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Group 1 Automotive (GPI)

Participants
Pete DeLongchamps Senior Vice President-Manufacturer Relations, Financial Services and Public Affairs
Earl Hesterberg President and Chief Executive Officer
Daryl Kenningham President-U.S. Operations
John Rickel Senior Vice President and Chief Financial Officer
John Murphy Bank of America
Rajat Gupta JPMorgan
Rick Nelson Stephens
Armintas Sinkevicius Morgan Stanley
Michael Ward Seaport Global
David Whiston Morningstar
Call transcript
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Operator

Good morning, ladies and gentlemen. Welcome to Group 1 Automotive’s 2019 Third Quarter Financial Results Conference Call. Please be advised that today’s conference call is being recorded.

At this time, I’d like to turn the conference call over to Mr. Pete DeLongchamps, Group 1’s Senior Vice President of Manufacturer Relations, Financial Services and Public Affairs. Mr. ahead, go Please DeLongchamps.

Pete DeLongchamps

the and have earnings everyone, morning release presentation website. call related related Jamie, refer we today’s on posted to and welcome to call. slide this to reconciliations includes The we comparison that results good you, that and will purposes morning, for to a adjusted been Thank issued X’s this Group

for forward-looking historical to are statements I’d made mentioned of we like make financial Securities harbor some safe measures. remarks management non-GAAP begin, of to pursuant call, Except the and forward-looking the Litigation the about information use during XXXX. are by statements Private of Before Act brief Reform the provisions statements made that X Group of

risks and unknown and in filings risks risks the the Those limited months. conditions and of filings known associated in Copies the Commission both uncertainties, actual may risks SEC company. of not the pricing, the are from last both and involve periods include, and with the over XX the volume statements future these other forecasted cause results Exchange to, with described differ company’s to are on Securities available materially markets. results. are which but Those and company’s Forward-looking

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

its non-GAAP As required on by measures to financial reconciliations such most applicable company the comparable any the SEC measures website. rules, of directly GAAP provides

Please are U.S. in all today Michael that John comparisons same Daryl and our the me Officer; Operations; on Earl period, Chief our unless the Officer; President of prior Corporate the prepared President Rickel, stated. our and Welch, with Participating Vice otherwise Executive call, and President remarks Controller. Vice Kenningham, and Senior of note Hesterberg, President the our Chief Financial

over call the hand Earl. to now I’d

Earl Hesterberg

This net Good $XX.X X diluted XX% pleased $X.X of share, earnings an prior all share adjusted the per adjusted and of for you, record time Group earned billion Thank to morning, million quarter all increase revenue equates generated to quarterly year. record everyone. income. I’m per that the $X.XX report time of over of Pete.

market record was to Our quarter in Brexit. despite the due headwinds achieved UK, setting continued

We achieve U.S., in in all in extremely by used strong almost markets in led aftersales of to growth three our were XX% meaningful and an of U.S. both vehicles increases Brazil. able the performances the in

is have reflect ensure approximate of cost tax million our had Our did but truly associated sincerely together severe an that our appreciate the on storm our them. open of that amazing Imelda, within did they We had Many were employees Storm financially devastated our adjusted our XXX support Group Group of this Beaumont their after yet storm by and lives with through employees market. the results X We $X more within conclusion. employees Foundation. important the to storm’s at our the Tropical impact than days victims in work family to best our X group stores businesses an we flooding,

segments. Turning to business our

on X% vehicles. we XX,XXX and by vehicle UK in increased increases basis, consolidated selling the retailed During average the new constant a new quarter, revenues over price. currency Total driven UK

new kept overall which sales the X.X%, retail Additionally, our with market. same-store U.S. vehicle pace increased unit

UK and Our geographic U.S., mix new was unit XX% sales XX% X% Brazil.

represented vehicle and and of XX%, XX% by sales. new both new XX% represented new of our Ford and accounted led our Our mix for represented brand unit which sales, Honda/Acura Mini Toyota/Lexus was XX% BMW VW/Audi units.

another that our U.S. in previously used as by continued XX% and our new by XX,XXX did also group consolidated at X% growth unit come our revenues a in strong grew vehicle same XX% the currency I quarter also XX% And impressive gross volume store expense of increased per Total units the note operating volume same-store for the used not performance sales. used performance margins unit quarter. retail should we profit the this by on vehicle also basis. very During unit Brazil our driven expanding retailed mentioned, increase, constant I a is U.S., XX% over while team. retail

consolidated X% driven currency warranty pay part X%. revenue customer on X% X%, of increases by Total in aftersales constant sales XX%, of increased a of wholesale of collision basis and

on quarterly our the XX% of profit time company. U.S. which for As I growth currency, increases Finance that in XX% previously as a and profit consolidated revenue mentioned, UK U.S. should insurance accomplishment the record in X%. was gross basis. mention market. local UK driven retail in in unit well was currency an good growth grew U.S. same-store retail growth and as our week constant all gross increased This same-store of was aftersales a overall strong also X.X% aftersales by a penetration

before over geographic call the I’d Regarding I Brazil. Daryl? UK our the U.S. segment Daryl our to discuss to results, to results of turn U.S. like cover quarterly President and Operations Kenningham,

Daryl Kenningham

were in volume. straight total represented quarter. as of used Earl. you, due our growth and quarterly XX% very sales same-store XX%, We grew a gross were the our unit U.S., quarter with aftersales performance Val-U-Line generate strong to increase profit unit XX% F&I retail X% Thank vehicles, able grew we third and unit Same-store for used in to sales the used in pleased second

a used pricing have expand The profit used our driving our which same-store the gross along total able big in to we over an more recently profit implemented in retail gross our channel strategies, of critical was basis. year margins up the XX% In data been shift growth, car vehicle to with addition prior on car business increase of with substantial to were volume growth, $XX.

same-store a increased our X.X% records by in XX X.X%, time to a by on XX.X%. and profit customer four employee day again last with happy headcount Our our increased a XX% was week revenue pay better XXX enabled all by and are increase. basis It’s increase increased technicians which XX the grew in has work the Same-store same-store months, driving to and very warranty quarterly results. company. stores We’ve over retention and us aftersales for implemented the XX.X% gross revenues

in week in initiative handful will service parts cover the initiative our fourth and We day revenues. and this plan stores of which another to implement approximately complete substantially XX% quarter, work of four the

Looking of sales a expect $X,XXX product to growth we to forward would single $XX to per fourth and strong to after increases. feel per income We growth for can unit maintain the confident by income PRU keep retail high XXXX. mid quarter full year for penetration F&I quarter, F&I increased we the digit $X,XXX, around contract driven rate. the

initiative efforts. remain and platform of is pleased on and U.S. nearly we update an AcceleRide digital and The the dealerships traffic, feedback. customer to all gross Turning our with our now online our retailing margins

vehicle quarter, nearly purchase. as the a in tool AcceleRide use During their X,XXX customers

our our nearly efforts are continue. service omnichannel In XX% XX% Customers and service quarter online scheduling appointments. grew now appointments versus the of addition, aftersales XXXX and of third

traffic increased digital visits positive XX%. trends track. on and leads in Our continued website and organic Total also a traffic increased XX%

the now over to Earl. call I’ll turn back

Earl Hesterberg

Daryl. Thanks,

last X% conditions challenging, uncertainty surrounding in discussed remain primarily roughly very vehicle quarter. market total was the quarter, we the Brexit. down caused industry new for UK As The by continuing

to is as support some were effect sales The likely went into that before down self-registrations are than new more pushing also dealerships aggressively OEMs legislation true September And sales X. even called the pushing numbers. emissions higher demand new vehicle RDE customer

increasing gross values we pressure pressure This downward XX% for on used same-store of saw market used per declines vehicles retail also in vehicle as for constant new and resulted vehicles basis. on profit new a XX% vehicle unit currency

XXX in cost points challenging reduction basis implementing the this even our note, continue grow aftersales team second in a to good did I positive business plans mentioned, SG&A the local were of we job a quarter. On over our lower as able previously environment. a And to F&I by and we versus

auto temporary inventory sector. expect Our as slowdown weather our on continue aftersales UK cost business focus management, be and will to in to the we be we what growing retail control a

In generated we used positive bottom very strong line Brazil, vehicle performance. profit growth SG&A behind and year-over-year

While a product certain was about to brand low due X%, our flat mix industry the new in vehicle OEM cycles. increased

aftersales able reduction as and It vehicle line grew weakness growth. while grew execute meaningful previously vehicles encouraging team cost the mentioned, initiatives given to we over sales plans bottom used in vehicle And used X%. profits the is drive our I to was that on XX%, new relative

to John? detail. turn to over CFO, now call of more our the some over our in Rickel go John I’ll financial results quarter third

John Rickel

good and morning everyone. Earl Thanks,

dealerships. net after-tax results by Storm impairment on For Tropical Imelda our announced $X the explained asset $X.X the comparable income our third our of of exclude adjusted results XXXX record quarterly increased of net XXXX, non-cash charges, all-time million flood XX.X% or These previously of quarter driven million impact damage $XX.X UK adjusted of $X.X intangible XXXX over an $XX.X and million. from to million Brexit million primarily negative by

quarterly adjusted a all-time per $X.XX record. increased diluted XX.X% to On fully earnings basis, share in

of the the from billion on record. an we revenues, in X.X% prior $X.X and quarterly increase total currency year quarter, all-time a basis For generated constant was which an

gross XX increased Our as gross profit decreased basis points to margin X.X% XX.X%. total

to SG&A weak UK and of Brazil offset basis as XX points more percent XX.X% profit, As leverage gross than conditions. adjusted U.S. costs decreased market

balances. $XXX,XXX $XX.X expense line $XXX,XXX Floorplan expense higher million rates. reflecting to year from Other acquisition increased borrowing interest or from or by to decreased interest $XX.X X% million, prior X% the primarily explained by year inventory lower prior

XX.X%. our year-to-date effective third XX.X% for rate bringing Our consolidated the adjusted tax was to quarter rate

capital structure. Turning to our and consolidated liquidity

hand we and in September $XX.X funds $XX.X of a had As million of another total offset million our on to that bringing of floorplan invested cash accounts, XX, immediately available was $XX million.

there line. U.S. was In $XXX capacity on additional acquisition syndicated borrowing million of our addition,

dividends During yield repurchase an the pay stock X.X%. share, of quarter. which of third the approximately million of per quarter, not currently do We common during our used to $X.XX any $X.X we is annualized

refer the to our news regarding well website. release presentation schedules our financial as the investor additional For condition, additional to detail as of attached please posted information the on

call back now Earl. to over the will I turn

Earl Hesterberg

London, four-story development annual to from in early UK year-to-date nine in October, Related state-of-the-art dealership point which opened John. XX dealership generate franchises. revenues count in Jaguar-Land revenues, Thanks, four $XX densely we million This Rover open acquired to our northwest bringing Rover million and $XXX total our a worldwide. is approximately the to efforts, populated Jaguar-Land to corporate increases expected in

also Since that now opened of we XXXX In franchise the have we in are Georgia. Atlanta, operate of that $XXX Volkswagen addition, trailing disposed in last expansion. franchises a revenues. XX generate in U.S. further earnings for in million center disposed collision centers Texas, September, greenfield opportunities exploring we XX-month call, in to-date XX collision in We our the

Operator? That turn concludes our session. prepared to operator call the I’ll the question-and-answer the begin remarks. now over to

Operator

[Operator from Bank go ahead today comes question question. Please first your Instructions] with John America. of Our from Murphy

John Murphy

bit. if on all in a lot like as I’m you just used business, which it vehicle grow Thanks used on other Hi, for percent the of just shined much But but that GPU vehicle it they’re how Val-U-Line information. news And good more a like morning wonder as on like outside seems that. out the on is to that similar, really helping we Val-U-Line. a much at there’s seems the of quarter, Val-U-Line first now room probably higher? question look curious about guys. in for total? is the seems quite also you if A the margins going then So think are of good business comment there

if that area can as if you strength So is the driving what for you curious what talk an focus that I’m just about was well. – of and

Daryl Kenningham

on on Daryl. quite to Val-U-Line. and with very John. bit a higher with Thank little think raw is pleased Val-U-Line, start dollar a the to them. basis, This grow and they’re there’s a good are yes, margins, percentage we’re room We basis you, of they

better things the do. unlimited whoever – announced do of we’re We being week, with all across scale the with competitors, that are the One focus right drove vehicle continue out the they think in than board. our more there’s and of Also on our Those And who metrics used we of them don’t little business across it’s our seeing inventories, there’s able to U.S., upside, healthier board. this the much there’s getting we little a on. of a think to more. of our rest signs but more bit we place, inventory putting to in our velocity add discipline

John Murphy

characterize Val-U-Line. But in It’s focused Daryl, a way operating on to that vehicle it? Is fair identified business. efficiency that’s like effort increase an not just used an

Daryl Kenningham

we’re do lot to of A efforts the of generating with well. additional operating of a that It’s car. digital as lot traffic has our efficiency. A it is lot organic generating used

John Murphy

an added LTM then as XXX It writers you a in techs, the here Okay. you other four-day on second said basis. big question And week work for on the like and sound effort techs. service

Just want folks to to hours. work four-day putting you of don’t right the just increase, work more so week, make they’re also but sure that I for a than want XX% that extra stories heard in then

expansion, what above So if is going you capacity and capital you’re to about is that it same-store in talking think this about? adding you’re your support there human heads and sales beyond growth

Daryl Kenningham

your they’d understand getting to And yes, were you’ve with the like number, heard question, that we I if XXX the of out If work happy is productivity are able still our that feel we and right that teams than there’s but we’re more to to, more group like go. correctly.

John Rickel

Rickel. just XX% that mean, to we’ve XXX I heads Yes, I that increase. a John. This add, added is John is

that supports Darryl the certainly that with mathematically target So shared you.

John Murphy

in more costs room a cost was the mean, saves. headcount? and function Okay, there what’s of great. pretty got that? on Is what sequentially cut much really there. is executed UK to the I that good it cost absolute How driving is driving – that headcount They And reduction? then UK,

Earl Hesterberg

actually is John. can’t little started opportunity. probably adjustments. headcount Yes, a by substantial bit it businesses we those we yes, in cost is a like achieve brand big Earl. yes, But there reductions underway. This We some cuts more have than variation varies we you have liked. Yes, would’ve And have got I are. later But there’s strong how cost making more because without –

John Murphy

– headcount need sticky. identifying issue more that heads Okay. it’s those there But come of or cost out. not where in to a It’s

enroll. Is statement? a that’s really fair So it’s something to interesting that

Earl Hesterberg

is, cost down the find to statement. we costs single your business the nature but detail, are area can fair Yes, the most this minute of majority It’s people. that that’s in of of every

area. by to that So a definition, be has of in there lot action

John Murphy

you. Got

basis. want Floorplan just mean Okay. on up the forward, it might lastly going down that a an to like like I you sounds was work And It absolute then bit. your sounds on inventory

bit you there’s real opportunity Is might you maybe getting of achieve you inventory. and guys Just that – Floorplan that be on? something going a real do might interest leaner that think think curious forward meaty And there? able with expense little what down coming you is rates focused are sort number to on a

John Rickel

a a definitely I there’s Floorplan opportunity is This it, balances. inventory heavy. little the bit little teams job Rickel. you’re John. the come probably in Certainly that done Yes, The The there’s John mean, we in spreads good of probably renewal managing there. a but the is negotiated. right, have on

Balanced in have little a So probably bit if you’re obviously, there’ll the come and will going think I rates some that forward of fact expense. also continue we LIBOR to but right, LIBOR Floorplan general, that there be temper in offer by swaps in the some some that, opportunity there’s opportunities. downside, interest

John Murphy

very guys. you much Thank great. Okay,

Operator

with Our next JPMorgan. ahead Rajat from question. question from comes Please Gupta go your

Rajat Gupta

able were well, of recover your of to my look profit? question. little and like it terms the do the a for as you the Imelda about pretty taking how because thanks of that you new gross profits decent. quarter doesn’t vehicle impacted quarter didn’t And where within in revenue like lot the Hey, Could talk impact bit it in a

numbers. that just the I’m through trying played So to how understand, actual

John Rickel

Yes, impact Rajat. and in stores is And It are of in two, main was those the the – This that end million. the of as our the revenues $XXX was kind there, indicated, at Rickel. out annualized of team the for the it hits there. quarter, of really was it John late But day, pretty Earl devastating the one, kind six about Beaumont.

market for not us. So a massive it’s

quarter, We’ll years units as but or it think revenue only many again, as The the had once sales XX,XXX get nearly way very the there market. that back in two the of in was So some Harvey lost impact meaningful I fourth that units not like are it XX,XXX quarter. impacted total in a lost don’t in estimates of ago. in to

Rajat Gupta

to Are a the Nissan talked did That’s incentives I on your that changes Got the then your decent mean, about, XQ. in your it. any of or side, new by in have one impact quarter. to you exposure that of vehicle do clear. at have you in mean, impacted they’re And by how all I surprised roughly mix results? peers X% the

Daryl Kenningham

Daryl Kenningham. is This Rajat. Hi,

Nissan, that you to Just said clarify, correct? is

Rajat Gupta

Yes. Yes.

Daryl Kenningham

Okay. carefully play try week. we to Yes. this consolidators commentary everything business heard of that way true. We because one that – of Well, structure we very absolutely they in mentioned Nissan of have some is our other the and programs their the

feel ahead do we that like it we of some we watch to those have don’t impacted We nearly and us – were issues. very as carefully We of much. like felt

Rajat Gupta

expectations you’ve I I a going interest to understand have that product GPUs, on. will just And mean, how just of it than trying better Is that on benefits? F&I, forward? any then I do function that? to within on mix continued it. is rates better to just Got penetration? the pass to it is Just there mean, And more lastly like size

Pete DeLongchamps

Thank that and you, been of in a This sales all job of consistent done to we procedures penetrations plans. is teams the product have product DeLongchamps. continue would implementing the I our say Rajat. Pete outperform good and and

So continue, comments, mid mentioned Daryl a model $X,XXX for place in we F&I is good as to the business. his

Rajat Gupta

it. Got

on. pass I’ll Thanks, Okay.

Operator

Our comes from Please your next ahead Stephens. with from Rick question. question go Nelson

Rick Nelson

availability saying? Good you follow-up Pete, near morning. that and of could on prime, question. F&I Good What’s you. about subprime. to Thank if prime the talk your

Pete DeLongchamps

we access still And loans. of to the we that got need getting customers and to terrific all our time have lenders. at Rick, assist all relationships this with our Sure. capital we’ve in

Rick Nelson

are UK, then in Great. behind WLTP challenges, you. relative those the And

Now if availability. could about RDE, you supply talk we’ve got

Daryl Kenningham

a brand. unfortunately Audi the in stores, row, XX by is yes. for And It far have us, major couple surprising, a biggest Group, Skoda. our group. by different it’s is eight and we Rick. but SEAT impact is Because Sure, which stores, a quite which couple for on drastic et most cetera, second probably the Volkswagen Well, Volkswagen is a somewhat issue the still

So that new – also retailing as we’re resulted the And our it now, vehicles it’s And stores. which cars in not is X. cars. since a problem to now X, we been used have proper still us some before September in many do of having self-register September

So that’s of a top market. a big challenge challenging on

engines. of UK And production to might OEMs, diesel that least gets at time applies for as takes And the their in do production a in the and is been diesel adjust lost petrol demand or most to material in have OEMs shift mix the factor the many many it engines, still other not brands imagine. for proper ability. There’s some you

And so what all margins these that market of vehicles retail is what huge this a pressure us frequently cars. is to in are precisely our move those to on and And of relate that’s not putting factors together part having the demanding.

Rick Nelson

going Again, challenge? that��s And they would better used also get the to there? the case that be lingering can in UK. you sequentially they expect is find a clearing in is that on used because price a business Or

Daryl Kenningham

it’s will quarter, And the out. fourth I OEMs to the But sort trying eventually think the itself problems hard lingering Rick. are yes, viewpoint. into from their Well, market address these

it’s months go So several away yet. to it should But get going progressively not better. for

Rick Nelson

buybacks at the point? versus you could and finally, And this view environment retirement I ask stock if how acquisition about versus debt acquisitions

Daryl Kenningham

these U.S. of Well, And UK no market. profits, at the things on we’re either not future potential there past. in still we value the company growing have interested or the to this shortages based point, are But via in most acquisitions acquisitions.

And careful we our deploy in invest so preference would way. in in money be capital external that to our that still very is But growth. that we’re how being

Rick Nelson

and right, All good you. luck. Got thanks

Operator

from Stanley. with comes ahead question next your Our Morgan question. Please go Armintas Sinkevicius from

Armintas Sinkevicius

there’s a of challenges we and it the When month at from taking talk With for to you end question. UK, used in market. car you maybe ago, environment. do the about that? get that some look still when expect about a could How you the Thank used release the the Pendragon seems I car take regards to like to the do Great. trend

Earl Hesterberg

truly the I true the for all auto nearly percentage of all used market where some vehicle we surprisingly of than And forth. is that’s UK percent a a the with are. the car very not the it are think, Well, of on continue well true high are problem is mileage UK of still inventory new those And one use of metrics used the very cars. used our us, year challenges The And quite cars. what more so used cars cars. with in sales in our to and retailers is old They’re meaning good. we do and

to their support and percentage we’re to cars need our just inventory. those continue the moving it. help our That’s of way We vehicles. to a also our approaching keep represent have to But, OEMs them higher we operation need adjust new

now. So right pretty it’s a difficult balance

Armintas Sinkevicius

from I the priced the cars. of you then sell car WLTP, where seeing able were that, of used then think this are on new or last of cars those we matter sell was basis year early the with that went UK RDE of side. on out the higher to was the prices sort able in than there that shortage signs as expecting year? you challenge because outcome And the of inventory industry or we to a got where Are higher for was the

Earl Hesterberg

and high this regulation is, But bit at days ago. that new the good impact on we recognize or lulled values a were year. very used fact of vehicle know this point artificially few values the you XX to don’t people XX time is I the by sleep last got what a that that make

a so, at beginning we’ve residual on the basis. drops to massive the now, value come based year historical And on where this from are of

volume. used and or on amount literally $XXX on down big margins we turn a Basically, – good our about those And make vehicles so £XXX $XXX. And enough fast money both any that’s are vehicle them. to new can’t substantial

Armintas Sinkevicius

planned you here horizon on ahead, rollouts of upgrades? of stores. the And most here? some AcceleRide initiatives, are What you have largely the on are What with in looking last product question digital the or next for your that things

Daryl Kenningham

of about business, ready But, today. that sourcing doing we’re always talk on we’re our vehicles. customers we Well, want opportunities things number is also used there’s our at how when And know focus to to. a not and in looking

looking very we’re areas now. hard at are those right So

Armintas Sinkevicius

Great. Appreciate the taking questions.

Operator

Our question question. ahead Ward Seaport go Michael from from next comes Please with Global. your

Michael Ward

Good much. morning. very Thanks

follow-up about you quarter? Did question in Just Rick’s repurchase. buyback a any third on share stock the

John Rickel

did not. we Mike, No,

Michael Ward

reason timing? there or for a that just Was Okay.

John Rickel

it’s we timing. capital. I We be deploy mean, the places to for tend No, opportunistic. best look to

As some Earl acquisition floating out indicated, probably opportunities around there’s more there.

we’re those always balancing So levers.

Michael Ward

Okay.

are your some On limited retailing, your think the and the you Or to it, going mentioned the year the online – that that XX% expand instead, that by sense? online include revenue, have Will the that of to end you now is availability XXX of it to most stores those I I XX stores service in but the the XX side Does or flex stores? week work out U.S. it where the it’s of with stores. stores doesn’t all is limitations that of servicing there think cover make

Daryl Kenningham

talking believe AcceleRide Daryl about Kenningham, and initiative vehicles. our new you’re used I on

stores the done all we in next days. in the few in U.S., We’re to be three the expect those

Michael Ward

Okay. too no? service And that scheduling include does or the

Daryl Kenningham

the in online Service is – service scheduling dealership scheduling every in U.S.

Michael Ward

is. It

Daryl Kenningham

work our the year. of revenue expect by be Our four of XX% day the to end at we week,

We you to… because you put will so be by can’t very finished that small substantially need then dealerships, stores, in

Michael Ward

doesn’t It just work.

Daryl Kenningham

Right.

Michael Ward

in mind? online XX%, the the in quarters increase steady a the seen goal this you’ve XX%, in three scheduling from XX% like Is year. And service there Okay.

Daryl Kenningham

do try want as possibly day goal, make as scheduling. we it our make and that. continue go hard to that it as easy to far We but facilitate to can go for to and on as every improvements more online a more not them There’s customers to

Michael Ward

can the is both and And the or online fronts, service into something appointments, that Brazilian that online you the UK Okay. retailing markets? those on expand

Earl Hesterberg

I think Earl. Yes, is is. it This

detail the dealer UK OEM interact correct Brazil, as it the is with However, more in I a is because inventory search And would the the in particular with to do the to systems, say as on to brand’s to vehicle a retailing, be ability specifications websites. quite the in and customer not and online able has lot the advanced OEMs have U.S. influence such.

So, I’m we’re other not come. do where that but we the can markets, it in at these quite will point sure

Michael Ward

much. very you Thank Beautiful.

Daryl Kenningham

Thank you.

Operator

comes from ahead question Whiston next from Our your with Please David Morningstar. question. go

David Whiston

morning. Good Thanks.

On fair it say resort questions really there as and last then the your one gets competitors self-registration bad? a Is measure the less do with you than and Brazil. when UK to do of that that you discounting there on guys just two only from it that really competition

Earl Hesterberg

a I like situation true months say market more assure of we of where group that. same fewest UK it vehicle answer. we of There’s my their additional some to brands colleagues UK, targets they’d that types to we balance tell every to it’s because And We competitive are have a the new that’s these in back give been major true. different than more of dealer in the you think our you to was there try in to want. It’s I had usually in for But, And I we’ve off. kind major retail hit. attached does of you talked money self-registrations do that the or sales. think can classifications variety But, if demo of of changes. a I I to you, lot recent can’t leaders we bonus legal self-registrations.

David Whiston

Okay. UK, outside think And will just of reasons remind structural a Can that. do there? large the improvement the there SG&A UK Obviously a the gross, in not it’s the maybe do U.S. gap to with some that that are there always fairly me, it’s you gap be but wise, is a can time you large lot great cyclical you or of there

John Rickel

Yes. is Rickel. Dave, this John

reduction. cost indicated, working we’re As Earl on

gap ever of differences. stream a there’s part over for continue a think profit we don’t will to is opportunities of do of bring think of of There’s that the But we couple to that F&I there. gross One a really number large There’s I the structural as So with close key U.S. not kind down. fully the reasons that.

turn You is park don’t more frequently. proportion cars higher the service There’s people cars a keep extended that long. contracts sell as don’t that basically of many the car as because company

expensive. So it. tends that’s in the is pretty to more a big Rent UK. expensive be of piece Land

never that, attainable mid things U.S. into a certainly going very the say for down like So the of to I’d to But high XX’s, probably to get sort we’re level. target.

David Whiston

the Okay. GPUs one one contrast Thanks. to used a And about in between going on lot, a a new Brazil there what’s and talk lot. up down cause vehicles, big there’s the that? Can in you really just – market

John Rickel

Yes. is again. Rickel This John

vehicle is around of front, mix. brand new the On some it

at larger a partners one the our of of One is of cycle. kind in product exposures down there, wall their

you those some basically do older to kind comes of units. the So, discounting That product cycle they’re when next will to through. have turn – move

used done the fabulous process front, price a there basically team has and centralized for to procurement inventory. down both the a They’ve instituted helping On job. the

major seeing we’re we’re both so off down profit generating improvements in and gross used there. the volume And in major,

David Whiston

how was just… Is on team the price better learned So or more used? data to that big

Earl Hesterberg

Earl. is This Yes.

Brazil, U.S. I sophisticated not may think be just the not is big It’s as in it in data I as market. as a

you central these day data a have we So it have so that into we available in have and of a every or But taken of four Brazil every regionalization do of is operation that’s possible values. have where people five they that lot massive that country, bit Brazil.

cars as beyond of available these So the generally level the dealerships. skill in the pricing sophistication

David Whiston

Okay. Thanks.

Operator

at closing this back over gentlemen no like and remarks. management ladies for call turn And to showing additional I’d conference I’m the to any time, questions.

Earl Hesterberg

fourth updating earnings quarter on joining forward call in for February. look our We you everyone to us today. Thanks to

Operator

conclude gentlemen, presentation. Ladies do you that conference We joining for thank and today’s call. does today’s

your You now disconnect lines. may