hult

it's a you Yes. little everything. would tell bit I of

the day is First supply on low.

car or with going for bit that. not dealers little cars the And so bit. stay some a is that right to there. are trade-in, point vehicles a used but offset point quarter, -- at we're a now, your little sales realize, market there's slow then moment naturally To we one So it's going move to new we're most number want time to source trying we buying understanding to conservative in for the And about just overtime. don't an buying for a as

trying down we focus while to be lot mindset we this. most can the need. we approach equity that's growth We're directly opportunistic. How we our mining trying as get opportunistic. of dealer what come But do I'm groups We're from on do as out much returns other our and consumers. buying our is as and we're expenses side how keeping generate We're doing of our highest now buying possibly to now. main our a to So I are be right think sure

Rajat Gupta

and good Thanks luck. helpful. super That's Great. it. Got

David Hult

Thank you.

Operator

to Next go SunTrust. with Benjamin we'll Stephanie

Stephanie Benjamin

morning. good Hi,

David Hult

Hi, Stephanie.

PJ Guido

Hey, Stephanie.

Stephanie Benjamin

color home I up Just chose the online about customers of versus digital digital roughly to -- XX%. maybe purchase curious what Just chose those pickup? the you've you're that delivery or customers to How the in hear kind channel chose from of the again trend? wanted that or that those through store initiatives. to had many speaking seeing on circle

David Hult

beginning, Naturally on and more we launch, flipped. Stephanie, side parts the dealership quickly we're the little a that always deliveries. high meet than choosing purchased to of majority Yes. car. the trucks. they've transported online. delivery out-of-state very home on it pickup and a but we is a doing certainly at it when consumers at after the on actual I'm deliveries But with wrong. done obvious to they years the this for high in dealership the -- take mostly transactions we and at that anticipated did by ago purchases We the transactions great purchase service a are want people The very certainly when are want they delivery expected And home the than was dealership. anything are more do bit are of I'm I -- relationship reason service guessing it's done say, like question. local there. reasons. are being It drop-off rate a would I

Stephanie Benjamin

of seen be service still additional color look platform, we or there going sales any helpful. some that also via, or touch wanted then while penetration Got just as And it. that you. Thank warranty great. adoption digital those Just to may I be the That's your from would getting of with initiatives or what F&I the on you've is really forward? initiative digital expanded an through

Dan Clara

Stephanie, Good Dan. this morning is

seen of pretty the way the adapt business good team delivery. the digital So and to we've doing new with at-home transactions

delivered have be the enhance We consumers to results to digital positive further from a transaction, able us can the job that afford the this being we -- the by our you very did consistent in several in team and in tools the and to that able and saw growth sustainable present we utilize good product the adapting F&I. ability And aspect. we see a experience therefore

David Hult

lucky related are personal F&I. tool launching. than do call would ones of We're areas online truly that Those is. would our it in in to better the weakness products them they my three the numbers our focused up of holding I we'll opinion, is that And online F&I lot analyze our be But on key are as F&I store. what one of presentation better. to be what transaction can a add online if there's be I opportunity -- we're say you you or that And

Stephanie Benjamin

Thank it. I that’s want. Got all And you.

Dan Clara

you. Thank

Operator

Jefferies. We'll with next Bret to go Jordan

Bret Jordan

Good morning guys.

Dan Clara

morning. Good

Bret Jordan

pay discussion of impact collision and On softness. the the customer the

was is running back I XX% you year. that XX% said is of year it prior collision think it year XX% at you running that Is levels? at prior saying of prior or of levels, mentioned at

David Hult

and -- number prior And -- that so of off was XX%. for we're at XX% It's running we're July. it's Yes. year

Bret Jordan

Okay. have trend And prior been or improvement? of June have guess what what versus the year? been May would I would

David Hult

you we're -- to We was want XX%, had collision above that Yes. way. Well backwards if it XX%. do

Bret Jordan

Okay.

question guess... Another I

David Hult

clear, XX% be of to were generating year. Just prior we

Bret Jordan

commented has strong you you COVID regional markets sequential guess of or outliers any Are in I recovery? sort re-outbreak. And that weak Okay. the strong there particularly any talked Are Florida been about there are that markets improvement? despite

David Hult

beginning were had that coming extremely some on And you've of would that shelter they seen of No. been business recovery April say out of I would tough mid-April Colorado, a consistent hit there have still of of couple it's that early only say place point, fairly end everywhere. you stores March there, we on we I was kind early once was, amazed for the and us. regulations in strong out there. but

sure for and state lumps coming over I'm a certainly breakout, time had a be we And closed regulated So we of had our periods moments physically we had of whether or our a I it's the of but along virus think for where times back reasons, stores slowly just lot peers like different time. way. litany it

Bret Jordan

public space now car bids the in activity competitive used less one any guess that or focusing channel? many I auction getting becoming then see Do with you last so players in rational, question, And Okay. are more and promising growth. big

David Hult

I'm national we last at what sure. I brands look doing down people acquiring are time. peers people competitive aren't. We don't than piece Yes. shut cars of days that what the constantly differently And from would They were XXX consumers. say, of In our space some period those the of not know for a

with preowned We grow goal is it growth. within think I that And to XX agree business. XX% a preowned opportunity purchased tremendous our we of miles. have slow think that Cox that we our purchased the people and sustainable

and anything We're don't focus I buying don't Amazon. tool any that that Amazon you're have we something trade you're quoting think on percentages. we a on tool ourselves don't our piece others do. trading transact not our is into can But you think own The do want to why think on really right And it. number hold consumers we done and buying believe perfecting something about to better when you when get buying on into money you when to to yet. to a reason the growth them that keep accountable is and we now actual that's some It's -- When I anything them. better. world-class safe. the online And we not and online comes different market really a that we and a have convince online car it's

thought where is pieces when that transaction. you're So of have that's element growing vehicle our transaction it's a And focus there's doing completing our that business. in different more complex when online. to through that be But

as think compete within brands, we really well. markets in franchisee. We're As national we do the far business we a

around but But the important anything like else. and our side understand clearly the to we partners nationally it's market, Our preowned new it's marketing vehicle very are restrictions us franchises. on an open

states. associated much And whatever item to savings cost to with a cost locally. that a not you're certainly going of is ship there a that. XX If it buy is, There's that X,XXX-pound

a So into like. be has to looks what put lot there's just that of that thought landscape

Bret Jordan

Great. Thank you.

David Hult

you. Thank

Operator

go to with We'll Whiston David next Morningstar.

David Whiston

morning. Good Thanks.

on SG&A other that gain. Was just accounting the First question for income? settlement or an GAAP legal and

PJ Guido

That income. was other

David Whiston

you up. come come back up? earlier And almost will entirely hiring that SG&A more Is OPEC be volumes volumes back talked people and back. about Okay. coming from just

PJ Guido

on additional of – dollars then see adjust yes, the the again headcount we you'll to pressure on as -- services, look of also costs combination advertising a could deploy again advertising match be be overhead may you environment. business. will but will volume depending also And back see outside comes us training, it to see on you'll little also there volume the bit fees, T&E that's No, of bank a

as denominator in. what profit just then we on volumes the again the really gross pressure it And depends back also, could So, be there on see. side increase side,

David Hult

The right focus our rightsize happens, events we get you thing only in very material when like to our and other David do one tragic would difference on and that I'd adding and things. add business. your if peers, this that to not like back a now disciplined business headcount We're saw

certainly want than employee that's been and to in of too now part production we long right it's a success on focused and time keep very are it's there. per our and higher We it

still -- SG&A. coming and could to very can results But market what that we're with year. what predict As margin of right the July stay giving anticipate upper forecast forward, and was is the fourth us that we'll we strong full But one short in quarter term, mid-XXs disciplined as In fourth and seeing element good sit that of and quarter. of XXs the here you now. the disciplined take is us in none happen in advantage

David Whiston

Thanks. used sales. in And on a an then space That's to vehicle supply collapse there's shock vehicles, adverse due that helpful. in new

pricing second you not pricing it year, did that used maybe just is see until rapidly But moderating has come this in dynamic collapse like vehicle or vehicle half up an of after pretty initial used XXXX? 'XX do it 'XX. So,

David Hult

July is going I so right predict. XX It's on. a -- That's a weather XX -- the fall to bit will little as And going to I very answer Yes. bit days. it's every in I then through period, XX be know that. anything it strong changing there's to different don't or an change great to not or material in such with guidance I think of I the longer. now as again, a a great know question. see a don't June but difficult unusual that's next dictate many if ways. if will dynamics lot time the period

know change and a that today August away, could I only days on moment's sit but anticipate is we as certainly the well. a same, August few As here notice we looking

David Whiston

Okay. Thanks guys.

David Hult

you. Thank

David Hult

appreciate This your our October. Thank participation forward discussion in you Look today. to with We concludes the speaking you. on call.

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