Sonic Automotive (SAH) 2 May 202020 Q1 Earnings call transcript

Good morning. And welcome to the Sonic Automotive First Quarter 2020 Earnings Conference Call. This conference call is being recorded today, Thursday, April 30, 2020. Presentation materials, which management will be reviewing on the conference call, can be accessed at the company's website at ir.sonicautomotive.com.

At this time, I would like to refer to the safe harbor statement under the Private Securities Litigation Reform Act of 1995.

management company's financial otherwise products about future. call, expectations information make conference the the about or this may projections, discuss or statements During market or risks and to results materially from a Such cause made. differ subject statements are that could forward-looking number statements of and the uncertainties actual to in and detailed filings the the risks These are Securities with company's uncertainties and Commission. Exchange

in and the may measures on filed as the yesterday. tables Securities financial non-GAAP report discuss to defined refer non-GAAP Exchange company's certain management Please Form addition, with In and Commission. current the the reconciliation Exchange by X-K Securities Commission

would Executive Mr. Officer. introduce David your like you Chief Smith, EchoPark's begin may and I Mr. now conference. Smith, to Sonic

Automotive's Smith, Thank Again, Earnings you very company's And the morning, much. Sonic Quarter I'm First Call. good David everyone, to CEO. XXXX welcome and

the Joining today of will of addition to our questions. first our from President, CFO, the to After will your also Executive Jeff Tim happy we the Byrd; our of to Keen. remainder Dyke; is VP will COVID-XX with and and that, Today, I in our highlights XXXX be respect Operations, me update for Heath on discussing XXXX, call the and able outlook take pandemic we a business provide quarter beyond.

our We over well performance XXXX. see XXXX continue into to of carry record the first quarter

first discuss Our results in quarter earnings detail. presentation great press our and release investor

that offer in months COVID-XX our business, see more to changed begin While it's on of of we we on to before first about I'll practice, impact talk the not quarter weeks. before information like the normal performance would how then our the has in our operating recent I the pandemic two began

XXXX, same-store increase in and increase new comparable vehicle revenues. sales increased two a first unit fixed in XXXX versus volume, unit sales total in used the revenues an XX% driven in the X% an vehicle XX% by volume During increase months operations X-month period XX% of

the the in the first on retail XX% and was by to grew revenues quarter. pace year for of two EchoPark Additionally, first months vehicles XX,XXX over

While I we is the strength important to has over business we momentum the dramatically from changed information speaks as this the XXXX. that it time, all and very carried world of know since our think

EchoPark for the long and been have Automotive Sonic built term.

seasoned has more overcome like We have a already of ago. historic the challenges that a team prior crisis decade than financial

business COVID-XX the pandemic sudden has quickly to a economy, severe annual effect a recover position our achieving our global and decade. goal to continue the billion the and our of of this in $XX impact path are had While our long-term team total on in and on revenues

this $XX billion in total annual revenues decade.

the in dealers Of to the reality near to cannot suppliers, facing are whole, a pandemic ignore on from consumers. effect a and the course, is the parts the to the automotive The we having as industry we term. the widespread OEMs,

Our do team necessary, business of situation our the and all evolves. making as to has continue so as working been day changes we aspects will and and monitoring operational night,

reduced consumer day country declared, significantly stores. at stay-at-home COVID-XX traffic areas many the was from across know, orders, the you As our enacted the which pandemic

During same orders. the this more XX% compared XX% period in year-over-year year. fell and sales nearly and as overall to April declines parts volumes stay-at-home declared XX% prior decreased states gross period, Customer-facing vehicle profit during service roughly experienced our early the

past outlook during several we for we recover original our on stay-at-home have sometime The than week quarter. states with XXXX, believe our resilient slides improved posted to yesterday sales gross used of week to orders to being over has for as rest customers the also will begin past work. more and new roughly and year-over-year and vehicle begin slightly XX%, expectations repair their the vehicle though, return which to service presentation maintenance includes vehicle delayed the relax improved investor Parts sales. the In the declines sales third

Now the $XXX and would million, other XXXX. first up operating XX% of like which I was an notable mention of highlights to items, quarterly some from briefly first all-time quarter. record the revenues returning EchoPark quarter to which include

volume We also quarter XXXX. first up of nearly units, the line of of had the We XX,XXX record EchoPark is quarter which from was segment in income EchoPark with XX% of retail which XXXX. million, had first $X.X

X.X% Our increase was profit revenue. lower volume first up a and same-store X% the gross had We franchise XXXX. income from of of despite vehicle in in percent $XX.X million sales segment quarter same-store franchise X-point decrease a

total profit unit all-time F&I an a had basis. per record on of consolidated $X,XXX We Sonic gross quarterly

quarter SG&A the for Our XXXX, basis quarter from of just XX.X% adjusted of to first points XXXX. the gross first profit up XX was

Our was to for $X.XX first compared adjusted operations quarter continuing of EPS of the the first for $X.XX quarter from XXXX XXXX.

XXXX. from $XXX current liquidity of Our of XX, is as available million $XXX is which an as and million, up December from increase $XXX million XX March

dealerships Sonic's pandemic's to market. outlook XXXX, in the or during $XXX result a is current prospects overall financial stock were COVID-XX for required due charge recognize impairment effect EchoPark. of We first noncash indicative, not stock in of a the not that's charge this noncash decrease release, or company's we our the is on to indicative noncash, impairment long-term position, XX price note As March press as on goodwill described franchise quarter our the a of million that to of financial $XX.XX

more information posted presentation release happy yesterday, in be results, our call. the first will Q&A our and expand that on of press For on to were that portion see investor we and quarter this

that for to began, we the have processes teammates. and Sonic ensure to providing responders and What's our others Since safety pandemic and guests ensure first we've most to this responsible continue continue transportation. services important implemented that safe, and to health reliable of at essential is EchoPark access

our our for service the services responders and disinfection to guests. also and we pickup health and for release, In services procedures safety complementary in enhanced are vehicle providing addition described press delivery first no-contact

guests we vehicle purchase a a of purchase allowing departments from Many sales transitioned and into our provide of during comfort how business and complete for take delivery the and challenging these teammates vehicle have in have own our home continuity to our experience, recognize their partners. this to that their best and virtual thought of no-contact our times, stability We the our can we guests, great importance driveway. put of

continue to We to a nation's monitor new basis. of reopening related our and economy daily the eventual developments COVID-XX on

on the recognize our plan taken have to to challenges, we business. long-term always short-term for a it's important While actions we manage these necessary that focused have very

pandemic environment. Sonic When of the the began, current operate had many in this in first to already place systems

working with all systems plan, to safety operations enhanced productivity, structure our executed have us functioning allowing and facilitates crisis We preparedness that and to seamlessly. migrate a

match In and although reducing advertising current reducing to capital expenses, fortify have includes unfortunate have our and continued to a postponing in some other current resources prudent, addition, we operating taken additional ensuring of while reduction we expenses very to business expenditures. new our environment. This the XX% certain headcount, difficult access freezing hires, and measures of liquidity

significantly week. Florida EchoPark opened Despite expect such to some which able ahead capital our store as Tampa, our we with last move successfully be to new in key planned expenditures, reducing strategic projects,

by two bringing our the more We year, EchoPark to nationwide later year. this also locations XX end total to stores the of plan open

flexibility to near low to expenditure outlays we believe grow capital of are our While the our us term, the in as and continue focused will capital continue levels on the and initial allow planned. on for growth execute we model to EchoPark plans

under revolving have our to $XXX liquidity in flexibility credit additional provide financial on strengthen our year of other funds facility sheet, proactive including position, taken down prepare several March facilities business worst, We if our this also order steps to for our borrowing the million additional in of needed. availability bolster maximizing balance and and drawing

nearly from as which the end is I $XXX up Our currently XX% of at liquidity stands, million, mentioned, XXXX.

are actions for commerce and resumes early and have the to we In challenges operate quickly efficiently when prepared future. we to in normal and as that these business quarter believe current this in have to place year. closing, the We recover practical of as resources position we to near-term taken third the financial safely manage the environment, the

EchoPark would able We partners, finance manufacturer emerge our company to each extraordinary pandemic continued I and like to for than our teammates the that questions, from an teammates vendors and our to thank team even through to team and to as and fellow go dedication thanks manage we to Sonic and and of guests. stronger your and before our efforts, to be teamwork. believe commitment Special partners this unwavering challenge we will and Lastly, for were before. their support their

we'll concludes opening and take now questions. your remarks be happy This our to

first Stephens. with Nelson is Your Instructions] [Operator from Rick question

I cover would like the forecast. to

high You suggesting we're time August pre-COVID for likely fewer driven. miles to are the July, business frame. like seems It have returns levels, potential unemployment to guys

your drive forecast. that discuss could you the If factors

situation, we We do end But the that on along us EchoPark put It's guidelines through that that the pretty the of guys volume not is, put numbers a all yet or of as used, the That's side, good together understand. we together, year. And for our is the fixed it's and daily for day. update slides we car together together whether franchise the we you one take volume, and forecast out on that the new have put tracking a operations. we of you news forecast this our missed put basis. every fluid

in positioned, that particular, we're well believe We EchoPark. with

range, side and like still sitting was EchoPark, pre-COVID. both the supply, franchise Our it day in XX-day on is the

so as of growing, along. And that that as to are well inventories take are think we're positioned and our it comes advantage we model, dropping, prices pricing opportunity

that that to accurate, are daily. numbers forecasts are believe so there seen, And our that are there while unemployment but we've out be we updated they are skyrocketing going

of is month tracking where us. we're are. an have can doing we so those our out for month level issue on for I like a we're we'll how confidence for put for was And plan the Yesterday we But there. against so And you high of great of provide of and charts that April, you for on a forecast this updated see May the monthly June daily. day said, we tracking and month X-K, the we'll what we

new And we were were year. at car year. prior prior up over We volume actually EchoPark up over actually in

X.X%. Our was down about used car volume

up by just for And The and that day, that June. it it's July, end the so hopeful you. going continues be above be U of the our we're time across and put out now of slow a each to all lines, business or at Sonic get that we better. has we'll the U get performing guidelines to to between just we at And there started

curious Those on of updates, the COVID. side the you group, consumer how other helpful, be will see or Jeff or I David behavior think, changing

interesting, action of side You other plans together the on consumer do but some those? the that are see how put you

a from sales Right This both EchoPark is for we're CPRO our delivering our it's real And X% interesting. count, on now, pickup XX% the home perspective, side. of Sonic and process about and business the in the delivery, about warranty at and of service. overall no-contact

believe it's the we for so in future, that range maybe going little to be bit. And grow that a foreseeable

sales than pick pick The even offering it want during XX% service charge the a XX% board, got that to it's we've And your across service. to But time, this dealerships, doesn't tell. the interestingly and still we consumer to to side. the our the no-contact delivery service bring is us, and to in offering for the the store we're consumer less of But mean the the to come coming we're telling enough, not still up on dealership, hard on It even car sales less that all home, than a car. free to both at it's the up. and side COVID, store still is look, service to process during

the the that out orders honest the consumer wants to the with come look place. have in probably all still you, vehicle, of at like the to seems and with be shop been it get store house, to the So to vehicle quite stay-at-home

more So it that so it COVID, to way come I than not as into sure expect prior that's was X% grow out that than of it's I'm that and pandemic. going so was this we up going less But significantly.

the And think been pre-COVID three industry levels. longer little recover a a looking industry I We've to to a yesterday, saw that before take and David. more hesitant at And is going little it be it, years report to be this may are people I is the fly. we back gets airline to think airline going and to

going to to so They're want other reasons, going all a of drive transportation their And rather going think, also to fly going people services that we of rather want rather have a own number to than and that. they're using are and lot car-sharing that's have their whole and and than then don't be prefer about discussion that to own to believe an will the their and world lot a that to We people that. vehicle. a lot watch interesting going that of car, own think car-sharing. just thing just to was of We the

And Rick, is Heath. this

to haven't is, of let home delivery Just as to mentioned albeit about pickup a than we crisis XX% are interesting Jeff and that and And that we but do go base, home it's waste and here. service, we've there add, evolved, our delivery the less believe service. the current it's customer formalizing XX%, we good

so we And that wants. the is will consumer Sonic the home that if service future Automotive, providing be what delivery of

we've to that our offering. add put just So to and product evolved with there out

to that offering. with evolved we've So to and add put our out there just product

this And Jeff Rick, again. is

is the we And appraisals, which of app surprising. is of across and way that's the representing The that anticipated. almost entire overall consumer better happened working CarCash went launched is right? ahead country. appraising at One things our is their CarCash of even than their home, app It's now XX% And we fantastic, vehicle. our our all this out out

it's a much that representing fast. our base. And Monday, and of been already appraisal launched week So ago, overall since

excited that services part So needed. offer to we the that it's of about if do home we're very being delivery

And also just offering to home clarify is delivery? EchoPark

Yes.

clarify, the not did to to crisis, EchoPark prior we Just we deliver. that Rick,

I headcount could, the if yes, final So XX%. question reduction a on of

of terms be that do top If that reduction helpful. in you consider how then And headcount, could I to be think would put permanent? you dollar or much that

that's the you number saved in Of is teammates, permanent, think, million you were range. between the or were and headcount. to be look going furloughed, we think, now, are a question. back million The I furloughed, the not starting at those cars, include $XX million going some our furloughed bring to by between of you a little recent the be we to loaner I going all And think X,XXX permanent overall, right $XX total. It's we'll the what we bring a to or And when now, of is somewhere it, think other advertising, over the X,XXX, be a drift. and rest associates when We're great be is X,XXX that that back going in XX%, month, number That's X,XXX I to associates think terminated. anywhere, name we're and slow end going $X that's the all furloughed around June.

Your is Rajat next Gupta question with JPMorgan. from

given new, the Just based us the on fixed-up Could your give and or land? could the forecast for where of to and you permanent rest kind sense used of for through also, are XQ anticipating level some you profit what year? expense that now taken SG&A gross range some for year, you've a reductions, and of

we of helpful QX we see we a if I sort where Yes, that be would and it I how graphs think are how of and the walk through you out. give now have walk we with provided relate coming

units, closed our are. wanted you idea keep we slide the have you but approximately we give X,XXX XX April are out mind, now, at April, on down vehicle in So Right units. franchise XX% an on new not now new where of if we start units to

days you'll notice graph that done approximately Now week ago, we you that This that. close ahead forecast. provide or precisely you the why to through of forecast XX to the X-K as that's so an give we so a that actually want and have take, out that we was month are X,XXX, updates is and

XX% GPU, in the Slide new. actual is that down unit so forecast. In basically on XX, approximately we're we're per line The franchise is in that, already that On down on indicating used, year-over-year there, of the April. with graph was GPU the on about we're And So down franchise $XXX upfront, ahead forecast. $X,XXX.

our at used and F&I, about you for look blended $XXX. is new If the up

our sets, GPU. comment out inventory the management to we two pre-owned inventory. ago lot in blow One skill dropped this you weeks on sitting as talk We, our pricing and strategically a know, we about about

of we water inventory a out So didn't the quarter. have of bunch coming second the in

went you'll able sitting with price. at price much XX-day COVID inventory if we into and at we still see, which the us and supply, to a to inventory a buy side supply so a on be we're lower a at approximately, XX-day franchise positions replace lower And

come that our just us, we'll out high COVID, sense. difference. we inventory, of But prices, as made So to up, will GPUs no to and up with that keep inventory sitting go make stale

in order that dropped So our GPU inventories do and we up. clean to strategically the

the key of that's slides? be over we Heath, and perspective, on to So shape next the demand few to Street inventory going the and weeks want coming because over you from great the COVID critical are back go an The is do month. supply in of out which to sitting next

our look XX, at If used you this units. EchoPark Slide is

we're graph down down further. The illustrates April, For about XX% year-over-year. that we're

about actually ahead it that we're So Actually, of X,XXX. forecast. graph X,XXX. indicates about The was

yet. we graph doing Again, is about better in haven't April. component about XXX. F&I closed is actually GPU the it down end and than XXX, the about front down the down is So are

EchoPark, we But in approximately level corporate mind, on April. well. EchoPark $X expenses $X as $X at store million keep So that for expect the a million with associated loss are in there's to million

range. store the expecting on a loss, in $XX somewhere from franchise And level million we're level, the

will So then profitability, April, April. for to about going look June, be that than June, to back And better when of little is you that. about half and It be at loss better than May April. a May million of $XX loss. breakeven,

make we as out guys quarter we're month, the of quarter should the clear see building put can the producing projections at so have then forecasts. how ahead easily can how or And original and trending gauge these you So the that we'll that you how today, each against slides. those look on and that very our that's against you we sort slides we're X-Ks if below we're

that. Just to finalize

we liquidity from On seen are have mind, Jeff $XX guys million strong in a store down level you And loss. as our April. XX% about And in the standpoint. very fixed, We're keep approximately number. indicated, liquidity just

to rate, loss basically level plus If you it's $X that burn try factor in our million. store

very so is mentioned as in about liquidity or in June as pre-tax strong breakeven forecast overall from loss April, for in then million And well, half that and $XX a just standpoint. we're May our approximately And better Jeff QX.

side then And what the unemployment Rick's are are some there and to you secure and reducing the some of pull-forward there on that just question inventory, some you are the up follow the forecasts year been feel just Or you have out here pretty that to earlier, risk see? could here where levels there given on comfortable for right now? with fact forecast rest is on any in prices demand? the used that Or I mean, front that there is risk

very them that car and is in supplies model. not Yes, we forecast, what especially comfortable to Low then we're those feel selling huge prices for is in inventory, EchoPark all way the on better money and positioned. one discount down. to our structure, kind We're four making position could EchoPark. for basically with the with pricing inventory, at year-old the F&I side. going cost the we then our And buying of remember, in used EchoPark be used particular thrive the exact prices of in. This

exceptional this. highest F&I Our has had through ever. just F&I We quarter been performance our

is, the thrives that of having when our inventory all industry, all environment of that all we we we used inventory, the way inventory, our franchise versus got model our it's it's difficult This put the stale add together, rid a situation inventory and as manage car that lining it. nirvana you you since on the out when fresh price, while very this of lot having way we EchoPark business the so that in on for silver a kind because for together, side. business come And

great of it's bit is ride get a April we once through show going be and a May. honestly, in what, to so quite a And which

we mind government too don't got And discussion you there's there's about know that projections keep stimulus any of Smith. that that this of is our to David come about kind I in that. may this do a count And that lot not

do numbers not that. reflect Our

get on would icing something or that cash just the if clunkers So like be we like cake for something that. could

from Your next Sinkevicius with Armintas question is Stanley. Morgan

and new and you it and forecast back January, then to and than coming the in March, Parts July. February, a original used services month new was in underperforming have the walk longer later me now, in outperforming couple dynamics it you in will of why parts outperforming services, to Can get the original and underperformed back it first forecast? of the the why to take months, through and used

digit, or business we've XX bit above maybe environment customer to really parts And that throughout for quarter. days we've in had overall So there's pay one the customer our think and that up going from if done, for We of believe we service the the the February, improving all our quarter, and especially production what up our throughout so. double be parts manufacture, was in see first it traditionally total, our about XXXX, of this gross if lag CP, you first industry COVID the a the really think, and X%, XX% lagged of and you'll and in I and for terms things overall sort of next business. running, January business pay a been in

And with XX lag being or that so said, we that there's of another service. and days think so parts with

our be in the here pace could days. there. few of buildup there a last We're ahead Now

And so terms we're of be this but see, we'll conservative to in trying model.

see, to but of be conservative in we're trying terms model. And this we'll so

adjusting if we're ourselves XX with negative put with coming from major news. XX now any hadn't a we position So there been COVID we're in you where giving and move back something days and and don't

the that, pre-owned gives Remember, little but overall XX-day the numbers, it's the We're just side. we going be especially side. volume. a in a be-up. our really the of aggressive as parts about a of it terms side, come in back, all sooner projections little we we aggressive so And show volume our us of in could And service to meant volume how lag on that as just we than on not on are side price, faster the it are terms

it for projections bit faster, but be could now. So our a those little are

And hitting and staying if being that home sort is helped then they're presumably, use, was than that's aren't well thought opportunity question services other leaving new sales? the vehicle just our process of people leaving their an not coronavirus What home, you seen people have home. with with equal parts and as because virus, their here drive that better

pent-up certainly as It could be. and well. There's there demand there's

might you is forward, pickup we a COVID delivery a role So spike how not a and can ends as much actually forward. bit a the in also move store. move of that a sentence come get situation. fluid up the to they gets more little this There's little being death our consumer as and and comfortable service, we that It's very

you. If it there. free the our There's But we're forecasting, for being doing of responders. stores, things to where back and and think We're data, why traffic are, than on it's ends happen. that's them are we going a such and we'll up update giving fluid what we'll right situation, let said our forecast. the we our X-Ks, fantastic. I services opportunity to franchise side. the services and an we I like that's disinfecting We're looking better keep know lot now what update, taking who just let leaning the are, know we So at a first on disinfecting side again, But both into EchoPark them with is brand, offering drive

Your next question America. is John Murphy Bank from with of

I wanted for and follow used on kind just up agnostic, to the upside-down trade-in it ton quickly. have much the side consumers turn I if pricing, which of pressure sort means implications leases. lower, values have meaning that you used idea were big on of is you faster really the inventory you at reasonably EchoPark. there's volume vehicle gear will mean, of a a you, loans, the on Jeff, be what that you'll assumptions on for great be like coming more more pricing going take because are and residual if much to does because GPUs I get flywheel that are their used side, pricing on new and the so the But lower you're some a more

get So, people leases. new into to it's tough

pressure on We'll new vehicle about I So about undoubtedly lasts sort you're come? on and particularly how of pretty it the you're might will long quarter, hope see this of do and being pricing, I vehicle mean how used confluence optimistic, of in the recovery the which for side the you events, that like that just that fourth And third right think but seems the pressure used pricing limit recovery. business.

made and buckets, look Let's at to into two break are purchases Remember, it EchoPark down at let's first. at XX% EchoPark, our auction. XX% of

an and a in, be side. put the have for vehicles sitting free away XX or incremental let's over coming days. to So OEMs yes, half there's OEMs, price EchoPark in on return the we discount I go, the for consumers driving forward pressure. us right? mean Move just built-in that's to to they're lease that So going

lease, have to a going to there's that's with. inventory glut we're deal of going and off be that a to coming So situation

ever cars. market not they're of will be model with producing out, It than shut used is new now point, heavy not going XXXX put XXXX, And at year to got out producing car vehicle But a inventory and real now. years lot any the they've right focus model to incentives give flood model going there manufacturers, year they ton They're XXXX going to year still more some They're that coming. on to And coming out. a would put on to cars down. blow think model pressure They're them on XXXX. I remember, year I and past, prices, valuations. inventory of the trade they credit. understand In

So up out us take cars it's the used prices really, as that I of franchise, not lowered there. not coming the going right? car and I the our over that we're of prices with to the a volume you And up going EchoPark this. very from car so one our manufacturers perspective, lowered we so position on day, to And spiking on I the things year, from franchise support one There's to side, the model pricing mean bad both think when and do I used predicting puts be bad, is a will our learning tell car our volumes new And be started which day, make of of it's valuations. as on on you a lot pressure side staying pre-owned XXX%. our we going advantage think spiked be next to franchise agree I that, side. in on and the on our prior there's

And we better above down was. better XX% year. so a than prior not It's what than were lot were because to It's a XX%. it lot trending we

Now was down we're yesterday, running X.X%. it

a the more numbers And so we're aggressively of really we're volume on cars on F&I little maybe side learning franchise take pricing improving seeing franchise about side. well those drive to continue and that the to the as advantage

helping with support. with We're be so with BMW units you. going agree I a pressure certified X.X% deal is And to there to a That's There's to interest We're lot. going to out on need now. it. manufacturer there. have going out

We deal in on particular, there And days, there's to to avoid and so for going with inventory, can't be XXX, XXX of lot the we're margins. it. next going have pressure to a

I to today. maybe to kind that I the mean other it's even some of were mean, take if time is, get for of start they guys to going side these up running, and and then

start it in. getting that inventory sort And you side lot to of back before month assumptions of deliveries vehicle of have clearing that to the running so on two seems a you're new one going your start

I rocking it's are a is you point as mean inventory I think the where they're things, at So production on point and short. thinking this equation. new think figure well, end time about reasonably have rolling optimistic that there do be about that? not odd How outlook an quickly to of of because think of being the at any you're of reasonably in do you're bizarre you turned would reasonably but if sales short sudden, like question might know what up where that and for you caught to sales inventory? know moment, clear you on vehicle sounds side but trying other all and way out you all way can be I this a your about the some out the a

bizarre. going of not who there's in volume. as is worried manufacturers about a I'm fact, terms that China China, it's to in U.S. go several their things up first. the And go is that a to cars And lot one of the that matter of produce of they're moving Well, there

That get by virtue through. us sitting And of certain even end an a At lower is March. of new the be have a smart sales car so good now just supply XX-day it's at in of of Sonic we going April, that enough question. the to I'm to so inventory perspective from higher. we're very, the on day number, car day, supply end very new inventory don't not

in And with versus kind an that with selling what it's to the would we just, short ear. so now. supply, good is our came tracking to we're of on what which at charts, provide we of can say, us projections or supply what's that each kind day, you and through those or you enough lower actually indicate had that's X-K, above see, very year, you're why talking situation, situation because get volume one be we'll how unusual items every guys of car was fluid an prior actually now, no, thought have and we're as these Right month new it into a a based play we're on you And we're about, our by play yes, really graph. idea that to models and

and And come like, parts on deferred then it maintenance lastly, some that through. point, at will just sounds service,

bounce at governor those You real get when at to you think as capacity a whether point, limit the you about the wholly bounce, going be? you're you to it oil capacity have lot that quarter, There's your some But fourth of or batteries, on a may of comes seeing be where into or pretty think moment the if manned moments and big do this dead to tires do. third replace, lot a debatable. changes

and now a make about or you a have ultimately can over pipeline United as and then sort COVID we're same-store think this we stronger time, fourth parts the we in people of and quarter out an this States, some handle basis better have story this you of the or help back, if we XX% whom be working techs Like growing you really on in? up of year-over-year XX% about well, even XX%? this third hired some that won't and everything beyond can of of kind is of crisis which of secular And service ton think retrain can work a of now

Yes.

So and up our And We to XX% We of quarter the handle in lot we run of in can handling kind that January flexible of that kind There's environment the of we be easily. were up and do can can were first a XX% range running increase. handle we February. increase. that multi in shifts. that and already things

out So I'm to shortage tech. Sonic and XXX the the COVID, at too We a we're a filled out that. always base hire going about that There tech our more, technicians have one It's hiring hired on was continuous could concerned number into trying and another we're position not right? basis.

there, are there's welcome. the that it our kind certainly So if I'm prepared comes that we out forward are that many to to be customers it certainly an will increase a of that looking way. handle day and

their people were seen they're get come in fix their they're where And serviced. since were you the get, if talking in, trade ago, not as earlier, years happy we as in obviously, they're going got going those with the they them We've appraisals previous in to keep car. crisis this trade to they XX about in, mind, didn't customers car to if

in that cars obviously, reflecting global are have such a trades is understand and well crisis think people number a doing. margin because and And known, that also our think We I the less, that. of that. do it's But appraisals we're there's which their I higher actually people worth in are understanding

so not of we is that's month-to-date normally from what this percentage I of retail was trade center to XX XX%. day, look, have point, if appraisals far right But from month you Yes. we which we're every April, our our trade XX.X%. It's know, That's really and for for and mean, now you far every or report, X.X that appraisal morning's David. the XX% just a looking Heath. cars great guys at run, cars, we trade below

in call, to company EchoPark at of that's and to in there, prices, the else, us. to than advantage consumer on car, so to adjusting, us the the to why going they're And maybe been is really going sitting take this out a And EchoPark going who that's any because we the marketplace, there's then at just of adjust lower not fix out in other their front is cars great And going we're the they're let their trade right? to going opportunity like be if anybody That's better advantage have take auction cars to I've saying it. And the there's many marketplace. in buys so that's position, of we're really they're that position. all believe than

you new I just because to you them from last much about what still to you because to have maybe more to you their a And follow-up one and customer. online everybody said. lot physical vehicle? a go work a to more servicing just a online the gives to as don't op you op one used just is opportunity lead quick that ability necessarily the them ship physical as valuable the mean think I to mean want that

of been a car with at times from to a would all lot financing customer another. get the financing, store the at comes There's to and when of we the have buying end programs the of kinds the look there's sell out a BMW, they the end and there on It's the to on customer things. one the manufacturers, X.X% At that car day, they like up different we new kind of loaner many that car the And side. store.

like it handle can rather and we've the system at So store. at our with store that that enough, technology built home. the be we them happen, process, a delivery had it our to come the having flexible is to we much want already great really We app, way. unquestionably, handle they have if would them preferable. But CarCash can either make to no-contact we is But and

is Benchmark. Ward question next Michael Your from with

are the sales segment At at what percentage used of CPO? vehicle franchise your

It's to somewhere than less low. in there, XX%. It's XX%, XX%

aggressive been Now incentives historically CPO-ed has vehicles? on there

decade, and of time probably launched They in their all credit dealer the And X.X% we seen, really seen I've just have give the afternoon. supporting got that BMW. a No, them with I've the that's time a fantastic in the kind world. done level. lobbied first to body. Friday I've job last a first maybe, That's it

next couple done XX That's to through of going to move we XXX, the in as our stores, somewhere rapidly across BMW there, weeks. of I XX think grow sales. we've out

And so we're very excited about that.

sitting any those help XX BMW back. glut Remember, There's us to going be of cars be a to cars were days customers supposed are coming of a And off-lease lot to those customers, coming way. still going in There our inventory are retail there's of those lot Mercedes off-lease returned that a incentives cars. ago.

wholesale than the Your worst retail better any best day true That is deal going deal to the the your week. and of manufacturer. for retailer holds be

need take we cars to that, off manufacturer, we're they the better like to sending can So the to have them us going know get programs to the back versus those be. us to to And auction. go they off-lease them more

CPO a brings somebody incentive a Chevrolet, a to whatever, BMW are take a to a store, able as are And able Chevy that to store as Chevrolet you if certified to vehicle? trade you into be transfer, for

a is and this actually, systems, well our decade. over and XXX% had this we've for

car inventory if It all faster. the the management in gross at look a in a car costs, coming to transportation a Chevrolet a will we BMW costs, Sonic have literally California. turn more will in price, will automatically the system Our store add at to make move and system opportunity CPO and the the it coming Chevy in store

So a and been we built into time. that our time, all long that's has for all system, the do

used vehicle you next the over side share grow So CPO on that see the whatever? your should of franchise

It Yes. should it. out support if there to are programs there

traded are In getting vehicles to they EchoPark. that same send model, the if those EchoPark in, fit vein, that we would if those

ballpark. A that old stores XXX unit really in that and franchise four don't those our EchoPark that's per rooftop, growing that lot sell stores. year that We at our Sonic we and of a XXX franchise lot EchoPark or them to per push years them trades per cars are and lift that last take franchise stores, from take on number you've of in we to month because seen those our is push the into above all where

on shape chart, on EchoPark And to the side in good of your looks relative like very inventory based it, the industry. is it your

gain and so market May, And share probably, least willing EchoPark to April, at buy you're auction on June, margin opportunity, stores take at vehicles just have for you at to lower an Are a to going to price. the... them trade much give those

on based model. Yes, whole XXX% our performance, that's F&I the

got right. You it

going to gain share. remember, that $X,XXX, those total. And $X,XXX that $X,XXX goes priced it's that copy And to F&I one of of a cheaper, getting and going $X,XXX be we're every cheaper, off so car out, buy in a we're can if in we

long months. and going huge us. of get I to for two once EchoPark think It's of wave sitting a is of difference come EchoPark that so And this. experience, it's just That's share going we're we mean what that's And described. they the out why That's big you that for to you not make guest difference. time to beautifully why experience or our makes going a a to just this because ride period to it's model three gain

the even open And first were open did And we going in we future. we're EchoPark then today to time takes ability seeing much to opportunities what before store our today. the and in over EchoPark we can expand it David. the investment were EchoPark And much stores EchoPark the our than timing, going cheaper an doing greater you're dollars looking was one before. be we think we it when that of is this even a at to started. versus much, at pandemic millions of And things an there's saving And early number than less store

are that seeing as some continue. those you'll be we things So

two to If in more said this least stores going EchoPark million open that, year. those million open. you at as David his traditional add in $XX stores, CapEx to on to a is we're opening, $XX And to

CapEx but out late stores just is there's that right we own a open, One year. a opening also we're rocket chutes. $X million store will we of the in one investment. third a is And the that it's the of the $X in in that million got $X to We And that to expense going another then a got a store of own, getting million we've that possibility even a million to facility to $X put store we're already we that going there.

kind four that next maybe progress. then all how of hopefully, things more. kind see to stores year We'll see to trying So and three of goes. for we'll open how And we're

right, And the then of get you'll to accelerate XX-store to to goal, have by end 'XX? or XX-store that

I'm telling fun is going be getting a you, lot there. of it to

queue from question in additional Rajat Gupta with have [Operator an JPMorgan. Instructions] We

I had follow-up a just question.

margin sales profiles? economics different And the how in-store online far different the April? sales, how in versus on have seen like On unit the the so of the I you also, trouble side, forward mean, are service

things your get right no rolling to that all The great we product there's great what thing online difference. when thing were on is F&I sales We've kind about one been is along. and happens concerned been you that, of the sales, is of the

the are margins same. Our

deliver in end, process. delivering the follow a figuring you We have of associate site. we're an the add If or an little car the becoming disinfect the on distancing. car, guide's what expense we too. deliver to all sales that they take social and part back. the But experienced we Uber So a they car. for It's And car call

make happen. we that order a have that in to through whole process We go

including done true So being the paperwork a electronically. it's no-contact delivery,

that of not more learn to about those buying online a were concerned car are has and store. same we big moving it kind the there. been out has been just of contemplating and And It been It's not a some as more So a that's margins in of doing as the we were actually things this doing sales. detriment. a crisis

They not I they drive back. a infrastructure And over. mentioned, the the good a We're relationship They delivery. large associate. it's actually Jeff utilizing, for with We're point expensive not sales delivery. vehicle Uber then And that think do we're as a no-contact trucks. building buying the

them get So to the $XX to store. it's an back incremental

like And economics servicing bots on for how service the the things, of work? the side are

It's the same.

service, okay. home For

it's Yes, the same.

it. Got

the taking getting last that in We're one car And customer. sale. the the the remember done online of for of advance even about of transaction thing XX% to

done a online changed. done there's be states are There's until of So that already lot way things right? And lot stuff those ahead some still there require via time. of and ink that's are transactions to a of the FedEx paper, that the just completed. some have we get laws But

very So to go it's market. seamless we how in

That the the the will you last of curves of looking based like to kind the are you're and one inventory where like, the kind going levels mean your what be forecast the in sales me. on one are through future now tailwind year? year given for baking I of have all. on this LIBOR rest and floor just what mean, Just is plan, right I

is keep to fed going correlated LIBOR, Treasury's that that X heard the to we've near obviously, number. Well, obviously rates

interest expense continued so relates as very to it And we floor a have having to plan. anticipate low

It's it And inventory that same almost day literally it will, you a very supply. that XX run pipeline, sell EchoPark supply just transport And the XX-day buy such turning way And those of to strictly. through. capabilities, are flipping in car, it, guidelines anyway, times so a We sort fast low also, at our we it's supply in to and that because we recon year. and online XX-day running if at inventory stick XX Sonic. we the at of recon transportation we're

all That's this. during perspective in an such the inventory why from middle we're good of position

XX-day XX-, and think allow just going I inventory, to our that we just there happen. supply XX-, wreck, While of that's a out total of that you weren't a to have lot train competitors see

Our allow to systems inside wouldn't that happen Sonic and of EchoPark.

Your next Jefferies. Bret with question is Jordan from

some having, this are I come space? it used these pretty a is independents you I we fewer of Do depreciating down here. with lot inventory think the doors going the so or pretty guess, was maybe are vehicle total folks and with in volumes The to out independent of inventory dramatically, have question, if of rough

their You mean closing doors? they're

they Yes, survive out that it? flexible this will put is shock of there some a big people business. Or Or this business is model not enough? enough

at if got Look, weren't deal. never money the that's the of a of SBA public big not, the The any if up you SBA money. to they getting take or they ended know allowed end and any day,

lot be there, opportunity. a be the issues to The be of us use and be there's they the mom-and-pops inventory. a the it's close, out the many a for so are And to eventually to they help. of doors giving you're to both But the a a depreciate right on problem big share that companies, dealers. can for to going dollars and there's just supply. will dollars lot so get us are that got if But dollars that maybe they going And so way, inventory, payroll low their sitting spend to offset it's inventory and they non-public, more they're have take that going right, there's day they much having any going great if can opportunity public don't to going

just just There's agree second that won't be the way of what that. with coming, especially over going there's here months, able in who be with described to dealing Jeff. dealers totally I many survive next we couple quarter, no to we're that what is the

just interesting, the out And and In early a banana prices really number inventory, data, going just you It's loss lunacy. take day. you just it's It's the That's study is this banana, try can't to the you ton whatever every That depreciating. your we margin and car rotting if every on, data, this. like of like bins offset Your $XXX, can't offset prices there same loss. rotting volume pandemic day, a were up way, sit a we've retail day, right? got and and try studied $XX, a $XXX is, is in on right? up to

some pay and you're and did is creating position it, immediately. you're We creating If point cleared just on This today. we're a going decks that cleared have in you're decks bubble, time. to something weeks in the it in We the it immediately, we big you're ago. for us put at sitting to several the

Well, forced to talking shut impacted in keep to And has about. mind our were shut that able a business on had been that stores who some areas in again, just stay-at-home we've were And dealers been doors, orders, we who greatly, were the to of there's to down, the business. hold that this country lot like inventory, continue a been where absolutely Jeff where of XXX% there to is that their while do was have lot David. been had there

be just I survive. going no mean, able they're And way there's to to so,

as this, ever our of strong out is been. come about we liquidity as for And position, it's us, as

$XX and some believe come our for there's ending. opportunities decade we M&A to getting of the be So out as us in to of to goal to billion this at going look we prior revenue this, do further bolster

M&A be your trying capacity? to buy on or more used franchised focus Would

is it on Well, opportunity. This depends David. the

certainly be the we're at before, fantastic to I but getting it, to some store is do much, we're are better these too franchised EchoPark to getting as franchise there stores the for saying at better opening mentioned outweigh team It's going better without be getting our have to an on but look it's to and a great that extremely efficiently. have expansion. very opportunities EchoPark ROI So on and deal stores, going you

are The saying, franchise it than just David cheaper. on the as EchoPark. higher, too a a And return further EchoPark's estate, could side. the on the bolsters lot real other thing is and margin And was be lot that returns

franchise So of opportunity going there us. There's for go it really lot buy. makes out can be to closed a and great dealers we a that

that we're year a stores of at of One business, franchise price. it possibly looking that went buying the open great out and this we're is to at a

to going take position, out advantage from So those and be perspective, a are that. be there, in opportunities liquidity we'll of our to

And going to that we we either. be to sure make also that, going if we're we want are as distracted saying, We're were we that not while across to clear come have disrupt and understands, of growth of going would addition it EchoPark But our make be sure that rollout deals, an to that's that, it's and to fantastic to that. not great. everybody

housekeeping last one then And question.

mentioned was it you was down, improved? It You guys was your that how I not but had but it week and was had what you maybe much business tell last How week? it last sort us up parts improved. less year-over-year, of could could service it assume

numbers about now, And now, we're were I down XX% think So ballpark. off in numbers that yesterday, getting to those XX%, XX%. somewhere April, I'm some in

gross we it's the volume is, from in the liquidity from day previous morning, of and we So improving And come and previous week. day every update and do model great what's the it is we're fixed. our the managing every by out

being now XX%, to XX%, to you. are trend there than XXs. what better. looking Wednesday expect versus being keeps sequentially over we're number the those comparing at down lower how so Thursday we just It's And being we right Wednesday, put along gone better, that from XX%, lines, getting in down to week versus And down that Thursday, week, if continue out we for and not

the same-store up X.X% it. fixed March days impacted through February last gross of XX was Total for

turn at to for And there Smith questions the I'll call David this further are Mr. closing time. over no remarks. back

you, Wonderful. Have a call. day. Thank for on participating the great Thank you everyone, so much.

this you for today's call. gentlemen, Thank concludes and participating. Ladies conference

disconnect. now may You