Asbury Automotive (ABG) 2 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

Matt Pettoni	VP of Finance and Treasurer
David Hult	President and CEO
PJ Guido	CFO
Dan Clara	SVP of Operations
Rick Nelson	Stephens Incorporated
John Murphy	Bank of America
Ryan Sigdahl	Craig-Hallum Capital Group
Adam Jonas	Morgan Stanley
Rajat Gupta	JPMorgan
Glenn Chin	Seaport Global Securities
Stephanie Benjamin	Truist
Bret Jordan	Jefferies
David Whiston	Morningstar

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Asbury Automotive Group Q4 2020 Earnings Call. Today’s conference is being recorded. At this time, I'd like to turn the conference over to Matt Pettoni. Please go ahead.

Matt Pettoni

Thanks, operator and good morning, everyone. Group's XXXX Automotive call. Asbury to fourth earnings quarter Welcome be recorded replay Today's being will available call is and for later today. The results were is Asbury's fourth this detailing website and our posted press morning on asburyauto.com. issued release earlier at quarter our Operations. with Executive and Financial and Officer; Participating Senior our Chief Chief Dan our President Clara, David Guido, Vice today are Officer; me Hult, PJ President of questions questions later remarks, conclusion will open follow-up for of for up available be our we might and the will At call I have. you any the

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

the statements financial relating which are subject markets to performance significant the financial potential from suggested as Forward-looking and on expectations of partners. by historical to statements and than the duration differ vendors our and pandemic customers, uncertainties, those business impact suppliers, and well our from pandemic statements contemplated All as including including statements materially forward-looking results may are industry and and those COVID-XX growth. products, the the projections statements, other and in our about on business those us, are COVID-XX nature, actual our impacts

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

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

Hult. non-GAAP our we directly the the is rules, pleasure website. comparable over to CEO, applicable such GAAP by required provide to reconciliations David on our SEC most to of call my David? hand It measures measures As financial any

David Hult

another the record morning, volatility Good uncertainty to We quarter in and Welcome call. economy. all-time despite fourth Matt. just earnings fourth everyone. our quarter reported continued Thanks

strong gross expanded margin versus we last delivered basis recovered points of QX from a QX XX which of SAAR As lows, XX.X%, year.

SG&A and of XX.X%. expenses We gross also in achieved remain a very of percentage managing we as active profit

on year. call focus great once prior also whole Our EPS quarter. XX% I like the profit gross expense year produced that of again was would a $X.XX, XXXX over as for to With management record out up a Asbury. a adjusted and

Dallas, we operations Jeep level For We Elway. million billion Barclays' highest auction technology announced dealerships, acquired and by from online by EPS car to of XXXX. center the two revenue. plan, our Increased million, $XX growing increase strategic income annualized total allows full-year, communication in a acquired an to grew and XX%. buying Dodge transaction. billion over in $X.X eight which which John our We We We from adjusted for in a $XX adjusted and ecosystem, in targets $XXX collision five-year Chrysler the XX% launched which selling Clicklane, company publicly centers true Denver added store by and the ever. in revenue one

flow. our due Our balance performance sheet in strong cash to remains

This will times. us grow more Our and acquisition pro active allow by pipeline capital. strategically X.X this business quarter maintain ended forma to leverage deploying at net a our

years. over back last the Looking three

acquiring billion and $XXX dramatically in by $X.X our revenue. annualized We divesting transformed million have portfolio

compared than us achieve margins Our acquisitions to X.X% XXXX. X.X% helped had our our accretive much and to overall This higher margin margin. our divestitures in were operating

in to our optimize portfolio future. continue the will We

key our to objectives Turning in XXXX.

transparent a stores Clicklane guest or QX, pipeline goal strong delivering more build the below experience. revenue end continue culture to active an by Rollout We net of partners to great our while allocation build OEMs maintain XXXX all of across of experience. exceptional acquiring the departments, Grow our all at will by revenue executing and platform billion same-store to M&A capital guest $X to leverage our support obsessed X strategy. our times, by with be a our and

only Finally, our is differentiator in we know offer. we franchise of have the system service the we level

men all our serving guests show us all than committed up our to who'd women performance in and and inspires strong yesterday. every Their day the because stores Our be were of better with is professionalism. performance of to passion we incredible today

Our we this teammates, all run forward to every future and with is bright sharing day. our who look journey business our of

over here discuss We operating to making performance, I our they Dan? hand now a call are meaningful thankful are difference. to will the Dan

Dan Clara

Thank will fourth quarter morning, you, to the performance David to My everyone. remarks good compared and XXXX. of pertain our same-store

Based vehicles. remains on focus volume. new margins at and conditions, market improving on our current Looking not chasing

gross All segment profit luxury the XX was was in acquisition period. year was up from significantly $XXX $XXX car day year to Barclays, per from or period. our new new per from million XX a and margins December, we up PVRs the down XX%, driving Factoring supply prior the vehicle of year. our $X,XXX prior car store our XX% total mix our all Our up days, of days the increased the XX%. were prior end inventory vehicle or At

As of of a reminder, all XX brands. days is an our average composite

Some XX due day major were during experienced supply below brands the challenges and to the our of inventory. lack of quarter

the remain recover to production as first We gradually the expect the that half but for for of day year, low back recovers. capacity supply half

vehicles. used to Turning

period, was of in we strategy X.X%, condition, the from and maximize being our current the margin improving to our inventory growth representing opportunistic new up per Similar XX $X,XXX. Our prior vehicle on focused basis market profit points to gross our with profit vehicle profits. gross

XX%. gross profit our performance, As result a our was up retail of used

days used prior represents day XX $XXX inventory two a which from December year. up supply, the Our million, vehicle at ended

Turning to F&I.

to year in fourth $X,XXX. $X,XXX sustainable quarter per delivered an increase yield fourth retail the growth per the $XXX front-end $XXX consistent of strong F&I car our Our quarter, vehicle to In and per record prior increased vehicle from a quarter. of

our and you front-end if yield parts per profit, addition, gross car. which per service, $X,XXX in In vehicle we include was reconditioning report

Turning to service. parts and

omnichannel platform improved We began allows feedback three service prior figures and and our like car to in extremely It business provide in and Clicklane ecosystem, but consumer, that fees, more In our decreased exceeded a three five local And the loan lows more results includes products online which choppy penny which the expectations. taxes collision double recovery a payment online Clicklane loan their on market. to Clicklane to Early we have April, and based appointment on payoffs, would I a all due unique includes, many to Although and been other true pandemic. marketplace, evolution online from that feels for initiatives. full encouraging. than that experience. with guest ago. on platform finance XX this ability communications stores stores perfect quarter, sign we December These period. latest via the the currently to launched VIN-specific values the trading have the our year the an and the technology documents results insurance in and DocuSign, in-tool buying customized for the in the selling continues vehicle December, Features update piloted platforms strategy scheduled and sales to now, our scheduler. real month of now are is versus lenders, than the exist service retail which omnichannel is Clicklane, years car on be guests online the our parts automotive revenue and

XX Since on took end out was end transaction timing have the arranging of continued customers only complete QX. the including addition, in to for the minutes. deal. of with complete of have of minutes transaction, Clicklane without The rolled it transparency, stores and a In the online entire all-cash average the and financing guest the great all we've QX, ability ease total X to minutes or commented an transaction use our to a expect rollout by to an financing and

of the QX. our of results confirms stores at of finally, why the full the made And the during acquisition. first With from connected we looking majority Barclays, half quarter we second

The previously are deliver would outlined. take track and profitability have we to top well opportunity to I we targeted And synergies to like within appreciation our results. line to first and discuss contributed to quarter guest timeframe their their now to the all XXXX. will over express I the teammates on experience, full to continued focus the performance. this PJ? of improvement call our during commitment for financial to PJ perseverance in field the our continuous their meaningfully hand on the

PJ Guido

Thank you, another to marks Dan would like I quarter record in good this morning, and company highlights, financial macro everyone. provide environment. which our still uncertain for some

you last XX.X% for performance last quarter February For to quarter, additional our refer year, XX% prices our on gross selling expanded in acquisitions for than XX Gross our new and the dated higher driven today financial proactive by press in financial would of improvement points management was to basis the fourth improving release inventory year per and compared X. completed PVRs by supplement and to focus Overall F&I, and average revenue on higher to our total unit. used. I margin both details profit due

gross and SG&A due to XXX the basis personnel is percent decreased a of XX.X%. down profit We Moving reductions to advertising. P&L. This expense saw by points on and as efficiencies proactive gained

the million fourth control pretax Adjusted or the previous share $X XXXX quarter XX% real period, imperatives and about $X.XX the a X%, charges was the $X.X momentum the prior gain for $XXX,XXX a maximize fourth basis XXXX EPS pre-tax for record related Net adjusted divestiture. per diluted margin XXX charge period by franchise from -- last in on estate pre-tax an a pre-tax $X.XX expenses increase $X.XX per a adjusted settlement Net gross increased of diluted diluted quarter diluted million $XXX,XXX of to from year. for a income a quarter adjusted actions per or Our or dealership same per or for operating resulted share. for profit quarter. points share. charge share A versus of fourth legal rights was $X.X maintaining and gain million $X.XX for income

expense rate the dealership approximately was rates. million quarter, the tax real includes approximately inventory $XX fully we quarter off Ford on to plan primarily XX.X% $X.X used lower lower annualized by during in revenues. quarter, XX.X% we on this levels debt effective the over $XX Also XXXX the in Floor line. divested spent XXXX. which compared million million deployed full for which respect a LIBOR decreased driven by repayment, spent $XX approximately year to With and improvements and and generated Interest estate Our Georgia, for million in capital store prior our year quarter, paying we

of times, result As and our position of a balance X.X leverage liquidity plan revolving on credit the I below approximately the quarter, X.X used million at of our like we regarding our of of end performance, our a pro $XXX availability sheet floor both at targeted forma quarter Also now strong XXXX. comprised times. expectations with comments availability very net would and ended to stood line remains offset in well a our cash, make facility. few leverage our for operational the accounts, and range

volatile half of do gradual are a operating production limited We environment OEM XXXX as out improves. get still visibility, second recovery rolled anticipate and in a the capacity vaccines but in with COVID

As and parts we nimble believe recovery. remain planning and adapt economy a see a million gross conditions our our we'll full whatever SAAR for the business we approximating profit the result, And up, to normalize to are vigilant inventories XX and begin to evolve. service units. opens But

improved believe productivity. should continue from benefit a profit gross also as that and expense percentage active SG&A to of management We

in of real estate financing are planning to potential million. a of CapEx that amount buyout lease excludes This approximately opportunities and We be transactions. rate tax consider $XX purchases also XX% for approximately we XXXX and

a we of to launch our would unveiled also provide like December. at I Clicklane plan quick our review five-year Finally, in of

our five-year EPS strategic billion grow to revenue by add expand excess and XXXX, of $XX is growth. in operating plan margins Our revenue of

five and teams thank continued of over to billion incremental new long-term tirelessly to the growth revenue years success. Specifically, additional billion current of $X acquiring business, $X ensure and years, includes over Clicklane revenue during same-store adding would I through an platform. this who of revenue work closing, time also this our across driving five like $X billion the unprecedented to In our

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

Operator

Stephens with [Operator ahead. Instructions] Rick Please We'll our take go Nelson first question from Incorporated.

Rick Nelson

where new same-store I to sounds X%. about talk try to used taken cars, wanted you've GPUs. both down strategy X%, new a It to used So, the and maximize going like down you're units

think I [ph] market is could If you and years which speak that the to to share XX - will whether strategy continue. happening about

David Hult

year. supply day approach thanks see with Yes, the this Rick the is of, good where you our We're went large October. into would we morning and the David. end the for is we by what and a question, And know coming can we at. sitting I tell We month we're inventories luxury. see in of what's December for what for can we have and

side, on would sales, chasing just I you unit volumes tell replace the So, weren't we couldn't the we because because we new car inventory. lost

a gross the thought return better on our as as possible. profit to So best we it was just maximize cash

below Dan supply XX out, in day strategy line. that's even and model stores had supply pointed a many As a with December, that across we XX-day all

So individual have supply. hot models any you didn't day

So there hurt that no is question unit sales. the

about and for about side, when we've that far when the a purchase vehicle maximizing On pre-owned go chasing it's our again returns. make a not greater for vehicle. We it's we traded profits we volume out us then sell

just are these the and give best really when prices high challenging So, the we to gross more can can. is we've and opportunistic the returns tried at that at least to tight inventory maintain as greatest auction we months be and

So I because some quarter other sat tell days of first going and the we microchips it's second quarter on bleed before back supply what's the be back. thought the you, going well inventories ago things, into with would a normal. end But to quarter probably here up to gets and the would by

or looking market return. maximize We're never up, share some and short-term kind You really looking do We're at and month, the gain how Even but that share how going we market our didn't. we're of some actually at we each we of picture loss. looking know overall numbers, exceeded that those in with it ends markets some not return. at into

we're with out it's played way happy strategy So, our the and so far.

Rick Nelson

so you back GPUs? hope go to back sort those level when of pre-COVID of [ph] the like there? on to things we it on expectation half XXXX the and think - hold tax you I front, inventory do your normalize, expectation. of current your sounds Do some XXXX Do

David Hult

Sure.

excited a when Park things pre-COVID in drop-off the the back does difficult going because those certainly XXXX. Do And be to business numbers to are I about this very what going some there'll move some honestly, As now. But that compared days go and normal, the incentives from moving We of be will that conditions company see our back numbers. predict like overall we're the things what don't XXXX. is supply in everything I'm what are. we to growing areas, our opportunistic - throughout, think just pipeline acquisition economic might think what be different to see active in we'll I maintain XXXX but is to XXXX we right get sure, very very quite around Place there about to offers. And acquisition be,

want lot good disciplined a we space of is we be as execute and to things there in certainly happening best can. So, this and

Rick Nelson

Okay.

about Just to follow-up comment that pipeline. on the acquisition

as the you're If you pricing - buyback you seeing buybacks speak up know authorization stepped preference acquisition of versus what at in I moment? there. as well the that out to could terms your

David Hult

what generally returns conversations greatest right deploy I us the for shareholders a with and activity of gives folks it picked the would slow around was our meaningful to our - for Yes, having of we're now. the conversations best say for kind and different but And holidays, way The January. capital. in overall, up lot dramatically Rick pipeline

But about lot in goes. it that. early. We'll a where we're So conversations of and see excited it's very engaged

legacy there's of want they As is far now. a who it's as the to And a sure their space pricing and multiples, that lot competitive to. out make concerned and about buyers sell sellers And of lot that a overall they're there. sure I'm right there

happens. so and from least see we sure perspective, what M&A at will should be But I'm be it it an see an far, active year So, what interesting an year.

Rick Nelson

Great, that. go ahead. all Sure, thanks of for

PJ Guido

pipeline. to that Rick, maintaining extent we as and waterfall, target, to active well said. target. capital there to has we I sorry over an balance the delever to shareholders. we're left the we look our we to PJ. over our And allocation and which have core in David is this then the I in earlier, add foremost, means which And acquisitions, first mentioned sheet We're as to business, And would look just would below is for a want our cash reinvest do policy. we're capacity our extent return

Operator

Murphy from We'll next Bank John go question take America. ahead. with our of Please

John Murphy

just a Just and are whatsoever integration more - acquisition what learned bat, - here right of still Place for gone there's seems the Exactly than any which sort I off process. actually on drive the a planned or they amazing like actual even pretty actually the like curious to helping been and it's mean, first an benefit Park I'm on integration is integration, question better the seems on and it's just performance if acquisition? it in net [indiscernible]. lessons targets hiccups the better we've

David Hult

the start. going pieces is I'll There's frustrated this a X,XXX moving really employees. of John the of hands a David, folks through changing buy-sell and on speaks Park Sure, lot just Park there's a folks and level It side. professionalism their Place sure Place to lot I'm of

luxury revenue post which I in really business but with for the the in a got the really work But is our don't is We the we've it's well. difference good a respect stream. business. committed think we're I'll that that of what steward they up, the with I acquisitions we at interested there the been look we’d mix We're at big think And and another getting, professional low-day that's came intent the how on and of teammates, the what business. look what to a both truly thought them. of making acquisition just we do passionate amazing that a far sure runs when day be exactly who have at we successful as steward or look working are as single I every would acquisitions. model tell if been at Indiana supply they benefited you, ones, we're do. us credit We've Certainly whether what sides be through that couple would and went so as integrate. the pretty it say and the in and and that years, to at trust issues when acquisitions one good it quarter, they Colorado the level of far the the last in

John Murphy

it’s helpful. incredibly - that's Okay

Just - the second world some around is obviously volatile. the question service, a parts are choppiness and here markets there and

it's understandable? sooner think sort you mid of over somewhat catch maintenance and about that normalizes, there So when could it think if half this on or maybe there's and normalized do post-vaccine deferred much is But you year parts you think that out or second it how the time? up service, you might

David Hult

those and in came first hit, In it Sure. but the bouncing and to like service coming year, we just And collision went more in the a been December. you volatility. quarter, of started parts a through in dramatic XX% around summer longer and then positive off reminder, back. November we're it it for and it the off negative year. starting was And been numbers while bit January XX% we from business it's back a kind back collision when little cooled fourth virus, only to it's our and as feels around still prior numbers tell maintains I'll and

rates high an little on market, It business. you're these seeing number the parts the country that a playing theme. and by varies impact you, positive service day across but bit tell the would a of are deaths that's and X,XXX I the over generally So,

it's it tailwind. demand things confident they August vaccines only have early be pent-up it the the not normalize comes really get groove believe it start of now your all every back to to that's predict is service and parts somewhere service a normal late and think and when and a we're is hard back, on sooner, should work So nice To opinion. a now. with with that's on that what's we we in right July, vaccine June fluid, Could our parts day. to and very way service. between should look we But see feel point about as And rollout going reading we right it's in

John Murphy

SG&A. long rates I to helpful. hope lastly range, grosses quarters And in Obviously, all of degree. in run sooner, the few that's denominator XX% yes, last the the then high there but will are you for benefited for a us be that's, the just some year, it's on

So your leverage maybe you forward SG&A takes even you low or you're if better going about this of and the in operate it that as has structurally XXs here quickly over base able can time changed that something whole you think think to and off bricks-and-mortar.

David Hult

say higher our business of had I said divestitures margin the main I stores those three and when a acquisitions business. of some would some and my margin lifted there's were history really the Like margins lower levers. in of that were statement, we

I think sustainable pickup there. a to going there's definitely be

your production with it's changed full tried and downturn brands And per stores, stayed in. it's XXX% with Clicklane that. close point to were when them also We but pretty luxury up we month, it's Most to that we one three our of over each. employee only the hit Clicklane, disciplined

in there those SG&A over a well. meaningful difference time levers So we're three between here very that as is hopeful

John Murphy

underwrite now would - But you kind or you land. saw Okay. where to of, this is really XX% going the range XX something low in

David Hult

around quarter think Yes. there's operating from we a depending is now. opportunity. think position when maximizing certainly about I be back call land, right I still maintaining view, this I an to many next better much were where Depending too pre-COVID. variables and now. say that in where margins than SG&A our standpoint normal, upon I lay, the exactly say, mean to we right I margins But we'll would it's would bouncing through goal higher get our

Operator

Sigdahl ahead. our Please Ryan Capital next with go question take from Craig-Hallum Group. We'll

Ryan Sigdahl

looking specifically Just XX. online, wanted to dig the XX a in at and so Slide on little bit

bit, kind or sequentially a online So also trending little internet appointments lower. guess of year-over-year down service I it leads shows down

guess, you the sequential As I you kind a pieces lot moving gaining talk and talk traction about you're you're your just online. of of Clicklane, can decline through expanding the there.

David Hult

Yes.

then about in have you So the leads on I'll on more more your have our industry, for more when and true online comment the thing traffic eyeballs and One Clicklane. you talk inventory is side. decline

traffic of was down had more inventory lack I much. So inventory, down coming think have leads we the don't part of been the would as

other really The where trying is more of to marketing sell didn't was we with had makes it it dollars. it. really to create an of piece to sense there inventory, too strategic be less the Knowing some product leads the we supply have of

On which about PushStart. we're Clicklane, and Clicklane when I the growth Clicklane would conversion. to It's up that that dramatically today from Clicklane are of am I side, PushStart the conversion it's material comment the the counts talking up is on the it's with stores going on the made our Clicklane, not compared say most lead we compare to difference on and

Ryan Sigdahl

talk the by rollout of stage the X of QX, just what of at the start? tested in out Can all roll couple going how through Four to months, and have you that cadence over plan - to you next the beta Clicklane. then cadence end December. on And once or you're

David Hult

Sure.

fourth quarter did we'll up, a XX in rolling between out at the and we're the transactional the not when stores in offer tail the include quarter depending all. Place, eight which And have week. of the the whole upon online towards We to end size stores company tool set of also Park anywhere

look QX. it or if wasn't end at get you will, It So first their at shot first at in QX. of all sites in their they'll the

Operator

question take with from Stanley. Jonas Adam We'll Please next ahead. our Morgan go

Adam Jonas

they as you wondering you use also just in to is your ICE-powered to questions of control legacy our - they business. a franchise I'm moving acquiring start-ups are the confirmed that distribution. understanding dealerships the they P&S model, don't there that they still are want So do that's not to rapid difficulty] you're lot but [technical holder direct David models. If consumer although including existing dealer fully OEM P&S, dealer a a tech on downstream concern, assure to insist, want it's possible entering to not down Apple ICE to of don't industry, intense legacy EV move ICE? about legacy And at products, debt couple ICE the noticing sell that business, worst here this auto of franchises. And shareholders any a on refresh could long-term the can us vehicles. if the doubling end time ICE for a your how Thanks. you're I'm want you at brick-and-mortar

David Hult

share we'll I Adam. that go partners to they're you tell in our long EV of have process all a for the quality for transitioning But that Sure, handle side. manufacturer cars would figure speak, and time will back out try I'm building and on would been sure certainly how which and you, vendors as along coming out, be ones and There's consolidate and the ride great you I to technology. service also in launching sell the literally will. to lot as ones working to aware, some if them of of the journey with car that companies a would which one them tell are make you're them. I their partners we'll we which and with and spurts And you which soon. industry has ones going and EV be any like third-party that see don't, tell they're parts

about think to well chain either. work model a is And there's something supply and that I - think thought something So don't now. and mechanisms tried I there the out that's true

or We're locally in might out know it it. whatever to doesn't We're figuring not to vehicles whether electrification many or community go. service matter. We're making how ICE here as reputation the the really and strong years a hybrids do it as sell recall. have or a So it it's and or handle we to for mechanism how the and be, and we up have been go

Operator

Gupta JPMorgan. Rajat We'll go next take Please with question our from ahead.

Rajat Gupta

question on Just based walk are you not some I'm lined growth follow-up the year, but like sort are earlier. expect year. what where the of of the sure I up. of if missed it expectations a SG&A give to SG&A up earlier, on range follow the you anything Thanks. to And I for a that for could you around in have a GPUs want just for sense this rest us the

PJ Guido

Rajat, Yes. PJ. it's

SG&A, benefit on are salesperson, from that as confidence know there we in So form our on to predominantly confident side units personnel metrics. other the a see QX leverage balance that What and retain or the QX, we whether we are costs. we David we track driven mentioned, up is - we and forecast changes then generated average difficult it's per that is the there will do it's to environment. growth What those per that. and and lot in related in have can continue to structural hope productivity do we is in we that the in we advertising of associate, productivity And higher of this

continue some will As made the our expense the the the will production very at changes of and us the expect gives comes will latter we're SG&A be structural be active growth, confidence in again, fact looking again, year. But back we've on SG&A. managing that see favorable. half pressure to We to we're online, do pressure - which that on put

Rajat Gupta

rolling around purchase difficulty] execution even should case? of Just the broadening the normalization advertising in advertising or back [technical after reach like, pre-COVID Clicklane that Clicklane Is a to context within expect beyond for follow any just platform. is we of look SG&A spending level, again there further Outside that? that anything another and this the which in might the in on platform

David Hult

question as guess the marketing This was And you is in to out cutting if David. the still against I car it look per peers, marketing. bit, and have I and but I a the can't do, spend we've speak fourth but if little I quarter, in apologize. prior lowest our that relates Clicklane, to dollars traditionally wrong, got for It in us at

investment we So time I our traffic. it marketing get. of fully think we're Clicklane the drive spend end dollars in make We some first going Clicklane by really QX out a the will much. to is for PushStart stores marketed to that an was never and business Once rolled

We will market Clicklane.

And we've the at difference count up, is to we at of meaningful will I continue our group. on probably quarter, and competitive compensation much see opportunity our is in of in forward that. SG&A, dollars us you'll in that keep certainly it. but time end plan spent certainly the that operating disciplined PVR always we've moving because The know productivity peer down been And there fairly expenses. don't with I think will our be we'll regarding look kept a and our head think over better half there the some the and So

Rajat Gupta

like in with for here quarter strength that the to one with in Any in when any on you about far are has terms and the you - seeing like Or me, environment in color, units? general, in the respect of last the color the margin same January shortages chip so change January? any fourth demand January? the what here In out? GPU was is Is situation near-term. talked demand is the trade looking how the Just just there like

David Hult

activity was overall it's a a the December, we're always but January will business you January, how would same by In from I the I been surprised day very the supply this the absolutely. little compare have Yes, low very of last to in the letdown bit tell tell January resilient performance with amazingly XX frustration of in and Sure. you, very January a was lot look. in areas. it and pleased

the nationally what that us. considering of with January numbers the you the of month is of sold have there saw for in sell on lack pandemic just all a you horrible what So it to compared what inventory. because productive was potential, But could in did we went January

Operator

We ahead. Glenn go Securities. with Please will question Chin from our Global take Seaport next

Glenn Chin

investors assumption a a starting the or David lot and Maybe the question revenue getting share of with and start framework goals for or TAM, of I'm ultimately remind that number regarding some a of the implies? your achievability rates implied then leads just questions from Clicklane. Clicklane. from expect first? for to could you. targets the share underlying just maybe Can narrow if just Maybe perhaps at us you in get market us you with it and the conversion So, by of that, top funnel down to the you

David Hult

I Glenn, back well, Sure. don't just at come please And it explain if me.

we at post-start any conversion It's additional traffic the Clicklane because billion will to do not of the looking and But additional Clicklane accounting looking for on We with the at spend we conversion traffic of expect we about believe start and the traffic. with our it we basically actually have now and what model $X when Clicklane. money on that. will is be talk

first Clicklane, year leads the conversion that's five with if place of Once more if of think we And like close were to and leads and push five they a at realize a then to and will number had more you call materially. those XXX you tool calling is time in because you number. that who will lack that we to of had believe next that there PushStart up can online, to on charge double the leads that people online used - term, be XXX any they they time tickets number remember about XX% level to the converted believe we in, we that transaction, you better XX than years people those acceptance airlines online. we out a when go over for trying XXX year enabling get your If takes actually full the same we online one. do by So,

of not. over next we going think and to the online of no, we between years. the online, will course, XXX% But of are the consumers XX% believe transact buy XX% So certainly somewhere five people

So it's basically taking rates. traditional our conversion

and really out Clicklane modeling years, can that Looking at Clicklane incremental growth mean, no tool over on PushStart do push I five which itself. the what against what

our conservative month of a one numbers those of would And So within with on numbers. And stores, we think import. three gate I in the luxury again, but in gate, in mid-line different were you, our conversion our brands tell you the approach. we only one conservative out four month again, very out we're three had stores,

Glenn Chin

five-year And that window, speaking about just David.

I think to Clicklane, you're Clicklane within the but quoting capability in two Automotive be News the interview saying type promising that not industry you years. throughout of sort expected

So online? network traffic conversion rate - the increased after diminish that you the nationwide, expect to the that it competition around when do or two-years, dealer given is

David Hult

that there kind late in is beneficial now overall the That's can an move online and and the at look be to phone within is, this opportunity flows controlling when the a in consumers of transparent walk level speed automotive experience meaningful. accepted a that I here to the be and the was came really satisfaction the will the space. the space the into traffic it don't, will XXXX, cost how really consumers, through benefit or of being traffic and I will and The this different with be Internet. of ‘XXs, how like websites go use that early store channels. tool The in

Glenn Chin

is retail? and And then and that that the new F&I? $X used billion target, all any Is David, parts service or of

David Hult

SAAR it to Well, not numbers factor numbers, revenue is same-store We obviously with XX% count, thought in sure. kind some assume brand. simply parts and what and and we everything just five where that then it's not in about talked over for any and plan that the at the service, our When at now period. and the have in numbers, our the five-year share retention market of growth about But conservative sales We service we model. didn't downturn F&I, any five-year we over of we somewhere do. do billion years, we looked store our that economic next five-year we no, we Very it's we did can it's our look XX% and acquisitions, a sales. between what we looked $X in assume talked

will. of the and numbers So where that's we just you way that kind modeled it laid if

Glenn Chin

David volume of retail less around, question rates a attachment guess, obviously got you increased with not more because so F&I, Okay. much or increased penetration was volume But I that? my around expecting you're guess sales. around I

David Hult

mid-line we're That's per going XX-day, so and but talked it's stores, it's talk I F&I luxury again, time. But most the than more I'll only one store numbers a pleased and cases I seen to know significantly you stores, tool with be in the multiple up dollars only very we subject small four vehicle far. with F&I few because Clicklane I brands. for. one to forecasted three so it's would far, the has And stores tell over sample. that in a we've but Again, were it's in import.

Glenn Chin

driving be think do that? And you what might

David Hult

and themselves going go think on they're and pay it and is they there a themselves. convenience buy they to why ever for something and going selling consumers I before of what it they're justify consumers sell people out to it. purchase Most

on years country. big that to XX is There ownership is The expense. products we a in purchase value the think vehicle. almost of focus big I add the length a average

and I end make think present price it selling to the give you to decision. up educated if you can products on is allow products. products What information fairly professionally an consumers with

Glenn Chin

times follow-up someone's times a to Okay. PJ. PJ, just guys it changed, was And that you Thanks for asking? X times, did the X I your appreciate it say feedback. much. X has target just quick Great. now leverage very housekeeping is

PJ Guido

Glenn. Hey, Yes.

times, a times been kind been X that's X X so typically of typically window. to big it's So or it's times

to X sheet imbalances risk put balance enables the times, we us conservative target Our work. both feel to that like

Glenn Chin

for thinking Okay. around your But clarify. Has to just changed? guys you

PJ Guido

X No. times.

Operator

take Stephanie Please question ahead. our go Benjamin from with next We'll Truist.

Stephanie Benjamin

looking on the your still, growth given, see slight I in wanted ASPs But just to quarter about the bit could whether ask acceleration year-over-year. business, it's obviously little a or the performance. even did margins speak at we up a bit in about of growth unit and decelerated a used by side just that, themselves actually the you fourth

Thank seeing you. So if you through used kind you're the business. walk could on what of

David Hult

say Yes. is our business best right I goal is the now describe the Stephanie, used is chase would this way not David. to volume. to

the has different we track whether best at charge, a where we to lot. service couple about take we're the and if on target off XX% cost would the up profit auction whether it, of being to return. want we Our was And the not thousand We I of what's and gross the get acquired in think are highest of dollars our an all jumped trade it tell very say, kind we margins but it avenues since goal be. and it buy margin a our deceiving, whether the probably chase how do our return. really or with we investment we really say, a in car you, would purchased sale happy is performance up you it's XXXX. I up pre-owned street

back I the the was XXXX, $XX,XXX. end at close quarter think And think you of when over to $XX,XXX, we QX ended $XX,XXX. it

is going have a increase of a GPUs effect QX standpoint cost as a XXXX to $XX,XXX an of were So car. in we sales margin. material in But the on just

hundred running on where a a ahead were of market based space car same-store dollars competitive we a in and a that's couple of still we're So number.

It's in So our we're plan. inventory we confident from. really being just opportunistic acquire where

the strategic money market pre-owned margin, not be on plan is really make inventory trying and sale price, going dictates ability turnover that Our turn going how low be a not fair the to over it's we're it really to to the acquisition to a because but a acquire And margin. to to in have the just about above at price. the inventory

Stephanie Benjamin

some kind rollout you like online behind digital some out possibly incremental advertising you Will of also that peers tool. table? on used about the supplying up and or support include and noted then Clicklane is some of something that through your that of there cars so buy component your And on follow-up vehicle, your advertising quick that, pure kind as an

David Hult

tool the of homepage websites yes. it, It's - the in now. a absolutely is, it's Yes, those of as that on and quick part the yes. answer on are But the stores

Operator

Jordan Bret ahead. from Jefferies. question next our Please take We'll with go

Bret Jordan

that just folks there test these customers Clicklane, in is better place? anecdotal is an the - a have information been be Asbury first may the that to it incremental guess, of I conversion store or coming stores, guess are would the I in On any

David Hult

few it's on, a stores. again, it's Bret early

market that Park miles sold them. online, it's marketplace. think just They It obviously, and of car a one on it to the you I'll customers actually the a transaction did put there would $XX,XXX I seeing online away. answer the and give balance acquisitions, and And credit from both. their within They marketplace honestly, ease $XX,XXX online transaction quite the DFW of was able and be over were call conversion in they and The vehicle with do had financed that our in it's down space, may give numbers. of Place can the them not wanted but share XXX the our real with be South that stores of the whole consumer. to transaction also. and with a And sale. card. before, the great so and when talk we they store dealers outside delivered have yes local anecdotal transparent you was transparency was We're to do that pre-owned. and Land It Carolina I lived the what experience because I for Rover whole it's seamless person lot may the Its have used higher one you is Greenville was So or can you

wanted So, for that's many I all that. they've the But think actually we like one awareness just consumers time. story, of a this long have

stumbling it when mistake website. are it the see know them actually out there, by it on they lot exists to on of So that a

Bret Jordan

do is more finding you seeing likely luxury different and or Kia that luxury? are or an customer Are midline and it midline you for a similar? you online just I in us dealership guess, a in at done reaction that transaction between buyers Florida, are to

David Hult

it you numbers. I'd like and my honest started the answer It's give question, the a to saying you what reaction tell or like thoughts you real we by was an fantastic then to I'd before give

I do how to luxury the it by with the but it, would well with take was did happen luxury shocked with like Before we the buyers, did it midline It had I the buyers. that. off concerned After well I assume imports. with was would really they was It customers launched December with midline luxury nothing I imports price well expected what I usual buyer. accepted was wrong. to, And transactionally.

Bret Jordan

versus us used before, in And outlook? revenues in have what's this guess of maybe expected mix told billion Clicklane new might you Thanks. I XXXX, but that the the $X

David Hult

- it this, with within a of a sales. same for new where launched we stayed transitioned PushStart right stick well the over and of of to there it was was kind tell I'll to when of soon we it new. So used years out it our two-thirds Very was months gate, and third you it of initially PushStart majority pre-owned

five-year the modeled off way As we've right granular we've of our now. with the it's want kind start to XX-XX it again, with to get plan. close Clicklane we we in, But

we've built five-year so, the literally plan by rooftop. And

and to Clicklane. kept kept we of higher same our kind just to volume the on new conversions used we So then sales ratio,

Operator

Please David We'll take Whiston ahead. our next question with Morningstar. from go

David Whiston

like a over on to very own having platform - neutral do to the Clicklane? curious, yesterday the new question more automakers similar e-commerce announcement just their the A capability their to you a that you? is Obviously of lot dealer. having I'm transfer as help Clicklane, end on capability But they a Toyota's at really meets does of customer you, on hurt or a it

David Hult

I the Dave. way Day. on did the for it is question, Thanks This I'll Investor David. answer in the December

the helps think space I it overall.

challenged being is system now. franchise Our

playing with As tool levels the field and coming experience. think John earlier talked into companies space, the start-up really about the changes I this

and tool it. the So, see excited them of I benefits get system am the within see my competitors to to franchise get the

helps us space a the for dramatically. very and we this thing in is So, run our actually see long positive

David Whiston

new or - customer used actually very high customers compare versus the focus just you I'm vehicle market, end the a could wondering on seems like who customer van. used a wants on that And and trends may very Okay. focused maybe the used if today's truck be contrast wants

differences what that preferences of kind between channels? Just in two those seeing you're

David Hult

the very depending great on spending could more our can't cost higher higher We've see truck, jump or scores restaurants more because pre-owned Dan more bars in wrong of looking you are discretional the with you of down up if They stepping things. with the vacations payments right that that is it quickly. people nice a the in the turn and saw market because sit people the seen we are and it's a or and going car I'll and upon then a quickly And in may new kind but now it's by going in as the And have price is then you question. buying that of When sale jump for used it's the may wants. move predominant credit can it XXXX to sedan XXXX. in, equipment. with he and a pre-owned - trucks same are on, it's It's on the David have business it's Dave, go what's same when in and this SUVs, SUV and you truck. bit, or it used little income

David Whiston

opinion sedans going keep in you keeps shrinking? So Do growing? or penetration are stabilizes now think your car to just like

David Hult

start-ups size electrification with and government, bigger the you anxiety that few say, SUV decades, an there the huge how been OEMs the seen out There of different to lot and coming going when support hasn't battery incentives in, that's It's country And The and mean come there is infrastructure I a vehicles, support movement there we've demand last hard play. the lot a get to of still a it the in the over of in into areas. the and addressed it. as issue an is products you to see it. to to is coming from not there but infrastructure the charge from

- to I get battery get there out will All been go life that that differently sure to time know range yet. talk you will and now. years that So no have when cars we electric think things and But than just I'm over aren't talk there to better that the the it’s and for anxiety change customers all you better. also willing that will

car there up far charging isn't goes XX,XXX get what new. they when was miles As XX,XXX, as life was it their the battery as

there things to role So that will it see truck relates lot as sedan, with work goes to a out time that what play over to market. SUV of and how electrification is and

David Whiston

generation that new Ford really are the on question anxious of customers truck? last buy to your And F-XXX, Okay.

David Hult

just It's the is tremendous not be a But hearing, it I'm honestly not say. I demand and great a numbers about what like as hearing far David. can't tremendously amount now. We're high question, all it. that I'm of Yes. what right hearing seeing There as looks a not it and and range would curiosity stuff.

Dan Clara

loyal be as in loyal the this our the Dan, I David. the regards ones very, that to brand, anything out is buyer probably very heard is No, of not F-XXX new to there. truck one have most although know you to

to buyer So, that definitely is it I and wait it Ford come would about expect excited can't out. for loyal

Matt Pettoni

This participation to look discussion. We day. the and you Have your great end today's talking forward concludes appreciate at of quarter. a to the

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