Asbury Automotive (ABG) 28 Oct 222022 Q3 Earnings call transcript

Company Profile

Participants

Karen Reid	Vice President & Treasurer
David Hult	President and Chief Executive Officer
Daniel Clara	Senior Vice President of Operations
Michael Welch	Senior Vice President, Chief Financial Officer
Daniel Imbro	Stephens
John Murphy	Bank of America
Ryan Sigdahl	Graig-Hallum Capital Group
Bret Jordan	Jefferies
Rajat Gupta	JPMorgan
David Whiston	Morningstar

Call transcript

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Operator

Good day and welcome to the Q3 2022 Earnings Call. This conference is being recorded. At this time, I’d like to hand the call over to Karen Reid. Please go ahead.

Karen Reid

Thanks, operator, 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 [Technical Difficulty] third quarter earlier detailing results posted The third our this issued on asburyauto.com. release is morning at press website and Asbury's was quarter David are Vice Executive President Senior our President of and Senior Vice Operations; and Chief today Officer; me and Clara, Officer. Dan with Hult, Participating our Financial our President Chief Michael Welch, will our of up prepared remarks, available open follow-up will any call and conclusion we for the questions. questions, the be for later At

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

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

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

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

presentation CEO, is rules, results. SEC over David our As quarter required call investor of to directly non-GAAP any website our such measures third provide by applicable investors.asburyauto.com, pleasure our It to GAAP on on Hult. we posted hand our updated also to an reconciliations measures financial highlighting comparable most the my the David? website. We've

David Hult

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

Also, thoughts Hurricane with to to would the the of our I members Ian. teams. all of living are say like our preparedness those started that get the we safe. by storm Before opportunity the to path team thanks in Thankfully, affected today, are our take

earnings the notable note adjustments effect that our net income our inventories. although damage reflect in diluted We stores store to to per we share that closures of Ian, results. any to estimate and make a $X.XX we are on the fortunate impact negative of quarter avoiding Hurricane I will third had

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

continued leverage. strong we reduce acquisitions, balance our a and to our During integrate build the sheet net quarter,

Our affecting yet day has million third of quarter. supply unit increased times decreased the to X.X to by supply Ian, at delayed adjusted XX-days, flow. end of deliveries overall in day low Net inventory have we generated partially Year-to-date, year-end from X.X due at cash sales. times to leverage $XXX operating still Uurricane the

cash reduced leverage focused strong age and is average XX-years. strategy. flow Currently, capital the Our park allocation car over enables our

we hard my discuss over Dan? our dedication for through [Technical look forward will years the partners to outstanding service our all your We Once can continuing to acknowledge shareholders. to deliver results the strong operating for of and be automotive steward guest-centric fellow continue offering the have these Dan retail. where our performance. the over It shareholders deliver environment and and and their our with Being our to to that would hand I while the team We in demand our from brands past great future constraints up and to supply results now parts retailer. I to thrive, now continue Thank most work an call Asbury Difficulty] passion is team members. automotive providing guest-centric OEMs members experience most the to strong in and revenue and again, two like to strengthen. pent you.

Daniel Clara

Thank you, experience. I nationwide for our also would and and their teams guest thank hard delivering all to like commitment good everyone. exceptional to morning, an David, work, dedication

will the vehicles, our below third inventory supply to new vehicle days same-store total At turn supply. XXXX, declined September, and to unless with remain our Starting from inventory third stated compared the otherwise. of XX% outstripped volume to in up I consumer quarter. and vehicle seven year-over-year. continue at the end our to quarter day million performance, of new levels prior the normalized quarter, well XX-days, constraints, vehicle new new Now, was was supply year $XXX Due demand

profit in to increase significant low a our prior the maximizing focused $X,XXX. also our remain inventory gross to to through the guests. and levels quarter steadfast which in experienced increased the of our average new vehicle, are We we on commitment new we per year end However, remaining while profitability, year $XXX from anticipate

used to last revenue Turning vehicles. flat Used retail was year. to

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

to In increase to team total front-end quarter the vehicle delivered for new from our per the increased third vehicle we to $XXX, in year to quarter prior compared per the of line of quarter. F&I Our and F&I strong year you quarter second once again PBR used an the XXXX. this an impressive yield XXX%, quarter, ratio another $X,XXX. for $X,XXX, of Thank was to Shifting F&I, prior our up $XXX in quarter result. XXX% with with our

parts and to Moving service.

the parts and increased quarter. revenue XX% in Our service

a year-over-year. XX% Jumping revenue with LHM pay XX% in customer over it’s continue vehicles sold including momentum Stevinson, we Clicklane, growth. increase third Clicklane and a not through X,XXX to Our the quarter,

best In billion a noteworthy legacy quarter. of [Technical more XX fact, generate visits a Based XXXX. on the ever. we in stores, approximately to on reaching Clicklane Difficulty] websites, quarter million are visitors to revenue $X XX% increase our was the in in Asbury pace We experienced from Clicklane’s QX

announce and to excited LHM rolled now out stores. the are is to Clicklane We that Stevinson

of for time $X,XXX equates applied versus a deliveries continue year. financing. increased all us across deals. demonstrates to a XXXX consumers. PBR front-end up Average over Clicklane potential and XX% and total service lack our transactions vehicles opportunity our discuss XX inventory, The remained rate Difficulty], I converting stores. customer with XXX, consumer. tradance while new PBR which XX% more Clicklane was will XX% XX,XXX year. last Asbury's levels of minutes call deals average have XX% front-end We yield. Clicklane are requires but retail which of service higher to down to XX% full Michael? QX transaction appointments, XX% Clicklane of or in our now increase compared robust sales thus this of XX% score financial retain from the hand quarter of achieved an of of over of of such to [Technical our vehicle total performance. normalize. $X,XXX cash average to customer quarters at for departments. XX% an customers $X,XXX, F&I line some of We incremental online our consumers see seeking the $X,XXX in from omni-channel the the Though financing to And Total received almost last payment or $X,XXX, our assistance. a roughly those of XX%, XXX,XXX trade, and than score radius instant of we expect achieved by finance a XX-mile of revenue The stores minutes prior billion to is at won't in that average offline credit were with Clicklane and than sales to new $X.X dealership were of inventory for of with eight constrained Michael to be generate customers we until with double the approval, recondition for traditional network. to allowing within for additional stores,

Michael Welch

XX% analysts, of for for press you, Overall, adjusted and sale the investors, Dan. dealerships, participants quarter. call, would $XXX our some good company diluted financial net our on release our compared Net for $X.XX was presentation details EPS income financial to primarily the last quarter which XXXX for $X.XX. additional XX% to and per on the other to adjusted financial million, team increased today I year, third our and in Thank of [Technical share. for our of on website. To income performance to netted highlights Please quarter see Difficulty] third our the adjusted like provide the our supplement morning. increased to members

Third quarter $X.XX in was XXXX Difficulty] reduction [Technical diluted per not have did Hurricane to a EPS Ian share. due

are As we this the did David quarter to to as include but providing results, size help Hurricane’s in mentioned earlier, effect. our impact not

our when for while adjusted the the same-store we Florida, same-store Hurricane. be September, XX% we SG&A last of continue basis those experienced pay profit impact closures represents of unit of to the excluding and sales, XX of XX week of the impact During flow members lost operating thus of cash closed. points, approximately in a were of We stores team the stores which business generated we gross estimate million. XX.X%, $XXX as to percentage Year-to-date, our

expenditures. approximately purchases, on million capital Excluding real estate we year-to-date spent $XX

availability X.X line ended liquidity, amended at sheet on floor used excluding comprised and our our approximately and of we strong cash plan of remains recently from Our ratio times both accounts billion as credit balance at with We credit times, our quarter our the facility. offset revolving objectives. stood X.X cash, Total quarter, agreement second $X.X Auto, Care the leverage pro to quarter. Also forma net in at the at of X.X end supporting year-end the end times the enhance down and flexibility strategic adjusted of at

approximately excludes purchases. are for planning XXXX, For we CapEx amount This real million. estate $XXX of

net made XX of For quarter, TCA income, the losses. which $X.X investment included million pre-tax

on of stores would investments. the for end and $XX [Technical horizontally expanded TCA F&I all expand the anticipate our into Difficulty] stores, provides million full to XXXX. we losses losses, rollout made investment excluding year-to-date to million the net quarter. our TCA now by the us generated TCA our income Colorado business. existing has on of of have a Excluding opportunity TCA have $XX into the We

XXXX. we a to by As reminder, unique $XXX EBITDA asset hit million from expect this

to our a thank communities, to and all remarks. hand I our some themselves our over at all I it our who team to brighter shareholders for closing have future will David? stakeholders. members back of Asbury, provide Finally, of also ourselves, would David now dedicated to building like

David Hult

park our the historic continue maintained discipline our business Difficulty] we fixed so growth, company almost in Michael. expense generate deliver streams, significant our car strongly, results. revenue continues and size And [Technical and age the highs In and the of through the profits. to revenue with of this cash nation's doubling closing, environment. control you, with of solid depressed flow operations resilience model diversified to Thank the We've our robust a

questions. your lines, strong We'll our over concludes the driving This execution continue the portfolio. our operator optimizing and are and towards take call prepared and across these turn evaluating Operator? we We remarks. always now to

Operator

take Stephens. [Operator now you. from Please Daniel ahead. go Instructions] Thank Imbro We will from first our question

Daniel Imbro

service everybody. Thanks and are? seeing Yes. they question. the we of about sale? on XX% good my sales yet Is I Just actually, about you're start sticky have the you miles, slide, versus think attachment morning the as side markets Thanks lifetime Clicklane track the how David, I quickly want data said physical in-market for of and do to data are it more thinking in XX what within the enough on using the there? those deliveries new same talking and to value taking

David Hult

selling depending It's we're but parts out we a to radius XX to it a metro a the market and within our by mile varies stores. service miles is generally conventional It to our and a Daniel. or market, capture it's The whether point really XX of stay lines great ensure with up business. single focus benefit question, and what upon

because, us. is govern XX possible to when and important beyond parts service sales is too revenue intent to again, miles, from Our the just

Daniel Imbro

sales? data, working it. I or whether service keeping Got those But don't no that's, know I you're guess,

David Hult

lot are showroom, their results It's them the far, changes. Clicklane. Yes. we're as on up compared said if oil I seeing early a sold the coming car And of in are on, to first similar there like we

Daniel Imbro

it. Got it. it. Got Got

on Second want F&I to redesign. I on ask the one was

guys about talked You quarter. last

bundling is F&I How some with in But there? the tools. that other how talking the new tie introduced and that progressing that about the looking then potentially the comment [Technical period impact bundling Difficulty]? impacting F&I They've FTC, of I'll does tools you've or business some closed that included that So department? think question. your and at I obviously, and

Daniel Clara

the second morning, good I'll I'll and our start F&I Dan. This with Hey, last then question, to of the Daniel. go is iteration tool.

for is and always our to products. business. supported I the think our and the we've the thing thing do right full the and to corporate it transparency That disclosure done consumers F&I do is for right in

tell you it tweak what on the So we whatever We iteration there, I what standpoint will data what sure operate. from digital FTC a to you we of to me puts on want they what continue and the under have spectrum. don't really see they From we've based of we always offered providing full it is make under the that make rolling to and is like the what like, share that we're transparency will will it's started that again, continue going. to But the aspect we what out condition, we for first sale. where continue the adjustments enough on adjust to consumer with Clicklane, on And don't they quarter to out. second

David Hult

stuff, to needed are what tremendous our products amount better of and value at to a end we certainly reserve. I to that The at sell of Everyone's do. add them sure I'm peers At a selling are consumers train, would we're relates we'll products compliant Traditionally, is, and products our from only these get numbers. the training our of our the only mix folks that we add that is we professionally. the XX% confidence, and maintain just to strive whatever and it pending disclosing F&I the have do, tweaking XX% amount tremendous all and outcome constantly our professionals have day, as thing FTC like

Daniel Imbro

one side. want just And then on the for last I to SG&A touch me.

guys normalizing. lead high-XXs Any used or on out ratio as the shake in of SG&A maybe industry the group despite evolves, I savings staying given the Difficulty] [Technical GPUs either you ‘XX think that you have update to growth where in to continue ‘XX realized? the peer cost

Daniel Clara

the the terms in our in ways think they of end in I Mississippi and is change the some replacing back a back acquisitions. think of in cost then we're on of that come ‘XX key if be new for change of in to mean business gross into still Clicklane but stores and acquisitions, sales. there a down us us employees But Place with XX%, volume that and is things under We some I ‘XX, to the that's those productivity it, oark to ‘XX, mid-XXs number stores. whatever have Clicklane some but Once when one go Yes. for we and thing then per that's margins range. second low the enough help gets range to that or also our kind selling the of that of structure when to up back there's potential will the higher percentage to of XX% wave gets the kind comp our also be able SG&A percentage bring at, of

David Hult

would I And to add Daniel. that,

synergies obviously SG&A, think same-store pretty XX%, I reached our haven't at our look you we is it If our And X.X%, solid. it was which yet that shows acquisitions. with

to XX-months over to rest next company. the the with of that So us there's on there for some get line tailwind the definitely work in

Daniel Imbro

today the luck going and Really appreciate forward. good all Great. color

David Hult

you. Thank

Operator

Please Murphy, go John America. of ahead. Bank

John Murphy

moening, of [Technical new here little that Good lot are crosscurrents Difficulty] equation. Obviously, of on bit a the there's unusual, a going on the side particularly vehicle guys.

I next year. well and what grosses But be well year, it's on I this you general. going the take will in is stay just supportive you mean, curious, know do volume, the mean, it? very do should this? guys to it this? higher And I still had which next between think grosses how mean how lower keep through better it thinking but volume, seems you but like it relatively how But Just some you taking this? much about said year. going stay is conversely, into tight think kind you're grosses, your higher into manage you of to Do and I like of of slightly to group it grosses through be lower strong seems end tight normalize? and grosses, varying when you slightly and guys do but fight seems you Or manage it

David Hult

one John, deals in. they're going and start those back Dan to time. at this come the then not is is where David. This same of jump can I'll all

when generally, a into and of quarter really could domestics import business vast the at a from When late five-day at cars think the with back couple results the where second second the of look volume XX% the comes sales our of quarterly luxury, it a our supply never import. Still strong of first the quarter, majority look lot year you're seeing came such the why quarter. at imports of had and And supply that that best. I in import come half the will be hard tell. And unit the the from, brands we to margins. of you you that's tables in represent the

are brands of back to days get into still half struggle going those to and think a I supply. the first normalized next year

selling our of really quarter, we're coming. preselling So that pre-selling prior but pipeline than bit still less results -- cars percentage-wise, a great still little into are

whatever demand there, than have we'll So the enough we're maintain script, most is of car still the the benefit point to we going way, with that age I sectors. just that attrition like natural or on better come can't even that feel and headwinds the our it around XX-years, average stress there's

So, do you want add? to

Daniel Clara

add. No, I have nothing to

John Murphy

years Where three And the in a It the follow-up mean to going six going year. into that, on for in it your service service what business? can then plus And then for -- a base? I your car recovery grow cap faster that push year-old you environment much is constrained side And you sounds be further? even to new to Does is like least fleet. be bode continued restock still opportunity a your in recovery well take to even to I and reasonable And long at might vehicle used time a one well business? on we're constraint we'll offset growth be there there a a constraint. might an take you there. next to as before our mean that you to really parts get on

David Hult

next and tremendous have opinion, and start think has I One to but piece I'll strength. with person's the John, part guidance, the service tremendous a first. opportunity Yes. not parts service XX-years

engines about think combustible of the cars number the electric You road, coming. on

order for repair us, previous is no quarters electric dollars different four quarter This vehicles. highest on were than per our ticket the

first to market. in is into vehicles those enter the going be as generation work So they strong warranty the

long, normally of overall haven't you're than So profit look to was market cars numbers, back in tradings, business dollars between combustible PVR. When which a and market, buying parts engine, service generate we retention used coming higher the you only while. larger you you for more were PVR point, your than car, we else. electric pay But in what at generated, get because for in so we has down our significantly gross business, our been great so the a you number for us break retention, been available quarter, when backwards in to pretty open depressed a is and $X,XXX for And look were was. if backwards the going at think space higher the it's anybody what good we on $X,XXX, our cars them used you be we’re XX% when

be down really our out. will XX margin. before trade to time, over it's start I XX mean normal. going probably business of been it our a months has So but think some it's we a that to good back get ways bringing out to We certainly normalize,

John Murphy

normal sorry, mentioned the is last just you didn't as there radius, Got now or with around it just service. retain had radius go store? and and normal for just you share it physical XX-mile XX -- that it's radius and be Clicklane because because don't what much just you you is garner into XX-mile before stores a a David, Clicklane something miles, same the we then beyond miles? want parts of Or about and in get stores, you consumer to it. the one of higher And for I'm think a I'm that kind Clicklane larger a thing, curious, about it's that think Clicklane XX physical fiscal XX of will normal might market

David Hult

in. I'll and Yes, jump then Dan start can

what's that is north a been that the haven't communities, purchased think the but consistent of with has done which been live customers XX% I business in our little through surprising me, quarters, of have stores. bit our to

of I these strong it. the value the look credit dealing don't things. So in and consumers scores or markets and customers tools. have private full capital the at couple that the The see independents with we're gaining transactional with for the a as time saved, we're The

penetration logic to time. in I use with think the will of But private hours, in the to grow. continue could quarters you to for technology. catches few minutes, mean better strong to see a we're sitting based. your next purchase up going it's I We a car X.X compared think that a the XX side if until what's for continue just show

other aspect the our within tool. I think is

time If a address purchase want the of from York in stores when typing is the and the it cost overall to per to map miles the like you’re your mile in vehicle, to Atlanta, how and you to our almost you're you're it out you. cost car in it and We it's car what Maps. New you buying exactly car or delivered the real you many Google where one shift is buying

if you that is cost will, to factor on the delivery, deliver consumer. So up. don't to passed it that marked the that have to to you vehicle in We have being

us customers to We a servicing well that services company have well, and consumer. additional those an transportation but it's the expense national

cars relationship. we XXX to it, don't We because we just like X,XXX do shipped have. to the want So we it's or say to that not haven't miles retain

Daniel Clara

convenience, it's I'll key what -- that is thing as maintain market reached back appointments. mentioned consumer we service responsibility area look service. close And the saying to -- what as really The OEM ultimately at -- what partners, XXX,XXX David the And primary to had morning. primary that. good echo we is to which you wants when I going the we is area John, we our online the market within we script, that my are one in by

think that within and given it of competitive and our stay has that's And model PMA we're a seeing from entire that, ratios reaping standpoint advantage. domino the effect. I retention benefits that what the right us the

John Murphy

Very helpful Thank guys. much. you so

David Hult

Thank you, John.

Operator

Ryan Graig-Hallum go Sigdahl from Capital ahead. Group. Please

Ryan Sigdahl

Good guidance on I start solid curious continues better want right the are for sequentially caught there. XXXX to to in main remarks, billion what on in basis morning, guys. growth but Clicklane, to $X.X that the metrics, prepared unit so a on the been year? But Board get sales, year-over-year has I I I more sales there? drivers double slowing the next guess, than think

David Hult

Yes. were It's really I'll David. backwards And just Ryan, stores. in but sales this were XX%. legacy out. things new is car A the point of X,XXX Clicklane volume, The we was year-over-year, couple -- up yet

sold. on stores in Clicklane, think added to over decrease of increase number we that next the increased huge It's is -- XX simple of transactions amount that the between I a we to legacy stores. math. taking the same a compared the there's of the delta top The on units So year

extrapolating have in we So those it's stores out to conversions number. to get that the same other stores that taking the and

for added Carlo or that are number increase that ‘XX. in be in So stores Arapahoe LHM, the we've now and ‘XX end the is that year of Stevinson, big going last all the to

Ryan Sigdahl

just Any as and given stock, of that M&A current how crosswinds about allocation. capital change et business, current all you kind think conditions, Makes Then the line, sense, to as both helpful. well cetera. on potential

public that? quarter, about do I how think think were buy only franchise not dealer but back just you in the the you to stock

David Hult

making grow we've stores one. we've lot want stores We And gun and to that really we people our we that leverage there will and trading down anything. question, low peers be that stock looking shareholders. now turned we really on and get of or our accretive and at, to naturally, appreciate us don't We've the certainly We $X a you'll see great call, out be It fair sure of I'm cash for briefly to that we the to our head and to up and our how generation on been disciplined their facilities going be to in amount pointed focus these not. over Yes, It's be offer are like stock. returns at it's going acquisitions. capital we're looked as a $X.X. at for recession Otherwise, did all catching feel also, stores. day new what But Michael will a this our into will combination of highest that the the to model have fairly strong might culturally returns don't down into repurchasing a and on to We're with our that, a do, acquisitions in Ryan. repurchasing making think ‘XX, really we focus portfolio. are on see best the organization in before We our we're a the time sure going expenditures of at believe, multiple next we we're fit couple us years. this

Ryan Sigdahl

Thanks, David.

David Hult

Yes.

Operator

you. Thank

Please We next ahead. Jordan from our go Jefferies. Bret take question will from now

Bret Jordan

guys. morning good Hey

David Hult

Good morning.

Bret Jordan

before I got this, we structurally I there? give obviously, of but have sound trajectory of color GPUs? peers did on about did levels you said higher a on mean, stabilization already be talked -- Do you late, little and sort you might others longer possibly pre-COVID one and new forever? you bit your comment term unit like

David Hult

give jump and luxury stay Place. more organization I've Miller try Dan stuff stores margin times, large so this (ph), David. bit he color drag and can the the wants. I'll in then little didn't if a high we to I'll in just start of I'll the with was And few a said Stevinson. is have This on stores but West Sure. some [XXXX] it. and of platform bought this, between Park we Mississippi, We had Dallas operating company. in that or then a Bret, a

my we company. is to few went would we're inventory percentage-wise the We never upon demand and still because gets forward going think draconian It’s and of the of to we're I've through XXXX. day different impacts are if Asbury to XX-years materially, some ever supply. a years, it because The and that's margins our the a inventory me ‘XX, we the back question it be over going before so a of company, have healthy their of age based of going we brands back would say, what selling pent-up over those stay being even got will to of be XX% for level what next how I within So there, car and here. peers? different average get there comes margins

you If numbers, supply the numbers. us. brands they table the back. we're it, that percent good the line And of coming with of there's pretty And sales, for imports we sales volume mix import put that important dominate at look some extremely no of sight it luxury domestic in two our low

strong as sit parts here very and next We extremely year we see think have in going healthy continue So to to today, service. growth think margins. we're going we is to

Bret Jordan

Larry have legacy then I owned since talk guess stores, you've the penetration, could Great. the Miller you business seeing you Thank TCA on trends you're you. in the the And it? and about stores the

David Hult

and Generally numbers Asbury if get this taken speaking, a around. question get us stores TCA I back stores. our network selling please the products. come It's to don't aligned LHM stores penetration higher linked and legacy with our And Sure. while right, the legacy get have than

Hyundai. started Asbury out was we our Shaw legacy that it Stevinson Mike the and rolling month stores Colorado with started last with We and TCA. stores with literally Arapahoe, So

to earnings Texas, legacy know, data hopeful their Asbury, far of I'm us it we'll pay using of LHM and the our will hopefully that there's you. any get track factual we're be the too to same we there. It's have experienced. give our LHM will how them can our we but increase early conversation that has methodology yet, some in to there for in that record end next out. the with call, roll to say sales It on with You get rest compensation, ‘XX aligning then take Philosophically, to next folks as and continue as date

Bret Jordan

Thank Great. you.

David Hult

Yes.

Operator

JPMorgan. Rajat go ahead. Gupta, Please

Rajat Gupta

Great, Thanks for taking my question.

pre-COVID, follow-up earlier. normalized the that Just wanted maybe normalized $X,XXX us from At impacts D&A. $X,XXX an to you that normalized to including today questions follow-up. settles number? you I a gap F&I from think on for Could that F&I the and bridge from the have at do of to number pre-COVID down or company, where level help Thanks today, one

Michael Welch

the that to Yes, at the $XX,XXX, want And perspective, $X,XXX were basis, Difficulty] on you impact. -- of that kind that bit difference then of we portion numbers TCA a numbers, of impacts PVR. TCA [Technical the LHM a on the this that kind if [indiscernible] we're $X,XXX is on you color of of on dealership for the number at from at I Michael. of look impact operations, But a little a gives the at on between stores. just store, $XX,XXX consolidated dealership so only because and F&I just a the TCA the

that's we what improve just level. on bit don't that a any do little So math number. see reason help you goes that of But continue the the F&I will to worth future. backwards TCA the And in store at that should maybe

David Hult

months flowed because in I more you're financing the over as And with the both say on to XX getting, you're add selling. reserve the up would last that, in sale, well know, dramatically. Rajat, F&I up numbers you're that products of to you the has just gone that, that cost

But we're the the and numbers. So as that we of be a spend future sudden, expensive that it decrease of there's look is cost I all electrification, improve cars in a dollars seeing headwind consumers the there's F&I there any into the I by sudden more in what room say the coming don't that for could sale, of with F&I. to grow think to more. opportunity a products, stretch, us on but bit think significant more we propensity for to little

Rajat Gupta

where levels Got Where of are versus in you terms think pre-COVID? it. can penetration you today product And that do go?

David Hult

reserve. It's we're XX% XX% for around right products a great Currently, for and question.

sell, but interesting and to would changes that product will more XX% all larger reserve, we're It get We and but that it's to to there. say would it level. a to at mix a vehicles. ‘XX, XX% start ‘XX sustains if I probably portion or see be at not product we like of As electric than

Rajat Gupta

you for over any in that are next the metrics see have you four already to on SG&A. follow-up just Clicklane three, In transaction. Curious variable, expense versus the that on path, years? mentioned Got your it, had just the a where we working could to where headcount particularly personal on the it. you changes what or And got share upward? pivot you're And maybe slowly more past, settling do structure that fixed

David Hult

we change target on to in XX% has David it rate changing don't shows productivity would is on mass the ours. as relate have from Rajat, good, mind employee We these pretty this tell is to to nothing And we're And would stores sales our we until I in we we're our between per to Clicklane and used call come of people, have for are changed. same-store we staff especially XX.X%, interest I any think anticipate high what with starting and XX% markets to. level, us of a end our that will what how I how our start again. and higher you number than compensate get critical Clicklane. in compensation, SG&A

see when mean. we're will with We sit from to achieve lean feel to still here opportunities we we now, number. get XX% years feel, we then three there, that if confident which that running XX% two and we'll start And SG&A. So to that's today, as

Rajat Gupta

thanks all color. Great, it. Got the for

David Hult

Yes, sir.

Operator

Please ahead. comes question [Operator next Instructions] from you. go Thank from Whiston David Our Morningstar.

David Whiston

everyone. Hi

still new the were the -- low. but inventory focus for Going the same-store profitability -- down back the volume year vehicle a Yes, GPUs, to industry for declining, ago, year-over-year. is that unit you was get incredibly guys I your

now a is else ‘XX, because availability? on midline huge that decline going is So there there's something in in Or import there?

David Hult

Yes. those were them single-digit I five study and look around of day brand [Technical to when XX-days most would at were days. you imports say, with chance the I peers. while mix, finished we midline our had supplies Difficulty] and the But haven't our

So I in business, think of deliveries of the lot we that cars was the Florida. material impact of Hurricane. there for luxury because A held us. those car got off, The lot a sell luxury

will. if they So fourth quarter, you into fell the

inventory, number. So timing back positive but standpoint. of day, end it the But the at say issue on of a our a we were is with would some Clicklane a I was still fair on amount

take you takes. puts So the the and

Hurricane did quarter think pent-up we're the hopefully, You there's that we Florida. like just weather don't some want to And with that demand, that and hit massive you think fourth well our for we will. that thankful did. means the your that, largest But business state, if folks

David Whiston

on is pullback used both for And credit the in availability, Okay. being or there any customers? available that new

David Hult

of there at Zero. that healthy not down saying still We're a seeing but yet there's scores. hasn't from portfolio real really won't well out business the see. we holding payments, quick strong just amount we -- credit and of is a it some I'm change point, credit our cash real reminder, and David, up low at what And a when good you a as at our business, XX%. X% is of subprime look high

it's meaningful piece business, piece. but a So our a of smaller certainly it's

David Whiston

low. got getting start the tired behavior where for inflation vendor consumer question, it just still can we've are the inventory? seeing on more you saying, perhaps to the And Okay. what basically consumers get. Or budgets higher well, we'll of just year, waiting much squeezed, of more People's obviously opposite compared food remains we Are now. the they're guess, I is take

Daniel Clara

Dan. David, is Yes. this

it. see we of think I a mix

to of want and attribute be and may luxury a what where they customer for it. a I'll knows business they're But the consumers, waiting bit there Some frustration. more that it little maybe

stock other available The or of the shift we and were particular be option readily what some wanted domestic maybe see just a in coming we within that there truckload. get do they go able to take letting imports, to next whenever to have in

mix. overall, through that also, right think it's just a now, shift wait. So pandemic think now, right we about well. whatever out have about to you before, consumers' I that buy And a to all whole as to you you was as minds that if about it's went there the now, But it right try

work as it's with conditioned available. product that that patient to So us consumer more be and becomes

David Whiston

going Where you question heard up penetration? I Difficulty] penetration, if to you is last What [Technical And Okay. on particular? the right, in about on F&I the opportunity XX%. talked product, product

David Hult

Yes.

So get we'd to done a stores. not that. number -- just all it's like there. I'll use XXX of It's round XX%. to And We're

number. take them averaging half top you the XX% and to that get half, the bottom If you get

retention keeping lot cars main consumer. It's for product a we their product a value-add service for from on standpoint. that it’s most a great product Our focus the our core longer, People a is a us business. contract great

product the on. that's that number So focus we one

David Whiston

everyone. thanks Okay,

David Hult

time. your for Thanks

Operator

as over speakers or you, hand any for back the in the no additional to closing queue. Thank further call there to questions are our like remarks. I'd

David Hult

This participation great quarter Thank concludes your We discussing We appreciate soon. today's you, fourth day. Have Operator. look and discussion. forward to a call. time results in our the today

Operator

Thank Thank you. call. you ladies your This gentlemen. concludes and participation conference for today's

now may disconnect. You

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