AutoNation (AN) 27 Oct 232023 Q3 Earnings call transcript

Good morning. My name is Ellen, and I'll be your conference operator today. At this time, I would like to welcome everyone to the AutoNation Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Derek Fiebig, Vice President of Investor Relations.

conference. your begin may You

Tom Thank you, Third today Welcome AutoNation's Officer; morning, be Financial and XXXX Conference good and Executive Quarter Chief call Manley, everyone. our Call. Chief Mike Officer. to our Ellen, Szlosek, Leading will our

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

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

actual in our financial are discussed results to in on Additional our call. SEC of Certain website the in discussions differ materials our Reconciliations our and are and will in release rules at our contained issued filings today investor.autonation.com. with as defined located non-GAAP SEC. be factors that measures, cause our this press materially on provided could

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

Yes. going Thanks, remarks Slide you start detail. the good Derek, and you some X, to provide going third I'm to on results before us today. Tom everyone. in great for opening Thank joining and takes quarter I'm through morning,

during sequential But and And we volumes Vehicle Used Vehicle growth all that healthy. And stable X growth of year-over-year in first consecutive seen growth in concerns despite quarters affordability, Used for frankly, New economy. inventory, combined quarter, time economic vehicle mixed remains volume. Vehicle the new consumer of and double-digit the relatively New improved Vehicle as we strong So for and in sales automation. in know, Used there saw this we've is be partly continues signals supply demand vehicles because to the in

very that's I So positive. think

operating and for a which We clear our margin, performance result, AutoNation focus also environment. After-Sales, evolving quarter significant see to a record on and delivered solid revenue continue delivered as this a benefits of in

going So sales, by to volume in I'll and basis. performance I'm look Vehicle same-store XX% was New total start a up quickly X.X% the where at on and just business, with

new but $X,XXX sequentially was down forecasted, remained as vehicle above quarter a the in And unit. margin

in the pent-up some our basically, did I'll benefited during we and everything Now we volume in touch by releasing But impact that our was see numbers demand import inventory on significant brands. those quarter, driven from minute. margin, flow, for And mix of on a improved growth we the which got, some franchises inventory that year-over-year the sold.

quite import So we in volumes increase our a the saw large quarter. in dealership

and our balanced very every But tend levels. to up which New income other sales combined mentioned pre-pandemic way. the potential held to I margin I Used, our performance teams deal would the across And in CFS industry look included remains above say inventory well well. levels. very in relative And see it's quarter you'll and at a fact, in

XX days among me variation, increased Obviously, have but remain ago, of than supply year they they've let a So frankly, but that. less we categories. on lot a from touch branding

XX have of We domestic days brands.

probably happening time what's about previous to that of So [indiscernible]. my the one in answers questions

XX days So and of days we domestic we brands have as days import XX said, brands. XX of luxury

Used Vehicles. on moving to Now

spent harder the be some used success fact at time vehicle this year. recall, would to talking critical of that inventory about the the to source obviously and you'll As beginning we year,

and vehicle maintain we've continued investments So used made grow inventory. knowing to that

car infrastructure, and to we've buy obviously SG&A. increased in our the we see Vehicles I did facilitate which your team and marketing our quarter going the retail think a good and to job Used in sourcing quality investment this, you're

way holistic at of retailable every looking much yield consideration also more we the sale margin, the the teams income trade. vehicle addition, have additional CFS just In is from sale a and considering our not potential but in

has Now focus be increase without as which, which resulted Vehicles inventory a over of used on self-sourced post would the which used of daily sequential possible in been XX% the result, X%, vehicle the the our stable, total has not us sourcing over being by vehicle way, sales quarter. helped Used in

use again deliver our you for know, as many industry-leading in us financial one is performance there reasons, which but for and Now New for continued volume to is key a customer important services maintain sales finance And to a team then to sold. higher done has by grow environment great the quarter. overcome penetration unit lower product per a job the rate and and continuing significantly interest

to After-Sales. Now moving on

business. was there from generation was customers. continues another profit quarter I'd our was highlights like other cash business from been I our XX%, Tom higher per gross is one complexity few on greater conversion income, are our operating spots. solid our order to about brightest leading the to up more up and growing technician a the financial of cash to and values be handing serve also of But over. It also vehicles was later. quarter on to more the keenly a aside Here, The allowing repair which of us with in talk relative to we've is which pleased net focused XX%. touch before great Revenue will perspective, workforce,

product and are USA revenue expanded day into increased X we AN channels. USA vehicle at stores. every X customers our the of our extending million sales finance and all across stores, automation focus, we're offerings now franchise are also our new quarter, the have XX we more in where and roughly plus we penetration streams AN our our financing customers during And we're of into core reach adding and recurring Our

to why it is, would our as be businesses. ahead integrated franchise thoughtful and AutoNation thought Finance continues to of and which place expanded So fact, measured where it is we be, we a in

while lease And Mobility, model and and traditional vehicle customers repair year, attracts These our our Island, we autonation.com. business Fort with our the AutoNation's services called the facility, opened service Head consumer USA Hilton us. products complements into footprint in needs, expanded We also parts actively transportation We're which new industry. and week. micro launching mobile usage AutoNation e-commerce in and fourth our AutoNation also quarter, supplementary to was this XXth accessory opening customers' X meet more expanding reach including platform called recently a of store launched along an acquired our expect with and fourth supports to and dealership the businesses, our which the openings we Myers this

growth greenfield to like as incredibly continue Now you imagine, that, selling XX,XXX businesses since year-over-year. and project the these far say get so sold are businesses to with and up and And USA has teams AN that are work congratulate and by over vehicles. with can of on plan started, way, an this. easy thank And now I'm the task I'd pleased hard to this over showing these not to they've it's running. also considerable ahead

think. So that's not for organic I out growth,

service because business So report. to tirelessly on. X I of housed work our recognized of that only not And public AutoNation in who did the AutoNation the The reputation moving dedicated and customers course, out have reputation like whom that would as group years. we possible last X is associates XXXX to of XX,XXX an thank. was go provide our automotive as exceptional of by That's unnoticed we honor top franchise dealer the

in thank business and out into So thank model. person I you as you for all listening, get I the

were And finally, for work by best we named to list U.S. companies

World. and News

can you we central do. So the see at customers what

our to through capitalize looking business. the future We a them operational more industry larger clearly are an for And reactivate will a share we're brand customers the is and focused also needs and garner our opportunity to and There excellence on and on and of of period growth, our outstanding will longer automation be. time. wallet evolve strong retain customer and the service value how customers to of what provide with over footprint

you take financials in greater the will Tom detail. now Tom? And through

Yes. Thanks, good highlights materials. on X Mike, of detailed of everybody. morning, the QX Slide A is our outline more and

was on volumes up roughly Same-store X% U.S. was imports with down roughly declined per with and year-over-year at retail Mike vehicle New XX% line. domestic per Volumes up stable. Used were and XX% down revenue as retail Vehicle revenue on and and New vehicle flat $X.X mentioned, revenue XX% billion. including, XX% were vehicle up volume in luxury, X% X% X%. sales revenue vehicle

by as unit-wise mentioned, Used improved over with Importantly, compared the Vehicle second quarter. X% sales Mike though,

in revenue, PVRs. volume volumes efforts to from repair stable our after This XX% XXXX the as margins App So to were retail fairly $X.X XX% the as sales up profit gross result both was sales business. billion improving well Services dividends. increase value up $XXX to Customer the Financial higher of investments orders pay in of X% and are revenue total in reflects revenue CFS the starting million. increased

operating XX% Third up million. quarter X%, and interest $X.XX, earnings were down down per while was expense share $XX income

decline than operations, Mike Our EPS count, than It's our we Cash million, up repurchase was XX% actions. mentioned, resulted which net obviously from in at income of share -- of on in were more is very a $XXX favorably was ongoing which reflection through as September. the XX%. impacted by strong more a share conversion

few my months in including -- the the cash days So capital. of drive right impressed first things management to really company has in few of first terms work the me generation, doing

as roughly million business for the portfolio we pretty of $XXX mentioned integration significant small growth penetration Finance. but is in we financing increase the of our AutoNation also This expect Mike still with a us a stores.

which we of USA of part credit stores. and in third-party roughly AN now X/X lending as business. generated the AN on portfolio, are the as most In exclusively CIG our stores, the Finance third commenced quarter, legacy discontinued Mike also a $X efforts, focused originations from these loans million. planned, As in originations mentioned, loan in pretax tier September, lower And we've our of automation franchise all of we've for gain represented the sold

and by top the commentary from gross very Slide XX%, unit third in we to points in offset we're in, quarter profit X strength Vehicle and reflecting Gross growth was the on Turning services mentioned. gross in profit And nominal more margin X% aftersales the profit, in in the pleased to offset but this lower down volumes P&L All in terms. environment, XXXX. slightly Vehicle financial Vehicle line PVRs for After-Sales in with growth as New that New were PVR the experienced the in moderation balance, New Used XX in decline than largely profit on and roughly was customer I gross basis revenue. some stability Vehicle we our

bit incremental Adjusted initiatives, on SG&A spending that touch and to and to costs I'll later. million, $XXX to a relate core with generally increased stable more our X% growth

It's borrowings. floor of of terms half the higher expenses in borrowings rates a both was plan million of expense about from the was $XX debt, $XX non-vehicle rates million, in and quarter quarter both up million half million reflection third was from That's expense and interest interest and for Third higher of $XX a which as impacted XXXX. up interest And increased and year the ago. the higher impact borrowings, well. $XX again,

income rate stable tax XX%. at Our was

this of lower outstanding in in, $XXX compared of blunted million meaningfully you ago. $XXX income average all see. I our resulted ago. the the EPS of than And XX% can XX year year net as as million. effect million decline shares So income than a a mentioned, This net to more We're

Mike Slide X, for I'd performance quarter. in the various the third call gave on on categories to the our revenue starting build On on like

Revenue includes new in this other parts imports. And the said, PVRs of volumes the stable pursuing were and you increased continue Mike our XX%, Vehicle As moderate, availability over reflecting of XX% Gross have to for mentioned, higher importantly, drive to on New business. vehicles. new volumes as vehicles. PVRs intentionality up remained

over both New from year values than levels XX% roughly a ago, increased more XX,XXX and units Vehicle have units inventory to XX,XXX have from new in units units. and grown

on Vehicles, we stores our decline decline. a most X, volume volume domestic XX%, pronounced luxury less Slide the a with had declines had of year modest stores, X% Used In decreased pronounced from important from ago which

up volumes As the quarter have the progress this growth. second good nice And sales. XX,XXX, unit higher-priced our roughly growth also seen some $XX,XXX and with tiers there, quarter-over-quarter the greater we respectable initiatives There our sequentially. twice The tiers Used market's was And Mike more The has was pricing tiers. more at and profitability. than better X% traction supply. and Vehicle than mentioned, below X%. demand was since Those of XX% to than the is clearly more pursue continuing on even we're which in comprise

overall pricing and Revenue lower-priced tier. offset mix decline Used inventory both TDRs in profit with stable by by Used tiers. reflecting XX were were higher-priced gross in very mostly declines down levels vehicle and at the Vehicles and sales year-over-year, growth of the tiers strong, days, volume

We iBuyer trade-ins, XX% expiries ] our Vehicles the of as emphasize for car lease continue as Used health well represented initiative our including to self-sourcing sourcing quarter, [ acquired.

on to in Customer for We revenue quarter. the line Slide Financial vehicle sales Now delivered moving with Services. X% In increase, X. growth unit roughly

For both products New of higher finance penetration Vehicles, unit and and stronger are CFF. volumes stronger driving nonfinance

On finance still at declined rate portion very products the the modest modestly given similar our very close had Used still we a but interest sales penetration. to nonfinancial products, On respectable also but decline, high penetration. environment, side, XX% with of remains year-over-year a

Warranty, growth On mentioned, up after Customer year-over-year. sales, X, Slide all at billion. and XX% I revenue $X.X Pay, double-digit as experienced in internal collision

and improving, And benefit starting repair very So the from the value entire broad in orders the additional see The of technicians. increased. also investment number is order it to across the we're was had portfolio. per

made I months. of the over the course think few last we've

profit XX as to up profit benefit of in XX%. is again, points XX% number as in to of quarters. we're in the grew a well benefits higher-value margins. than gross this scale from the those And more Our gross increase the our year-over-year repair terms reflection orders starting basis of We're

inventory hope on After-Sales mutually situation was of quarter, building monitoring this are the We've UAW quick of inventory we and A much a impact OEMs. with In the the support closely. manner. financial obviously comment can the obviously the resolved preemptively We from We strike. apart not been is third where agreeable there build. slight in

the for than supporting pre-pandemic the income X% the SG&A from from for year, as also Overall, as normalized Operating of gross initiative. do well And profit XXX our much profit down some ] lower points including vehicles aftermarket inflation in as acquisition quarter, been Vehicle XX, self-insurance remain higher There's levels. stores for moderation XX for business. [ USA New per than growth to reflects losses. some decrease of pre-pandemic costs higher as last investments in but AutoNation Slide advertising gross via as to our related higher increased infrastructure expect We've weather-related had was like percent vehicle The still basis the SG&A reflects levels. for spend some we SG&A. well from a growth and Walayar the

Slide XX.

income We Our remains were conversion operating for of the cash robust. quarter. XXX% generation net flow very

in increased operations floor cash Our from and third non-trade was our $XX CapEx the million we flow was million. plan million $XXX quarter, $XX our and by

depreciation. third So around ratio, a of now up cash together, these for quarter. have mostly XX% X.Xx that the AN and resulted was reinvestment in steadily projects. free facility spending including for CapEx increase in at some drove CapEx IT-related quarter flow year-over-year And reflecting principal And Some has electric $XXX for expansion, growth, million XX%. increasing for the the the we're been that roughly vehicles USA

the on million X X/X shows was months XXXX. the roughly reinvesting allocation It XX, we've first the is was more for capital shares, in repurchases. focus And since fact, in allocation our capital beginning repurchased of XXXX, our and year, share low environment. business a XX of which than count. interest of Last and rate outstanding Slide our XXXX share

course XXX% as be of flow, are cash the recovery-driven 'XX landscape that great of as moderated flows free cash interest rates would the look a a it to normalized. have we as increased wasn't price. our are deals in repurchase have we when share flows. share stable, of longer-term close cash still, We flow. free the the still activity percentage cash M&A share our we in and relatively you attractive of while repurchases enjoying The at We've level over our believe And dislocation value and price share presenting viewed had in

quarter is value. very At leverage EBITDA. we allocate to continue I where was our end, our sit with This of forward, the Xx And there. maximize shareholder X Xx target. to at moving to low and end we'll capital comfortable Michael

turn up. it to I'm to wrap that, to with Mike So going over things

to that session, for think new that of will a and thank I the of customers as our Yes. we as and the in going before products services place, tremendous been And Thanks, effort. our said, there's putting I'm business. go to well, of progress in associates infrastructure again lot take just Q&A terms I building Tom. in all offerings,

all. you thank So

with And start let's that, the Q&A.

audience you to could the Ellen, please get prompt how if the in queue.

Instructions] [Operator from first take Murphy Bank our Will question from today of John America.

we to John. have Maybe come back to

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on JPMorgan. move Let's from Rajat to Gupta

parts on trends Just strong very a there. services. and question had first Clearly,

the was color terms might to amongst the your of you peer been quick and that pricing the traffic across saw have well? us As growth? growth. how able much expectations the any best Would if driven quantify that I give forward size think more And regions in it going follow-up. you differences have growth result be mix, there any or led you by or I any have as could to might of well as it X way either to

as this both The in in technicians. of growth an volume. increase had the productive we We as is we increase saw through increasing the came of from result volume terms quarter, a progressed Yes, Mike.

So and really Pay, saw park our a of combination into in was that as we the internal then our well. growth saw vehicle of Used then and sequential growth account. that we RR work growth the But and Warranty Customer with value New well as Vehicles up grew across out reaching the

both it's So of those combination of things. a

it's not distribution of broadly a in growth. big terms the have geographical look across seen I the roughly line. market, difference that I If of in

from influenced necessarily perspective geography that's that think anything don't a I it. So there's

So in value increased RR but per combination just of increased volume a well. summary, as

helpful you're on color cars, then profitability there. on clear. how That's just the overall it. new strategizing the on Got And slides

coming correctly, the both you Or you have sure comments remarks you some clarify and slide that that just volume or make get to you if volumes also GPU in. was bottom those bit You did CFS reductions monetize suggested CFS the you F&I I But would CFS mentioned a just were helpful. with make understanding could deck, of push selling order income? I'm all still were sure prepared inventory trying to to but be in like that in order to stimulate in your to just that wanted services. -- you

in if to a And step problem. so and asked we No do, -- that feel we've What invested try to -- and the obviously by way, me dive redirect. lot. We recognized I Yes. let clarify will the teams back. free just

mentioned be recognized we not all opening I Vehicle able As Used to for the able opening. to also we're going inventory progress of in sales year this incremental comments, my terms of as to we into go Vehicle stock USA our continue us to and year to next how be critical businesses, for that in manage be that is get franchise Used up we but just our stores AN through

whether investing recognize of view holistic have of to money And of very your incremental do we terms infrastructure buy to but in recognize good we just we're to to terms all, anything car. record a marketing we in lot is marketplace, we to distress a And support or CFS volume teams our performance. at ask a very in in incremental sell take what it's the not that that,

into sourcing. one the make just you as of you're New all on good account opportunities And the sale. as actually Used of profitable or that is because of a the in We terms for in at a most sales know, sources traders looking car Used Vehicles, come sure have you're marketplace, record those very taking

and a managers, you're individual recognizing that of building was general in sure making people sources deal managers month. dealerships general multiple are profit an reflecting as make us are reflection that that just there sales it you're as sales in So really of a the sure different when

balanced it to something to was, and description want multifaceted. approach I So really them is of take a would business think, just do we a logical that

the the GPU. expect in strike That's build think the would decline to new any quarter around Got do the from the it. And to benefit fourth any benefit a it. -- continue in in you the Or GPUs like see just strategy those up Got Maybe to of GPUs? slower able you on third? clear. do here volume driving inventory fourth growth Were in to you like like [indiscernible] quarter? the and like you CFS finish

models to be color and will were we no some When supply. rise short rise saw all the there we benefit, across industry, saw because the of put I'll GPUs No, cross-shop them in that. competitive

my So in every situation you at supply, drove where individual that reason. result than get have to we days There's have If the have addition short they domestics and supply, supply or looking brands up. just brand those but domestics others. view, may in potential in no there'd consumers a pricing was the not, cross-shop short therefore, for the less no be to domestics a a prices fact few are as in of

in Tom And was that's just we got take okay. that through the a XX said be few the the the said, -- for as strike Obviously, pandemic possible. end supply with next in secondly, certainly days, That's reset today, it's before we I domestics. as in term mutual enough one what industry. soon to near [indiscernible] had we're is as as we've But months. fleet we mentioned was looking we've nowhere speech us but we'll pandemic it to general, see And his is think for the of the

Daniel Our from Stephens. today Imbro from next question comes

questions. sort follow your new I'll Mike, maybe Good for morning, everybody. unit. the Thanks of up

the affordable brands I so Can think trying increased. think strength understand more well? about why driving Is it you brands in even are that? talk Port out you some caught what to outperforming product, is a you as strong just lineup, of production

X, about effect we as terms of into those of the we in supply. is days saw if X few their we inventory up holding low, were really with talking numbers, kind pandemic inventory think last X, got the the inventory. diving I brands what of And about delayed into were their came just initially without of and all a import we So years, levels saw

for those of lot couldn't find branches a the So customers those [indiscernible].

has flow it been rebound some able was we've to rebound convinced and in phenomenal. genuinely increase pent-up brands. And of rates demand see improve, think what I And as that I'm we saw strongly. been our unlocked get result and And as a those brands able that those turn to that, are there's just that, is just

you can very produced supply As great see, low we're in volume quarter, day think. still the I but

then, And a great. That's maybe for Tom, one you. strategy

bid during big I guys, on in think, dealership deal. quarter You international the put a U.K. M&A fits. a asset Maybe would discuss a have where been can you

You about dealership where obviously fits focus for the maybe saw quarter. international as your next AutoNation? growth of you in buyback think a more But of for guys this a And M&A lot becoming the is you focus?

the when Daniel. Yes. answer the in when I'll it specifics you Thanks I comes mean, the let I on -- mean. for that Pendragon. But question, capital -- cash have Mike capital a to general, very they're In is allocate. is strong. we look AutoNation look words, cash, when first the of I lot I thing at to at generation other allocation the

So I we've in to CapEx a and is we we business And with levels optionality, like we really are the think now. and to, can even to I what at we need in the join comfortable which me debt place. in, right either lot M&A we're the as reinvest where attracted extent which said, of got through first And delevering. company

The low our continue moderate which our do the given the environment. dividends, to business one returning the ones time. abundant. through And thoughtful on in shareholder number do in has is the shareholders value, and through that shareholders and also mindful repurchase. And that And to we about front, been Obviously, profitably M&A and rate we think very opportunities. said, active value trick is we're we'll Things of share to to think don't where our that as primary the emphasis can be have to couple opportunities where share over looking just for at cash of return I opportunity finding there's we different last one can which, thoughtfully. shareholders be interest of them that and have sorts we'll to buybacks, I are our good we add are in years also we we And business. objective reinvest all run maximizing and the think

comment particular. Mike on in let one Pendragon I'll So the

made a by decided Well, that were thought an mean that and they we delivering add to on question. to up an we good assets at memory much compared way, not offer out and the I on also I I time there's it there the that. great was think obviously, offers at we answer that Pendragon. offer that a more point. we was our appropriate and formalize were to thing, think did when

I that nothing to much the same close. yet think

to as continue you exactly do Let's describe.

CIG if clarifier. Or is helpful. your getting Got And so, the that SG&A was below squeeze is the reported Is in gain. model think And sale it. I That's offset? one you where million P&L? it was gain? in this where quarter quick really could million of more an Tom, that $X it loans Just I $X an in prepared pretax line? remarks, mentioned the that

Derek, with help that. me

embedded it's the... think I in

Yes. Yes.

within -- in the statements, in one, net going footnote financial footnoted It's the at financial the see Daniel. And you'll which you'll Look see there. things of it it there It's it's in say on. other It's can there. other. the included statement in press You release.

right, was million. Tom? Was number the $X that But

gain Pretax million. correct. That's $X Correct.

comes Our Jefferies. next from question Bret from Jordan

successfully spend sounds Could additional It run to is optimal Bret. guys further Do like Buckley on sourcing see rate? bit room environment dollar is the used close to the you grow for pretty increased through more during This the that there. you you talk quarter. Patrick on Or a spend?

It's great a question.

X just to at really probably now as lot can is trade. have to only each we're make we've deal things in out we I credit make scheme coming a whatever struck not second we're if we which car, a your balance forward. a the get quarter additional new factor balance there's to get think not the have in, in the of we the in USA., looking that also thing The to a we of I that that of of openings just in And in, see inventory trade But there AN that sure sale I but buy think may what's the got sure is optimal we good of good giving going those. selling, incremental trade. terms sale and the said,

this inventory, can balance answer more at need So I we'll get time. to continue you. would but optimal now sequential say say give we're growth, able And best I'd if obviously balance the I to in get moment is to right

That's your switching new affordable content side you to Great. Are demand helpful. versus inventory higher then seeing of more units? the term between for any mismatch And in units lower things. guys

I'm our don't think at rates look seeing as does I we across different everyone turn models. Obviously, any mismatch.

I paper on lot from with And would the mentioned the as that I remains happening at thought higher saw think is straight call help contented the least that it we down. new for even but penetration quite leasing. that, I vehicles, penetration in moved I levels things that quarter, it obviously. stable, in can just New did into new total finance us opening what does well the a finance in on were one reality team that's of my though comments The

And as drop. I beneficial side. for where that new rates the we on said, on think that's new penetration So us was saw side, I

the as at the they that other the seeing of are other at see in nothing we electric are moment me. inventory, rates differences turn twice in only on to powertrains electric turn out powertrains are I versus where improvements take fast vehicles turn still roughly look moment. So at terms but When twice stands vehicles, I

Our of America. from next John question Murphy comes from Bank

hear you me Can now?

Yes.

phone not we're bill here, our like seems it I Sorry, paying apologize.

question, It Used to on might to getting willing were business of a on vehicle accepting comes be -- institutionalized if will, at the bit and -- the or vehicle you're talking lower you how it maybe how and something the of like turn? might business, there and third growing be that car CFS lower as about you of the a opposed and Mike, what comment make on second alluding in to because the you maybe go might into trying sounds grosses mentioned deeper you there's you about CFS can to and up little Can turn maybe third you kind trade. also when First that's the that the side the accept make on up turn. grosses retailable there that it kind process is just you that

of Yes, do what is to don't any John, -- create course, confusion. I don't want I

share for we that the brands is overall they but our within continue at also what their do generate. business. look represent, that ratios to or We to teams grow growth grow new-to-use to them the So want hold to sales market they obviously ask

there's a appropriate So different deal I a think sometimes, in particularly and constructing when ways multiple showroom, the fashion customers. an in you've interest executive as the manager sales you're that environment, construct that high deal got a rate or for sales

get represent So of that a take of as lot shift average into of in a dynamics terms the income does seen is alluded at Used does trade. Vehicle mix and also have represent sales. an that to that Tom things is a account, to opportunity means you're big as and it we one you this But it CFS looking of that,

So driven vehicles was it's by also really that we all were sequentially. That under up the $XX,XXX. fact

$XX,XXX a So broadly to amount got Vehicles, down. of above. the lot $XX,XXX, you've a growth down there, if and if then Used Under $XX,XXX think I and $XX,XXX XX to XX-plus XX about interest, XX huge to inventory flat still of

think, what thinking well. more as at doing to inventory investing be So level sub-$XX,XXX trades able I trade, in as keep are, we're we're we our to about is that

all just not advertising we a cost, right, with sourcing you just your as your we costs vehicle the cost, comes executive that your your car heap not a associated because, know, of of buy channel. with take commission and costs, into So sales consideration and that other

sold. business think the way, per the as we're about an profit to a maximizing whilst unit So making just sure gross channels unit make available let's us, total are all per you we balanced in acceptable

very our balanced. per but it clear very that teams we're important, that very, think unit with profit we I also So recognize is

then more gone how may And like into more? finding, headcount. you and can count And there if a it or on I whatever doing with I even just finding increased After-Sales. is are quantify mean Okay. the everybody you sourcing I you mean opportunity is them. hard was that the And the question That's this. helpful. time there second tech headcount increase these wondering technician have techs? But you're seems to

I give headcount. terms the in can't would significant -- the remember exact you could I Yes. give if you, I but fairly increase, of it's

whether how dealership me what increased service it understand what first is of And the So improve park, exactly in thing tell technicians. go it's just think I that by I memory, penetration try is me is done for wait as vehicle while let productive to of my out that and lead whether in And you we what you've is, terms once their times. we're you by in basically drag let number opportunity the you dealership that, doing. understand reducing to customer that customer and

led teams have and technicians. And attracting great campaign together think our right. is to of more recruiting for pulled then group directors, HR our quite a senior what But we service I together you're put a

hire just over. not got. I to in that And we added better this our to I'm keeping It's say ones sure we've it's memory, if also as in-demand think to have marketplace in-demand not because benefits to have packages, Derek, trying from an know, right, than the We about are you've an circle back you're profession. going and about, our make constantly have to area, may you that you fully it's aligned, pay be more.

same-store. XX%

[indiscernible]. XX%. for the Thank you

Okay. On those that, put into. people mean stalls to I those exist

room there's to put I -- of CapEx. paying capacity in. there's not $XXX,XXX to them You're mean, $XXX,

up. Is So a statement? Cap that fair goes

Absolutely fair.

XX% utilization is by moment. Our the about at

dealerships beautiful, part some dealerships. capacity has beautiful built So they in And we plenty as of a ordination of there. put building

in terms of are not even capacity sure We value.

Our last question today from comes Morningstar. David from Whiston

the compensation to your increased tech was if just that You spending had in happen? I to aggressive mentioned curious do headcount. that advertising or make slide on you deck any you

No.

area, lot work that a those in work for regularly of everybody of lot seniority, tenure but check we like it, work a hard are also bonuses said, packages are else, it's pay the as benefit we a competitive high marketplace. mentioned something we this I recognize market-by-market something we else, before, more and and very and the obviously market. do in frankly, As we to in it's others. we And we there's terms Like it's make signing of And can very do very do just things. everybody we with protection. that I as that recognition, sure But demand, in-demand

were believe of Pay customers. talking more I'm than so? the your start recurring doing side. using quarter, you service they get I convince haven't the wanting And more a curious, be dealer course, about have to last business just normally considering you do consumers any who Service how that, part of would from big especially Customer to, been to on or

needs just me right? will I'm the you different at trying to start for of to an you're an car going help to some but got obviously to you answer way, as need service a and things with for communicate, let service, to point, So And out channels day is -- suit what we [indiscernible] slightly individual. out that let's poorly, are a you going question in I'm the the some build a build give you've the do so trying

to that got You we'll do is you yourself, the which we've work why now want anparts.com, provide may parts.

want to environment. You may franchise a use not

live the reason if we nonfranchise environment. environment, you environment. mobility services, franchise why franchise. it. miles bought And that's why to That's the use Or may to use do want may XX closest want have a repair a the You we away from AutoNation you have we franchise

about them that of right are look appropriate convenience that and them it for right the cost. and kind ways of different done the service that providing it's us says channels I have So work customers at at getting giving and

There you not we services. mobile hey, to So I spending of talk you is are those there you. obviously target the right. franchise our Head customers you're want I else, to the decision we [indiscernible] channel repair what this stay or franchise making for to call if introduce what After-Sales, do the AutoNation if something it a you people fantastic remains a then in to channel -- channel. But is where Christian, when say, with very And aggressively line

Okay. And last thing one on just M&A.

mentioned just play Are there You other more here are reasonable? Or variables becoming change? sales becoming more it's at that attractive.

again? Sorry, up, just you you could broke repeat

their there And change? more becoming Or in prices? are becoming sellers think deck, is mentioned asking variables solely you the that I causing that because slide attractive. just in M&A reasonable other are is more

as lots with the whether or I'm any not team Tom. the relatively seller. mean of work pursuing corporate is mentioned. development of that say things I that as This to I probably has it's opportunities, environment. Mike obviously, Yes. a and And we meaningful other seller franchises new can on different way have expectations our some as moderated in would you expect, stores,

figuring point with particularly The last trying the us pretty be. and U.S. expectations whole make evaluating of P&L. the the are those be here the in frantic out level of of pandemic opportunities time I to mean start is what have impacts going trick a expectation but as is period to normalization And the that's was retail was we to think their to I going I many of is And moderating in in couple off that being just pretty P&Ls not for sell auto the to is for other out able high. Globe, cycle what years for moderation the industries.

So [indiscernible] clear you, Mike. that's for point kind I David. Yes. hopefully, Go of ahead, the that's

think was the I anything no, the No, think Did was going to that I question, I So David? was -- that question. I answer now. last don't in add

Yes.

technicians number and mental be I'll the the by doing me on math was I Let your Derek, wrong. think way,

a So over put is my something takes in because X that we've time. circle we period probably the on recollection of to have order it's to XXX between of

covered with sure But make like close. to we've the that, So just back a call I'd that off. circle bring to to

look for I the you to team. we next quarter. thanks everyone. in being Thank you, said, And as and everybody, Bye-bye. Thanks, call, seeing forward all the our on of to

conference today's concludes call. That joining. much Thanks very for

now lines. disconnect may You your

Bye-bye. everyone. you, Thank