Sonic Automotive (SAH) 1 Aug 212021 Q2 Earnings call transcript

Good morning and welcome to the Sonic Automotive Second Quarter 2021 Earnings Conference Call. This conference call is being recorded today, Thursday, July 29, 2021. 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 your David as and to report would the with company's the and non-GAAP I on non-GAAP defined addition, Mr. certain earlier Officer to financial X-K the Smith, the like by Securities introduce Commission begin Chief management may Smith, Securities in of Form may refer Automotive. conference. Exchange now Sonic reconciliation you tables Mr. Executive

and Thank Automotive's to Sonic XXXX you everyone, second and good welcome earnings morning, quarter call.

company's As CEO. she said, I'm the Smith, David

is during EchoPark our thank all. XXXX. and Operations, achieve Relations, possible of Mr. Mr. customers, Keen; Retail our to operating publicly on Mr. We'd Heath partners Steve helping our by record performance announce like vendor call effort and President, today for Wittman; This Mr. record-breaking CFO, Digital Sonic the company not and President us Wieland. have another for quarter me Jeff been second performance without Tim valued of our thank to execution our Investor our the Executive teammates. President and Mr. excited tremendous the Officer, Byrd; financial Danny today our We're Congratulations our Chief and would Vice of Dyke; also you manufacturers and Joining Vice quarter.

Franchised Sonic in Dealerships continued second to the deliver our XXXX, During performance of segment. quarter exceptional

million, up the our the we business. before the unit quarter of quarter quarterly billion, XXX% of when XXXX. record to record consecutive revenues reported On to XXX% quarter XX% up $XXX of revenues and basis compared sales of XXXX, continuing a a volume taxes posted and also income We operations to basis, from When We onset year-over-year retail year-over-year. record of the were total up up exclude quarterly generated second $X.X all-time of effects consolidated fourth EchoPark compared pandemic, for second of XX%. all-time the on revenue

showcase all-time reported million quarterly franchised and earnings operations we've our These share, continued or share. or of the share, well continuing second environment of $XX diluted continuing $X.XX EchoPark's latter seen the to maximize lines continued efficiency compared of from at diluted $XXX operating operations or $X.XX XXXX Sonic's per per of our of million also quarter continuing also nationwide from network. to We business from adjusted consumer record operations results reflect all earnings $XX expansion $X.XX part as since strong per million demand ability but successful the earnings XXXX, across as of dealerships diluted

grew reflects which $X.X balance operating strong well our the are from XX% continuing throughout that grow segment, confident core million, can all-time benefiting per XX% XXXX. up in XX%. the are Franchised profit was XXXX, XXXX We per prior XX% to margins from Same-store XX% be gross of to increase compared $X,XXX to XX% from pandemic increase positioned $XXX comparison, up XX%, revenues second an In income or unit demand million, height our variable Dealerships Total quarter of the for billion, a year-over-year two-year dealership revenues total second profit year-over-year franchise and franchised basis, year. XXXX. compared billion $X,XXX. our the while a revenues up unit million Franchised performance and while by Dealership of XX% well $XX nearly into gross year, on Gross last in same-store rebound quarter a were profitability. the $XXX the second XXXX, increase while increased to consumer last gross $XXX significantly pre-tax to and up was annual dealership quarter On franchised sustained of F&I we XXX% from the rose was per record strong was of year. since XXXX. second vehicle profit quarter And unit, revenues total

business Dealership been to against performance continued on has Franchised execution parts plan, enhanced including and ability around focus inventory. our our SG&A manage efficiently Our by discipline our spend, our service and

initiatives brand our acquisitions. remain week, expect acquisitions we growth optimizing that in and committed our the end, to To earlier overall Volkswagen billion through enhance drive the $XX and Looking near-term franchises dealership growth total toward in revenues completed acquisition forward, strategic in acquisitions strategy, both franchised our business, Subaru additional XXXX. Grand we and organic this Junction, through we franchised Colorado. portfolio dealership and we by complement These announce to as of

tremendous the our and us Turning logistics value And top-line channel, consumers. inventory and procurement, reconditioning sales now pricing, to efficient EchoPark, offer has allowed combination of to below-market our digital-enabled to processes, growing EchoPark We this all-time record revenues brand reflects quarter increase to and year-over-year of recognition. compared second on the XXXX. a of quarterly XX% up million, XXX% growth $XXX basis generated a

XX% EchoPark quarter, quarter nearly XXXX. all-time volume to record achieved retail quarterly XX,XXX sales units, X-year the On EchoPark up second unit volume year-over-year. of retail second the comparison, compared a of increased XX% During

our drive are and gains EchoPark. plans meantime, in the with by EchoPark at nationwide our distribution as by EchoPark goal halfway on expand our of coverage to anticipate success In proprietary locations XX% in our and digital XXXX. penetration of opening and existing already market have our population coverage population opportunity, markets, EchoPark achieve future will Further Based the our driving to to our and date end the launch for markets, network. to next expansion we we XXXX and XX% market our are continue recognition over we we XX for excellent platform XXXX. grow we to We share fourth XXXX on decade expansion rapidly network track brand quarter new progress retail expect made continue

a markets with more launch, EchoPark shown that has in X-year plan. expansion share, from for indicating category, market vehicle Within to detail, consistent performing X- EchoPark locations at is opened EchoPark's less old our than X% for trajectory opened X to now Looking an a share years X than and average locations average XX% where share. EchoPark X for to markets opened more a markets with locations years average X share, with EchoPark years X%

of new that ends we segment, drive network vehicles, to old positions X- to XX% we our XXXX. In reach the our the spectrum, share market sales growth the market. of remain X- vehicles volume to can longer-term, confident units our addition, the continue below expect to old of X-year In which and an interim business core EchoPark and on to development billion X-year us potential omni-channel X expand X-year market to allowing we vehicles adjacent price compare target a pricing date of to opportunities of for $XX annually both continuing at on our million old vehicle retailing drives XXX,XXX the of both to combined goal market revenues age of our within with and EchoPark addressable we by where X- achievable maturity. progress wide, units With platform, to in favorably

have this quarter, a basis XXXX. With X-year represents improvement total of points improving and from compared margins in segment a margin X,XXX record percentage and and results a to second XXXX. of of profit to point expenses the quarterly all-time a the SG&A from XXX realized continued XX.X% X,XXX XXX up expenses X,XXX to quarter a our reflect previously were from communicated. In an point percentage second point XX.X%, a basis XXXX. basis were the we permanent basis in of profit the as second These quarter XX.X% of quarter just the XX.X% basis this improvement gross leverage, a the in decrease gross year-over-year XX.X% Franchised second expenses throughout X.X%, committed quarter in managing comparison, addition of reductions, SG&A and team the adjusted top-line expense expansion as second organization. results EchoPark, decrease operating a second expense second In XXXX, XXXX. quarter remains EBITDA On of our of of quarter point we

current a begin to pre-COVID build. new to inventories gross to We fully GPUs not due operating new vehicle vehicle margin constraints inventory. higher While levels once environment regress on results reflect do to expect

Assuming forma point XX% result Franchised pro normalized and GPU vehicle sales $X,XXX, is permanent unit additional our used and the pre-COVID of SG&A of range, assuming new basis without a growth, levels to expense volume $X,XXX GPU XX% or Dealerships' a changes be our of to X,XXX from structure. as improvement service vehicle the expected in further parts in representing

on hand. expense approximately in in focus continued addition we sheet. quarter available million In with balance leverage, ended including second operating deposit We our cash and balances strengthening on $XXX to over million $XXX the liquidity, to

the on strategically During the organization, all payable cash stockholders new capital floor our with our on and and maximizing I'm In per and Franchised company's growth executing our our Board as repurchase dividend our our footprint, on strong to borrowing while attractive long-term earnings EchoPark well Dealership our raised all-time return believe our to that improved quarterly closing, of the performance, success With plan to the EchoPark's continuing driving programs. at and liquidity last record in our expansion earnings Directors a liquidity our company debt early of a quarterly record nationwide resources, costs of XX, the extend positioned which our our demonstrate the part mentioned report efficiency to continue business $X.XX facility on growth X-year available dividend continued billion XXXX, XX, throughout in potential. of to terms. available October future execution pleased investing XXXX. through share, operating capacity Sonic credit is plans, of to shareholders Franchised and results we $X.X also focus continued we share Dealership approved September closed of maturities, allowed quarter, total on us call,

today's and on our value pricing, and strategic our as and demonstrating this and for process has turn before consumer in reach questions, strategic initiated current plan call at leaders comment Dealerships. a company believe to potential the We to future and the our growth strong your that review results on business. automotive And focused Sonic retail Franchised like EchoPark guest EchoPark's that through announcement evaluate is EchoPark and unique over Our shareholders I'd we approach for deliver experience evolving alternatives maintain nationwide to position both growing continue to environment. customers for our will based

working that remind explore of creating there a the press has established the can specific will our release, for together in business, the review, and completion of with board, allow our me to advisors value action and assurance timetable detailed you or no our a no been of for range we be As alternatives outcome.

unique this new As the will for competitive to executing deliver we committed offering while are experience. central to remain the accelerated bringing to expansion progresses, guests, the value EchoPark to that plan our also EchoPark, and our supporting review teammates for cultivating markets

to upon remain We the opportunity and are on in ahead. the business the continuing positive long-term momentum focused confident growth build in

ongoing, to the As make forward is any any the particular Thank outcome process. we answering We opening This not any related may review you to remarks. very speculate look or comments have. questions our will further you on concludes much.

from question line [Operator ahead. with Stephens. comes Rick the Instructions] Nelson go Please Our of first

that Hey, great this morning. like is I'm on prompting strategic to at follow It's this review Good time. curious thanks. up I'd quarter. a what alternative.

opening not But is once was the that, in wanted point, at statements the is there Rick, And as complete, going comments. just may additional this to the Heath. any everyone process underway. release evaluation as well that We're be both statement make I was the than aware David. from to press that in comment further this

got Thanks Okay, you. that. for

saw in those EchoPark the we so side, GPU, at saw So, And that the on GPU. you [Technical we differences? help meaningful on declines a Can Difficulty] expansion. franchise pretty side, reconcile

give a morning. this will of kind the a Rick, that help get you so and answer, we And answer don't why question. investor start, but this long-winded us think presentation start, to XX let we don't to there. me a and Slide released I second why Yeah, we of I'll you is this [indiscernible] of really refer that kind

But on we to prices. also never can a decision doing inversion this a adjusting magnitude in look this, has week you margins. early drive as average seen rose and the April, slide, but by EchoPark see the of all. our market or to wholesale volume years make in market mitigate length X, strategy market career, is at prices my beginning which you and we had losses decided above price weeks pricing retail wholesale market XX really So In then up. at share, strategic X And when XX, normal through conditions normal

current now That's and front-line quarter, But XX XX XX-day quarter. of day do we store strategy are however, to As returned pricing move run the we to in pipeline. that we we new our inventory. a supply into Traditionally, running return normal XX-plus the conditions to were and have first driven we've normal, on openings. beginning third in supply, by the the market

a And expect on we've a we sell EchoPark approach up XXX,XXX franchise pressure result begin Fourth end The XX%. we margin quarter. on August. cars at percentage quarter, look that to to remain that year. going our you lot about expect so, trade-ins through beginning are the the the look that normalize. side, first XXX,XXX do we the actions track But the continue third of margins big of make taken, volume, margins we quarter as And the we sell would we like as of to to the to of to told Street When the a

And franchised higher short we where keep a that for And very cars of Everybody's than speaks few, cars a EchoPark the - at so at percentage that cars come as smaller so, a the is got lot we're from much cheaper level we of a buy wholesale dealerships. the auctions buying come XX% for and and lot the EchoPark But obviously our supply. for line. industry exposure the of cars we're the our About auctions cars day well. at wholesale is, trading at margins.

events this have well. XX and an is, happened time in you good margin news these years onetime like happened into run have call when have on event events to The going we're this. in So as is my anybody one that's probably

to it's for certainly fourth back So into into September, return us to on closer move we go concern XXXX. the normal as of and a as into getting normal, as things forward. we move believe quarter will and month not we the We

it. got Got it,

thanks So, for that, Jeff.

you're So forecast of or sort losses kind if also your here be curious and would QX, QX shift profitability, we to in expecting do helpful? of,

Yeah, look it. here's you would how at

but at the in you probably loss are see a I saw you relative the get be first still the run show And September rates that that fourth the think August. should then quarter, in that turn July. we'll second in month of saw better, to a be back the in quarter. the little positive. quarter, in going kind and losses of they We'll

stores, event inventory So weren't if going that that his just lot we we're something we because the of entire our overhang And not our and we're buying David going now. wouldn't have to of slows obviously in have, do. lifetime. happens an said overhang share in as once that not We're going we opening we're to adjust strategy but right It so a continue down. many a to opening an comment. It's grow business to

We store. have a year old X

share in has our really in share store XX% years. anything got XX% most over the And market we're averaging Our Denver X in mature mature most market.

going onetime down And decision that a event. slow we've there. not we right think made to we're the for So

September bumpy better a little fourth a and get in back August. quarter. here for So lot gets road to July, Things normal then the when

for Also, I that. an today. you Thanks announcement noticed acquisition have

We one in a while. of those haven't seen

to If that you side? and on the acquire your franchise speak appetite to could

the of a business the mean, there lot side side and look, bullish of now. franchise I out business. we're right There the are EchoPark on deals Yeah, the of

we're that strategically our going or we're deals so, fit buying And footprint into. that markets

going see as the the calendar Junction, the markets on opening state as a now. there opportunities although to of statement, from purchases out of are through you're there said And at we're move But right year. us Grand more in franchise like we New his this David side announced Colorado. in rest lot we of

Thanks and luck good Great. everybody forward. going

much. Thank you so

you. Thank

comes question Gupta Rajat next line Your of with the from JPMorgan.

would the the is in great. EchoPark helpful or Thanks but review, there know there event? happen the a color as follow-up. don't possibilities, for dyssynergies would I the us have you for that on be that color a that Any that separation the too and strategic taking quantify of business that give question. can on much in Hi, there the might I way one is be any of frame to you want brief event

comment question. we the No, can't really appreciate But we further.

qualitative resources mind Anything terms Okay. shared of or in in that? to keep or anything like auctions

Rajat, this can. in our make is comment decision Heath. just details. in any I just like that increasing on that company, this every much this assure is focus Again, releasing we're on not company you going of as we as we value value to and the shareholder can

make. driver a of just decision we details analysis. of that's into we so, that other get that, every But won't And than

No worries. try. I to had

X can like XXXX somewhere on at in EBITDA at units million the targets low-single-digits, profile but kind ramping business Just the you're stores of the The margin maturity, still point. at? imply run what up that

kind on color be at business the maturity? or what can profitability any EBITDA So of of margins

Yeah, projected that, you're to on immature based That's in to on particular, in an what we expansion XXXX. going of see continue based store-set.

So base, maturity more a toward you'll continued see mature there. what as run we and out get you expansion that is store beyond those

We side. we for or have scale are I opportunity is efficiently and and is. than think more that the those upside better expenses were leverage basis able on what dramatically not that EchoPark the to franchise But we quantified

so, see continue of north as and base. to we And store units should the mature upside EBITDA XXX,XXX meaningful to get margin you

more talked expenses fixed. about are how Yeah, and at the to always Danny's point, EchoPark we've

a obviously, higher scale. And we EBITDA to drive that's so, going as margin

GPU? on But to stores, on And taking any Got this onetime what what the margin kind EBITDA they're any account obviously, into at, of quarter that? like matured color hit it. the reference

going ballpark range, in mid-XX%s for it look think be to I to the mature to somewhere in way is that at store. the is best SG&A So, XX%

it. Got

- okay. So you

to mature our back pre-COVID, go Denver you $XX X Dallas, in did did pre-tax. and in those of XXXX what markets If markets, each most million

them think, think X,XXX, that I year is average. month at, so, on running And a units if you about X,XXX

So revenue somewhere base. $XX if is be you at that that north look it of going to that perspective, EBITDA million into from

that timeframe, share for the month, we XX% during markets And those June running lower. share ran of was last there. the market month in is Denver

X so mature driving critical a more that's think We're can is which forward. number years much think we don't to million, and I a that at as move at that stores know XX%, it's thing our go. So we to share now, calling upside XX%, are out but $X where and the there's about certainly market

it. Got it. Got

one Just last one.

On some the SG&A could side, in business the look color gave on us GPUs franchised context like. you of like the what

quarter laying have helpful. the of variable that, thoughts this that comp curious would the last drop the franchised Just from leverage bottom to any you Just gross that looking change the laid just model second the sort you been when or seems share increase XX% of drop looks off be to number, at drop you It unit profit like sources through if there any gross. the to the for or line higher terms benefit. anything through you much at to could XX% made different? over almost be of year, - that versus there Thanks. the what are there Or gross some of for fixed through? peers, of something would off XX% in seen any has we've lead some like profit a Is there were you that it staff that changes kind the when

couple want hit opening comments. it things Heath. - a well missed of David on in just is the but This I very - it, little and bit A of to I Yes.

we're actually not we XX% our of First guidance year, expect around be this of XX%. the at running for to of I SG&A And for high - level, in a for level, we XXXX, higher at we XX%. gross XX%, think, February on all, actually had year, percent that the had that

we to the normalize you expect If you in going articulated believe is on that look normalize and GPU to XXXX, to forward, we you still - David new, tried this use. be elevated see where what

We franchise are includes EchoPark and and that looking at XX% business. a the

now our but month cuts productivity can are the sell on got at actually as And our sales driving than a the improve better units we these we're that place - associate per EchoPark we associates, these for if to even that XX couple for efficiencies, the matures, things and XX% in that we of look put running XX. We've before used XX, example, throughput. you range, so

And that new change see these so can you that's at a levels fundamental we're even maintaining.

have been And a changes big so - made that part it in organization. of that that's structural changes

a a is and that's of lot one happen. spending other effective. huge less our it's to throughput change that advertising, that The is We're allowing on SG&A a component to structural centralization even more advertising,

changes the And that so are are the those biggest that throughput. structural driving are X of

driven COVID, big It's event, of and really deal gross take a event. expense out did made not gross just out and of lot saying, of a a It's that a we this we driven expense business. during

quoted million out. that's in said we his come I annually think, opening And that. $XX It's David than as permanent, it's higher statement. running

rest to market come you And has year, you back underperforming really at take terms as our don't know in but consideration how The compared markets. California just of great so, at to is to really there the COVID. got is, market mentioned forecasting into big when then not news business. you the the fast And I in models look a you're or of the looking and if not, Heath, that way due this for and your next

stores So points, basis X,XXX basis points. our X,XXX down used the if and new Total our look volume basis of [indiscernible] gross points. basis you underperformed revenue it down X,XXX by points by at car in rest volume X,XXX California, profit was down basis points, by car by XXX

We've for our fantastic stores there. opens us. chunk got out big As going California business of and our to it's up, a back be just

going but to down. enhance portfolio, that's so further continue it's the to going SG&A lever to And the percentage gross also

levels. smart going we they'll doing car even great don't really tight the job to margins - forward. the Again, by I keeping pre-COVID are both And the news that return it continue and from inventories to So sides. coming as move is, to do a new have they're as manufacturers think think I return is can we

of do big So keep still Then which expense coming reductions again, on you and where that time down. you you we works the the gross have is are and were permanent, pre-COVID, ahead that we at if model get well get the a to that's in PVR, place, $X,XXX growth top of through crazy getting of went inversion really of SG&A you the into to good really, add us. just performance back for EchoPark that out going just picture this

And is that's and growth. David. volume that's why sales no unit that why further And this additional in these that - We're or in assuming service conservative I noted projections. parts being

Yeah, analysis SG&A pre-COVID And missed is that models be the least line Jeff opening mentioned, tipping reduction we've being in continuing. going from opened. as our that's we of be XXXX to some EchoPark. are stores giving models at times, as we place. that GPUs, think power perspective, of side. to sell perspective, our that also have are mentioned some From we many think think company is back I've that That's any assuming when we seen less look, point credit. what And we are I EchoPark it's our staying some and than not people of the the from go that I I which the will on elevated is of the - think specifically,

at that jive think don't missing. ours, things we look some I the when are think they're really And those models so I with

Hello? it. Got

you. hear ahead. Go can we Yeah,

think, you'd the I missed can I the cut I few read off, when but Yeah, like transcripts. last seconds

So thanks color. for the

You bet.

Difficulty] you versus... the openings store And [Technical just

we Yeah, really our our X. XXXX. and perspective, missing analysts some reductions buy- assumption from to XX-day the continue manufacturers from our I as go was as when look back GPU permanent goes of saying back it of with and number the increase XX-day doesn't are things that think the in goes Jeff GPU the I understanding models some just new sell-side to back of the any the conversations, regardless that of at that supply; jive impact not that again, we what new EchoPark and will into even elevated, inflection XXXX. tipping least is is that's it going point be XXXX have starts for less happen. going before, happen profitability and going we so EchoPark. at believe mentioned, it that the in you've to that half though California, the From and supply we of us, stores place. is Number X, will are of because are volume, that we where to when many or continuing. second to Those point exponentially, we And the have the XXXX And today, is opening mature than matured. as stated The our stores specifically got

it. Got good and the luck. color all for Thanks Great.

You bet. Thank you.

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

guys. morning, Good

a X of ask questions, answered You've lot my I'll but just X or more.

thing you or that? expand some on that? you the on What's or Jeff, it's there beyond the But vehicles. could How offering slightly be million. significantly iceberg at vehicles, this market is not are You saying to your mentioned mean, you're paying you where the target maybe maybe X just EchoPark based that's this be than if $X that XX% opportunity I maturity. share XX%? larger markets the million And for older $X you this are that units than were is XX%. markets XX%, sort expanding might target $X there then of of the million in some And, more million, are kind decide other something

the old store right is right mean, take average, Yeah, XX%. now average X-year - the we I if X-year

sold going swim to market we above be own what of I defined price is. with understand marketing. safe cars our to efficiency to percentage million and of are think the in overall the to number how what And to we lane X, that XX of model might that that the retail a we're $X model selling the of million - can $XX,XXX It's the this you always - at industry a have million. we have of $XX,XXX of brings average the grow bigger be think have, in expand EchoPark can But price So looking near. adds cost being is take us, year nature you was, average to X, XX cars might competitors million much traditional a X our number pricing tradition being day, fit market that for the lot into great at think an a retail that a really inventory car? exceptional it of it it EchoPark than I not to of don't about less about could anywhere we they doesn't traditional So differently. share. of a further that million, time, expand crazy $X we're And expand smaller process some year. at and of $X And doesn't to complexity not the we old is instead And, model. that. $X into lane. a we're model, just lane, smaller expand we so EchoPark fit model end kind, always of okay, look I because our that's X, is levels? the come to XX% than would take because the talking yeah, know we terms our yeah, that what think, we model, is million. but and It's every looking the which things good, can one look really the and something It's - larger that that to At this $XX,XXX, $XX,XXX because EchoPark we

we're thinking it's So, that right and I absolutely the thinking. think, you're way

be about old, buyer of with to car X because are And car it's than good higher to a also rather X. also, now of X-year TAM. X- the I've mean, It's got as new conditional just just old That - because good X- from X X-year a car. I We're to $X our a X-year buyers, and which as adds because new report X- low a a as X.X. to they to that that our pulling a of lot also part We're could think numbers. so million, X strategies, into pricing pulling that you can priced afford when we old

million And so I'm pulling from as that well. $XX

other feel to way have to those like migration because of we the we X going some the into X, price. from we're populations So

below and today see of not do happening, that's pricing as move today, to that quoted we the our an we price that's old the model in some includes low the we've we're for so car X that expect expand to new X new because it includes is of We got car with some XX% part market the big forward. our share X- Denver traditional vehicle and category, continue X-year and share we XX% and volume buyers, part buyers, to number. I priced that because it there And like but

you're right. a all-in, again, think, great and So I us thinking for opportunity

that answer I'm getting mean, a market. going then inventory, I'm the be trying million And start just not And that of second units X are just case to simply auction. to chunks you big you franchised big there obviously, you're be I understand from to numbers, sourcing over your sourced just I mean, - you're XX% willing other Will time? the stores? this, into, question. units, you but sure of mean, from flowing EchoPark I can said are XX%

I does at sourcing EchoPark? stay So it time strategy, the over mean

just a a still At we many swimming but not a competitors off of selling of car. we those not It's time, for that end and we the the average all really down, It's think trade the big or our some stores And upside that it. street car old, customers have years It's we're about old pool day, where old side. negative XX-year buy lot strategy. as not see our cars, road cars trading a drives equity as cars X the want, you X- you X-year in as on and the the as the just whatever. X- the margin on or is X, franchise for might franchise to of they're see

can So expand. yeah, I think,

to that. other got to franchise If the opportunities XX%. was sellable they car never inventory. about own don't people And able don't think, cars a big than see we one we've we how we the We've percentage set auction. really greatly street to being We inventory they are XX%, better EchoPark, our a from you don't do model, and - is - do stores take from I to we the or a and EchoPark of don't the it be our we've up that point, increase time buy X%, we purchase stores significantly some franchise margins I franchise there, when the it's think at - benefit mean, we're don't I of as hear competitor are way. - X%, look buying on that have a we move for send the day inventory. a first I we all going as our you problem at to even topic started not And our certainly stores. because but Cars every might But have fit it's overall not other some number of the buying got us, had X%, talking conversation

When we problem We now, tight a don't says is haven't inventory have had buying inventory. a problem. everybody right

because had come going it's drive - enough over going You got to we're the it, through. you market enough we're for we is of to to - to through, stronger continue to it's it our we're business slow continue just to have this, The what pay that's we going that it. here, strong do to lot adjust not down. to going us power But And the that share, We're event now margins. the events side when not a going for be a is not like other let to big worry us. out and summer power is

point have don't to that we get want across. any sure inventory. problems that So make getting I I

EchoPark it EchoPark we simply grow This our but David. number as resell. to that go markets, then increases, the think to model the do is, Yeah. there get is and brand we that quality that share see our so brand, trade-ins fit of and related And market can that our actually we about and you the

see definitely we So that those numbers growing.

mean, How Okay. very core upside some time? outside where think that core million there's of part obviously, idea us you're an I very, And the acquisitions? franchise still have on mean, any X go then which EchoPark. core you where of there good I mean, is just you you like business I you've lastly, do when I business could units, goes that about where a business where lands? over EchoPark. designs business but think mean, top you - the given do making do out or a the that about there's

Jeff that, a and have number extremely country. still know, on comments this there's to ways franchise that. answer will in of I the some Well, business is But fragmented

alluded which our still so And in tremendous to opening there's opportunity that comments. we that in for growth area,

the end right? Also, John, team our just position We've had a business. of This just together shoring been never been has we've We grow, to in up XXXX. since been liquidity. haven't the

we the to perspective, can need business so now grow franchise positioned from to do continue And EchoPark. liquidity we we the company of do to kind what in a and grow

so when franchises just here operational manager great is comment perspective. it's order and grow And an got liquidity, The a it X% We turnover in We said you We but coming. performance. to general can comes on profitable. really see that company dive It's really said, Heath the there. our house the second, less, turnover its in to or we've has our from to business from more also our going in us strengthened the want a now opening, like you're highly have that business. in

processes playbook really have are - matured. Our

time we're to now. grow a do that and position And business, to it's in the so

been there's our look that, ROI just the emphasize that to some deals absolutely want at And but of investments. of all too we

investment think that shareholders. there more move been forward, opportunities we versus of seeing lot deals we're - will and for to have just did that investment get great a represent we the in a our we've for that add as so value accretive on And great are and passed some more not acquisitions EchoPark. But

And from our perspective, extremely balance a sheet if you look at low. leverage it is ratio

the profile credit from is a agencies Our on basis. daily improving

the readily got we've So markets necessary. needs capital available to for if access additional

X% it just I follow-up, the you I of mean about would look it's market. mean, at a be, AutoNation,

now, I talking you mean, would Lithia certainly sure, ideas some ever, making can't aggressively, X% on you I'm got you right the about because about You spot I well, about this. may have acquisitions I market. pretty mean, getting put of the

could this addressable X%, say saying, So you I sitting of you market, of be X%, could a the can it here in where ask, EchoPark, yeah, certainly percentage after as out be you're I'm put fit X% be going mean X%, market? going and right? the Because to willing up market opportunistic in new XX% to the of be new I going something point? time? just see over at vehicle some a Is target you you'd roll is it to or that Is more as

of we our because buying right that's look, the mean, that I'm in right? the back same, sure the number now do you'll just I so, buying, and opportunities ton Well, in see with, go the competitors there you see us end pool, between of and a and we'll a year. there's And just out particular, now come

And so, starting our really we're M&A to perspective. an yeah, I from But kind time, stride think at that. some of point define hit can we in

stores begin and these where how buy as so, kind bit of quarters, we'll little to and of And give few that many we we're a more headed talking this. going with us a we're about define

Thank you much, guys. Okay, very great.

You you. bet, thank

with Instructions] question next [Operator of Jefferies. Your the from comes line Jordan Mark

for how I Thank morning. you multiples seeing you on up taking trends? questions. my guess, Can talk following compare what to M&A of and they kind question. Good now you're historical about the

narrowing city. that really just different the down market, north buy a Porsche store, so buying I They're to it of the X.X, to those But if ballpark if different X, mean, our markets some It you're you basis, over. X, XX of would that over going really depend place. it's you're that from And with multiple. or you're and out a go and kind we're are I a a somewhere going all brand numbers all There's the on but, the think does on because imports, seeing. of pay different depends domestic as you're issues in hear well. many on competitive the set And it in, nationwide

looks market earlier. of up the on EchoPark of quarter, following above I GPU headwinds. up, guess, the kind question I to some And, Great. offset in like some Okay. those pricing yeah, from took you It wholesale think

is bit more maybe where of model sourcing maybe rethink a just get above you this to EchoPark? to So pricing when back been little a be historically we kind environment, opportunity an for normal have of the or

conversation, loss XXX%, XXX%, what the because an XXX% we because of interesting It's brand, high trying the in it the in balance of and the of share. numbers the is to market terms as this as timeframe timeframe, got during strength our showed maintain

So they experience you just price, our then, get margin strengthens, There and just introduce the experience going fantastic. the we be than great to to to guest the brand that coming And into get gets the that in experience as more be opportunity retailing road, store. websites down the fourth digital are for our definitely is quarter, expansion. to and just the platform new going

platform. numbers today? our definitely go us retailing and butter. stay quickly across with very known defined those to aggressive yet, the the We and a country not I that might have below market will get same bread we to brand market below expands nationwide market. play market still brand. from down digital Could the That's just We have becomes will as continue Wittman X,XXX versus on you see of to X,XXX share kind Steve And and seeing the that our we're X,XXX but comment

sure. Yes,

parallel, a digital e-commerce and are tool. So here In retailing we've Sonic X-pronged to building proprietary Automotive. at EchoPark.com approach taken we improving our

Our retailing launch track to tool year. digital proprietary of QX on this is in

product of really that's lot out consumer, owners for there that a of we're true a lot have designers, without experience having a human deliver other of of XX tools working to team end-to-end improving the big and And EchoPark.com. like our on now. right In a are developers We people who intervention set parallel, have. over

ago, our up ago, XXX% visits year year are are leads up XXX% versus are versus EchoPark.com, cars from ago. a So a versus XX% year sold a websites and our the up

the did more single May our we're June brand. the strength than EchoPark.com of in we shows we and actually EchoPark.com. just July, third for shows of we've the every time actually, also day. strength generated website first And and our from leads the then So improving from and parties,

Great. Thanks, Steve.

further no conference at to questions any management I'll the time. closing remarks. have for back turn We over this

your everyone, you, great for and of a joining us week. Thank rest have

you. Thank

for will that all Thank today's conclude gentlemen, you call. and joining. Ladies

may You now disconnect.