AutoNation (AN) 16 Feb 212020 Q4 Earnings call transcript

Good morning. My name is Chantal, and I will be your conference operator today. At this time, I would like to welcome everyone to the AutoNation Fourth Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like President the of now Rob over Quartaro, Vice Investor to would call turn to I Relations.

You may begin your conference.

morning. XXXX webcast. Lower, our Good and our Chief will you. And Financial and AutoNation’s Jackson, to Thank Joe Officer; fourth be full Mike year our Officer. conference Leading and Chief Executive call call today welcome quarter

Following I to by have. available the call will address you their additional phone remarks, that we will open up be the call for questions any questions. following may

of our read statements the materially me forward-looking actual objectives, statement regarding this statements. cause let meaning including Certain of begin, we our Securities statements known regarding from Act and or that Reform brief XXXX. statements to performance forward-looking comments. financial such may Federal and results call, within Before Such constitute forward-looking results on forward-looking differ the information our and any Private Litigation statements involve unknown anticipated risks

that are Form filings, XX-Q results most reports factors subsequent our current actual SEC annual could including our our of on reports quarterly X-K. earlier and and on and issued on report in discussions release recent contained Form Additional today cause materially XX-K our differ Form to press

AutoNation’s turn Chief will over Officer, the I call Mike Jackson. Now, Executive to

of us. compared and thank adjusted increase you of to we Good with morning time last for Today XX% quarterly operations all an $X.XX, results joining year. record reported EPS continuing from

has X%, recovery million by miles in the offset services to During Care, was new, financial revenue slower customer correlated driven. or prior Customer compared and revenue year, declining a lower same-store $XXX increased solid which used fourth the with a growth quarter, experienced partially

period. demand we remain levels an supply and New for vehicle expect to exceed inventory constrained extended

remain focused in optimizing Given the current these business operating environment. dynamics, our we on

XXXX retail We strong expect growth $XX last to to with sales compared year. million in sales approach industry

in annual forecast. January line ‘XX, have solid trends We with in a growth seen with our

XX%, or the gross increased $XXX to increased or We was a as gross prior leverage compared SG&A SG&A Thanks gross to XX.X% operating compared $XXX X%, total gross prior compared in to profit XX% XX% year. for for vehicle significant used profit SG&A percentage basis. representing percentage quarter, increased an improvement profit our retail of adjusted $XXX the the variable on same-store a below quarter, We to change XXXX. to quarter of vehicle our gross retail fourth new or year. committed mean vehicle to quarter, vehicle drove and For retail the as a XXX-basis-point of long-term per the per profit the profit

We continue shareholders. -- are to opportunistic business capital returning and balances allocation continuing in our that capital our strategy investing

share franchise to expect Board AutoNation We X% XXth. from through of Today, open capital we shares. February repurchase additional new our repurchase in share $X Denver. acquisition. the from be an billion of and the processes. USA X in stores XXnd stores our also AutoNation expansion, the brand to XXXX. in Antonio, on stores year. Were October the to bought track USA five open end We allocate or back towards shares and These an stores and this proven will AutoNation located and AutoNation of phase Austin, USA additional customer-friendly The entered its benefit planning Phoenix San XX will stores We two made authorized announced million outstanding by

experience. a a I optimized Joe. over omnichannel insights retailing We provides with solution announced units the retail seamless to and million recently purchase step-by-step AutoNation turn combined customer experience. and by now provide mobile highly have selling We that enhanced per AutoNation Express, used digital over our and Express new will shopping the X call integrated customers intuitive long-term we powered year. have of real-time set is personalized that goal that

good and Mike, morning, you, Thank everyone.

fourth highlighted Mike solid versus an share per XXXX. from $XXX during services adjusted Results represents reported or million income offset by the a today operations growth $X.XX of As profitability, new, $XXX used, share in or all-time a of has XX% per $X.XX quarter continuing net Care. year-over-year. decline partially This financial customer high quarterly and increase driven by were in million EPS Customer

or During share the non-cash in our Vroom. quarter Your with demand quarter, new while our exclude associated a adjusted million inventories. equity continued program to will accounting Fourth supply, of exceed We $XX Car XXXX supported vehicle results vehicle Buy $X.XX after-tax per our investment loss used

was year, the billion our we of balance at Senior from January to which resulted of with end this paid in $XXX $XXX December. capacity our of liquidity, in borrowing Moving and combined balance sheet total maturity of balance X.XX% the cash the Notes million end available additional sheet. our million, quarter liquidity $X.X at cash our Note, approximately on

of declined times net the quarter, Our at end plan X.X the covenant leverage at floor ratio down X.X year the and used including to quarter, availability, times times third end. debt-to-EBITDA of cash the end was from X.X our leverage of fourth at

shares million. we quarter, equity remaining shares the sold Vroom in X.X for invested Vroom of Early in of $XXX During proceeds proceeds XXXX, million fourth sold the million. for we our of of $XXX

delivering million opportunities, to investment. organic -- which allocation, So committing on value total strategy we a committed share growth and capital gain in acquisition AutoNation realized our disciplined cash shareholder through opportunistic attractive repurchase. $XXX a includes of remains

growth in an XXXX, five track USA earlier. open AutoNation Our in AutoNation attractive USA stores on as Mike XX to opportunity additional new expansion we addressed and XXXX, and remain provides

an $XXX shares for Mike mentioned, we XXth, aggregate the fourth February billion. in of additional by million. $XX additional Year-to-date $X as million announced Today, quarter, have increased also our share shares through XXXX an an repurchase X.X During that repurchased million of repurchased stock an X.X price aggregate purchase we our authorization we Board million. common of price for

awards. dilutive XX were shares has there increased the repurchase, company of available approximately excluding $X.X stock additional approximately With million the share the authorization, February billion certain of as and outstanding XXth, for impacts

investing Mike. repurchase continue opportunistic turn Looking our balance share will ahead, in to acquisitions. with back we and that, With business over I call the will to

and unimaginable sold over an to associates our delivered vehicles but came December, We together Thank XXXX in the do year history in results. you, so. was retailer XX million record automotive only Joe.

retailer have one cancer. largest fight reputation.com, In -- brand a the We in created raised the the as celebrating most by automotive to at excellence We highest Magazine. Fortune companies most in as admired one AutoNation associates $XX continued the auto and are on the most recognition, success. against recognized the achieving AutoNation reputation it retailers. when XX for brand, XX,XXX admired all leadership, innovation, one Congratulations in public ranked of sale, the over third acknowledgment such did for according a score one recognized XXXX, and we for one the the number as awareness row years AutoNation million list. and we vehicle world year tremendous having retail time. to was was The automotive of and service,

take will your We now questions.

Operator?

Your from America. John Instructions] question of Bank Murphy comes from [Operator first

Your line open. is

do? two you on over Express a just it the when question guys on so the opportunity ramp names Express guys where you time. it cap put curious, emphasis AutoNation versus the to you put capital execution needs it morning you that because politely. and share need buyback a am makes buybacks, and seems other you If capital, hotspots there. hold Good question you sense, some of advertising or acquisition it you But -- have think really and I isn’t and you on good how of it that like to think or contain, do which like on is can do just to stewards acquisitions? been be It’s capital more congrats seems needs allocation, a what up and spigot or first again the judge turned quarter what here. the there and on great to those lot of advertise be to to get it to Mike

I Excellent to Excellent. first question. I will Joe. and go it turn will over

significant surge that look, the we the enterprise investment have is making the and surge on perform platform the is want. a for to day performance investment we of we and course, have sustainability remarkable, capability priority basis we made the capabilities, company investment out, has the behind are and but investment significant that the first digital in have in behind on that So, a need is a built -- period We, thankfully day that and us. us a will continue digital, period invest we and is in, to entire

our continuing to investment are stores. USA We in

we absolutely it. new are where XX our that into optimistic that. and XXXX about rely additional in AutoNation not on dollars and you intent and that to the the communication will some marketing with We And established here right we John. strong been we markets new in move budgeted don’t are have But brand markets, are need we is for where We that’s and stores today -- USA. incremental of as confident

We will company, low our with a vehicle will on do the I don’t are do, take that there? it it strategy expect to in position and expect also Joe, we that acquisitions because and franchises, And all I footprint, you now, Joe, some to our and we fit turn leverage that happen. it very new we could over in why from

of and are attractive and way reinforce, balance To very underleveraged there us. Mike. a front sheet, opportunities have take flow we cash strong extremely an Thanks do the all in you really with especially

the will to been Mike and said going be business, is doing first to priority which do. reinvest continue in As we to always have the

which significant very front is As attractive in behind Mike USA, us and said returns. AutoNation us of see that, the digital we is in the on opportunity investment

believe said, be Beyond Mike M&A. to there And to opportunistic that but do continue continue a We then we discipline. is our going stock. maintain as will tremendous have pipeline in to we in be value are

We will obviously recently been in and active do including we historically forward. continue that that have going to

under franchise collaboration more or seems up attitude be see It towards to robust Are follow And a and larger as acquisitions. day maybe to that. the groups utilize make and of could acquisitions? as that far yourselves more on you as bigger you balance up seeing automakers towards seems to day, just opposed sheet will. the either two AutoNation, said, and to as the you we if moving one your levered approvals loosening It like

Joe could you please? that take

Sure.

tell within opportunities, you, are So to looked we in viable they I we to the across acquire say think do are for as and have I how location very are of at us relationships feeling. can those. the very constraints believe we OEMs it’s opportunities the mindful spectrum are entire there hard offered

to we So strategy, that one as very focused an and albeit see disciplined. our inhibitor don’t that’s

give of forever, but around like stick this us then on. a an of lot lastly how progressing, surge to stuff? the helpful. That’s we would how may could I on there should us curious be going timing, some that that’s update think Okay. And am Mike just is you just us big about

John. Absolutely, Yeah.

Board. to address you Chairman, going the to would If could remain be the you on

things, So I actually today, a as at step succession. we taking because are two look

As we we the is a XX company, role my step of years of XXXX, long and departure. plus a who Rick Director previously we and And two will split we with have serving Because going the have Burdick lead taken successful. that. years very ahead announced as CEO the doing in Chairman Director with

as Board the the and selected and yesterday company. elected the So Chairman Burdick Rick of met

that should give forward. everyone gives confidence of have way a and So the -- right trust lot this lot a we

kick assuming new but We company with also becoming the have the will answered is in CEO, this the off Rick the for spring the and equation half someone already Rick lead responsibility. Chairman. within will search which from

Got it.

very Okay. guys. you much Thank

from next Your question Jordan from Jefferies. comes Bret

Your is open. line

morning Good Hey. guys.

morning. Good

with equity Your inventory, that Car, of on are are seeing you, some possibly obviously, or used competitors trades the financing, attract landscape landscape, When to will away any others used in are sourcing competitive Buy negative of more talking to being aggressive about execute you obviously, the recent you inventory? you trying sort changes from strategy We just maybe

Yes.

We pre-owned have business. been very successful our in

lease. and impressive, vehicles, an in fourth the with increase XX% revenue have of them As is took in of off either Car you have Your fully outperformed marketplace we or of or fourth in quarter, trade We came the Buy see internal the AutoNation. all for which retailed XX% in quarter took those quite efforts we we from them We as will in

experience a that quite I price have acquire machine formula fair we customer. on a inventory It’s created digital investing winning arbitrate the view and pay at the in impressive. this of recondition it brand, it’s environment it’s frontline sustainable. at customers one So business then U.S.A. in one it are it to the to And the combination our of it an and we reasons is and as an our of ability right speed get price customer, to and think present price capability. and It’s that obviously our We

this next stores stores XX more So five more year, year.

the up have of you Okay. should about called in lapping improvement a We be about be traveled down And Is last, in think going Care, I then demand. back, of But that and has out April a and obviously you theory, on vehicles against run being of service declines follow sort year. we now. start real comp is it? negative seen VMT the miles as to Customer that in VMT March guess, last any fair come cadency way impacting and should

are miles the from about dramatic we We We are lows, driven is. that at It past XX%. that. estimate moment the down obviously

the that. in X% fourth down Care business something actual Our X% quarters like or Customer

view gradual broke And existed don’t so will this the you the why extreme opportunity when that as against and and year? talk and shelter-in-place. the have to it Joe, pandemic first Customer unfold recovery, Care situation we about we a think how you shutdown obviously, out

look of recovering. Thanks, kind business Mike. at as again I reiterate will we

recovered If all the has volume the warranty actually as pay, driven was you recovered obviously, by quite indicated, miles. think of are Mike doing business that internally, about really collision customer we lagged, nicely. of It’s bracket has

and with look you dramatically that going COVID, year. in Care you as talking collision see driven In the will the But at think and you the you through and to to two if the going as year, are of of vaccine really, we even decline impacted, the course last April comps business. significant reopening starting QX throughout being in months the of be in particular QX, recover year, that correct, Customer in favorable benefit as QX I it’s us you the As really the the think, particular the recall recover I were continued associated April will saw with through year-over-year about are May the and miles country.

you. Thank Great. Okay.

Sure.

from comes question JPMorgan. next from Rajat Your Gupta

Your line is open.

Hi. question. Good my morning. Thanks taking for

You parts provided miles is how here? work you comps pretty or I driven so the color has you forecast. early in January line the And performing, used quickly. February through. any year-to-date the I new business been pay and color services and in to business pent that part should also tracking levels of the customer there side business on was about Any assuming talked the in the like flow more the with started talked and up vehicle demand on on tracking about unit far January. and color some vehicle sourcing, some but there inventory back continue how is warranty to am come on

there follow thoughts Just a give I your have us here up. and Thanks.

Sure.

production a that Our don’t units. see impact on of by path But XX very where disrupted produce this this is to business with a I volume vehicle have pandemic than of the improve million opaque, to the you view them. that, combination situation production the the now approaching on year, will There new chips side uncertain, shortages demand about higher side for the it’s is but X% the vehicles.

out ours literally months, and to show months. a six of One way was be things that parked told them having parts completions we after the we didn’t seven made fiasco that the months, through, production and turned we went was up vehicles eight that the were for when even manufacturers the vehicles had all and then resumed without we on for were shutdowns are

have of unless pandemic And the all when anyone I think a practice shortages And so chip really don’t and really clear, the to going to sideline combination that and the don’t this manufacturers the they knows. parts. have produce stopped

I is So think the demand there clearly.

smooth I tracked The extremes that there demand think will look of of say year. new out safe it’s at year, along if is you the this January statement last line. think sort up be I to X% you and that fairly that volume

business Availability, industry said, terms much goal. in our outperform pre-owned the fourth did can. generate I But means we the I the is That’s as as on relatively think for look think own to our we we probably we as quarter. and I will stable. as

with very have We successful been that.

continue driven the when And at it’s that Care add will existed pre-pandemic a of fully do We working to that. behavior a that? know situation again miles you Customer what people could take don’t resume and I that to exactly. Joe, while. like would

as the going the touch really have indicated, One, a things. used, I me one Let think, to is couple of of benefits sourcing. the Mike we

customers peers inventory about sourced a lot inventory. from versus or our With being XX% the less. XX% having many So used directly is of are of

that think well serve dissect positions the for XXXX. me well Customer little us Care. does -- clearly and bit on let us I a And

think and asked pay customer I about specifically warranty. you

if through miles particular really that is are that. down area you if fourth in in Again, being collision portion optimistic little as pay directions Care a the that go And down positive again, recover, quarter, actually than entire business ZIP dragged, look think, a a that you code flow in So about indicated, kind we warranty to Customer of Internal I will. and but Customer the you Customer miles was XX%, same growth bit more same XXXX. again units. recover similar, not at area down very down the associated much, see greater is bit the if saw that of collision Care as The improve is has with we little of general volumes business with the about as will. X%. the will the

warranty, fourth perspective year-over-year comping that in in down December January and it pay exit at helpful. into the That’s down or a from the or it here Did rate still recently. it. here is quarter? customer is Got positive And slightly

slightly trend It’s but still a be continues one. down, positive comping to the

any Got was about you so over it. last Like economics And for the they just years? like units far, the USA, the couple profitability That’s can five of there are looking to color. the super then the AutoNation Thanks in share what just helpful. the What those, mature and the on metrics of as continue today stores? quarter?

that Joe, please. take you

Sure.

stores the continue successfully. five existing So operate to

continues seeing. positive, you know run five tax the to stores kind pre million if be you kind X Again, very slightly indicated We sample of the those this As were The forecast to five the it new provided out of good about we optimistic. will. that And about tax, open year below the we about. are rate. pre roll locations feel increasingly monthly as set very we previously units, we

continue very to believe gets the the we positive estate $XXX,XXX real and are so month standpoint it by economics from encouraged tax rate, to our when area that making. run monthly very full and within the and the the pre And a are progress build about

helpful. for color. super Got the all will Thanks it. get That Great. back queue. in I

you. Thank

from comes next from Benjamin Stephanie Your question Truist.

line is open. Your

Good Hi. morning.

Good morning.

Good morning.

Vroom a I your bit exit wanted to touch decision investment. your little on to

or means on this think Just timing played we our for expectations about that what that how based going should of how the your and forward? curious out future investments

you Excellent question. am I glad asked.

So, together. look, and the our was We to of common made find there that mutual something reconditioning do that be enterprise. could the out. in grounds we thought benefit two Well none When digital companies for not expertise, Vroom, worked with with could just hope whatever. whether we it some we together that investment that was work the will an we are partnership synergetic

$XX, we an and not was what was And on. really once was Joe, so we became We that. think not and and just it intended business doing $XX then finished investment, an the you this know would back declare originally it which together. move reinvested investment And be companies it clear million million, that X-X, purely got is like I $XXX decided something receiving. victory to we

Yeah. $XXX in total. million

the $XXX operating million are together, in total, two so basis, doing But on nothing. an excellent with investment. we nothing companies

exit was decision position. to correct the the So

Vimeo investments is we I operating have on and Now can the other tell basis.

is that and things doing something. interesting together are lead can We to

we works because the the that stay only hopeful Vroom companies. to and are position. was cleared that journey But we companies we that these thought together case, both all business optimistic we that could steps the are I When and out. exited two that not we So want was on win-win with took do be we from clear

just performance and then No. have or it. Got my of And target two you seen long-term last up or well just kind record given own any the adjusted in XX%. you second chalk that quarters? on just your would an going your below last quarter level on sub Is how your two of outlook to given the very lower That’s helpful. SG&A another kind certainly there question forward performance target performance your now Thank you. your desire quarters

Yeah. going doesn’t lower The to that performance from target is the are that outstanding, XX%. but mean we

be basis sustainable our add? on can will in, and but we That’s are good actual position. like a would will come we far post what we the that have like at the we last the we to see our as two really that. far you as But we years on goal doing Joe, dramatically have efficiency so XX% We effectiveness not today you improved cost to of moving on numbers tell XX%, doing pretty the AutoNation how I and are below. and over our the steps commitment or taken commitment. the feel

Yeah. Thanks Mike.

is Mike So correct. absolutely

of realized business. I and clearly the benefits think the investments a discipline running better have in We prior

down $XX really look $XX categories of you comes when leverage million. as the at SG&A, was I But across mean, all pandemic, decisions SG&A, That’s compensation So, make difficult was through fewer and obviously. the million SG&A people. up operating again with remarkable some growth it three

and the office. store to I technology in think in back Lauren effectively very had both leveraging the that do

a an in our finding level think, driving the we to overhead reflective a in Clearly we capabilities. down so that, I success an of basis of the XX despite, think then, basis that down are in than from that discipline and is we people and the leveraging being then reduced digital had points the business very decisions have XXX down a so And XXX the a across points categories commitment year-over-year. bought of our Mike really we results greater significant portion operate variable we is prudent made committed basis benefit and and a in still while seeing think been are compensation as the or area peers, advertise obviously, in basis and I advertising compensation year-over-year all So, I over right degree to is we in points again, overhead, down below points, XXX in at three to the have the perspective XX%. into finally, said level, within difficult my change it albeit driving continue operating many

guys you Thank much. so Great.

You bet.

comes Your Rick from from next Nelson question Stephens.

open. line Your is

I in Good lot. What seeing and environment, seeing? terms brands, geographies there to you what at you Thanks are like a of of morning, you the about acquisition are ask looking guys. you opportunities? that would kind multiples are

year. and have I Yeah. am will vehicle I new of not negotiations lot number to a lot on acquisitions we conversations definitely put this expect specific on it. a fully going have a some of But franchise We going

through and footprint reinvention have the that every that go to reasons lot new is one acquisition we as we most say And with our We we we we complete at to important. go really the would we to time an is and course, success you a to you at what XXXX time, a within don’t comfortable and doing if would or be it are will franchises. are fit open would look I when it infrastructure around be have vehicle the outside but to disciplined sort cultural of say how year-to-date cost vehicle have look with we had much fit very existing at the in anything and ‘XX business. a I is store of AutoNation the careful happy offered. of and be was know, optimizing I look for very spent very our the and and on our course, world standards of issue very the ‘XX, is And took in new operating whether Rick multiples it, or number of adding do that’s meet like. then, back We because of decided not. and dealership side. that, have with a today order we expect in are we one they

our So that’s approach.

do all very stores can keep of all be we stores think repurchase which I vehicle there think fresh, the will in our above, and do invested our digital USA is our so stock new And attractive. capabilities, existing acquisitions some we

for color. Thanks that

Someone your on your look I’d like OEMs the peers consolidation. would public talked for of company potential and supportive about of get here one view to something you that be whether think the that?

to you through return for acquiring, are approval that climb tell brand brand will to want demand you you XX, they the what’s and on and number you we So, the me And negotiation already experienced I okay, when large one I you and takes increment. Z we it more to add it give you will number store as so difficult XX improve What from will the really keep XX you let what and but you the on that have number the if get manufacturer, in to XX, my becomes next a number do is own become you Z stores view. as mountain really are you and higher XX buy climbing. ask, with XX order investment to and changes have make the acquisition, an and the

gone It’s now USA one from our we XX the having destiny. one are through over the experience. in of are I else view million own because so the is experienced That’s us is we stores am of our yet. revenue, of Now for point reasons talking only has charge that the no AutoNation one

not stores and much of manufacturer do We the is the is the million, customer market are need approval. build need larger. $X brand We we ability the the million and experience great able size penetrate each. All market to and digital for $XX the to

because approval gone building charge fate, period, in customer own of the brand, need perfecting destiny. manufacturer I I the And all am most to own experience, need is execute. time to we is which the all the have I the the of beginning capability difficult my So my capability. digital way the back and don’t having through

very on just invested equation what return one on capital the -- is return spot reasons that invested you for of called. a Rick and So capital real is on

XX negotiation. a over but Our experience you quite the can’t you is you manufacturer, when stores but you number of can, get have, and get billion it’s

Thanks and That a good sense. Okay. lot makes of luck.

you. Thank

Your Stanley. next question comes from Adam Jonas from Morgan

open. Your line is

Mike. Hey,

of luck… best First,

Good Hi, morning. Adam.

luck Sure Best morning. we the new are last Good not of see due. going with to Hey. chapter.

So luck. best of

Thank you.

Yeah.

Thank Thank you. you. Thank you.

am best use they more get I the time stuff? lot the that planning leverage the going share. market yourself? a AutoNation and hey see so direct-to-consumer going them on you either think to of many when breed or go spot an are do don’t got EV, OEMs going is, least, -- some Why you lot and direct-to-consumer of say, franchises why are You are you existing the to foolish? curious, by we startups at why and and to put really Why Mike, to

Yeah.

mistake are they and… a think I So making

No.

in coming frankly. And I close quite to verdict think the is

is a complex is the So in technically will we what route this by by way, for need sophisticated, Care a thought care going of investing vehicles a cost you And also not folly. that avoid very are Customer infrastructure electric the going massive product. the

I more fact, the electric because with complex to investing need, have as all seen the heavily matter care for of manufacturers internal equipment far be vehicles. to able you vehicle a As expertise are we combustion the there as and are

gone one Tesla for we time. in whole do one by route others go that And it trade taking and have wrong. something the experience customers, number care we an when if frustrated care the the when some listen has want can So lack basically but all hear of enjoyable of just that you infrastructure they the customer skip you for at are are gone, Tesla to that to in issues your does trade that they is footprint

the be strength but think of dealers and and win wrong a so has bypass, for win or are the to a value investment and in I and groups marketplace. sustainability, think think the manufacturers new it for be mistake the think can equation And proven win-win-win the traded good viability investment it’s franchise, that’s what of vehicle it for consumer I will the trying I publically been I and for proven a they

So various website for manufacturers. today, you go to a all all see can from you electrification, the will autonation.com, our the vehicles huge offer we flag

for We the of this this others we have viable, ultimately in is to care their and will how with they customers? are -- are will will to win issue I and model deal game going think

Thanks. Mike. it for Thanks thoughts. Got your

Great.

comes Your Whiston next Morningstar. question from David from

line open is Your

chatter could effectively that public those you vehicle startups curious or players block digital model larger disagree do I earlier Thanks. some would wanted Good back hearing morning. consolidations the out on late another am guess, to be go with and just been I to about, I consolidation amongst agree just if the have methodically were some use? comments thing the there on used that? -- I

just can I traded part at for would the in issue together, I that smaller say, just as public don’t much see consolidation problem smaller you But you density So into too to companies don’t far are whole could as thought, the whether tell one I least what us. that going acquiring of have of because to be of run one. I us immediately you a come ones. a can’t have divest a that’s going because to of market given happen, you significant two

real is was point given market question? and it be to I And for the off what other don’t your -- So line. we other us traded overlap company. see issue publicly too any not the finish pay will in so density genuine acquiring and much a

sorry, model basically, vehicle thought, even I see was they getting inventory [Technical Difficulty] in late out search block customer current on going used owners That inventory. and other digital was and the

the I so answer. is But I really broke tell I do the -- think pre-owned can who didn’t huge in sound this marketplace. up, hear I you wins

a great digital customer this with I will and pre-owned marketplace take think experience a huge capability else. in share companies have from everyone brand that

And happening. say, to think you well, my make not. I money what’s then does have that’s or model

already So model makes makes we money, model proven CarMax’s have money. our

combination marketplace. the think digital I winning in capability brand, great but is pre-owned So a and experience

That’s Thanks. right. helpful. All

California Texas can they like you talk additionally just Difficulty] especially and given Florida the [Technical the places your On a market. little bit and vehicles, from be about, can

demand Tesla year how up, much it two, you the demand, still Just ramping past have -- is of EV, or the is really for there in to really is seen outside there because Tesla? trailing

No.

me. gradual We is you to journey no turning have it for if and definitely there passed numbers on an the back. want some inflection point is electrification But

XXXX, vehicles electric. you be will all if think new fully go I XX% of sold to

the all throw where not like this the you phone flip is away phone. smart However, to flip from the going phone,

obsolete engine years the if think X% engine years. I years. units next. the lifespan that to There all operation to by will combustion of that and affordable years in the on will XX internal on It’s XXXX, is internal for to America have XX transportation come electric segment with consumers from go of years one of not the going huge is are of a roads and existing day combustion a the

in a long units for transition the operations So is decade process.

other as you go our way other gas trips, electric obvious that with you as anymore. and they the vehicle all do internal And used suburban delighted. not at who that vehicles, for use electric and of use And they the pulling gas condo it all what just a day, they -- never end to vehicle some going I home as unit out, it parking and are range their as plug a who well XXX the about in, they give as, either can got the engine the and they long charged is the they every and it as get plus, morning a a fully they and long it, they and what when vehicle, like in they The the around. come vehicle are combustion a buy garage customers use They to of have long use station. they customers at have the is not and -- things as another in or daily or buying like miles station far our as have for insight have have

So here. is it. We electrification I embrace think journey the to

going a are of part be it. to We

Hummer We in are be Taycan goes is have the and business pipeline from list excited a the in. the exciting to what on to the at sensation, very manufacturers least Volkswagen, Mustang and the Mark everything on. It’s

from Yeah. on am the the these risk EV, maybe you things? of your opinion though, a just is things value because agree. leasing mentioned. perhaps they a way, for back I in full there you, finance change want capital lot negative is demand more for the change and coming from great hearing Staying residual in don’t arm one to and pull on There I

We haven’t seen yet. that

are residual or the flags. So on red no electric far see yellow vehicles values I flags fine.

it. thanks Okay. Well, for color. the I appreciate

Absolutely.

over There I time. for this the are to closing management questions further at remarks. would no like turn call to

have we closing today. you. your we other us best. the very joined much you you than Well, are Thank All no remarks delighted for questions. Thank

This concludes today’s conference call.

You may disconnect. now