Sonic Automotive (SAH) 1 Nov 202020 Q3 Earnings call transcript

Good morning and welcome to the Sonic Automotive Third Quarter 2020 Earnings Conference Call. This conference call is being recorded today, Thursday, October 29, 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 and Litigation Reform Act of 1995.

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

today. discuss Please filed Exchange In Commission. current measures Jeff as and to report would the with company’s the and non-GAAP I on non-GAAP defined addition, you certain earlier Sonic to financial X-K the may the like by Securities introduce Commission conference. President management your Dyke, Securities in Automotive. Form may refer Dyke, Exchange now Mr. reconciliation begin tables Mr. of

company’s good and third earnings am you, President. quarter Thank XXXX the I everyone, Sonic and welcome to call. Automotive’s Dyke, morning, Jeff

parts rate These recovery a third and per fundamental vehicles year. today consumer Mr. expense improving of our CFO, our well last structure. demand our were morning, and service and used on Wieland. Joining up adjusted growth our Mr. Operations, Tim results continued EPS call Relations, me of Vice $X.XX, in we Executive from the the our our as by XX% for of quarterly driven Keen; our quarter new on business, unit the record Investor Danny as with Byrd; increasing Director and Mr. of earnings history, and F&I of in President highest company’s This reported change Reporting Heath Financial is in

increasing very during Our margin consumer business core the all steadily demand across quarter, franchise and dealership reflecting improvement well segment performed lines.

level. efficiency and reductions continue at SG&A drive unprecedented the previously operating profitability announced increasing the permanent Additionally, bottom line store to

total retail XX% increase quarter million volume or revenues, XX% quarterly of a record units, EchoPark achieved for were Turning on XX% sales to nearly year-over-year. of revenues basis. the year-over-year an XX,XXX up EchoPark, all-time of $XXX our

which continues our buy noted our to in to in Carolina, plan. second July, and ramp delivery quarter center opened Greenville, our we first South according call on As we

latest opened in Houston, Tennessee retail last we our just retail store store September, and addition, in Nashville, In another Texas in week.

we additional our more in of Before X $XX as in at plan, to in to year, We our as remain and and least other on expansion continue billion updated path track center. Plano, EchoPark the well buy Atlanta, with the keep to stores, end XXXX. delivery retail Georgia; open Texas; revenue X on expect the you by EchoPark we’ll X

expenses operating exceptional store quarter, gross XX.X%, profit throughout In of from the performance as a the improving basis continued XXX our we our addition Adjusted were down organization. to efficiency year. third percentage SG&A during entire prior points

purchasing. to approximately of We open includes phone permanent increasingly SG&A million utilizing continue wider online, reductions buyers of annually have in-person to or a seen shopping go-forward the we combination spectrum. shopping to more achieve a and $XX car basis. month options across In $X expense million months, recent of dealership expect purchase. and, majority per range omni-channel finally, on shop complete a to to This the online vehicle then associates and physically large get our the prefer the then Several recent car that before to begin a buying support to vehicle shop – studies knowledgeable a of vast visit belief inventories to test from access ability support the process drive have consumers

consumers and that on-site, hybrid approach pricing buying quarter offers between want, strategy, by evidenced important and with another This online firmly believe compelled us EchoPark, by guests value proposition is used record as factors price experience are addition, the EchoPark. when car that and In exactly to quality vehicle. the selecting they our yet our tell continue most at our a we the offered

experience well as at to this our accelerate expansion online retail will options, continue our websites plans our buying EchoPark additional network dealership provide our we franchise and as echopark.com. As guest guests with enhance

that, the of Hertz Stephen Mr. our hired and President new and – development as our evolution as company Each Steve omni-channel experience are retail formerly e-commerce, Wittman, extensive individuals our experience. Belt ongoing with contributions Vice digital brings we our Given of to Conrad, these guest the pleased formerly in stores, their Hertz to Officer forward recently Digital that organization Mr. oversee look future platform. further of our we Retailing department and to today – we announce online of or improving to overall Chief

management economy’s necessary we the the teammates and our growth the our industry and health and Sonic Sonic EchoPark forward, our Throughout safety franchise the strengthen and company positioned to operations to well and point, believe both from at automotive and believe intend We future on with eventual take team to our benefit the are the guests, move capitalize we this of EchoPark and steps for while is we taken an recovery. momentum positioning to inflection also As has of pandemic date, success. the care dealerships.

deliver our have. our safety forward manufacture This answering you like would the I and relentless questions We all their protocols. support. of remarks. experience I take teammates any our at to to commitment Now concludes guest stores exceptional executing also partners to their for while time for our unwavering to the look may and want vendor our franchise opening to stores EchoPark thank thank

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

in EchoPark you units year, and on the follow-up pressures can to profits and quarter the your and discuss for looks down profit wanted took saw revenues if you we the for it changes? I and those guide morning. like Good

Yes.

year used inventory, going has into was perspective, a the – that’s question, right. and you all floor plan aside, – the franchise May EchoPark from floor the know stores through of most what floating really XX-day of board. stores is might geeks, our us, has a lot And a set XXXX not COVID over April plan particular, a sort a of for and the So, been all thanks. pre-owned lookback. with in it’s just Rick just great car interesting and a been for

April? all didn’t We So, we and preserving deal what were down was inventory last. because liquidity, to how selling in were going know COVID the long we doing

on a XX our floor adjust perspective. capability floor X point a got plan was we we borrowing drop the and from to May So, basically by going and half to had where May plan

when Page refer it So, XX, Danny, you see can deck? if – to in is you I the XX think

Correct.

You during can see the we great to time pre-owned that do and cars time buy it. was couldn’t

we whole floor to that to Benz-specific with to have, plan So, maintain we had we the went and and we work floating from size really banks. triple its team floor have And plus with plan Heath the deal liquidity a but the a Byrd now issues have. moved the

enough for the future. plan now foreseeable have So floor we

are But got the was there. time we shape could real buying. time it plan in good handled, So start we we by the floor that

we the sudden, a historically drop market from rate in Now pre-COVID. have gone increase, big all some historically of versus wholesale terms XXX% high – historically of low now of pricing a to

strong interesting what, brand if opportunity our obviously interesting, because you said Had we cars because volume really records bought kind really that did that X were opened during how all-time the model and we where period set And is, hands were so more hands tied. X we is our cars indication strong And time, it a of tied. and revenue of then and we the how if profitable. think remained isn’t had stores that, during don’t lot have Having we EchoPark just about know the the an had we all-time timeframe, not, stores, I cheaper.

did the off And as we to over above leak $XXX so were, now is, margins think we’re bit It where down, great what’s I little and volumes drop the The into back races markets the back, it’s back. a about coming October. again.

had that And XXX two you fun store we’re for a the little October, every after basically we Southwest our is store now in on opening XXX in is month. first days for on selling we’re profitable opening pressure then be pace future an for few mentioned openings, for the of So that there in another. mind and that opened was opening #X. to week, another the our pace store at an range car my Houston but if car you, in cars already Nashville weeks XXX And That coming they’re Houston just to margin month just comments, a our it’s store XX like the over thing average. that’s back. in I the one store, going look month. foreseeable Southwest first last the And EchoPark means Houston, last And opening

excited what So do to we’re real in they November. see

It’s a blip. yes. little So

about had excited is to thing volume able at QX. it, get the constraints that very actually the were someone to the do, a We’re their long-day look forward we which wholesale supply, we supply all short-day have out is, height, look the a prices. and The a interesting if and point great we’re that that run at you having when still given more cars the you buying you’re retail prices where than running in you a

So could they car some words, being retail to cost the had supply car that those was in other than more of it a XX, buy XX, of XX-day for. that

in now what’s a long-day of to companies quarter. supplies August, on us in situation that going the we’re I so to going were now. fourth quarter. did bought in August, are And cars to that suspect happen they July going is into deal fourth bunch the And to so those go and behind good with that’s because sales they’re have which then And if

excited we’re are. we about where So

We’re a out and time, EchoPark. excited again, of we’re handled, crazy forward. seeing but just about rocking It’s rolling the moving volume it’s and and we’re

just Rick, is I’ll And Heath. add. this

look If far and severity, – you and never happened so only correlation look Manheim you where the happened the this back retail at trends, wholesale the at was to it’s off. has this

little a ‘XX. XXXX had bit You and in

So was And resolved. "black of it’s swan" event. it a sort really

plan of as gives this behind mentioned, floor Jeff to Our room Benz plenty us. grow. is us And

hear. Good Great. to

new the a tight. that both could know used seeing I of also supplies been it on short-term? cars, have you you think been multiyear we is is strong. demand this more If and really comment Do ability are or demand tailwind it’s

is address let’s first. Availability coming back. Well, new

did we’ve a X,XXX and supplies this improving this car or great getting have is we’ll I’ve that back move be as From just time. than we on more job quarter back keeps the don’t used cars there, since never ground there’s think year And I month got doing at The perspective, and month. next X,XXX said demand second think buying a point of Manufacturer every or me, problem our this as you’ve at build. the is hands. a rolling I we cars. we first in – last all and known ever into inventory

in and to supply the a that, historically than other never go you because that’s old day with you cars The pay inventory, had have and beauty a have EchoPark, you is model have you X-year just endless. pay more particular, that’s problem buying didn’t resolved. availability. them, cars all back less. we look We franchise business all inventory we can our long, this it’s mix problem – under if XX,XXX the is But plan time It’s any and and there. when buy just with Sometimes to all for historically, a that X sometimes a don’t miles, floor have We to I just access of inventory. problem. because the been But

plenty that to As you you many for just out of out It’s supply there’s across look go line it in – inventory how and There’s know and range, you years. fact, very board flat it’s just get supply that not for and there years those matter blips. – a the out at it. a plot and it chart of if inventory you

hired to is EchoPark? purchase what at if the an goal Great. running? provide that’s And case, line new get digital to the Is you’ve these that and up And online time executive. the

Yes.

to a Denver, how have examples But EchoPark so it maybe So we go consumer of see on go go You far. Mercedes-Benz on Greenville, a different you can end-to-end. and can little today, what can our you definition can right? to than at is that heard of I’ve

but now, wants, a from really XX to, consumer to if XX The no buy of car which the population they touchpoints, is best-in-class X% Our it to wants less make definition And touchpoints. a easy. then touchpoints. if is the online, than can right? right now go No end-to-end, consumer right is, has

end-to-end, building to the it we’re we easily, what very – clicks allows buy and go very we’re promise. do touchpoints, few so on out that no a deliver that have And out consumer vehicle, solution with building

are car. from And we our going consumer between are where a of from that. away the to XX% think is robust percentage time the before doing heard deliver completing now There end So in. little come we’re can deliver they that some pick bit some like to XX% numbers we it have a customers base the next customers those mean, the I some I’ve we can to competitors, our competitors just of go can today, some now and – and then, online coming hopefully, towards environment any And we year. I and transaction be reporting. and of certainly on our a right But to have of about customer in XX%, of ranges store and up. touchpoints

And I we’re that’s want in we’ve they and to we’re Who are right to why answering can the for does. on you going fantastic. resumes ready sort that’s the what Steve Stephen. fit that to and added going So to consumers to and them of Is grow do, be think They we the and next that do introduce bucket it of move that. as knows. overall they it future? forward. we’ll come now time, start if into Their with the trying omni-channel questions incredible And right pedigrees. snap call But

That sounds great.

I and Greenville, the in sounds rollout that’s of add that mentioned center like you year? if how the going delivery to end the more performing, could to and plan you’re ask about one Finally, prior the is buy you new that

Yes.

We’re to Knoxville. probably add going

just and We’ve that We store, doing it on running best. and which right got get Greenville trying now. couple we’re to and quickly is up great. But We’ll pretty the working of opportunities. sold month here. last up out one We’re the average We fits a see national month. used And it’s running, here. cars you stores in out the the it, the store. month XX being new of car XX car think if dealer our cars of and about chute sell sold first a XX

really the XXX, hub-and-spoke we that we’re in We as model excited cars can a will execution get to come of then bring XXX so that, better there. And think our it. And about life. month market sort

picture we If deliver to one and able of Knoxville stores delivered using actually going at Nashville be into markets our office and look those cheaper. there, you in we’re and there. markets, XX we’re Kentucky Lexington, Memphis and an lot Remember, can some a Greenville, at to cars

overhead, no nothing. have We no

little our just we us And a such XXX forward. that so a not model, of And move of to bunch hit forward by ahead, to on if it’s revenue year right open ‘XX. look $XX stores pace, we great up and number, better, next it as in those puts line, bit a billion if not

Great. Thanks Heath Byrd. guys. Good luck

Thank you Rick. so much,

Rajat from comes with JPMorgan. question next Your Gupta

the remainder lower as the quarter And for my levels? services, lower miles Hi, with also for for up have and How quarter terms on volumes you recovery do parts looked third driven, good from you, just Like I come in your into of here what of likely new/used services? here, you’re just the demand place. and had Thanks of particularly seeing be like on October those shutdowns to trends? morning. taking questions. improved then kind parts a see how near-term and potentially shaping question both more

just to company-specific mean, driven Just how much a thoughts business? growth much you likely go much miles curious your miles and around of vehicle into independent actions XXXX, how driven? that I goes the there more Like complexity, of how like that as of And into function is equation is or for in the etcetera? as also,

Yes.

question. the for thanks So

fixed X.X%, So in great. which operations up let’s year-over-year address actually by is were think, September, I first. We

a October. We day’s difference in have

when for the of fixed, But projecting volume you’ll X% back. slowly, up. coming when what operations happen So we’re and see just started remember maybe you going we back fixed going take I back surely. down kind be was It all month. is And fixed things said it was of or going if but think to to We’ll X% to mentioned. the because while longer with a a bit that we little finishes

and high, topsy-turvy lot that is California in a little than our when to other market out too is is shutdowns driving. but more a The anywhere, exposure comes had it thing less quite that, there bit we’ve

From at used Automotive, October. new EchoPark the both going certainly So that a on and is just and I’ll in EchoPark perspective, better. business keeps issue Sonic comment And particular, getting on. in

of we’ve up for the they plan that cars our is resolved, pretty the that really rolling and inventory are to are Now got decent floor XX,XXX quarter. engine think range cars pushing north levels and back October issue out supposed and in I X,XXX be, where to again, a for EchoPark X,XXX is certainly of

we’re about So excited that.

margins, our engine cost on be a a shutdowns, I that they a year. and the a The strong happen so and over again And The fourth the had plan. is it’s Sort the really selling is have had we’re business and a – And how going little quarter. little a last said, a the we’ve again, more The a we particular inventory. we’re copy, EchoPark, cost, X,XXX car great, much slowdown got would to a it’s floor should is to we cut get, be the going, is for just right? get the We’re a year, still quarter But it. to we ‘XX with of "Hey, crazy got whole where new more because we in good." educated there, from great and think deal of have if there function are going going the all not tighter, been structure. revenue them. margins which demand are look, margins to inventory with we’ve different in XXXX think, lot the We’ve I function tighter little quarter, was

prepared with We’re the – just deal to it. economy’s better

We’ll ‘XX to better great that away ‘XX, for we’ll we this. is growth year. far EPS strong by is we growth even a a be with an And stay a year do perspective. done, if fantastic it and fantastic always happens. in going we But it we’ve out going – think so volume EchoPark. to as be happens, to from move record-breaking of And through XXXX us as again expect and

stores is Got you – cannot XXXX, run just EchoPark even consider happened EBITDA should EBITDA is opening helpful. assume like, of it. that be Should but fourth and any we $X at to say, sure potential I That’s million there guide, get the And exit good On quarter. with not you helpful. XXXX I’m the when new EBITDA, offsets to a EBITDA the expected looking mean, third up? prior issues – of any in look puts quarter point the EchoPark rate in you about look back explained $X into to pretty like that into for million, or on the takes color Just the to that rate starting EchoPark? would – that

Yes.

is here little So how I into a look – here inventories you of I over bleed kind there. is how We October. at from still had September guide from

first the that’s margins, It’s now. not October, finishing but few now. So done difficult right weeks still of

and EBITDA normal And our pace. on so December November back be should

my list people, that X now, I’m I’m what that X you then got And we’re throughout means X to months. openings. our in remember you to our we’re carrying next XXXX XXXX, that million to and However, accelerating in the used accelerating deploy employee in to managers EBITDA, the we that need I’m openings, going $X to got right? So carrying model is where on

cost common a the to bit as we of expand going a little That’s carrying revenue. just that, So natural. that’s that’s happen. we’ve just sense And got a

EBITDA the And in perspective I to as to profitable centers expect terms been in X profitability, are I and lag Houston most ramp-ups fast profitable lags these we And so of QX to months in expect move of the X Nashville, forward. would a couple or last QX. faster from in than an delivery much don’t I have or So as immediately and because X would the well. getting course, are get better saw really then we – what expect

that we’re mean these and I’m million and – include having openings. ready afraid EBITDA people grow. million, store growth of is still $X So for I up growing to But the $X like keep hire get going going that us and in to ahead to mind not time of quarter, ramp

is And Danny. this Jeff,

million drag to And Just we those of about from of EchoPark, the we In third in add because of quarter, we that. pressure talked gross well. new $X.X million about EBITDA that that had quarter. margin we to as openings that the at had $X lost

is reflective those. million $X.X of of of that see So actual EBITDA both you

are October, from if forward, that as coming of still should So have here normalize margin but some drag we out to upside. give those us going new to openings, go you

to Yes. inexpensive And the buy centers real new openings, the open. and delivery are

it million either talking the lease, a $X take depending of maybe to store – at a own property versus Let’s is EchoPark get XX or it XX is are and we most that’s the million – either a to traditional size store. anywhere store $X opening, we from the about the on

Got it. Got it.

one for me. last Just

progression Or thinking past are SG&A as you hit new like mean, changed side, start we tailwind of I I – margin mean, normalized how like an kind the here there this about like Like think we that I gross because the on number should that organized has did XX% your track at on about of to in kind to competitors, is SG&A-to-gross the but basis. the basis? all? On kind a still of side similar on you have have some XX% probably, a mean not talked on of the

Yes, this is Heath.

you going COVID. go looking be a look to the Probably If percent XXXX, year. you the think be year at full whole you those of low-XXs for quarter what XXXX. did XX% it’s percentage as where have XX% to as of you for quarter from XXXX, not going percentage – gross think very if around as is fourth look at you got similar in in I go going got the to quarter, SG&A if this year, factor that after And to And the we into that, savings QX we’re And gross. at fourth be total it’s to you we of annual are a first projecting. you into that then

color. Got it. it. That’s so helpful you Thank much. super Got

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

morning guys. Good

bit. they carrying quick that days about little impressive. But of it and you sure sourcing kind you being to XX that First opening mean, a Where mean, sticking store? think capital just – I how to are any you pace. know that that’s that It’s store, like in, which your GMs store, are how is in are that backlog of very seems but is question comfortable not I’m coming built? get backlog from? EchoPark, every a folks, calling X with people you’re plan obviously accelerating kind but human go on do that curious important equivalent pretty you store is your you’re in capital a them? And into human when needs that store, saying needs go challenge are you I’m where at GM that of I I in

question. good John, Yes,

$X.X part So you have Heath XX those is drag head remember that mentioned buy is that of that the is what delivery earlier then capital, people. Danny earlier. or count the to right, in billion centers, And about mentioned and of human

head very So it’s top-heavy real, to few right? when count, people. comes real not it It’s

picked a more those We lot is problem we yet. have And lot the opened had here year growing before ready. we’re for those the we’re a managers opening already XX into well obviously, ahead – out. part that out mean, And the that haven’t that, a all recently sure internally. And they opening that provide we’re today. So I of of working and time environment you’ll head we’ve the in of got we’ve go picked EBITDA over. we’re culture. stores make count carrying store, managers a can when are to it’s that the But see next drag they on stores our

our And to You and what culture people be to move we’ve got at EchoPark, that to able we store. our at the to do. to We’ve to they’re got store Reputation.com look and charts. store scores have train from the off

we’ve we opening part lot buy store or remember very and thoughtful to and to their carry making I that a it culture But that pace important when a easier of it’s of to personnel. lot are to there’s XX open think here store comes So centers and been so about from store delivery opening store. a very, less to every intensive that the that really sure days

sorry, Sonic am so stores those the folks moment. internal are all from correct statement? Is I of And coming at a that

That is correct.

I kind well Okay. geography need, is used in on going there great what good you now robust is whether Then a debate new a either or second, coverage footprint enough mean, that of what both need local as curious dealer you your reaching core on just for as a where there to your I’m in you’re EchoPark? franchises everybody. be national is footprint thought on right

honestly, country the car a the car before. that right. We really that from – reach having do going network makes EchoPark, I market everywhere greater, of It’s this over this battle even rules that. particular, that the and selling that’s the seen the the the get going our or all what a entire from all interesting manufacturers and plan to to And I new cars have be the mentioned going time our cars we’re a the every the believe franchise, this with major perspective, We coming. and it’s country brand experience the provides, and keep that have Yes. brand deserves a are network. States. laws That’s brand. we distribution in serving over deserves need in covers I majority mid, between quite perspective to franchise mean, from everywhere. new really is advertising you by Then and dealers XXXX, grows, distribution of previous to is used quarters just fewer as grows, idea e-commerce to in car – a United be on

I all So over don’t with the of just XX do think recon sort that country. you can centers

an inventory that a store, they inventory us drive consumers dealing data want at to a that’s able the If got to the big our what with they with before the looking They they’re search you associate saying, sit at. to want look and buy the decision. from want read they but experience telling and are come are to that that make online, you car to be test consumers car a

want to goal A our Z to Our them, want going they A hybrid to allow allow is from happen. J or to to go go that to our A in is approach they Z, system to if to

any and end wonky, And But so just they stores retailer A still over right? not of points now delivers is to There the our to auto might build retailer option. today. there an in what I the by EchoPark in no in points. the is it’s buy with all everywhere, trying auto Z as can That’s one do like touch car quarter. country touch add it Nobody, we’re a

to very to and a network that of it’s allows touch market base, provide still the provide mid small that percentage distribution the but experience in every us a buying with important Now incredibly hybrid it’s major approach to country. and that

into good often A that you online? on you online, financing they to maybe thing them hey, completely hurdle trim get opportunity to or to they’re the for. very And a Is another really you that the done can would include, the that want you financed do process getting getting them discussion down the A do have to to hey, that kind you F&I be in the consumer a for follow-up a when to deals is people, just financed go online? done, want, But you can’t to they when vehicle Z difficult if either to you’re vehicle may way consider you level last major is get they just say the of other I Z no vehicle, a them will this and last – work as being for lose of does shift right, sort them. this alienate in that or, Just what and not said, maybe be where the maybe plight about interacting in phone how just them hurdle person, things of with then you a the done truly to thinking think lot about do somebody think

good It’s consumer very small touchpoints. Z that’s why A stay of to future. do the it’s base no with Yes, to complex that’s foreseeable for percentage question. always to another too the And far a purely going

our And and learned You changed, one right? more the up on Charlotte, phone. In here is, business with it. in getting good it. sales into a haven’t There still do F&I Greenville of real can And profitability you of is and that sell the department the we all think thing is It’s F&I job all online, our doing delivering part cars a our example, as still EchoPark’s we’ve end – numbers and our for Greenville we’re department store, statement. becomes I products. is big that’s know, F&I

And mark we’ve that was so big question that. our overcome a in and head,

with not, that investments that you help expertise and have why find Because at for a the and like, financing needs need point that and are that an appraisal, are to it’s point, and why same take be are me I all like electronically lenses we’re at bit – an us store feel it’s we’re the to right? you we would differently level. Z it clicks touchpoint making Steve the auto all needs that when it’s A term, Amazon We that and at the things. offer to through retailer. about it if as to or Z. being Steven to care to you at need the they you we retailers, go have little find whether to to experience, better with a versus the that The to that experience at for or experiencing an about But don’t going lot brought very transactions or to to to longer. simple like consumer a you’re easy best-in-class look do A very talking In be store our That’s the not do with arrive Google have the flip And complete able A of turned going in. same have then from long just gets get we’re automotive looking experience work down the you experience a something it few that consumer to a Amazon, the thing. I believe a make And to those exact Q. have believe have But difficult us them or online be more you wherever the and all very worried you It a online. to stumbling going in we need for can through were off to great or to to as not that block hard any the you them at and

just from it about of and expense that us more of has A that John, A to through the been to down is talked all productivity, Z, will wants that get these this the further And and to I the add. regardless we makes from majority believe, the We’ve Heath. reductions percent you much go line, or can more truly productive. J

And the about absolutely From experience, provide. – the is the online, productivity want do forget for a it more so better standpoint, consumer can to we which you us. not

complex the getting do a cetera, part can so And you as line, well. But integral about with I I when a technologies And AI, et even the there out believe, down in coming very further questions very them to agree SG&A Jeff, it’s algorithm start are completely there’s financing. solve. where it’s with

evolution, an it. be are to going and we it’s to So committed

the of – helpful. financing. just bit you short that’s And heartburn the just in had vehicle lastly, a with being of quarter the then And little very sort you. then floor Got plan used on

used vehicle that’s going forward. out mean just somewhat that inventory some it to in Now likely just some are XX-, inventory keep Because that. likely cheaper that, that just that of folks get curious, you is your and or if got stay curious to sell through on hey, do plan the tight, it vehicle there Or you kind way has you inventory? the better the heartburn anything in a now floor of. changed that still, should that that’s manage beyond would were XX-day used pricing about way? window, who volatile sort out, I’m it? think XX- way am of saying to you’re will there’s that, that best side, it’s factors to not about I’m it changed had going if anything be doing because had worked XX-day think same I in has I they you very to drive –

all got plan Dallas just we behind And record sitting X tied because competition the higher our hit had the that when out supply. end we we store XXX to to dropped when did I able margins wouldn’t we with I the of had just market numbers prices cars, do the XXX%, end to they’ve if to regions down of most that in point that But all was you day to – have just No. as managing than a floor bought and XX-day and again stay that where Sonic we’re And a that to day, got and on-lot announced. saw hand we XXX%, are. and their That we and was the floor in best at problem. amazing. took supply been buy our are had all Look had XX could, had April, and mean our store, we plan when inventory historically to all-time look, XXX% we way. charts, you We at had out an did. a above. of that hell higher of EchoPark still They really the the much within day a mean, some that – with back. and be that fight profitable come as knew like a We’d levels, it that the our that it wouldn’t during much inventory. low stay

no So yes, the just we’d accordingly inventory that, downturn like supply adjust and we would couldn’t. buy our more inventory ground, and during have We on a base problem.

XX.X% the And this that this point. But of I time floor the one-time We inventory would in swan profitable. event, that. foresight yes, is X be have black short-day If supply is at we’d changed the your the was best for a and that add way Heath, years, run so model last the have will our to plan.

Got sense. it. that Yes, makes

much Okay thank you guys. so

You bet.

Instructions] with Bret [Operator next Jefferies. comes question Jordan Your from

Jordan Mark for Bret. This on is

Mark Hey

let’s I Most do of X quick so questions my have ones. been here, guess, asked

for supply? levels? normalized next that we pretty they will GPUs quarter to in stay where more Do about So back And are inventories, year? thinking early days where stronger did I sequentially? new getting about I that the quarter. with we kind guess, end you should guess we think I of QX? do kind inventories moderate the And piggyback new again on elevated where of those Or in Is expect

quite robust is money. We can third manufacturers. bologne, in of the they come everybody continue our a most bring this nice. make more The difficult. through is we all that, end oversupplying be cars be don’t back forward. get car really were. tracking oversupply, all be And it not quarter, better And new inventories gains mean are more was to as do be move expect of lot may as to And margins to for new. first higher the not all the they the behave quarter all doing But the last the that but if they as higher margins. going with can it and high and into to they appropriately, as a sudden, The to Our to they we’re manufacturers best day makes quarter, supply to get quarter. incentives including think they’re they the still here to can I too. the have I and good have were I problem going when and XX all margins days to going we That’s as going

forward think hopefully, good us margins, better learns and we’ve better that. from couple a of with I inventory management, much So we the like got and world that, ahead continue quarters of

about the great. nicely think a Okay, per term, longer down one guess, Then just F&I opportunity franchise the F&I thinking thinking year-over-year, about we how should to I on there side. per continue was bit unit But sequentially. expanding the more, unit? up it

over $X,XXX we where I have of our is are got headed well. mean, a – it’s look, copy, we and as some that up competitors

upside. there’s of I tons think

better better, a we We little get different. little a continue It’s to expect and is a organization. as improve We to little an getting continue. better and every it And that October month. no

So I we that when and of that’s on a car a a a that big of do, dollars number. volume upside couple there’s hundred lot kind upside, think of the you place

Okay Thank much. you great. very

You bet.

you time. this no further further questions at are Do have There remarks?

will No, on next for you just want to call. to listening thank talk the we and everybody in

Thank Thank concludes call. participating. for you conference you. today’s This

disconnect. now may You