AutoNation (AN) 17 Feb 232022 Q4 Earnings call transcript

Good morning. My name is Breka, and I will be your conference operator for today. At this time, I would like to welcome everyone to the AutoNation Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

you. Thank like of call Investor now Fiebig, to turn President Vice Relations. to would over the Derek I

You may begin your conference.

call fourth Thank everyone. you, ‘XX AutoNation's I'd morning, conference quarter like to Breka, welcome you and and webcast. good to

our Chief Officer; our Financial and Mike Chief Executive our today be Lower, Leading call Officer. Manley, will Joe

we up the remarks, for questions. their Following call will open

Securities Federal statements regarding Such results from Before the within cause risks Act objectives this forward-looking materially call, on statements and statements beginning, Litigation information and of statements. actual I’d like meaning results any the to our Private statements Reform remind constitute that of involve or our unknown differ financial forward-looking XXXX. you forward-looking performance to known that certain and anticipated such may including

cause factors our actual are issued of differ materially press could in in today and discussion to that contained results our release filings. our SEC Additional

rules call. press Certain on under measures discussed at investors.autonation.com SEC defined our in be provided this non-GAAP as release website are located will on our financial and Reconciliations

I'll With Mike. call to over the turn that,

us. Eric. joining Thank by record Tremendous entire many know driven Good everyone. and a of AutoNation team, was full I you AutoNation morning, the quarter. results year for are you consecutive on the Thanks, and great Yes. for XXXX call.

congratulations personal to you. my all of So

retail touch to X% up us was same-store just the prior going some year. on detail, posting new industry to through us take going of vehicle is numbers. but over Joe the result X% I'm in increase a headline with QX

our vehicle a view constrained X%, in being declined significantly industry my inventory, key used driven also down sales used by quarter. XX% vehicle which New vehicle the was was driver of in by which

and bringing to year-over-year in a up full-year revenue revenue quarter $X.X billion, up X.X%. $XX Total billion the our

quarter, be side, particularly inventory to the can vehicle choppy unit used the vehicle used margins. retail wholesale margin vehicle in and on a new somewhat notwithstanding increased availability seen continued used our disciplined market, of both in in the So our approach

total with year unit being customer of This an the than performance view a flat more ago, variable per on my conditions. a team delivered peak in market despite essentially result was combined our and margin sequentially level which strong acceptable another given down from financial services $X,XXX,

our Now the and consistently pleased sales teams year, to expansion. into are coming report we making their double-digit challenged excellent they their as that aftersales And business progress grow growth they to I'm delivered with combined margin performance.

a income will $X.X on with year the well we with which Joe for detail, more Now controlled margin in adjusted of X.X%. expand of expenses, net delivered billion

XXXX, effectiveness, our on intense of have I a So business for when in improvements consider is sales product sales that discussed look I our pre-pandemic our to by I structural operational levels. contributed focus business focus These are record penetration, our the we've compared see consistently after our clearly for back now our the which CFS, control, and which at improvement, results to drivers year. driven all finally on think drive can before, you as SG&A

XXX%, we a nearly strong of to for disciplined significant Now allocate excess year with the generated this flexibility in us in and at way. conversion, billion which cash cash a free on gave remained capital focus flow $X.X

assets underlying included organic to operations, we obviously core growth we than our in maintenance billion performance of included During which key which the cash our in AutoNation generated stores investments, year, and billion to business, the our from projects expand from business. additional $X.X business, $X.X the invested acquisition continued USA more ensure

addition, year, In $X.X to billion returned the our we in shareholders.

investment million we which in think shares and per an back average repurchases is XX.X share, shareholders form I Now bought in that during returns $XXX price the year, to an excellent was share at of ourselves. of the

future, we're performance, on able the And of given operational calls vehicle XX% and be and an frankly we these all We that's for an future, landscape some over continue fourth talk to and in And approach how this segment, ownership adjusted think at year-over-year. EPS industry evolve, exciting offers opportunities. $X.XX I often time the quarter Automation result deliver customers the usage. the including our will foreseeable about the assets. retail and excellent many already believe activity has our for evolving to to

enabled and us our XX of our unique nearly representing million great X with in over company. territories, which privilege foremost, is of OEM of million customers to undervalued another course, First from brands strong strength transact households, significant has

typically frequency we database, fact per extensive, to base, customers is that already out customers. which there's part pointed business our new significant inactive customer us offer existing of significantly year broader the value chain improve additional grow that reactivate to retention And enhanced of customers I've a within notwithstanding an within interact covering the we add to by which of our our automotive around our our giving opportunities customers, with products XXX,XXX the and know we opportunity increase services, we as and

acquiring of result, AutoNation servicing focused and creating to focused acquisitions So additional at on solution customers. and expanding this acquired legacy for business CIG AutoNation extending our and the buyers on year. addition we to stores, AutoNation establishing will future addition This made number were vehicle in to a CFS relationships franchise Finance, that used an reach our the brand. expand USA as is later we Financial select stores fall, but key dealerships, in-house Last a of currently in current three

recurring revenue as we increasing business grows, Obviously this an will have more stream.

service automotive acquired expands meaningful after we and services utilizing creates network. mobile AutoNation outside range provide acquisition of dealer existing solution. automation's including sales and additional have January, business another purchased the channel to opportunities, to base, who maintenance a this vehicle our Now repair vehicles owners, The customer RepairSmith, and introducing

not sales services products are brand sales gives also offering USA of proposition a used unique do customer and RepairSmith that car experience AN our off service just frankly, range a have. standalone the and competitors,

sales under decrease ends. rate consistently after is high vehicles convenient is we've of reach off-warranty vehicles. very know, And stream rapidly gone RepairSmith customers after a recurring The more a into their their expands service warranty now percentage for means warranty. period the business, bring provides with customers our and which you to As revenue service

our we experience Finally, improved and enhanced digital with an TrueCar. also retailing with digital collaboration storefront our

places we're great All cyclical time and are as competitive industry less in focused more exposed the targeted to that automotive of nature beginning, at And control be in to create I these activities of is a a stronger, our and to destiny. more the the segment. business us of this said

Joe, I'll Joe? that, will details the with over take of results. through our you who to Now hand

Thank premium more in over the above unit Strong unit total our healthy you, The helped $X.X our in support half than X% market we billion, increased revenue good vehicles which performance our new an remained for reported compared AutoNation's new morning, luxury margin Mike, quarter, were $X,XXX quarter Today, the and to of very retail quarter. X% X% by the year-over-year. higher sales everyone. a SAAR. PBR, MSRP. brands increase sold or fourth during of the as was increase overall quarter in of new at

fourth used our pricing Total in discipline down, constant but the fairly quarter historical still quarter, from third the far sales strategy. PBR levels. it’s trended in has down were remains unit and than higher This X% reflected

inventory, fourth acquisitions self-sourcing continue which represented on to our the in our vehicle XX% used We of vehicle quarter. focus

While greater this car our to have needs fuel we good, increase your up will unit sales. efforts ramped and buy to used

strong to increased After drive as revenue profit higher performance in business. XX% our of and grew sales we margins gross year-over-year continue both this area on

for after alone continue $XXX future. revenue very performance While under $X,XXX. appreciated was outlook increased $X.X and million sales XXXX lease more by a from CFS also profit with strong the some, by billion strong gross above consistently full-year with stream the PBRs recurring in sector we to to the than

gross of SG&A increased the XX.X% to permanent as basis pre-pandemic structural SG&A significantly our an Year-over-year, to adjusted was Moving only cost quarter, for costs, basis. reflecting by profit on X.X%. a levels, below changes percentage

gross the technology business and quarter percentage than investments SG&A a new recent in reflecting initiatives. in expected was fourth slightly As higher periods, as of profit

levels. quarter a third quarter ago. floorplan year of million million was in rate $XX expense by interest from compounded Fourth primarily quarterly increased increased million $X and the The impacted by inventory $XX and expense

Reported increase, expenses, this the compared XX% net $XXX $X.XX or was share. of the $X.XX of an million fourth of non-cash time EPS quarter year's EPS income portfolio. related Adjusted at and reserve a CIG a was the adjustments record to include acquisition year the per to acquisition upfront loan recorded including quarter for The $X.XX of for the ago. EPS

our to flow our deploy a and very performance cash from for businesses significant the operating cash totaling billion to Our record operations strong into with capital remained return year. and This capital provides $X.X capacity generation shareholders.

expand for mentioned, included Colorado. we full-year billion invested our XXXX, This than in and Mike dealerships Financial the of $X.X acquisition CIG As business. the more the Moreland to

of the our meaningful Expansion month. further RepairSmith, capabilities. retail our business We acquisition used expanded with closed footprint digital investments to the which enhance USA last and AN and of expand

our last November, and current to continue XX. Albuquerque as also St. AutoNation store adding footprint as to expand well USA We in in stores count Louis the month, Austin bringing

plans part of and integral better scope serve long-term markets our growth of our meet the our and both density an customers. in play needs of the stores USA and achievement AutoNation The to scale,

new will an XX have under XX development than We with more stores the additional we currently XX-months. over facilities expectation next that open

to capital share our repurchase, mentioned. as significant shareholders also via We returned Mike

$X.X Thus During year in purchased share invested than to by of authority. X.X million in share our alone. more billion repurchase count remaining shares with were million far of XXX,XXX $X XX.X totaled XXXX, reducing shares shares, at which end. we fourth we additional Full-year quarter repurchased have XXXX, billion the an XX.X share XX% repurchases

approximately with the a ended liquidity of We quarter billion. total fourth $X.X

will focus leverage operational supporting remains X our of looking And growth well long-term value. drive disciplined and capital to to allocation current times below excellence X.X of X ratio Our ahead, to times continue historical times we shareholder to EBITDA range. debt on

turn will I the that, Mike. back over With call to

sir? Joe. Yes. would you you, for open Thank questions, Derek,

Yes.

I think we can, yes.

audience queue the questions remind up to for how please? you can Operator,

Instructions] [Operator

are there? Hello, you

from first our have of of Bank We question John Murphy America.

you Can guys. morning, Good Great. me? hear

morning. Good can. We

Good morning.

on inventory first are getting a and aggregate, the different to tight. dispersions the that sort for inventory be what the GPUs maybe did bit and still some you front. pretty can big the very go in between to the normal levels I'm returning maybe in a DX where think question are if implications and closer stand of slowly kind But GPUs being comment just Things JX normal, of may forward the and you we tight. maybe but dispersion Just the brands? there's you for stands, maybe curious

what I overall it our it's and inventory in at track as we is a you morning, by all levels doing this Joe mean, of very, Good look our of represent, very low. you're inventory still take exactly Obviously, OEMs of our are as well. of jump then we and and John. our of supply, all sales sales. Yes. brands can right, if days as still percentage national we are that national the across levels percentage below, a I'll

that like those from inventory to So still -- I perspective, OEMs, a have a balance than even you been from other we're able if in good think a shape. faster replenish

prepared And the talking really over days I last detail and for this in and looking were Joe we our inventory. few obviously at as

going but new obviously think is for into key one to that's And absolute numbers inventory, questions go that and is what year. on volume. day’s the through how with the we the you supply to I as not that key of vehicle translates we us think happen brings of

there relatively at I very and a a under somewhat on what with increases over end but continued by you to new relatively think I period as continuation frankly, back frankly, the a I the new some as some the margin. of vehicle when year potential look happened continued think right look volume of low, above that, just But volume year, levels result supply that, think if day's be for the low vehicle and circumstances million, you mitigation of strong inventory previous of I see there's year’s on the -- we'll $XX So at -- low sit this across And be I brand. at basis. compensated look really, will XXXX,

So answer wondering sorry that all are for these obviously things tied a together.

Joe, do to add anything? you want

partners, further of also are I a XX XX of same kind -- past. if think John, the periods look, days of in at cooperation think just everyone XX-day of I the days hope type pretty are healthy the unsustainable, we're XX. theme. on you with I to place I inventory our to And for to operate. elaborate long is a days from Yes, nine XX normal

of I end that's this that business And and get thinking I whether by a year, nice interest, so that don't how now. would serve we're to kind level everyone's think exceptionally to but of that would we me the well the know, right about be

then second allocation just finance is That's And The slightly question, going Okay. a business capital human grow. helpful. to cap multipronged allocation. on and

Just want and really RepairSmith sort there? you that understand what of and exactly to or new is augment Mike, your there? which the about -- of RepairSmith should goes of business. kind think do to means very where that what are something customers, that might stool, augment leg is intending if And to the reactivating I'd aftersales helps love hear and another interesting

there's And share then the buybacks. obviously

going Because on be new are then and free and that might capital extension sort there I flow this flow are should a that up of So own. USA, to if think that AutoNation big buybacks. cash to on your after the adjacent of business, sales you you about even or if that think may about AutoNation be think be finance drawn incremental how about businesses their forward? there, businesses cap drawn an the kind USA popping the we not and mean, are of the capital may

Just think about how do that? you

shareholders that to thing there and clearly, assets capital will is two on think clear And and the seen given first is what very our perspective. of -- to out it of that years that the shareholders continue. was last return overvaluation very conditions have return use we're best the the over about we John, market the the our you and best for

discipline Our mind. be continue with will in that to

but that the I'm of our Now lot that have in place a you that, assets things on deliberate. broaden we approach There are really our inappropriate expand going talked to is coverage, some to maximize that to will about. and add of geographical firstly circumstances to very the

significant and But the share and those our sales period in is of relatively Maybe and active customer embedded whichever total it not of service. broad. buzzwords it a wallet to reality are customers an want over their has is organization, that have base asset very, very But you narrow. use transportation very the years We on a of their long is built mobility, sells, significantly. now used all spend

So or eight to of thing really they or and our the off. customers the that's why have penetration our approach so aftersales become therefore stores radius to they therefore in years to seven our the our of expand that base, and geographical and understand add more of it's our mile believe over business, we franchise reach, is customers a to out move right to moved outside because our ages do is that time part environment beyond the inactive drops them XX a they can continue vehicle of typically, for

you team other consequence of in to vehicle, is by a of a is And USA to RepairSmith, the are not they're now our well. underselling provides service value them the services their that, as in when our great convenience providers RepairSmith incredibly for means able limitation, AutoNation, the access our services, for only phenomenal their car give also that way not they because able an to being a a imagine solution to backed to the but business geography option of ideal that are used you and will frankly, convenient also have about AutoNation now coming you, because to it them package service buy it you likely not customers -- think overcome able package opinion. convenient they're that we're used in USP, only stores professional most

we're is well we sure is buy, really our of what that is customers make we're to and needs franchise of we reactivate are about we adding that help as and type about our different will thinking even customers, and services not the think That the when reactivate XXX,XXX existing and to offer. our the them. a of can for you as term then imagine businesses that looking added are buying growing year, the those those adding businesses open so each sometimes base if traditionally that that -- not broaden provided by customers approach -- to service we even these that customers So including we're not store them really

well, to -- really are that's grow the hopefully that. are it in think relatively we've -- that the think that at of directed clear I we acquisitions what trying And that I we're and businesses terms internally doing. made

on intention financing? that Any

If add. I could just

Yes.

Let me -- yes, Joe.

Michael, just strategically, we're do. that boring first-class capital as When of finance the we what financial match particular trying in or some a, strategy, answer Let with add very Because to you to problem. a think kind I clear this. to of, have

robust a We cash balance sheet. strong have flow on very

of we most question approach the not is at and is then and that maximize on it's utilize what it? the IRR-driven it's to how each do opportunity. return So the And benefit surprising we look an

an obviously, the as viewed in share past recent repurchase extremely as opportunity. mentioned have attractive Mike We

some that returns. about we in As have fashion I identifying really a think forward, we similar And look think incremental we and that were not funding opportunities we're very going been very, very we be utilize we I truly will value. deploy clear forward, sheet. think where And one, you that business balance will found about it we've going from is our compelling as finance capital to offered there facilities that all delivering ask we the and directly to this going of growth are in

about you plan. ways some in similar typical is As way the floor to think

putting dollar the expense not we're behind dollar capital be the business other of at to going for So opportunities.

on me just that. let And follow-up

and CID, to has John, intention that business predominantly. business. that that pace we growth at XX-years that during the think And past, businesses is grow That of are we that going our very has year, been the was in about successful when So grow period. clear manageable on business I AN last believe is our Joe, a to USA around think, speed with been we

We that businesses have and in good our will relationships continue. with our OEM captives franchise

wanted to we in is AN we will So slowly. it so it's really think deliberately grow and USA, way of that a to will on work grow the focus going manageable. it grow And

great a customers. full phenomenal to business. to really service terms business much been RepairSmith of way trying think grown and to things But They've dynamic of to of growth. new convenience grow in their forge people a their younger trying start they're is a to are they've very make start-up It's need a well, there, and business up to of a that But they scale. deliberate that provide I business. happen there's lot continue to

So course over progressive again, in business to to think really is don't expect dominant two, the quarters ways will approach we result. balance four next a time about that RepairSmith become the force to deliver good three, deliberate, growing a a of in start our

opportunities very of capital fair been out fair just a a this? to say that calls not to the have think big quick for would on about that room material buybacks It's follow-up. part share going are Mike, are these story Is to to that there's crowd that real that be good probably incremental everything. and way

think put I more Actually, could eloquent than I it. that's way have

answer. your for you thank So

then Okay, you much thank very guys.

John. Thank you,

you. Thank

from Your Imbro next of Stephens. Daniel the comes question with line

is line open. Your

the to to questions. Yes. follow-up the on I morning, of Hey, the Thanks Joe, one last answers taking wanted questions. good guys. for

days. as XXs disciplined you maybe little I back think OEM confidence XX partners, Historically, they've disciplined be comes to just what going it, the gives maybe a do are think confidence the to supply I'm that curious cycle? the in partners high if talked this I less just been you online. guys about OEM

Just the in kind shake to the that changing to you What And conversations? outlook you're what's rate maybe would day the new what's that? then provided? a it, expect, you you in confidence supply maybe curious is of based where dovetail on gives what onto on that planning you for expect if So for out year? XXXX? Or exit GPUs

don't levels we I this them actually conversations daily, monthly of complexity it, to OEMs inventory we that but mean, you talk the may with of think have periodically. weekly,

would when their been scared what was basis. the there Nobody So we I to what is volume number a it clue. you do what It's was what hopes share, do a can sudden But aspirations individual of as I inventory. are all it. both too correction the look then on think Because an you but market OEM, an happen. get back, really any has -- had also new and Everybody that of you to if interesting industry-wide I I support production understand tell of crushed.

And So you and churn, was example churn, and my fast everybody at predominant. a reset speak your to same you to like, life, a the in and was as prior I and if share OEMs across my best plants that to your those, myself, the churn, where I'm churn, a churn and of talked as speak again, efficient. life situation that buying let profitability guys you the that can, in have for affected you of but marketplace for was And guys, churn, in a guys predominant. as can't rate create that the this, I industry. sales got sales [Indiscernible] was there Prior anyway not was circumstances whole hard that concept the keep but to frankly

so the get know, future, You it, to right? you this reset opportunity

this comes of that, opportunity in and and supply maybe whole yes, there. people the And concept demand actually coming realize suddenly

say, learn, on worked as and take it to you XXX%, your think for it that And do relationships, union that go balance that. a I to everybody. they an large do do believe. confidence had back? is the very I recognize, I don't wouldn't within so that Mike, believe want are that obviously remember, and that's I people what No, But I level different that pressures investments actually think want I very OEM, they on large to FanDuel

But be prevails. all they wouldn't that, they won't. I'm able hoping I if those people, they're think to intelligent run that businesses complex

GPUs question to you inventory, of, this given expect expectation? then kind end that on it. any Got follow-up year kind of where And Joe

to can predict about was with going that an consistent pressure level. not an of business that's be we're expectation talk should in way going much pragmatic above of, levels. the And XX expectation to consistent Mike, The inventory absolute but that but the And are be with provided be at is there the obviously as to sustainable PVRs, days also that the of a run some some pre-pandemic moderating whole level obviously, model of alluded about kind cooperates while builds, work So everyone XX process pessimistic, very that view a thing. to.

Got it. And then want to…

brilliant cautiously I optimistic. to are we we the ain't by think that's moment. cautiously it We're do optimistic, going but final

Makes a years, Got you few sense. like of more does just maintaining higher were of your kind group. business. side the on in follow-up your a it. to Maybe improved but It relative sales customer a feel guys lot the of, kind last bit GPUs, light the there on sourcing, something sourcing unit used have control of

are as vehicle what curious from continue consumers of buy your used difficult becoming normalizes? it to the self-sourcing to expectations there equity more units Or in growth future? outside kind to So your ability enough drive is around

to there, XX% have I QX, sales I anyway. or like in our have think confidence ability because about XXX% an Joe, in something XX% we self-source

But absolutely don't think. confidence the to the I answer not have that's that. I question, in real

sold, help been publicly is us standalone think roughly I roughly advantage players, dealers are in franchise XX% sourcing out talked in times. large or those which industry that's new of under First, franchise used about. our are to that I vehicles used terms sold are competitive going car of see reality pointed has to do think against as vehicle you're old, But the player to Obviously, all new used in a we a increase either dealers that vehicle, XX-years as retail of most XX%. business an traded vehicles and the going car the that that's

that, XX% vehicles. available. three-years be to two -- the market ago in vehicles And are have three-years two vehicles and two to sold three-year between and old those be put of those and Of old

change. profile market in United that for to has been the unless is States absolutely sales the So clear car dramatically it's years used the going in

of that's supply going up all to We are through think wholesale know three prices ultimately going to you impact out And because majority vehicles, be to entering the the bounce dynamic. retail a sales. on retail and make in which bounce prices, out, and prices and I tight fine. always period margins old prices They're and bandwidth four-year move, of car and two in these going the that are they move as wholesale

the vehicles be But reality supply short are period is those impact those a in to for prices. time, will that which of going

we that what So will maintain supply your we used to XX-day-ish, And our XX, in on new that we're do continue a we sure hopefully We playing we're overpay, to appropriately us, is going is to hope those obviously we're vehicles continue through going our our that that for on to doing sales sales. velocity. maybe what our vehicles. buy strength what franchise get maintain market won't we maximize XX-day-ish car, is more than fair get share to make the trading of vehicle

to And your but that supply. is reactive. your if what our that come margin volumes that know that better response So that we can may be in our down, down, may reflect teams volume scan coming that mean

the that's in. few that So a dynamic to going think, began, we're It months into continue it's year. this I ago,

bridge price for news, on wholesale think a balance because retail news, to price bad pay same net going and to we're that vehicles, solid customers. we help new that if see seeing, it's don't our used vehicle transaction net is I the bad The price

news, the not is So bad it's think that it just what we'll the it's business of six it I months. one the and reality But be next is. facing for

it. You just react to

of best luck. color. and it Appreciate Really helpful

Thanks.

JPMorgan. Your apologies. next question My comes from Rajat Gupta of

of Our next Jordan question Jefferies. from comes Bret

are offer remote know, of that? guys. Hey, talk scope how regional of as, work a what on or maybe outdoor bit you morning, you envision basis RepairSmith, know, there good little the any sort And you there, driveway about that services can repair, are? far more you and restrictions Could a as you

and which repairs incredibly changes, services obviously, about Bret. all out that change, on diagnostics. do of provide car private another park lot cabin drive a Yes, business car another includes those but me to a area. it's one you and selling selling to a of free. someone's oil the There's those, or sales. a the there's of guy of whole different it's a host of to repairs, There's or private, vehicle servicing girl of a still filter you mean, if great things also change, business, a range can are elements question, always They give think great can be I'll can carried lot car they I is guy, things one in those that of one limited those broad guy repairs, or

those turning a lot a used car fee doing for -- Some buying, mind CXC diagnostic market. the them actually technician of people in a relatively gives quick that of they're and competitive that on their up protection wouldn't in

So there's using have because them. incredibly exploring of at to for things have operators on. night a their serviced their convenient and they're it's lead large companies, with are van, when fleet that working RepairSmith whole these transport host also They relationships great not vehicle

have. the is to the that physical They phenomenal. mean, of infrastructure back add we breadth all I provide can that So of they services

All that we the physical of infrastructure have.

example, around country and clear. to But road, that the of you thousands that go do and you now need turn that of the do RepairSmith house, tens access transmission, your actually on you. can up a ramps have for the asked side for us where to into do if and So that's going at they new we're of to diagnosis come you've

so for a they way, to it get door, could what the necessary, you you you're you repair is door, repair know the your able So did if by and certainly your diagnose at in, if we benefit can you can they're they at ramp. to

I that's person's But prolonged if how current based what actually look what been going less, do grow you I the in much likely are footprint, of winter, our together, again, we're to call the thought would process. jobs. to footprint, obviously of part current So at you've see the you the don't limitations would upon the north you obviously said go less and the further with say, exception I

great. Could percent maybe question, commented then quick the MSRP at you the give And transactions one above that XX% that in you've above what's or were MSRP. cadence us and Okay, mix? of

business… MSRP really not really entire through above has the changed, It’s

we above XX% done That ever this, to in there's clarify XX% not added transactions never MSRR. need --

MSRP. add No,

MSRP.

or your was to comment above. get the at above I trying XX% was and No

Yes.

good company above My below has mistake, pandemic we've maintained. is slightly approach, X% really So today a much been clear which very policy that and is the X% above clarification. MSRP, and and really never

at and think buck. So less XX% than of X% of their bucks MSRP a

for clarifying So thanks that.

Perfect. you. Thank

you, Thank Bret.

Colin Fargo. Wells from comes of Langan next Your question

open. Your line is

go causing Great. GPU was mix? we as Can decline? Thanks What go new questions. to that is Is decline, drove for about taking just what And into we I quarter-over-quarter. about you customer how that rate that continue? that forward, my the $XXX is down think think it should going

new going of think here ultimately is what drop, you're inventory a going sustained that reality GPU's the brings back of be in the because to profitability. I level restore to in maintain it it long GPUs better we've levels And a network talking time balance. as but trying I to at say And level. franchise that the that some is do you're the better for period volume to see overall never begin been about new are

by to And surprise well that well, and I year So of it manufacturers would recover. was I of think really to would I certain how as say, you this I as And should driven anybody. will began think it expected GPUs. That's levels, see in fact a inventory new moderation describe the it. that don't come course,

should And in it. rising that year Are much we interest -- you line may the item should rates, payment. think progresses? people dealers about with concerned [Indiscernible] there about of article we F&I, that getting were as think pressure the mean, kind scrutinize some about that I Got how quarter. how

been to begin a rise an the it become that's So sort happens. and you'll gets F&I little when bit, see because at staff results is has our balanced our and term, for very been or consistently as in has you've what of rates news levels deposit. Often have by in focus with we consistently, what an so on products I a us CFS great performance additional I more then mitigated The drop focus think our think I these what interest big our get it and gets increase in good passed attractive really and/or penetration performance, think within levels. that that of, on, you providers terms extension other is rates of seen

continue obviously, to lights prime, and up interest the mid up on. you passed FICO rates go, see, movement to into subprime see the from as range you So being away

written the think to the pseudo rate you products embedded captive for X% the industry, customers to that captive just that's says about of it's add the it. I our rate. think now all penetration our finance that are should on And an reinforces on you a And levels additional linked value in companies. of that's that finance or how in focus States. about not mitigation interest But I United locomotive, think see from is

to than is as Yes, forward. And the XX% maintain being confidence rather we able profit more on than our is the product focus in underlies increasing further coming I have per clearly penetration, real Mike to financing. only that indicated, thing focus I from just going would actually CFS add increasing clarify, think of is product and our a

be But just person still pays. in to into financing, addition are embedded to products the the those those what clear,

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cases, In most yes.

buy on Yes, I they standalone. think

Okay.

basis on like a monthly most people to pay well. But cases, as

for Okay. questions. Thanks my taking

Thank you.

you. Thank

[Danielle Your Haggen] of from Morgan the comes next of (ph) question line Stanley.

Danielle. open, is now Your line

for Hello. Danielle on This Adam is Jonas.

and similar car heard industry morning. we the print contacts market. things you from We've heard manheim the dynamics conversations with our prints, this including in play So and talk the recent that used about

of Are at of you. turn that demand XXX on the kind changes is macro into heading supply, other kind tighter play? consumer market? anything the mentioned sole dynamics this You uncertainty there used of driver you a Thank year? in this degree Are in seeing

Hey, Danielle.

last of rate and doubt because side, also kind stopped. the But mitigated because buying now regards, also availability. give my saw is him, the you that it, what profile well. him when not talk to year drop it's side customers And things is age impact the and begin the as the Firstly, prices you've of the of that to which a of it. on one demand no demand we of it, being the seen, ill, range And impacted car you're terms used end increases of and at but he's is has that that Adam interest -- depending so in just. obviously There's of there affects on on we've seen

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and I I when think a do obviously at -- performance identify I and look key driver. really when try when my on and comments very look opening the our basis we -- we regular it we

buy answer. and was the it to us, gross, of per around deeper not that wanting se For expense that's so supply at tight very hopefully an

you. Thank

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of Your Gupta question Rajat comes from next JPMorgan.

line Your open. is

months. a Great. a those Thanks the for for forward. next as taking I can uncertain trajectory come And bit down you're XX we the I about maybe of willing profit to SG&A question. to, to Obviously, range on you GPU this that the thinking had the think SG&A should XX how gross how over And But XXXX? have follow-up. question about a is gross dollars through Thanks. SG&A going us you're and profit drop predict. that a give if

talking Good to Rajat. Sure, you.

you saw SG&A comments, the in my So discipline. release of as in kind maintain strict

GPUs. through in dollar obviously per growth think $X.XX between of dollar. fluctuation $X.XX and per is comp Think a SG&A have you we about your with primarily As somewhere the it, flow associated

Beyond be essentially efficient really that, obviously flat sequentially. store and corporate in do to see and marketing our what can the controlling overhead, relatively advertising again which trying very you then sequentially and is and we're flat was

what as see we to are quarter. think pressure going in investments, XXXX see, discipline. intent on beyond some in strong that a you that, mentioned getting that maybe points ensure the maintaining percentage growth positioning is this road. investments much as absolutely our and it's there of XXX of a which can well slight on then but make was the essential I down course basis longevity I of think as forward, the XXX I Results don't still And basis I the below points XX%,

I and going give of kind below year with maintain XX% including can a of clearly I of XX% And a at this fluctuate the XX% strict will in range. elements overhead range, mean, to the we're the be advertising lower GPUs. that end our other to discipline you with to measures But somewhat on. the And to intend that kind we target stay

it that's manage how it and that's we how about every So day. we think

for and the Got used? on around comment just quarter the or and That's like like terms first you just prices print on for Got prior it. helpful new able demand car of color. to it. like follow-up used manheim January months been has and to to-date question Are unit just Maybe February in turning. both you, comps how

as dealers, that sales vehicle mentioned, we're I'd age will [Indiscernible] by say and historically the seeing franchise converting be so very particularly strong. in is, for continue interest in buying to a used still into and of sales is inventory, have be profiles availability those public the impacted used I of car bulk That been that.

efforts. we means that our and efforts in our are redoubled of like, upward it some we of recognizing I remarks, mentioned stabilized, opening you'll competitors we've his That have that's Joe prices. on sure redoubling for -- think, prices all pressure see this

because relatively necessarily that's helps. every I that think what in continues focus ramping that on started. margin, to is and time in it area and just day, our before how saw a it's Hopefully But got impact it's great hits focused but an QX teams short we QX of retail. going we've that

queue. the it Great, taking in helpful. thanks for question and that's I'll No, get back

you. Thank

one We more question. for have time

go from of David comes ahead. question final Our Morningstar. Please Whiston

line is open. Your

decline Thanks. got to a it you've Ford, Good income, at from Ford inventory due kind was others, down pricing? domestic, was for or mix segment of at related and or looking the there then the of morning. that, but especially lack first about level to unfavorable is I brand hard just guess, more segment domestic just wondering from large XX% overall

domestic, there's data, -- some movements both from of down. you and Well, in no had up interesting all the

play. are there things think three I that

but really not the areas that premium Buick brand. for parts doubt and those there's inventory about was that about brand, main no mainstream Lincoln parts still their of the their and brands, the talking Cadillac, sure of For inventory, I'm

pockets available. You had that of are inventory not

incredibly terms competitive. in and movement price had position You of it's net

to dynamics resulted think the the to of also OEMs plan are what in do we adding what start all not of -- to towards And they're I they like just end look the year is but those how And to the going the do year. year, of and end the saw.

them about up. they talk want for the the And already, it That is invariably think, Year I we've started. is is the silver comment off did bullet will thing OEMs business that's But of finished one I then wrapped there seen and the don't year. how some not on that just be they So complex. the this great that New year to beautifully how why

market deferred of from a have now perspective people pay people Okay. a outlier. And are And back growth just growth lot -- time? mostly a just coming or warranty? that's -- positive I'm a service, curious customer long for on a that's lot And the to of is who is the there

volumes your or additional significant dealership coming into least. to customer it customers coming Yes, isn't pay, of mainly but at growth dealership is about

the think really to vehicles road reflection fashion. keep miles have fact that driven, more been is the it the they in direct a driven safe of the correlation expense miles there's a I between on and

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improve well, as work as an has internal well. impact, continuing And to is obviously which

more So said, repair and broadly, maintenance. driven, mouse more as I

to do. I'd model doing is and where a for the opinion, direct just model? a your question. dealers, EB In hear contrasting the sales consumer that guys higher-level you dealer to franchise OEMs key franchise the Having model that value perspective to in on model, And at having versus to the [Indiscernible] model direct both Mike, were sale your direct love worked the

significant that an chain can Well, only part dinner, community, reality you four an buy But question. the I is and complex what is Because connected not me to you but answer of the customers, given they to invaluable that question. are tell you I'll are beers it's the supply dealers going on when give are an they that after that value. or that money that incredibly vehicles trust spending their repair they emergency and looked a needs going of is an where level up there are on something at and that know be local can else a to having service price up relationship amount the they whether is

own their OEMs not up dealer the enhanced the dealers with at -- truck. in car bodies of back are replaced my the with individual and invaluable and OEMs how they a by of day, developed their is be turning and a each bodies their and will work establishing the these And will those and be dealer opinion brand are on end position of invaluable and brand always therefore positions

that in living and room. bar I a have Well, my I appreciate

You're anytime. welcome

you. Thank

genuine transparent me working body dealer the as the the customer to always and customer I represent obviously talked just have does it's not flipping but really their And of OEMs and moving ambition in our just develop mean about as are they OEMs don't partners it, on spent is done aftersales dollars I it through the can address. of of OEMs together but lots there's continue possibly a to well. be through pieces, email the Just think question, lots and sure and support be That it's but as valuable feels seamless that's my -- purchase, the billions it the make the It's experience have a our of is nature way. journey I to obviously complex it. means say and as that that and years view to there that brand it, that

think right? are So the last That it was I Is with question. done. that, we

Yes.

like who done. were results the off not on customer you to our but our thank our year, us. also record And experience. call earnings, capping say Again, we've fourth have our for to that the discussed just really focused I'd we've a And you things us. all quarter this are for associates joining year you And for that thank on just just

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the of flow the about of our we are footprint, investments examples thought So the we've expansion shareholders, and I that. transportation including that return all additional think, made, solutions, to how cash our

when company ago, that last looking half, openly, now year initiatives for been are our in it's one very nearly back means great. to deal or me is get your organization. and go markets. of we the big It's of the of what with that our with whether said organization that it's business things whether constantly a now organization and maybe the understanding like go that man a Pink individual the this that just be we their have fantastic the the year and should launched Drive it it culture in strength engagement I've whether was And in people is, means the be I part all they because in bit through than a last Now they great involved a in we're also that that in that's you and each a for automation. communities you of in joined through customers and performance how communities, the give to maybe longer the And way

things call, And frankly, fact over And and and important. is doing are I things Mike from to involved. isn't grassroots because in this the people that think important. million it's it’s notwithstanding Manley things Drive the those Pink think out, think last $XX important are I me, these a guys girls year, These that our quarterly it getting call I that. with Nothing do we

give So the With Thank that, everyone. days back. Bye-bye. you all. thank you you I'll

concludes This conference call. today's you. Thank

You may now disconnect.