Asbury Automotive (ABG) 27 Oct 202020 Q3 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, Inc
John Murphy	Bank of America Merrill Lynch
Adam Jonas	Morgan Stanley
Rajat Gupta	JP Morgan
Stephanie Benjamin	SunTrust
Bret Jordan	Jeffries
David Whiston	Morningstar

Call transcript

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Operator

Good day ladies and gentlemen and welcome to the Asbury Automotive Group Q3 2020 Earnings Call. Today's conference is being recorded. At this time, I would 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 third to Asbury XXXX Group's Today's be and later recorded call being is will today. available replay for earlier The results posted Asbury's detailing our this issued on asburyauto.com. press is morning at third website and release was quarter David are Financial Executive Operations. Chief our President and President of Dan Clara, today Officer; me and Guido, PJ with Hult, Participating Vice our Officer; Chief our Senior for the will conclusion the of later followup At be up I questions and we might open our you for call will available have. any questions remarks,

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

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

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

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

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

David Hult

the economy. quarter the call. adjusted time times I year high and we of prior all Matt, in good below operating well quarter ongoing record reported despite third third with We everyone. our margin all our to just uncertainty morning, levels earnings an Thanks, Welcome an delivered mean X.X%.

cost of achieve our the gross result XX.X%. an of as implemented, profit a percentage we As able measures of control adjusted to were SG&A we

expense a with focus of the again prior on management up great once quarter and XX% adjusted $X.XX produced profit gross year. EPS Our over

the addition, to In volume significantly this the lower model. increased the vehicle vehicle over $XXXX constrained we quarter per dealer inventories continued franchise of prove and prior new strength front-end year. and yield by our With

improve and also deliver cost margins We our flexed managed to maximized these record profits structure results. inventories to our down,

and XX%. ended the range and highly a acquisition performance strategic of well our company We teammates strong ahead strategically capital. our also pro us of our schedule forma flow, deploying ground thank of closed aggressive successfully the on Due this to all by after of employees integration to increased ensure new all times worked to want which size pipeline leverage we allow largest on net business X.X quarter We the at hit more the grow the our and who history to in and our This our running. maintain our acquisition to financing will Park targeted acquisition. our Place welcome cash by

used our In buy result launched the ago. strong of quarter, their years omnichannel third four to Our vehicle the guests performance is chose online. pioneering that of we over our XX%

I experience. with In focused enhance results, July, the building While we said tools guest we an on refining these software. pleased update regarding further have online we omnichannel our our are and buying to are

guest will experience. online enhance and the platform of greatly which We the construction have redesigned completed our newly site

on kinks may we any We out have. work the have platform begun testing new live to

detail. in November have to in the Day We Investor late to mid you an will software walk through

building addition most online we guest industry platform, automotive centric began become to In retailer. leading the years sales our two to journey ago an

enhancing the with differentiator franchises to incredible believe a made omnichannel and and and plan guest of service create in Amongst the have franchise differentiators only These second is people experience and culture. model. our the level the our your provide a our omnichannel investing first for strategy. strides class teammates seamless dealer our We experience We continue transparent in key tools world our guests. and

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

Dan Clara

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

the we last vehicles, margins margins were we All prior gross the mentioned in on vehicle XX% profit up our and taking not pursue Looking at or year from this quarter. and to segment quarter, improving period. $XXX per strategy third prior continue remains period. focus car up as year significantly per new Overall, new from the our was volume,

days driving of to of supply total PVRs the Park XX from inventory was vehicle our new our September the luxury increased million our our acquisition year. With was up At and Place, XX%. $XXX score XX% all down mix from day we days, XX% the prior XX end

winter increase supply expect through season. We to day the selling gradually and fall the

Turning to used vehicles.

XXX a a focused our we prior with profit representing improving up on being from per period, profit profits. grosses vehicle X.X%, $XXXX. gross gross margin basis the strategy, inventory and our to opportunistic Similar maximize was vehicle to new points Our of

aspect our used the with our over second where and result, wholesale used million able our The a as including was car increase period. year flat profit revenue business wholesale, prior is $X of we were gross to

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

Turning to F&I.

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

and Finally, turning to parts service.

Also, see revenue decreased and last our margin quarter, gross continue declined XXX in month our profit Although, up In work increased and $X.X business internal attributable service decline year. each improve of was month. for our to and parts inventory service the our parts to our the was and Park we same-store parts X% services primarily September, the the in XX.X%. over related The research to in from points basis acquisition. preparation vehicle million gross expense reconditioning a to Place margin revenue

opportunity the now over to call field this transformational acquisition. all managing next We pandemic our our to discuss in appreciation margin like through and I to center to quarter. PJ levels expect this performance. of PJ? express for take our return the to and to teammates support would to our financial hand I will normal

PJ Guido

achievement everyone. for you, would tough provide Thank company Dan highlights another some uncertain to and I still good and macro marked a in which our like environment. morning financial great

profit through in improvement management unit. F&I XX.X% business. release. proactive you to in For would supplement expanded XXXX last by margin of completed PVRs, press and additional and financial parts details basis the in due recovery SAAR quarter, the acquisitions on a revenue our inventory refer to lower compared XXX wholesale by Gross a driven our the on gross all-time our financial per on points of high an third our gains and I performance year, quarter focus improving to service despite and to Overall, in continued for par was revenue

adjusted profit we by is reductions of to P&L, saw Moving to basis advertising. XX.X%. SG&A XXX gained decrease proactive and as due both personnel points down a expense and efficiencies gross percent This the on

year. of in a million margin all-time or an X.X%, the XXXX prior period Our $X.XX expenses dealership XXX control record or EPS Adjusted the per of diluted a XX% adjusted actions share year operating real for about period resulted share $X.X also or by per estate $XXX,XXX charge. can of an record. $X.X $XX.X $X.X last acquisition for management per versus an was which gain divestiture, on diluted gross basis Net adjusted costs was related increased income points profit all-time related same diluted million third and increase the quarter share the and

rates. of tax the quarter Floor third the quarter inventory spent rate $XX the over XX.X% quarter. plan million the Our improvements $X XX.X% effective in capital compared approximately was to decreased interest driven LIBOR XXXX this prior estate for year respect by real quarter, lower and store and primarily excluding we of levels acquisitions by on third million quarter for deployed expense lower XXXX. With to

quarter, we the acquisition. the Place During on closed Park

credit due in To senior shortly added acquisition as revenues. fully [ph] expect Greenville $XXX We our to dealership we Lexus notes and million our XXXX notes. Very in in this facility regional new we million to senior existing pact million senior $XXX facility. generate hand, in $X.X due finance the $XX and Place stores. debt credit the used notes. approximately our we we proceeds cash senior on $XXX to $XXX of Lexus to and add-ons our the We quarter on approximately issued million pay closing, after our Also due need notes billion We acquiring our annualized reached ownership divested acquisition, Park towards to XXXX. revolving during the notes million as down repay

approximately are Lexus in still for dealership annualized $XX However, we revenue. our under store million cap ownership. This total generated national

quarter, results our credit account of plan of cash, the revolving used of pro strong ended facility. very X.X our liquidity to our with net stood million leverage Also times. a of our the and in comprised X approximately the at at offset availability the X.X remained condition both forma targeted on below of As $XXX performance, operational and we sheet quarter times balance floor end line leverage range our ratio and

business, were Park commitment to I field. tirelessly put advance reduce ensure much original position forward. cash like our flow a acquisition the teams our strong our long-term and in of well in generation, unprecedented this leverage on time continue able current to for result deployed we going during the our closing, of yields In capital more our to across also would will who strategically As the success. flexible This to proactive thank us of time fulfill Place a and to work

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

Operator

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

Rick Nelson

employee Thanks, to working supply, would inventory I on want constrained. did GP SG&A? When and that a been the about think pretty you things for have [indiscernible] going good ask normalize morning. is and to tight

Dan Clara

seeing selling surely inventory we the seen slowly, continue through obviously We're back the is morning winter Good we to the fall flowing to in constraint Rick, expect go into we but and that Dan. To in stores and grow into your this the seasons and have inventory. point as -- QX.

continues our to I asked, you to think mean back -- go for some expenses cost there we and around, well [indiscernible]? other the ride get do come structure question along I business as to one of expect As was

Rick Nelson

Yes, we normalize pre-COVID until higher the GP levels next frankly go rates back to at year?

David Hult

tell we and back you our inventory to we sit here the don’t would QX. I the somewhat all still to The GPUs see anticipate the we’re you David. from we don't that we’re -- all, anticipated benefitting that backed assume as is heat, but into in is benefit know, point factories throughout down we shut at as that at would this this Rick, get virus first but feel some quarter in starting you margins, we to point today lower quarter. to levels up in inventory would assuming normal, at point it happening and

Rick Nelson

understand [ph] GPUs, cars those at inventory comment that, take what can give stuff her for is or a stair thanks Certainly, compounding new and a to is and car is margin you there? trajectory it follow saying- [indiscernible] if different faker used also take trajectory with

David Hult

bit point. quarter Sure, we car to more car it well bit again inventory for in levels well, not will with do available start think time, to of falling as a gross this yes. little pre-COVID seasonality But in up don't at quarter this that but of profit, as a in us just those new in the bit over on this inventory. virus. anticipate the particular normalize of what's as is little we pressure little back heat We've a seen going Used than that There's the of quarter.

Rick Nelson

to that Place, half Park how filing suggested and for your Thanks performing can XX%. is first relative was if for that's down I about expectations? that EBITDA That ask

into think, could you I Place? comment going to at that effect are I Park if the on drivers client calculated changes what

David Hult

the margins. on so closed Park going It's all expectations new. low very Park the exceeding sales, but Place. parts and and Asbury this the our pre-owned, is they're end service, in Place supply it's August, from Yes, We of like our very, departments, far, Were day at expectations exceeding benefiting point. at what's

Rick Nelson

Very good. luck. Thanks good and

David Hult

Thank you.

Operator

America. will Our of next question Murphy from come Bank John of

John Murphy

Good guys. morning,

to expect may think have you which recovery, service parking accelerating, continue the work longer drive the it's to and to fourth catch was you the Miles up off, internal it some as get on or sounded driven do on that? your first a like other maintenance economy? of backup going quarter to been Specifically definitely in ramp put right, deferred it take we

David Hult

would and collisions depending disclosed products start In Yes, with is service market. back, for just there. XX% upon in John, just Collision I for our I'll that the reminder XX%, first. we a us to numbers running,

and pulling upon few been months for but back green, numbers. last the that anticipate it the months customer and have parts We've excluding that in with putting last it to a hate happens could on At to our relates CP negative been that's specifically, relates how keep the disclaimer I virus, that we've So and what service in point positive service warranty. to the would I in depending to as up, continue collision. as pay this time assume impact. We this specifically much few in it, heats

John Murphy

this It that capture, you sort or to of been service. is natural then singles, the quarter, deferral or [indiscernible] had words attachment than mid put on mid in to single evergreen, of is just getting what's and you're natural second in happening, mouth, of it mean It digit it that? of worse that up able you put seem and parts fair be your there like a does something seems was should amount is or better sort that like does kind

David Hult

number. Yes, no, fair a that's think I

the in for Park up little and had increasing hit do we're was acquisition. gross that with in we a of Place the handle more in September script, quarter, said X% a for We Dan revenue. but the reserves how As and bit to

in we So well. if our quarter as you actually out improved pull reserve, the the margin

know, this say that. that So should single assuming at with back point digits on dramatically the you And we to we're I again, changes stay would but on nothing fair say is track mid virus trend.

John Murphy

on this. say started was operating. think the auto I and you How [indiscernible] think assets is, [indiscernible] me key and It thought way Let after stopped. for could this reason you going you leveraging much existing start, there your you're do the like good you push sounds I is that you big in pretty significantly one-to-one. get leveraged growth think talk there in omnichannel drive higher to and can the energy was really that up has do any start I quarter remembering driver you to you above think It XX, a with to efforts asset to maybe be significantly in base. opportunity

David Hult

accurate. question, no you John. said There's is I mean everything

relates lot this We really we've and about to our as that biggest what what through a the end thing market volume having dialed digital think that acquisition would not it But one think just profit. in We will quarter tools sales, excuses. you people It's industry end like It all, large don't net us. for take the feel above with that, a at and at tools, of we is all the Our tool for want back To I was quarter Pre-owned going I'm the to margin unit thought different is busy just opportunity leading really the you come wasn't operators for think purposefully there's in that that don't a be driving still the significantly person. was driving done see was Investor we're I acquisition, going in it. busy that with of gross can no said we've we the about are. today when the making in a one? focus. been was quarter. to be on with and us. Adding chunk on about Day, they through It answer There's that how many sales. in question exist tell the get online. question, it one, didn't quarter

John Murphy

to bucks that any X.X And, yields you other Maybe are fade are do very going to have good just there? all sense. What here, reasonably point good think those that kind Makes pretty sustainable think glide like high solid X front-end mean, numbers. had or about I quarter path approaching how what's in XXXX we is you yields front-end stainable? lastly, in a of they're your thousand before, do quickly? a was you

David Hult

give I ball. had wish I'll way my personal so the Yes, again, I But you crystal opinion a on see it. I

particular compared I think remain fourth what our this quarter, on elevated will pre-COVID levels yields are. total to

we sure look you pressure back normal, had back a come inventories go gets margins, when world down me, I'm lift though if pre-COVID, now well. excuse material and expect car with get as will I little when were our their still slightly Place, of PVRs, And we back, to yield But the think, or Park total in some bit. quarter. on even even that acquisition use, new our you natural the there every raising PV we

quarter, it surely think the even but And impact of number then expect remain I in higher a the I'm So well. when to elevated in pre-COVID. will I will settles, the elevated the as QX, at sure, high Parks not because settle of as be fourth as Place dust this

John Murphy

so Right, helpful. you Thank that's much. very

David Hult

you. Thank

Operator

Adam will to We of Stanley. now go Morgan Jonas

Adam Jonas

done more how for I of third XX% your that and to and everybody, number a I on Hi you you sales the know percentage number XXX% give the used year-on-year? share that you on to have give internally are you the a digital? have KPIs sales don't can online, compared that bit that of quarter done are that

Dan Clara

Good morning, Adam. This is Dan.

financing, cylinder a a customer include home option vehicle online, online requiring our by the see of not purchasing full the online, transacted with signing of then to the has in And to vehicle in broader reminder, things define documents completes process were This pick start. and the receive must fully we to the process a a receiving trading, select delivery. dealership. up our state as the just online customers we entire when all quarter at XX% used for surprisingly, is sales the through addition most And push that So continue insurance, a law. signature sales, of one to

David Hult

a tool on newspaper of XX% I Adam, this that's not I We're term. follow quantity, lack are with come mean, tool. better of the online channel down push looking utilize and people that. start the day mean, the a just for the first. but and in up that counting age the

Adam Jonas

was get year? in as the this XX% was what we the quarter, the years And what comp prior last

Dan Clara

Adam, it was X% year. last

Adam Jonas

say front-end, on just any -- Okay, that the of and start you color okay, the in-store online through and of as define push rate sales? attachment GPU versus online or what

Dan Clara

Yes, same see you mean hundred look but a it's individual or about it up store, you'll each Adam. when aggregated same. I when about you down, averaging at runs the it, individually couple the

Adam Jonas

of kind That's great. in unusual buy and the would year-on-year quarter GPUs. But helped to, related And much then SG&A the meaty versus ask is just sustainable? gross I if juicy, let's structural you Thanks. level, call high say improvement finally were obviously to the how it XX.X% you of

David Hult

employee. believe really It that. some that's an increase tell never waste. opportunity a sustainable gave perspective, to potentially let lift natural the go and you the Sure, I from tailwind that you a downturn tailwinds to get get operator, as we'll of From wouldn't we a an and back time some over headwinds have. We learn production could of when we our us per

on. what medical And up get you a that that to so stuff could trimmed that the normal November, get be Some will bone, with be costs, you ahead be data it that certain and that actual the opportunities and getting implemented, there's The we that. real, the really looks may If creep it expenses, walkthrough take to there, get be detailed very trying volume our it side seems play we're when video kind to headwinds affecting at year, and right we something Later a myself until a to but look aggressive it we've structure the advertising, always But tool. conversion the on we insurance that software be won't a stuff, could of you might make in those the see with every I'd like. of on of expect, degree. of get cost screenshots, the case much again. the

Adam Jonas

to forward that. Thanks, I look David.

David Hult

Thank you.

Operator

from now will We Gupta question Rajat of Morgan. our take next JP

Rajat Gupta

my questions. Hi, good morning. Thanks for taking

trying vehicles, channel, It the So at like but electric think Hummer kind like. look be this? recent that, electric think not might what to broader offer bit just Florida you on question just has side? start too. impacted, these website, forward? is a to renew the are norm, how to supply are to economics channel Again, it efficiencies and two the GM how as change like just mean dealers vehicle looks well, of going GMC chain perspective to us, like, likely the for mean the on unclear they're the profitability and in on you side dealer curious vehicle the have How it's margin the program. doing after vehicles, this Thanks. why profile to through could also get vehicles, happen your I a dealer So of as one here, more Indiana from other the business, announcement, do OEMs economics price of noted might new become I the the do service changes the but

David Hult

lot world dramatically still give coming vehicles and But do, and point by push heavily specifically now. the profitable lot be is direct, incentivized that this But time at really big look chain consolidate servicing and It engines electric is don't, still right done gas selling again, going think in make guess to to It's the I the looks the I they're Yes, changing. it, that's don't of to to time. in, it it, manufacturer. don't at solution tell and It has career, works government franchise with the a way of credits. over Specific change the what of are don't and sell has produce changing. a as coming trucks companies tends manufacturer. work today, relates how current will a be them way In best it I've the selling it's to General works this to and here work to dealers, cheap, of infrastructure. in seen be that lot to the big see model it's of materially results sale. All to with big many as well. them as startup of currently local over are see electric well that interpret because to try perspective we from selling so the and the We we SUVs it how direct as like. you their incentivized dealer sales, There's doesn't of going push The a many time has sit that it time. and I'll my not different you my Motors. with I how success David. supply many a the and a states the are manufacturers

Rajat Gupta

Understood.

sense is demographics their assigning think half to give investment or that? to or then one or Participation requirements, also on talked dealers are Can be about, you like just as decide it economics would any color us only, why I the to like like GM like Agreement of like on or network. like going GMC not, participate a

David Hult

couldn't be specific become investments be anticipate of their We the what value see why. products. to make. there's thinking, were dealers getting time what to how to infrastructure I for and as thinking that have the and you Any in something, are insight in ready speak made, they decisions you other that part give but doing couldn't I it, We it. dealers might as

Rajat Gupta

makes Got sense. it. That

on a looks capital balance allocation, levered one, it fine. last your currently on is little a forma Just basis, sheet pro still

like sense might looking might all, priorities your talked expand forward? your those of what regional a opportunities, mix look give it That Is or sense density more You those strategic going outward brand and like? or trying to any look is further, of thanks. what about us

David Hult

Place to a markets down still fits deals, buy excite a much the away that time, looked would that in that. election There stores over them of capital we'll We've put of interest are with generate have and We pay feel our the chip that said meantime. in right deals worth lot in some deals. acquiring, don't certain to try generate we're look it. It's not I the jump us. competitive deploy surely like out in cap the But more really the And the return. lot the a or at But time the lot We cash. coming interesting many, to easy there something tires all But as be past, about and it. thoughtful debt say, and up private think Sure. on to Park acquire right operate at I've of an the It's that we're for just into we in our not acquisition. and us. mortgages are It's going because certainly getting that don't we that looking space us. very coming to don't look us, We'll time we're a now. harder that's every lot at or we and time with if deal this way to it's investment at into capital some well. a [ph] But with on They're opportunistic cash there's with coming it deals it's focused down comes now certainly up. accretive right now. more we're for money we'll for it

Rajat Gupta

you thank is good Understood. and much so That helpful, luck.

David Hult

you. Thank

Operator

Benjamin SunTrust. will We of a now to go Stephanie

Stephanie Benjamin

morning. good Hi,

David Hult

Good morning.

Stephanie Benjamin

could you of Park in bit that Place hoping closed August. was I little on us plans the briefly update obviously integration late a

quarter implemented what's fourth quarter? maybe the of on at what the the So was here? deck for end And

David Hult

the wanted this integration. would well We didn't We at we There, piece, is all and infrastructure, and we're From their didn't profitable, Yes, all we structure. very integration anything Accounts standpoint, an tell David. that didn't the to support change on early you is organization. keep biggest doing operational change accounting them run part of all. I Chart the standard Barclays. change their

their kind and the we into plugged So kept ecosystem ours. of same

worked would I better challenges certainly lack that, all phone operating. were, say, and of several issues back integrating everyone's normal circuits. But the first settings, things and a for for and had software to kinks, lines weeks, with couple those and So normal and we like weeks we've normal. term the In businesses through

Stephanie Benjamin

you're I seeing Is slowly started you. any the on slightly where inventory, back your domestic that difference at seeing import it, returned inventory on new come And of has Got rate? faster the think there to you a noted thank then divisions or between please some you're luxury this side.

Dan Clara

This morning Dan. Good Stephanie. is

yes, it are, then luxury would up be And of there where in to obviously, pre-COVID-XX. luxury, because a a our the slower through our whether than we're of some with And impact. and on over some we were it influence you've we the little of in, domestic seeing the affected go segments, like doubled We the of strike difference did import or some carrying COVID-XX the imports, to some bit in be. so then, that, and is are by different as, domestic. today is was inventory on coming slight that There a some may bigger not domestic is

David Hult

our XX-day had quarter supply didn't about Yes, any some have talk we where had of I at cars models And cars of we add models stock. less times. included, the would when XX-day supply overall another thing that’s some than a all a in that, in to we stores luxury

it even sure, that counts of naturally didn't same a peers, kind than the have you inventory, the different side, the was well. certain there's When dramatically light had Even I'm not though impacted you So models think side of just you story. the domestic and as unit on import them.

the sell. have didn't just You inventory to

Stephanie Benjamin

Got Thank so it. I much. all That's had. you

David Hult

Thank you.

Operator

And now we from Jeffries. will take the Jordan Bret of question

Bret Jordan

Hi, good morning guys.

David Hult

morning. Good

Bret Jordan

what choice? own auctions On own by and that greater give is demand the wholesale pricing you are now outlook guess expand? is you you would you with your that now? think us putting you're for gross through acquired doing an that cars because auctions to going more be our or with think I used vehicles I driven

David Hult

just we're lot in ridiculously few it's [indiscernible] for the we what month, Yes, the what The we the are operated. how really bit, how it, July they've And and it it that we is, to did it mean, a off still Manheim. week it than convinced were had just went of August, like see And auction because acquired, we about auction closing the a was of with for again Sure. last even off I a We to potential number. a of tailed September. is. The potential certainly our with did, on, there into month our of observed potential high. weeks, the prices really we they've more going tailed mindset pre high auction. a August, of last it today what that kind we've little the with thought but want forget

doing we down and besides may road So the auction, anticipate that. be growing that more

Bret Jordan

effectively. pushback be mean, Can markets clearly or to you applied Okay, new great. own Place on use I be a And omnichannel. an to franchise? seems pretty that? sell a restricted omnichannel don't could then California you're vehicles would the from luxury you do or get you going question Park selling you on where into new to are to it And

David Hult

Sure, come I'm if We it's don't a because couple number. that highest the hit in it, that going XX% different ways and to I back. address please felt

we're car new side, the XX% with about the start On push tool. running

kind to someone framework and with in any there. brand Los yes, So laws we answer's from have out from just can't brands, I franchise Angeles. of market and new to us? car Angeles agreements. our buy The cannot I Can reach a market want a us have we Los vehicle

there. semantics some there's So

and this of participate there's purchased currently there's that a term. term. better benefit lower create you of a you've equations that you'll road, fully some a we've Day part see lack that how say, to the the But we from, need that having the tool can do. solved down that's and the just answer chose at look pre-owned have certain don't through? more see, tool? franchise We country know experience tool. ability Investor opportunities we're utilizing few Full a you'll exist, better for that the digital looking a a and the from that or what distribution of the things show to fact question lack in of an what with car And start and brick-and-mortar. need tool omnichannel, sale excited a cost to way lot distribution Carvana, in that at And think opportunity a weeks. more If do start dramatic you baked is and having if showroom and And flow a at. we're we if I don't for markets the some for from you [indiscernible] push the maximize system. that a the target those dramatic hub a to to in the There's of enhance in differences direct just through of the the tool we the say push a in in think differences disclosure, We tool

Bret Jordan

thank Right, you.

David Hult

you. Thank

Operator

Morningstar. go we'll Whiston to David of Now

David Whiston

Thanks. Good morning.

special charges Just GAAP XXX,XXX of and items the income. the quarter Real first have books the on other we Estate for

PJ Guido

PJ. Hi other is books income. Dave, this and – set I

David Whiston

Okay. bit And what year-over-year? GPU up talk you a XX% can drove about F&I

Dan Clara

Dan. This Good David. morning, is

strategically a on of an update to Our and that on F&I there the be and top basis ensure training have producers strategically we that performing. them at continue we're following through much team is one but the store good focusing focus as, Don't week-to-week job consistently with bottom of seeing our level. is consistency the maintained improvement to more to and we that stores we very train a the continue bottom an consistently that they're training top producers and are doing

David Whiston

Automanage? Okay, that and room lot a think improvement do you on still of for there's

Dan Clara

bottom the there half I said, say more I would always for half. always earlier, I on those top improvement much in top we there's focus not half is like to and room the there's bottom and room that go opportunity half, Like yet. in The said

David Whiston

pure of I'm but logistics earlier. distribution angle a discussed Okay, different beyond pickup the Hummer lot like that given like premium, to really electric, this the end new a And know very creating it's truck lot all and of GM, are and segment. a legacy pickup fact just both automakers after high of Rivian you all from price startups be the going they're obviously Tesla a going low on -- segment, a niche, GMC the the looking more volume point. just in interested as

waiting they're that [ph] near price something with series So when reasonably ones the more pickup BEB years. electric to or because especially people maybe there's for interest that want there. perhaps think open a will vehicles touch for - or I they just a are the But at are in F something a few all a I bit mean, point, lot customers of they truck, be priced. will they

David Hult

can shot up. a I'll take and this David, Dan at it clean

just And, cash faster the the I probably I have today, traditional think people to been and sells. it tell with more how a the buyer interested electric happens. very the right is long do discretionary at I'm starts and out you, buyer pandemic. traditional curious truck of a and talked available. that come if trucks they've what to truck truck truck see when and expensive more shifts buying to now is about and it domestic all I'll The lot the

$XX,XXX a truck. sell than pickup $XX,XXX will faster pickup truck a we will We

Now, been that if way creeping it's a while. for I know but over don't that's sustainable time,

there's one the very when it's market a as start than here, today I The I watermark, truck And what to range to think sit you somewhere become can opinion I see. an in don't small. do think see seems XX,XXX XX,XXX this I sales appetite, trucks, person's So just that. much to from more again, have it's the

David Whiston

it. That's helpful. appreciate you. thank Okay, I

David Hult

Thank you.

Dan Clara

you. Thank

Matt Pettoni

forward next a concludes great We quarter. Have participation appreciate discussion. the This your today's and discussing look to day.

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