Asbury Automotive (ABG) 28 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Karen Reid	Vice President & Treasurer
David Hult	President and Chief Executive Officer
Dan Clara	Senior VP of Operations
Michael Welch	Senior VP and Chief Financial Officer.
Daniel Imbro	Stephens Inc
John Murphy	Bank of America
Ryan Sigdahl	Craig-Hallum Capital Group
Glenn Chin	Seaport Research Partners
Rajat Gupta	JPMorgan
Stephanie Moore	Truist
Bret Jordan	Jefferies
David Whiston	Morningstar Equity Research

Call transcript

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Operator

Good day and welcome to the Asbury Automotive Group Q1 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Karen Reid. Please go ahead.

Karen Reid

Thanks, Mary, and good morning, everyone.

is this and afternoon. call for be today's later replay noted, being will recorded available As Welcome XXXX earnings Asbury call. to Automotive Group's first quarter earlier detailing results posted The first our this issued on asburyauto.com. release is morning at press website and Asbury's was quarter David are VP Executive Chief Senior our President Operations; Financial VP and and Michael Officer. today Officer; me and Clara, Dan with Hult, Participating Senior our of Chief Welch, our we available At and will for of the remarks, open questions that be our up questions I call follow-up will have. later the any for may conclusion you

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

are those may to Forward-looking statements forecasts certain expectations, projections, than historical which in current which include other subject financial nature which are uncertainties. and statements of are each

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

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

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

first quarter over is David posted investor call website, David? CEO, It updated presentation highlighting also results. an Hult. our have pleasure our hand our We to on my to the now asburyauto.com,

David Hult

everyone. earnings Welcome Thank to you, our call. morning, Karen, quarter and good first

in Asbury’s all-time an were for history. results quarter any quarter first Our record

meet new although was demand, vehicle this demand low by continued We constrained experience to consumer our inventory. very ability strong to

to drove by million. million We points. and an basis of to margin, adjusted increased EBITDA XXX quarter, $X.X profit billion We billion X,XXX, $XXX up operating F&I $X.XX, per EPS up We a vehicle adjusted we revenue $X.X million to gross the from XX%. increase gross $XXX delivered For record by adjusted $X.XX to million X.X% $XXX by increased and profit grew $XXX to $XXX.

We was all continue decline SG&A, This full the to points of year's the quarter quarter. have a approach the in our from resulting Asbury first a the XXXX first acquisitions strategic reflecting XXX is around and of prior umbrella, fit under clear. basis disciplined

stores. are record execute on 'XX into plan. We dealerships our TCA our ahead performance to see our Clicklane us acquired Asbury remains integrate all team We strong out tremendous our to excited about cash sheet and we as and ability Due and of roll flow, opportunity to legacy the our strong. balance

operating of Our $XXX $XXX the for the first was of increase first an adjusted million, quarter quarter XXXX. over million cash flow

ended leverage net this quarter at Our X.Xx.

share the During completed of our $XXX repurchased we quarter, our stock, reauthorization. which million

has earnings our morning, in announced we Directors of As a our release new share Board approved $XXX million this authorization. repurchase

that monitor to of that strong potential in priority free share to same already in discuss shareholders continue I of pace debt near-term Today, later the our our as there to exceeded integrate acquisitions update fiber the the to to the and opportunities to our would to strategic recent repurchases. use is briefly last year, be through our acquisitions net growth our acquisition M&A time, enhance dealership call. will we'll portfolio. first our Due we'll an providing cash believe we the target year plan. plan Our flow level cash market we opportunistic the lower At continue are return and strong

results benefited, strong unusual great in most thrive recovery anticipate model. reflected until fully unlikely these franchise steward shareholders, to believe which inventory to We our team an We for in continue and automotive in are We unusual demonstrates environment, while normalize macro levels our XXXX streams. to members forward XXXX. look an in not a offer has be of industry guest-centric our demand providing our quarter our experienced strong across of can to brands deliver the these revenue operate In is and all retail. and where continuing first to meaningful levels the our experience do Dan? resilience results their OEMs environment value the outstanding and and in partners with the times,

Dan Clara

and David, morning, you, Thank everyone. good

being thank the our who work automotive to retailer. our commitment dedicated you of teammates so to most all First, hard fulfill guest-centric to

divestitures plan stores work and a our for was Asbury, acquisitions Clicklane as legacy TCA quarter made close develop of continued busy in integrate to expand one a to Asbury to to quarter we XXXX, This and on fourth acquire the to stores.

first to turn new quarter the strip Starting well supply was levels quarter. first XXXX, performance At of to quarter, million, inventory the with normalized vehicle same-store inventory allow I'll otherwise. the and stated end our total In remained our and to from days vehicles. new compared supply. days XX days, consumer XX below the prior demand at our continued unless down was $XXX new of Now year March, vehicle

volume this XX% Given vehicle new declined year-over-year. our dynamic,

automotive new levels a increased vehicle, per from we new mission anticipate to which XXXX gross also However, commitment experienced We on most $X,XXX through total to while to significant to increase our focused XXXX, $X,XXX. the average in the and our inventory first of a remain low guests steadfast and maximizing our profitability remaining profit quarter retailer. guest-centric be our we in are

used Turning to vehicles.

first XXXX, vehicle in gross used which vehicle gross profit. used PDR quarter $X,XXX Used retail a contributed to to used in increased in retail volume increase increased of increase to by resulting XX% $XXX Our XX% profit retail a revenue. X%, compared the

a the year. inventory up prior $XXX XX-day supply, from quarter day ended the total vehicle X million, used which at Our represents

Shifting Our used for to new quarter was XXX%. ratio the to F&I.

growth year F&I retail consistent $XXX of to I'd prior tremendous and Our the this $X,XXX result. per to team strong, like vehicle F&I thank increase sustainable an from delivered quarter. in our for

front-end to total quarter, per vehicle yield vehicle per $X,XXX $X,XXX. the our record in In of increased first addition, a

service. and parts to Moving

at achieved XX% XX% over The our normal appointments which XX% outside XX% of XXX,XXX were the legacy of Benefits seeing. vehicles quarter. prior customer service rebound, X,XXX quarters were growth, service sold through enhancement retention, experience, online couldn't continued them triple repair full results which the in our our more over and growth. is conversion we be year revenue, customer is warranty appointments, the dropped pleased dollars quarter, which revenue order, new its We higher parts generated of posting the Clicklane pay XX% to quarter. used. we're first ultimately and control, to in over XX%, Clicklane stores, revenue strong returns and higher Our service vehicles higher increase a include the of have at per and higher now rates our online We increasing We provides customer X shareholders. with increased all which

XX% retail average received were vehicles to XX.X our financing. normalize. a for In consumers. of stores. rate new retailed score time to network. XX% assistance. we some average a customer at Clicklane which with but levels $X,XXX, Asbury's our of Clicklane X.X new our be that inventory inventory. double had of approval, payment fact, X.X parts continues instant Clicklane's opportunity ever. March with for a QX, stores, additional average The remained this at trades customers off-line roughly was the retain for cash seeking line about deals lack XX% Clicklane in minute vehicle of due our was quarter an of minutes within to best front-end down a credit traditional those total sales vehicles XX-mile X.X used, are Clicklane the of customers thus of customers depressed financing X% reconditioned believe us with than see until to trade-ins, $X,XXX Average were to $X,XXX. transaction XX% is was a sales incremental consumers deals. which and increase of to score saw full of F&I to transactions as were month dealership of Clicklane prior finance yield XX% per approved In of deals deliveries Internet potential minute new while were our We won't over that a credit minutes higher decrease equates yield. to our for The the XXX, $X,XXX the nearly an and had and and quarters, for XX% and such $X,XXX service we are applied converting of allowing And require department. in leads, radius front-end of

growth out that the the growth opportunity accelerate about newly it to I to acquired roll Clicklane our now hand financial excited stores. performance. as to are discuss We to Michael? Michael call we and of over will the continued our

Michael Welch

financial some for on morning. to analysts, highlights, you, team record Thank another I good would marked To our call, our members participants like provide Dan. investors, other which company. our quarter and

for our investor in the financial on and quarter. performance see presentation our website. our details additional For on our Please our today press financial release supplement

line, million As mentioned, Overall, of first adjusted $X.X shares. significant XXXX of million year-over-year adjusted XXXX and The XXX% on estate-related the X to related of cash XX% of with first of going Adjusted busy onetime which charges $XXX the share. to was income Net quarter was first $XXX $XX million, one, was on. of a real totaling and diluted million vehicle million, sale million, or $X.XX of of EPS increased from pretax per used the in $XXX or $XXX $X.XX our floorplan million our combined quarter adjusted legal proceeds increased share, quarter for debt to for net to and diluted per onetime for the we compared generated a related initiatives last $X.X number of gains $XXX pretax a us quarter divested operating diluted internal year, pretax first allowed pay quarter. stores, or income to and repurchased net the to Dan the $X.XX of adjusted per flow increase gains primarily settlements, down million income share, gain primarily $X.XX. for dealerships

in quarter. on estate real purchases, the we expenditures $XX Excluding approximately first million spent capital

year-end. strong X.Xx, plan excluding at our of credit forma quarter, cash quarter accounts, of X.Xx net the availability offset Also approximately line ended at both balance auto, liquidity, the Our as and at leverage pro remains from at of the we end adjusted million on used stood with facility. and our floor down sheet ratio Care revolving comprised Total $XXX cash,

approved David our has we stated, Board million today, repurchase announced share new $XXX authorization. As a that

This purchases are and in breakout One expenses, our included a dealership is TCA we've of that and transactions. opportunities XXXX, a we is of approximately related versus a on For item operations be financing to consider how excludes of and buyout we we revenue lease change $XXX CapEx earnings planning bit million. release. potential amount account for that TCA

quarter This full was quarter TCA. of our first

of million $X.X quarter, For investments. losses made unrealized of pretax TCA income, included the million on $XX equity which

Excluding the unrealized $XX losses, TCA made quarter. for the million would have

We shareholders building for our Asbury, I our start state integration throughout back in rollout of dedicate like ourselves, working for the who plan and thank TCA to on I the to our Asbury future now to teammates also strategic communities, closing, to system discuss our for rollout all a are XQ. all hand pilots update would call In of themselves currently the the David? and licensing of over to David requirements our brighter to our will plan. stakeholders. and

David Hult

Michael. you, Thank

to Today, growth. entire doubled stay on customer referenced the investor life much almost to XX our larger, plan of presentation. before. TCA, One from top we providing can XX our through Automotive sound we benefit mentioned more available involved we annual example are update financially our cycle claims today The now last to we As call, opportunities side, with drive be which and acquisitions as with an our in to in revenue. is more which company earnings Slides a never was able productive are as made XXXX Asbury on the strategic well line us

digital acquired given as the we provide about the the spoke common high significant leverage we stores to conversion metrics a a platform. we and Clicklane, roll we Regarding see earlier, to rate opportunity out

now the billion revenues just by from to for Our $XX a simply Because basis, plan billion XX of refer over grow revenue will are XXXX, significant pro growth in XXXX. on progress the to Slide $X deck. we presentation in revenue. made and or we $XX original was billion of forma to I now

in of representing $XX additional billion growth goal Clicklane of by is revenue billion. billion $X an $XX billion new comprised acquisitions. The same-store billion, and incremental $X billion Our 'XX, from $XX an additional an revenue $X is

use increase those than If our share. buy terms we EPS to and share. leverage could exceed assumes be stores per EPS our to earnings or In per of Xx proceeds our are share, targeting to a $XX greater were per additional we Xx to This leverage. purchase stock, back

referring Slide #XX. Now to

and generated an business Our XXXX increase $X would we have $X XXXX. cash of our from $X free cash over billion deploy for modest between to billion, in flow to leverage incremental to Xx a billion

that So the right the in strategy with right states business. have improve execute closing, we brands our right to grow we believe and people the in our to

leverage our We to are generating the will cash strong that through returning us continue while additional acquiring cash flexibility net balance to flow assets lower repurchases. share allowing to shareholders and

remarks. Finally, very I like being Asbury us produce to our your shareholders Thank while most fellow my through efforts concludes would dedication to our work This is that prepared all hard the for bringing continues acknowledge our automotive teammates. guest-centric you and much. the of It goal strong retailer. of closer to Asbury results

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

Operator

take of Stephens Daniel question [Operator We can Instructions] Imbro now from our Inc. first

Daniel Imbro

want the uptick there. I the best the business. on start mean, to peer really used side of of near GPU was organic used the the David, hung in group I and growth

could GPUs? maybe how are and that seeing what capturing of talk maintaining you used used demand, while about So sale guys in you successfully terms you're

Dan Clara

I'll Dan. to glad be take question. that is This

the even So XX% in to through that the the pretty is though inventory. the acquisition is continue our is consumer, through consumer. we're know we the leased used to Close XX%, that return where into in us acquisition results generated. is coming satisfied of the is cars, what we that focus all We to or from on know whether of the with we And you -- cars are seeing earnings, it directly continue margins of that form when is allowing believe to trades buying report PVRs a today.

from be a we to addition the online, In to used digital provide retail of Clicklane benefit brings well car environment that the that, perspective. a benefit able that see to as

forward. overall So execute to as to continue move we and continue on we focus will that strategy

David Hult

stabilize The X talk direct to about the pilot tremendous But ability We'll which consumers about, of fully in thing the in vehicles we're company, acquiring Clicklane first is to decoupled create quarter I'll in the our vehicles or at or month end sell direct allow our prior or of of really quarter. profit inventory. add to if quarter we car. the because quarter the launched of most will, our a had our April, second price. at We're tool margin seeing cars us. we're inside the The stores current talking in the that, from the market results all per half importantly, consumers it is acquisition to our used trade and about it you helping we gross to detail going vehicle on dictates

our at will car in price, you the acquire cannot you impacted the If margin dramatically the is proper be belief.

our is it So easy sell really we're helping what make believe opportunistic us, support we vehicle. to really and for to profit gross vehicles their to trying be consumers per

Daniel Imbro

on really rollout then I my TCA. And ask of Great. wanted follow-up, to the That's helpful.

slides a really the some product? should linear to stores infrastructure we rollout rollout first we really the commentary the But some have bullish of accelerate be or Asbury at up before store the or about the You training this that of stood of employees is kind opportunity. be to expect can needs there in

Dan Clara

clean the the up. the the it and anything are of in of tell selling up can the I'll easiest product. rollout because you piece in I'll and stores used then stores be Michael folks start jump I to the screw will

stores working we get insurance a in it. efficient. the plumbing. the and start Michael to company, backside quick stores. script the in to it out that in very we stand-alone the really discussed right before be will mean start QX, implement all roll been I legacy on We've that the it's of to So will Asbury

so to quarter-to-quarter on the the of vision to We isn't within out going an time the company the goal XX Our where of organization. XX Asbury as will whole months, long-term that TCA. frame, It's stores plan XXX% race. in roll be somewhere we're

Michael Welch

in rollout from impact And From to said, stores. David the months because a revenue, we for of have defer see -- now XX kind those the a will life there lag have results financials that to XX come the the to a the terms defer because contract. financial be through over revenue when we to just you'll of reminder, the statement the of on the as

so positive results years And probably the P&L from start seeing you P&L. before a it's perspective, X the X to away through

Operator

question from Bank take We our next Murphy, of can America. John now

John Murphy

that's addition we topic. mean Maybe just stay in and the state in of lack sort sheet, tax on just to funding offshore. to the mean ongoing earnings, or what the be how even beneficial same might just in TCA the the more follow I I'm tax to going implications than up on advantaged to of the the see the balance be potential just earnings. or curious benefits thereof the I

Dan Clara

TCA a currently, is up So Utah entity. set as

And kind looking the setup. bigger now. tax with of into advantage of kind scale pieces to the handle We're so that's current the

And so something make to it baked those forecast, any currently, looking from at it any Utah of we elsewhere. do are but into have of not does the currently sense a is we and of perspective have

John Murphy

as imagine got mean right? cash earnings what have it makes positive sense can would be versus right, elsewhere, I've to, meaningfully you to distribution it the reasonably I to ongoing as it far expect.

David Hult

Yes.

John Murphy

of mean I right? just rollout, that, the about huge, forget it? isn't that's structure the on Yes,

Dan Clara

an a company F&I true it's regulated So piece. there's and product insurance X There's pieces of then TCA.

cost away different the worth some setup the basis. a And that is tax benefits so there's and what then yes, on and got least pieces of at the tax

and a there. it company. the We and benefits pieces just get that up of you So for bigger I agree go some got through out of set with figure there's kind that to

John Murphy

more might That think more leverage going as plus, I to $XX benefit to sort risky. capital as you When maybe at get or And like looking growth seems really the I and be upside. David, thinking you general this is you about in are of there on it, being I mean, seems how okay. Slide aggressive XX. mean, too for turns, you're $XX from X aggressive I second redeploying of leverage do question range, about X X But how from going leverage? turns to understand this, the expansion. here? look at you're like Got in not

David Hult

Yes. leverage normalized kind more margin environment. so XXXX to a is the And back to of just clarify,

Xx that a normalized you not on I an is So Xx is leverage basis. target. with agree overly that aggressive

that Xx you're to Xx kind leverage think I that kind normalized be being that to still acquisitions, of where below after just the a flexibility don't if environment, is up near Xx in allows flexibility. you we you same Xx, have larger go where of to want but

the So I place larger to after Xx think to the opportunity a Xx is right be go -- have to to those deals. leverage

Dan Clara

And conservative is whole down is to brought a to We $XX plan, targets environment mean, as back hit up what current I was certainly margins to in I we've and well. approach this coming plan conservative million. This or exceed be This history baked not in a we years XX-year them on out know certainly, we're time. And future usually normalization company It's the our would us. the we to exceed normalized is margins. certainly just at to difficult going moment add, a any put them. and in there, that

John Murphy

the little potential new demand the prior big does on thinking guess, is question what Or is, part a used XXXX ups from the of benefit get to shifting maybe the That versus what being thinking you're just there upside benefit margins. get the and now from better from parts XXXX means on mix and mixed I it could that much you're mix there side? basis you're Is the levels of getting normal it? obviously And XXXX or and growth is business Okay. Is what to in more bit that the then from and going just more it business there? And how of automakers forward? some supply the margins driving the levels? service. mean potential in slight you disciplined in I a mean, about be Is

Dan Clara

up times. again. I everyone Yes, referring XXXX, no. I'll and keeps few this to bring brought a it up And

sales LHM the company. are all our through We will margins size, we've again of sold of a all was not and productivity the had alone, accretive acquisitions And a in of the to Mississippi, where from we've our We We're which per been also, a that off on them standpoint, were because a see yet. our in acquisitions from integrated accretive it different side done. any 'XX. in in increased never lowest hasn't because XXXX, We're advisers. for increase margin Asbury Stevinson, legacy under XXXX Place, but platform. margins standpoint, XX% stores from of we we've But company, Park productivity employee production variable for

upside and significant, is going. we see is where that's So Clicklane technology where more going and

we'll So you, just We're is the be My to speak specifically margins X% margin I'll normalize. in high John, range I X%, new higher belief X% would somewhere in Asbury. on car things when or tell that business. and

to as sale's it of used would simply a Now tell margins margin. the cars, cost of you I reflection on relates

get the materially back Our to environment. see now in a we is don't changing much We when range. gross that normalized profit $X,XXX

John Murphy

think just, it's it. then just a, front. And to starting maybe it. higher it's maybe that an absolute do to going reasonable should I guy way But level, gross to about that. how much about than it's think think you we margin. because think technological gross, XX%, to mean then to complicated than a way all -- Got I like it? you you slower do mean, the as mean that, kind SG&A percent but mean I a we about there's simple how of highlighted. good the a dumb mid-XX% always think talk it there's How question SG&A about I is, gets than about that my on of forward? percent and more a hey, efficiency last of it's do this it, about just I dollar it's how you place But that mean

Dan Clara

looked and Sure. modeled way point. this at can I'll expect be to exactly and tracking and we've it, we're Michael start this where finish we The it. at

XX-year opportunity significantly we're to right were to SG&A execute So where but it are that the there plan. where on believe gives today. over improve We track confidence that in we an us somewhere is around we the XXXX,

So look SAAR what's I forecast on interest we’ve the going the we sense, economy, and it like here doesn't don't out, things on see that moment rate, today forecasted, it, in our recession. macro at different see sit we going what what's in assume you in plan time. But as a that that and

both So efficiency here opportunity this have today, employee we we per out, assuming model SG&A. to with our software have the production tailwind sit as of a we through

John Murphy

maybe that should not really in but to high So about Is you're think that say, improve yet? way and you with fair grosses opportunity grind better a even and baseline, to the assuming XXs just we as an get efficiency system.

Dan Clara

Yes.

tell plans, these don't out So XXs it look, should that we have by I we if in the literally . did we store, -- aggregate things it mid-XXs to somewhere would be do anticipate, by market. when X-year way play we in the We upper you, we bracket. numbers. the

Operator

Capital can we Group. of question Sigdahl now Craig-Hallum And next take Ryan our from

Ryan Sigdahl

was on and gross parts year-over-year. strong guess, financial XX%, the I same-store there? kind X sales those? revenue service, excluding going then on secondly, margin TCA, of, but stores, out a from One, bit X to divesting you're to even what's annual Anything call questions. And the of weaker kind at lose Curious

Michael Welch

you on So -- divestitures, the I'll quarter. just the give just

For quarter. the quarter, $XXX of the stores on those represented revenue million

out. gives if kind run So just the back rate quarter that you number for of a that you

Ryan Sigdahl

guess, all similar they And I sized? similar for the other are X,

Michael Welch

includes plus That stores quarter, all. that on in we sold the April X. That the stores X sold includes the X

that's the X all in what stores, quarter. they represented So

Ryan Sigdahl

on And service? then and parts

Michael Welch

billion. $X.XX Yes,

Dan Clara

Ryan, service. this take Dan. parts the is other, I'll and

and just a parts So that margin service direct mix is we're reflection seeing. the the of

lowest which experienced our margin. down. you that of XX%, with out carries we there you the parts mix is then addition in our pullback And on that grew As the in the of when see bringing to in pullback there the your what margin that of up is wholesale have warranty warranty us OEMs, some see carried we tables, that, some

David Hult

organization, and And we're one to certainly there the as relates it for us I'll And our many there's say sticks They're Miller learnings just with a that's out. as impressive other stores lot that happy to areas, that parts well. legacy sacrifice of margin. for wholesale but Asbury

Ryan Sigdahl

Great. One for me. more

SEM other So of good traffic organic incremental out a channels? to on versus that Clicklane, of Curious on there. percent is what kind sources the lot break of progress paid or paid

Dan Clara

of So the Ryan, David transaction launched the pushed this millions and standpoint, advertising traffic from our we and start store Clicklane. Clicklane, digital dollars digital Since we've there go clean the dollars websites. is for that not go majority Dan out again. up. can it advertising spent I'll and have And then we a to gone vast of our

website. traffic tell we is of growth will and that the the traffic pushed I majority you coming that from So organic the the vast to

David Hult

promote for can't just hasn't on Asbury reason And stress to been search. inventory. I'd logical There just to a enough. The stores. XX% X,XXX XX without I put about sales legacy really And us you a tell the for it is it, are paid harder it number simply any

our all. Clicklane forming are end We at not to XX to generator, store acquisitions that. the towards We'll rolled the TCA, the to do roll being first lead it on stores But this Again, out quarter. a Clicklane of yet. because a any out of takes time the transactional fully additional none start it of we of purchased haven't tool, that

that growth, number solely the that is So stores. legacy

Operator

of Chin our from Glenn question Partners. can We next take now Seaport Research

Glenn Chin

to it see want congratulations benefit an just Good detail new at on be normalized margins is plan, side, as morning, mean, And the say your But acquisitions look the in baseline you those if that period. understand terrific at very made. ambitious mean just not margins, safe that that, around David, decline on for little industry prior about may to encouraging. new have forward. perspective, it. folks, Is long you even think I from thank upsize you might broader for probe as only XXXX been such but Nice secular to will XXXX a were you've the these I bottom? I what a all maybe least comments to because I and the used margins, mean, that to a use plan. going or a much I from very

David Hult

an error. kind I in of would a bottom say the end of at

had You've 'XX. a amount growth and since tremendous of acquisitions consolidation and

coming cars electric disruptor in, going normalized margins going does better see incentives the What's 'XX You've what again be to for the lack stronger had you'll question The that electric of of more margins. incentives, believe supports a consumers acceptable is How you are end on be preordering really margins, as EVs 'XX, don't for a mean? term. government? long more 'XX, The if of it and for the time. an are road? I the just think the industry, many to

be partners see profit from since lot a in the efficient our then. what you do. manufacturers, they think found has more with to the I And changed ways they

online better level lack perception, automotive than EVs, catching think demand when you the retail, space, place between term, end one a someone better enough, I online, and of introduction at comfort an acquiring go the and finally for price meaning negotiate. margin up letting up their oddly you technology archaic consumer a to So it of and

people, in we been has use And model, model meaningful taking I that and the are franchise companies and value and and industry strong and does we're plane present But now to we whole. the day bumpy just use That's get it and how franchise these here, technology our can't I at how everyone every around just they're model quality those the add struggling products X, I happens what I can look know that now, change away? that the see through just I cloud this year yet. the see think different again. go the our better you I a they're industry really today for cloud. we're much I'll to a we better some the of be. little to as and compensate above next we're with but it this sell I belief. looking the just partner the EV, the months, role Right It's space. as sit a start-up a hampered in when the good franchise add As XX and think make you you and ability worry so about and to I efficiency it proposition And or things think XX clouds electric of feel my play and and a you here term our going them, last what the about our products in off So above going manufacturers to and

Glenn Chin

organically? having be And how think then understood. appreciate anticipate to if thoughts. next, funded Yes, plan will about talk upsized Or markets? funded? can you but or I Okay. And it, the guys internally it I the you missed the access did do Do capital I apologize be you

David Hult

No.

If for of you that free flow. at out leverage the paid all, number, acquisitions the is are cash look onetime

additional debt So needs. no

equity needs to Our raised. be

Glenn Chin

will out Okay. really And or just network be Very lastly, build good. just any Also acquisitions where to the hear. markets those you dispositions, at that to on acquisitions already to then or going types of the you're in exist? up stores bulking looking thoughts, gentlemen, where and be good or on looking

David Hult

lot lot years and a doing value retail on in a of us. side, In see with lot of partnering you and a this XX for created relationships the friends of dealers

relationships today billion purchase have the go through another we X wanted out to and if to today. ability We

to goal Our grow is quickly.

great is shareholders. be for and allocators our goal capital thoughtfully grow Our to

the think pace and is important. cadence timing that I So

process where states grow the with seen us states. of our you've in balancing thought the think I the brands right

And accretion an a from did them they manage us You look us a portfolio think What from and be won't from line gets see accretive a well. revenue, do buy? think really acquisitions sell? lot that is of The our you'll Not really see us. they the as going do management. thing don't that I top differ so what do space but will standpoint? forward one did that do whole? portfolio for at What I What to

and the shareholders. But in future. well. probably our some to over You'll acquisitions that's time, certainly for stable see as our employees more company the the really and see create returns at more highest maximizing generate you'll point And most divestitures just the portfolio

Glenn Chin

confirm Okay. with Or Can David? and on agreements? framework it Very you management that portfolio to you acquisition good. each And OEM then is or disposition. comply lastly, still this is of stores X bunch disposed of, fine-tuning, that

David Hult

and too thankful brand, were not to quick. and organization. nothing Every we opportunity store, XX the getting relationship then love with deal got the situation. we're the a who the management with do pass this was a this, manufacturer the group them in together we there of and teams. the people. if Stevinson much fast when Miller into to into against was But and it going deal. didn't didn't knowing my we case, framework. LHM want without of to weeds, represent group relationship to came I went buy had the on forward, that and We we senior particular the in competing to And when there We were and Stevinson we're getting The know didn't we're Yes. it's -- competing the the Toyota-Lexus Toyota 'XXs Miller that know get in one. Then a signed GM we was We timing

to because how a stores limit issue knew we many we can So an reach to manufacturer in. has order you the had

needed respect to They we manufacturer we we aligned the with want the working Did that would with sell we So do to course, sell partners But in knew us of to comply tremendous quickly to and those any were to have and of we that do. we divest relationship them? stores. with had we some fully what not. Of stores.

So and our we're are where it we relationship, happy and with think timely because the with portfolio. happened all strong we today quickly of

Operator

our We Gupta next question from Rajat can of take JPMorgan. now

Rajat Gupta

unit trajectory. just question vehicle used used the The was growth first on car

units a XXX,XXX, XXX,XXX X-year by close like plan, move becomes rating annual run currently that from probably, we're to to that XXX,XXX. XXXX, you of CAGR. It we here when a should a bit out supply XX% is around near the roughly roughly seems here. expecting XXX,XXX that, run tight get to How that You're And with in XXX,XXX, like hockey just particularly the which the term? acquisition conviction like bit like rate a stick targets in is

that. that also So come to contribution the is context much have put you of you I conviction through? maybe if bridge like already And going that in incremental Clicklane, to how could

Dan Clara

then of I'll the can Dan. and up. it is first the part David take question clean This

very continues transactional because of party as that accept one been tool XX% transactions Let's from want going at to not digital cars talk the consumer industry have for online, not basis. having few look that market our that to us evolve, to to them. those private be between transaction with going are the is between and adopt a private the believe We big on continues happened private level. used about to customers fully picture a of that the We annual and parties. transit XX% sold of those that XX are parties available million digitization an to

take lack of out share better from will to that is being so certainly a a there. after.-- and that able that give pull advantage to see we competitive market go us So is a for we that term going

David Hult

it's but there. there's to stick at a in hockey you I add XX, it. Slide don't know if up, I'll And look And showing how well arrow

XXX-ish I a you be reduced future. So would you now, market, you stores, from comment an SAAR there, $XX average like in understand When those million CAGR get easier. clearly I cars the out terminology your you the and I coming XX year go to in to problem back you it to there won't back sales. tell up aren't and of got When typically get back plus that on market normalize the while you coming cars the make that levels fleet now much are stores normal used with that. to

side, talk the unrestricted because of relates as share growth to it when you you're PMA, your gain, but about restricted or you're on franchise market pre-owned. So somewhat incremental

repetitive, and XXXX So stores, looked no on when we're have per where again, selling new acquisitions car Clicklane. I with more store we're again, growth new going. launched but we're than know X,XXX from XXXX, And where it's with And legacy none we the originally the used was we of tool, going to the forward on our average inventory at there. XX I'll say it at,

this of We number it So made understand aggressive we've to us. number organization quarter, looking I talk like Miller be We're this and exercise This cars consumers. acquiring about comment We and an a from is SAAR done by we'll store. overly earlier, isn't directly is we're at assumptions. the our logical And next for feel the to lot making used for new phenomenal of same-store, parts and are but or used us between good in new wholesale others, pretty to the guests them, they taking is care a one and our opportunity retention, distance in total of our shows things the it a it. of in the a quarter, behind Even and them employee is huge ratio. ratio.

When tailwind team meaningful an organization, a new to very take get to as size them dramatically of improve ratio. they there our well. with to talented that we'll used over time that ratio, used you So there's new work to their up

Rajat Gupta

color. on helpful That's And maybe services. and it. X parts just Got it. Got last then

round You into just factored know. bit target? pay for and what's with Is warning that to the opportunity that with have in even a share with next that few the and would smaller helpful from just down like mid-single-digit miles what's mid-single-digit And Or average conservative, and conservative? dealer there X%. just as back customer to to averaged the gain growth pre-COVID, curious years. be to independent, inflation the franchise the that It seems and continue X%,

David Hult

in and federal significantly materially going there what factors. if The every these but we right And minute. are this growth excellent quarter, forward. is with before, a what rate vehicles. the we the miles we be, cars? all be last answer how it, It's 'XX us change all car quite for cars become the this values XX% spending on be to to will I repair average as car, one combustible 'XX a vehicles. maybe fully we said per we as the how lot in is as far a now. the today fully Does order question to know we The dabble of are X and see no and where that coming out and on dollar didn't of consumers transaction. service heavy buy sit higher electric because spent old the and why track a lot age transactions of the coming in it was The a different. will engine, the going years, change from the dollars start it's then for of average there's quarter electric start that -- it's the the with of cars those a to it's the and are to And incentives lower. believe here in that dollars the shop we department availability had about hybrid honestly, And We question. with as lot extremely for and per We an talk they're I'll There's while. debated And see years conservative. answer

million-plus Now Approximately the cars age the much age older. that average the a road. average there's comes through car is is miles. department our Again, of XXX on service XX,XXX

moment again, -- almost statement. of like a time. sheet plan made this in lot a a we've So balance It's X-year is

conservative what by and As market put we 'XX, our through plan what literally is grow. sit and out and by we believe we looked a together here we store is it plan, today, to we've at potential

is enough upside very to it being it extremely There's conservative. back didn't that able without it. to So We a feel raise fair it's up. into come so potentially many factors just It There just confident comment. is in play.

Rajat Gupta

looks looks Got or it. like the more units either you win the resiliency other like shows It sense. model. service makes Got way, it, more of

Operator

next Truist. of question take Moore now our from And Stephanie we can

Stephanie Moore

hear a the on right you continuing the over the about having years. bit several OEMs kind same conversations of of question EVs could talk think the EVs. now next I the to you're with little Maybe introduction on about

coverage. just have OEM I nice of think perspective you brand given a breadth your

preorders. thoughts agency our the direct-to-consumer what maybe general from on everything to introduction. end, just on the investments just from OEMs would expectations So in charging stations, color I your get models, about EV to love of capital terms or stores

David Hult

Sure.

has day job getting the the installing think do our We've running building do a manufacturers in charging and stations for ahead business us future, day, and great quality we of I and for the of Tesla that dealerships No been lot anyone them. mature compete products space to you, had haven't standpoint. a that I and extremely they with done this at to at would great and very well. offering against. products. one at a good the has looking ready X planning been job disruptor, tell They've really future a but in going for been years

year future are are time. just more are And for would than I say so that from incentives has is I'm a Sitting But about again products a Over believe while. a opportunity better they're what be off my to over I a the the battery down like out person's that of Tesla excited out get going change there or like me drive to our electric that the so. far materially and and seat, we finish to And technology, the wants go come have either fit manufacturers. quality market. happening. the a anything opinion. to one the to finish them. as that comes the that you're I like for going the government couple as what's of fit improve lot believe see product. It's opinion. just next and Everyone of to going The years, And I'm cars coming in or and just their extremely and everything own this and software, quality excites standpoint, from coming else, road, not knocking the with

out we're the supply think there. is with really well this, mature meaning chain, I we a would call brick-and-mortar So what positioned

in at, see realizing all You The electric mature. Tesla, the already see direct-to-consumer brick-and-mortar. for these importantly, significant making we're honestly, been last made. is these That's our sell work team, quite work years them investments folks out training technology, and at cars on. or and you you training and electric already the Carvana, our Where training our the start-up complicated of need on on to companies been there. see vehicles very most companies dangerous couple to have investments That's we've to technicians already

for out extremely Haven't optimistic standpoint, almost So with they're electric seen cars. quality about what a manufacturer the again, every space. from from coming

all be OEMs how the these going it's fun time think I a disruptors. to at legacy stay against see really to

Stephanie Moore

I vehicles of has Great. a been quite new Used increased the coming topic No, just think, think are more environment. meaningfully. pretty really this gears, high. been that's prices then as also Obviously, affordability I And up, that's have late helpful. switching in of

you are What do of view stands think where on you changed new on overall the -- rates. that interest the rising in have just we just and used side. April? at what Now quarter kind it affordability during do you And and all or

Dan Clara

Sure. reason The payments, down average rounding numbers. $X,XXX, quoted that the we I'm

that of gone up We incomes car the So $X,XXX pre-pandemic, consumer see dramatically, though tells is of down inflation car. they've have significant. age to their has on and on even high, used $X,XXX cash lot been And payment didn't there. is on a almost a What the is and me running sitting that car the spend. is new a cash

things side to it the supply can't don't zero us Ukraine. vehicles. or happen So issue of with to some on chain desired interruption buy relates brands. know I rates in It's what's the had certainly predict future. as with going we've to demand the I the affecting consumer raising

we're of strong sit their today how how prime is lot XX% a propensity that out still business, variables buy. bit much there's they and over consumer have of business. we our XX% the where a is, optimistic want little to and to So but cash resilient willingness there, and

in subprime more. would small paycheck, paycheck them issue it So we're way which point. I'm But a this more folks very sure living any business. in seeing player affect not the to at subprime inflation affects the we're

Operator

our And Bret we from Jordan can question of now next take Jefferies.

Bret Jordan

traffic? was pay customer us XX% tell the could versus what On price you growth,

Dan Clara

XX% probably were consumers traffic. the spending almost meaning was it say would I more Yes. price, XX% and

Bret Jordan

the number job But as like a there same is well. inflation SKU it for there? a feeling same $XX like what feeling there an that just shift like on pricing price be? mix would obviously, Or include is Is for in the would

Dan Clara

inflation there no at Yes, in all. there's

it with We haven't adjusted to relates our inflation. prices to as align that

Bret Jordan

is I And you Or repair that battery the BEV going or electric bugs Okay. is business I you something that additive any you're vehicles just saying to Is will population, over that need think because have see these they they look a your and vehicles at service, are negative? this forward? new don't mean, worked service with think that higher term long perception be as time? do investor are bill. you out

Dan Clara

to that be work at what frequency Again, spend, coming sophistication end electric But talking Yes. are will aside propensity is about we putting the learning X what in will features in in you. or the today, shop car cars could not and my the autonomous the That's them with break your it. lane be belief time person's charging dollars them. front technology And opinion, of not you, in and all there breaking of where to can shifting technology someone but less. they the bugs up because greater, just of have some changing,

piece, lot just in cars. hour really XX So more at vehicle road, there's things miles to opportunity an when you while X,XXX-pound it the for allows of content the heavy battery get go liability wrong. about for And a not down driving with the cars a technology, talk touching those

to vehicle. got and do think liability to be do the about nice you've have a you're over what the going what and that really driving So is going airwaves to that thoughtful real to have may are you're

these really to vehicles with additional then And in far that while. will positioned as not factor going all in the and role a a To roads and the We're as better see performance. we're over we you So the the surprised the software well. technology water, dollars. by their technology and they play potholes time. point, get your It's take

Operator

final Morningstar Equity from We David can question now Research. our of Whiston take

David Whiston

On because think buying higher the Clicklane, Clicklane so portal? the customers good, I already they or rate traditional it being just which customers much of is more would digital do enter to it than because committed are tool itself be these so is other conversion because versus is the

Dan Clara

I'll Dan. is turn to over David. David, it this and then start

credit you advantage from that score So if from tool, know that at you have is data our consumer us perspective. Clicklane that transactional the average a with over look they being that which in the consumer, a XXX, about competitive we gives fully think very,

that the So process traditional that have spend at the to consumer makes X day want hours of acquire through it taking the buy out to, how the we they not best technology that full go the time they in or guest. a are does that a there lot inventory that more want advantage go X store and efficient want to to, and and where benefits and of the

in tool the it that fully just few -- it us the believe fact that But So that that, is transactional attracting of a addition one very, is better is customer. results is tool as score very we the good well. the credit very to giving

David Hult

lot down of I credit that, just to then lead a saw We now. lower we more tools top what a And would I payments. on the prior and add We what out of customer. there to generators had lower are score saw tools say, just call would

transaction meaningful. is in to X time room consumer their and the of a for minutes think to show hours able I sitting be a in XX appreciates instead do

you If autonomous center. platform, for a fully digital need a don't call have have you transactional a

product consumer fun call more. to experience. any need Think finish of not a If call out, you with kind on can't get buy you online, you about center, center that figure It's frustrates if that's to it, only the frustrating. have to trying a things a you're

have it's adage, to we're grow. don't the we'd and buy love things. sold We We a continue to tool believe we for only don't old that things. that be And itself, stupid all to consumers, So going speaks call love to center.

you through environment select want your a to pay it So is sign safe which in for F&I and any, use, your the to products, ability you home to want, be go tool, what meaningful. in able own decide lending if

million annually We year it's tool Pay, software because on Pay and $XX Invite email. We have via online or did In did to over Invite convenient. to XXXX, people which million $XXX pay this this last via text. text called we

focused themselves. for for our logic best And It's best So on we're constantly the the want manufacturer Star. money, the best us what's what's that the them. if to not us almost that not with is That why the to F&I concept $X,XXX generate not North logically, number selling. is transact most to more. what's per We We're the F&I is again, be to in they going tool for for believe process. like repitching. F&I back we interruption buy. And and It's so on We're customer give that's about There's that consumer. no most self-selecting best people transparent, them high.

one. is no smartphone So different we think technology, this than power. the any And that's or the year first

our It's quarter, platform F&I improves, more we'll software later card to the with our become on our significant roll second As software, out of the comfortable this Clicklane. in version. people a improvement iteration

So and transparency tool we're the going continue will just it, for logic-based. it's we is time, constantly to But win every consumer. as on Convenience, improve well. to working out the time

David Whiston

at by customer? is quality you out sound easier that's quickly doesn't for who quality that doesn't customer. also to digital higher quality lower the time, attracting But lower mean the totally and I'm credit curious some I -- go wealthier the with afraid Clicklane a perhaps credit who crowding are Yes. store? maybe just that people Clicklane. and see like it make happening with efficiency the have attract convenience agree you It more to I or credit what aspect the it's same

Dan Clara

comment, we really to great X talk we through all about. I'm No, a it's life. never that's going journey and

We might credit have X a our never be they low we affected why ups judge score. and and downs, situation and any by

financing, the be has saying of XX% decades. for Clicklane. help pre-websites out in been me. From business reach So that relates help. people That situation, the store and it didn't What to doesn't and first out people stop the want the always you we I was websites, could assisted XX% -- financed. most up anyone a for financed. get need about this not tell needed talk will get XX% current with reaching their then everyone via After there they're there people have in business and would people with isn't being We personally assistance, as entered disparate is I a the is it a mid-'XXs. mid-XXs of anyone. that the today, I would got of until That situation. of it. to But It showing and We to at the financed. lead, disclosing them they people position the

And understand a software and gets point what The more where a situation, customer's that's human through to and at subprime empathy the understanding best I and machine to this learning isn't so issues. can assistance. the involved work tool intervention identify that

Operator

further now or David Hult this back to close less. to the for or no have time. any at call additional questions hand I like would We

David Hult

great a participation concludes much, Thank to at discussion. Have This end today. We talking of you operator. the forward to next day. And quarter. the very look your appreciate you today's

Operator

for you This call. concludes today's your participation. Thank

disconnect. now may You

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