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Group 1 Automotive (GPI)

Participants
Pete DeLongchamps SVP of Manufacturer Relations, Financial Services and Public Affairs
Earl Hesterberg President and Chief Executive Officer;
Daryl Kenningham President of U.S. and Brazilian Operations
John Rickel Senior Vice President and Chief Financial Officer
Daniel Mchenry Incoming Chief Financial Officer
Michael Welch Vice President and Corporate Controller.
John Murphy Bank of America Merrill Lynch
Michael Ward Benchmark
Rajat Gupta JPMorgan
Rick Nelson Stephens
Armintas Sinkevicius Morgan Stanley
David Whiston Morningstar
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Group 1 Automotive 2020 Second Quarter Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the call over to Mr. Pete DeLongchamps, Group 1's Senior Vice President of Manufacturer Relations, Financial Services and Public Affairs. Please go ahead, Mr. DeLongchamps.

Pete DeLongchamps

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

the forward-looking information cause to, and make risks actual mentioned to markets, the involve conditions with from for as statements management I'd pursuant related forecasted of begin, months. resulting that for provisions of and the remarks unknown Reform over in and the prices, brief Private harbor company's the of economy as crisis from travel, future and demand Securities commercial can and are statements vehicles we Except to but call, and some for an of new various of may U.S. Commission and the in and effects the of unknown COVID-XX risks described Exchange are use safe like unknown used and are impacts the timing, the vehicles XX include, impacts risks measures. activities. in during duration, Securities our adverse to both which restrictions pace demand Litigation adverse Uncertainly limited risks historical of and well public and and of impacts conference its U.S. of made company's use the the elsewhere affect of and Act regarding available impact the The developments which economic these from forward-looking uncertainties, on future COVID-XX oil the on are Copies differ filings extent filings are Before oil health regarding and non-GAAP Group that severity future related current the made have periods services. Those financial statements And and service. other authorities and not forward-looking and past COVID-XX current turn virus the the company. associated on recovery the results. both will the about likely by to X uncertainty statements materially and in the in producers on global international SEC results volume, known pricing, such XXXX. transportation Those with economic

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

of Senior U.S. Chief our Operations; Controller. Michael incoming Chief and over required our applicable President financial is of Daniel Financial GAAP President Welch, Vice the Earl. and most our company call Financial John Vice now Corporate SEC the and to measures comparable the on Hesterberg, and the reconciliations Kenningham, Executive call President our its today, Officer; Earl rules, As Daryl President me Chief by Brazilian also our and Participating provides give any like measures website. to non-GAAP I'd who Officer; on with directly such to Rickel, Mchenry, Officer;

Earl Hesterberg

quarter that The describe. to in business extremely are March we months have The all believe challenges good uncertainty since through our and faced and unprecedented makes everyone. been results Pete, early impressive. experiences, are Thanks, have us difficult I and morning, and of personal recent this

but the performance. cost resiliency revenues. of are extremely our quarter. in March company and three actions Unfortunately, of adjusted all in nothing be we per employees, furloughed very This headcounts adjusted an it shutdowns. in point we our necessary that original three as increases, pre COVID nearly respectively, the our spectacular of a will total, were a of and face afloat to earnings take variety return total XX% our net virtually X/X business roughly keep brilliant furloughed aggressive a due Clearly, income $XX.X shutdown and down $X.XX financially period results levels. they business numbers took markets many second the were across represent where employees. and our our uncertain are decrease able by accomplished quarter Therefore, unknown last stabilize represent entered numbers decisive the of in the actions U.S. over in became to and of painful and demonstrate it early million resulted orders duration to this we've when second also in to workers Our cutting X,XXX the a our model been our of were all to April. many of of in U.K. was These These locked XX% goal April despite of efforts of XX% of these share, the short At to late year's due being point, businesses of impressive our shelter-in-place markets. clear of and many of our

employees we reverse of some these actions of made and beginning reduced benefits as we are large compensation further sacrifices as the to our remaining with a stabilize. see Additionally, number market well, and

in during decreases quarter, sudden April. early Looking a the U.S. the track our dramatic in and at we of second U.S. our operations businesses U.K. saw

sales both During the down and of our vehicle XX%. first were business about service April, half

dramatically. sales our meaningful increase departments below May until levels, two XX% gross the had In new pace to our except approximately a but generate to to service three business the near-normal quarter. made of vehicle continued throughout May, stalled until vehicle to our of out level of completely And for This in the closed and profit open, closed impossible the inventory XX, departments entire U.K., year, quarter, quarter the vehicle financial to most X. our sales were our to our showrooms last this the steadily dropped the issues. quarter. had improved traffic second By although new months a due end June emergency used it vehicle remained then of service our obstacle were were and in returned showrooms service In down, we for Some customer quarter early closed. as of massive overcome

cost decline the expense. June, few That strong level XX% market sales our Daryl? our turn Mitigating companies a losses U.S. by in can with our and a I'll performance, May something our However, we to June back adjusted going versus profitable service us our and enabled with gross team and June in combined our snapback great to third and a mentioned, June the business U.S. in the to in reduction on in quarter. have Kenningham. To reductions, company is do. some with SG&A a color and the brought over work good model to XX% Daryl into hold leverage momentum U.K. to profit previously drop I provide and things revenue our XX% strong

Daryl Kenningham

Earl. you, Thank

quarter results due SG&A Our gross part to second reduce a our move U.S. profit cost to percentage outstanding decreased structure. were as large to of Adjusted team's ability to a record in our quickly XX.X%.

XX% profit to SG&A this the gross reduced that year, Our gross from new vehicle helped and our important our while improvement performance, note by we prior million. or $XX million or but it's by XX% $XX used declined margin certainly

XX%, shortages. vehicle and declined volumes by of vehicle XX%, down new quarter second were volumes inventory used latter the which Our caused was

strong. was margin extremely gross However,

the they decline April was New unit profit a of up quarter. margins, in with used vehicle June. finishing as in dramatically And after a in XX% the XX% gross improved increase month per well,

Our after throughout the quarter. business sales accelerated

profit sales was them. as after quarter revenue us was customers the story quarter. ever While great down than of a dramatic progressed. up June was AcceleRide less XXXX we second saw than total pay our over June appointments increases during with online, were gross we and the scheduled XX% their X% over while in us customer total, down XX% more June for

X,XXX tool purchase a Our experience. customers a a nearly process streamlined our retailing the from new triple XX% quarter customer up branding ago. a and from are levels better already year creating used online, and to car digital our first more Nearly

on AcceleRide and Our our customers will build we teams embraced continue success. have that to and

flexible of the to added cars few now we've past XXX% full locations from suite buy our and products the customers ability of offer finance In a will AcceleRide. to through Over fall, access months, offer we we And AcceleRide. which also launching more way additional the options. insurance an the acceleride.com, financing customers And months are ahead, this through will add platform. customer

AcceleRide our market launch in end year by as U.K. to plan the we the of Finally, well.

loss the Turning June the to a quarter improved. realized during but Brazil. We in small macro profitable turned environment as

working fantastic our of much job with our reducing flow costs, cash U.S. and in cutting environment to team here what with in As we generating compared capital place experienced orders an stricter positive did shelter U.K., in markets. a the

and to liquidity we meaningfully SG&A historical continue it our structure percentage Versus gross call John the turn leaner profit Rickel, provide be pre-COVID levels. to a sheet John? leverage CFO, a emphasized to expect Before a our I should forward. balance as of and our should going over to be able to cost lower that review,

John Rickel

Daryl, you, Thank good everyone. and morning,

$XX.X items quarter consist I share. net severance detail. and of of The been to million million. adjustments $X.X have employees made costs impairments Brazil intangible income asset to of compensation accelerate asset that diluted noncore retirement-eligible bonds of net for negatively out-of-period for redemption to U.K. First, X.XX% U.K. These impairments GAAP on $X.XX million the and noncash million, $X our our $XX.X loss pandemic. adjustment in million more a of expense COVID-XX The by the cover relate adjustments totaled will second $X.X of adjustments million, income the for or $XX.X and per impacted stock-based valuations

sheet position. balance our to and Turning liquidity

also million. million had on of to our we accounts, our in that $XXX cash capacity invested XX, million June syndicated was line, $XXX and XX. total acquisition bringing of of on million borrowing million liquidity U.S. offset There bringing cash total As liquidity $XXX was to as another $XX immediate additional of floorplan June $XXX hand

quarter million of in Our Each as business closures. we in flow generated quarter. strong remains positive adjusted flow generated flow one cash operating $XXX our despite cash of degrees varying second regions three the of the cash

strong environment ability been million used even debt roughly another of by XXXX. during million This model in well flow, has the $XX experienced we borrowings the back strengths July. line XXXX, cash this as reduce quarter difficult and generation our acquisition One of our to important was most quarter partially in cash to the this in macro $XX is repaid of non-floorplan as business the generate

credit are rent of U.S. the end have the any reduced X.XXx in was due June before X.XXx X% ratio We our not do from March. June, bonds at of maturities adjusted down facility 'XX. to at of end debt Our leverage material

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

and moment comments. Before I would be a Earl, to scheduled over I few earnings is to Group turn a closing go it last to off my call for make back with like X. script This

I've than that and him. and So, you support XX coaching and are like very deal and relinquish folks enjoyed would last, acknowledge you've lot years. the the over is and I number on learned Hesterberg. the appreciate marriages appropriate there podium, Which longer list a It Earl thank. a is great me. Earl back entirely opportunity, before a first with Earl is of go working I from of I much I've given to

on being lot comradery the best circuit a most who's than my team, bearable. and his Counsel, family after spent Peter want spent leaders our to privilege automotive key made second honor also teamwork, colleagues with personnel remiss partner, Pete you've an of my Relations friends specifically thank Jones. the sales Frank to You're has to the and Thank have infectious day many in longtime work and To value Pete. those this Investor known. and important And become and more advice, me. hours good been friend, to board be business the appreciate to a for I Thank for willing spirit like made to and always best my also to energy. thank Mike I've hours a leader DeLongchamps. the together, adviser greatly. I operating little would and with candidate has input Grese warrior on his Mike Darryl, with and be Darryl the always my an a hours you, brighter professionalism General one advice support, I'd of road ever of shared. like everything. long his for and optimism and ever. my We selection humor group. you listen. and mention it not a sounding we I I thanks I brilliant Burman. good acknowledge space, was Darryl visits and

been Daryl Kenningham. Your handling of HR President, our to has and inspiring

from miss beat, never when the but and depart place. some You I better over us you you didn't operations next took to big knowing you in shoes Earl, level. took stepped U.S. the into ops have a been a

only align better of team football I and Group finance couldn't of can space. the at you the audit, yourself If a proud tax X. thank my team. IT professionals also in with accounting, to want here more auto be team finance, I

Brazil. built very have a organization none. outstanding you Thanks work that and our as efforts processes hard your Thank second We that colleagues best-in-class efforts, talented in would you. friendship. well, without of have of for with to possible None many been U.K. are of the the and

teams in advice number to their of our in we've with been patience in has support, your brash a of for been work partners I folks generous also success. want dealing I'm my Americans. the the the friendships. banking markets. their and company's both years privileged thank assembled relationships with been You've over and large I've with critical talented XX and to support proud factor

equity X having and all Thanks the learning opportunity you the the investors, tell you've analyst story. us. Group enjoyed invested and for time recovering I about For working with have our to

in support been want accomplished sacrifice, sounds and X I They've I've career have cliché, their that over none possible partners and Finally, advice. my my Roxana Catherine It children, to my Emily. true, of wonderful Jacob would done. David, all it's I've acknowledge what but been without and wife thank entire love, patience, and our

So I company operationally now to for that be signal they success positioned knowing along wrap continued give best this luck. could time passing talented the depart since team. the of forward. up. in recipients, going to selected I more and my in been a knowledge our was replacement getting over back most I'm Daniel that Oscar hands better McHenry. the to never Earl. not the leave financially I is I'll long-winded has well internal also individual and on pleased easing from Daniel baton Congratulations, turn and

Earl Hesterberg

I and X responsible suppose controls. to many me his was past John infrastructure appropriate an is most management years. of the to John. Thanks, thank the contributions for of for over for this Group team and XX our time operating establishment financial John our

straightforward by detailed We're you communication. his as our There to fortunate of industry like XX. automotive understanding come that John the have very be with as style appreciate is and assume business systems. investors learning someone by of standing position a as shoes. well as I assure sorely I will he indeed company CFO Daniel, be to efficiently have think as familiar will August of John's McHenry well most our for fill John's will sincere and Daniel Daniel myself can and missed team. on our to minimum large the the curve

Pereira] Financial experience Director has global Additionally, has our U.K. [Roberto with highly and X. Brazilian we as to operation and Daniel Group prior replace executive such Siemens as joining financial served of global the have in XXXX automotive since a companies to Delphi experienced the

of So are again, X. from fortunate to we Group experienced bench use John's to backfill our make management retirement

to continues some we half COVID-XX spread. continues and of year, traffic into market in intend markets flexible responsive move conditions. fluctuate service to As to second remain Sales we to where the to the and continue

and New the uncertain volume remain factors vehicle production, the quite U.K. impact inventory these and and both in incentive both levels Clearly, margins. U.S. markets.

to the control scale remarks. to now important effectively. has ability the second That begin our half the Operator? of session. turn adjust the operator concludes will This quickly remain team Our in cost question-and-answer call levels the I'll and over proven prepared to year. the and

Operator

will first John Bank [Operator our Instructions] come of America. And from with Murphy question

John Murphy

over want First from and industry. we've foremost, amount him just not on John, years I and X, tremendous career Group the him for to thank insights from but all congratulate a fantastic because learned his of a just the

So thank you, John.

strategy larger of " building The that U.K. here to changing sort U.S. maybe heading juxtapose bigger been Earl, here the may your as at anything between on the your networks much of the you Brazil. see see of greater the in rethink in and versus you up here, of in automakers just a competitors. picture getting the in internationally question if the opening better kind landscape curious, strategy and you seems international based towards that and to has and getting there and and going aggressive U.S. distribution U.S.? the in opportunity the in be U.S. look I'm opportunity of And and they're might the here than the "national provide first the channel, a more some sizes it Just relationship opportunity And big the strategic. dealers between on past

Earl Hesterberg

This John. No, Earl. is

I I well. think that's the is auto as still manufacturers true for preference the and market of U.S. think

I land think in have used capital dedicated used the the a have car market on the operations service and justify buy get of been lot big real to years expenditures a difficult to you CarMax. to have it's which and shifts differentiating return to good a And continue within unless for which car in them and used just market. service be lot recent toward that physical business, that vehicle reinforce plant. our want is key headed, to And bank, of factor been the right, the we the is in the upside where we to ourselves has existing market strength

those opportunity the U.K. on physical years, And uncertainty And market best franchises and Brexit. because we to primarily operate at a to We capital. with we continue new timeline. of the because went the declined that continues return plants, there streams. expand We seems is that revenue gross of Unfortunately, to our expansion has in businesses. we most relating to long in auto remain excited U.K. going to like complete going to retool provide good we're this And continue to going and of to U.K. been ever some investment coming nice we of on brand plants to I've vehicle much come more U.K. have at been a I much as but that the about of we've things. be the case. out efficient near that and return to end really businesses, think Now recent be the be do of multiple have efficient of And we a those physical our good another higher but them. management and originally seem a lower. purchase don't the this as ever the of profit don't used potential that's And mix if how we the to look a period and I here overview we've we're kind of U.K. know your more And than question, team, the market are for we there today. time. more there to is shutdown our sit answered

John Murphy

Okay. remarkable quick U.S., at just like a I here, that. what with and that mean went when this really it quite mean is And then amazing that's like I you disastrous the in in should look execute follow-ups to X applauded answer. on XX.X% SG&A time because to be

by traditionally a sticky? to lower all SG&A of discipline opportunity think that than going of always be of forward? you be able the how might Just crisis industry, to at. enforced a like Is this you've through SG&A about kind kind keep get significantly It down going disaster mean, I to opportunity of seems curious and there's to flex illustrate may really you it there as much this this the we're down. to tough period and you on And save sort structurally this much little going that maybe bit be takes cost forward, that the to where lower persist run is

Earl Hesterberg

person. did permanently. efficiency we SG&A Absolutely, the can or that efficient, be the and in already his measure we U.S. this to actually And on in terms more efficient lasting that XX% the from Daryl we're terms we'll, rebuilt used in per our more part we units materially that this in same And what we ground that that from did service sure, did, of and back crisis And and less per We it number cars and the business going people. and of the we person be levels. U.K. come the headcount maybe the say the of and head. least by of selling way can you U.K. ground volumes and would we in up, up, John. confirm a more and that revenue-generating of from in produce in will team salespeople sell operations should to U.S. is up pre-COVID support can rebuild we productive can can comes thing people, the the the basis, it cars than And the I'm to servicing we've And technicians more as quite I all in handle will at number cars per

very we're that. So in confident

John Murphy

dovetailing with Okay. the helpful. lastly, beyond vehicle kind seems folks opportunity. of of is thinking more, they strategy It bricks-and-mortar And through of use incredibly let's or the all-hands-on-deck this grow strategy And even I the are interface this CRM just and the obviously, opportunities AcceleRide along But and mean, used the service that opportunity, just an it's our and that seems maybe kind is are to you're existing and build the -- like bricks-and-mortar it. with it typical That's interface consumer. parts going are sort with opportunity have where approaching go you as business out interface. to some the like bigger to leverage much a is just that alluding then more

as op time. car you you point superstores over from So, your and productive base, even footprint? can make more where much maybe AcceleRide, stand-alone about time need I service there listen, be break say, in traditional brick-and-mortar used think might service I'm how this some any and/or build would just you curious, And to

Daryl Kenningham

is love it's customers a and something provides where focus with demonstrating to Daryl focus we're the I productive be that. may more our our to and forward. faster will they what and more the want this And it is us are seeing experience. are with AcceleRide. us our is existing to interface provide John, ability What And in be forward Kenningham. better And with we moving Earl believe moving that add that's AcceleRide customer that to footprint. efficient

Earl Hesterberg

in almost not that's good it haven't And existing significantly capacity And belief stand-alone last do continue a our for operation and wouldn't opportunities service every a expanded build in to we footprints. we our can vehicle that. date. we've particular, if provide in case, clearly, But investment. service decade, the to used had we look to on to do say we or our facility operation could thought that that But return within we

Operator

question from Ward with Benchmark. will come next The Michael

Michael Ward

on Just AcceleRide. to few clarify things a

off, for been in First correct? years. it's that several Is place

Earl Hesterberg

It's we it been for now. year all it a fully a in place, probably that. And for over year Mike. of rolled little We've out stores had a on before our

now, say would X X.X I years. probably So years

Michael Ward

that's all in it's for years. that for model, several but And right? scheduling Is service across the business

Earl Hesterberg

service years, yes. scheduling We've several for been online

or center now telephonic which in years, customer a contact interface. So combination for and of is our place digital six seven

Michael Ward

Okay.

the wet until can on entire vehicle, go side, a the up the new signature? basically on And through selling digital so the you process

Earl Hesterberg

Yes.

Michael Ward

Okay.

selling can the about vehicles? you way about efficient. talking with you am new when I clearly so the think So from is there thinking that our was about profitability. correctly? John the is vehicle you the headcount that Is Is the also more -- what scheduling, combination So have which -- service enhance store that it the that it And productivity then reduce tool have allows used this side, it you about perspective? store a going forward, in to to think

Earl Hesterberg

We AcceleRide. through productive, can used yes, see that And we and our sales yes. even sell teams today, new and it more makes

Michael Ward

Okay.

XX%, SG&A about we could? bit. percentage going been or going at you've a we're down XX%, think a down of if gross, we historically, We're just as So simplistically, under looking as

John Rickel

metric you number, margins by going on volume doubt They're a yes, calculate of industry It's to it, of for we're and profit, such. but that. hard to a volume the with gross me going down. end all but give yes, driven no -- and we're that number, There's it's Well, down. just half cost the hard about being

Michael Ward

thank luck John, you good with And and much, everything. it. Appreciate very

John Rickel

Mike. Thanks,

Operator

The with next JPMorgan. question will come from Rajat Gupta

Rajat Gupta

forward. couple thanks lot last all and the help going of for a of years best luck John, over the

Just as of The slide is the online fully question online first think, the that gave that the is everything units, units on you set or as just just means? it of for that define exactly those et in where like curious way, it what to what units when in on us done cetera? I'm just you or on curious a And terms unit AcceleRide. omnichannel to particular the sales, XQ, online a X,XXX transaction SG&A, the economics I were GPU

Daryl Kenningham

is This Let Daryl with economics. Rajat. the me start Kenningham,

are very front-end of sort start F&I gross similar vehicle terrestrial deliveries economics. the in to The our and profits with me profits. Let

it, were involvement And will they capability up us of how AcceleRide that. we what demonstrated expect the sale. fully AcceleRide, to expect On to be of -- many to in that a SG&A no will in true to our go have And we've that we of able our side fashion there's tool more omnichannel is as continue. terms less to they that we in an human it's set enable AcceleRide customers, And out In secret continue. AcceleRide tried add very and to easily.

left we three cars digitally. dealership be in don't they person. to the off. And at want to we to able into decide or go have if We them where different if over, to two to come look process to want up to them want they start over pick don't So start the

and then and online and there, get a get do So back some customers driver's come things. insurance payment test information, that upload trade in us may value it they car, to finalize go and their then upload will and drive select go their maybe and like a they their online license

are how it So capabilities to us with going to telling to our focus and does we'll customers do to like to tool, out have it enabling our that does offer customers on the is retailing able want we CarMax Carvana do And of AcceleRide. and continue digital they tried and be same in they what our or we've is that. what

Rajat Gupta

Got across it. quarter, both the I specifically, U.S. here you're U.S. And the mean update in business early different That's and U.K? helpful. lines, And trends the how seeing in just on any the into the then is in are that more near-term July? into how June August have seen into just you what And here and versus like your Texas evolving trends expectations the fall?

Earl Hesterberg

would Daryl here trend he add U.S. June, U.K. this But was the is as the I'll a what is Yes, very into Earl. in the quite markets. in strong moment. like in it and let both is which much July

U.K. in fact, they In closure vehicles demand gaining I U.K. particularly in pent-up because longer market in period, say and were service. periods were and would closure more much the the the Obviously, used complete was U.K. the strength there very, is very

there. me at so factory. strong New many from inventories little in more U.S., such. shortages. also to vehicles momentum but the let vehicles June, big snap continuing inventory that produced of of The back at we're And be probably headwind clearly kept let U.K. much dealerships the have from not and can't to because There's so pick Daryl up kind the see a with

Daryl Kenningham

And at our hot And with a right. will are did like and especially seeing in bit continue inventory after June seeing exactly that up shot some used a on typically new July that's in paving good our strain Yes, with a the sellers. and we volume customer and sales, are again. new models we're side an of

that's what seeing. we're So

Rajat Gupta

up Got on it. question. the follow then And just to SG&A

the mean a I demand talked XXX like points of differently. for introduction weak years U.S. now. you ask U.K. you been in there to per has about couple to pretty basis XXX Just almost

a looks of in it lot of lot demand region, taken like you've So out pent-up period. during the a that costs

what So a how to similar company, XX.X%. be? be I gross at asking a just could you way, say, for gross around like to lower much I XXXX back had of level finished mean, if different you think you're XXXX, mean in SG&A the profit

Or kind wondering after just at XX, think as that, XXXX, gross how So is number our to it about model level? to of that? fair this we assume probably XXXX, is that profit sub that

Daryl Kenningham

least variables efficient I that be be Well, media. also that to I is generally Yes. in are -- some move think cost. expenses efficiencies continue to do digital these as personnel give marketing days headcount more And at XX% area. we about total there'll more you of there's we many media you expect XX% and non-traditional but too that and expect number, into to I our would develop know

Operator

will question with And Rick our next from Nelson Stephens. come

Rick Nelson

all the to John. awesome over last years, him He's XX been congratulations best. wish and the My

those follow-up to able to Daryl the supply going GPUs? about talked you going like to on to I and constraints to to when you that be are hang long you're think So think ease how had on start these

Daryl Kenningham

quarter, the believe Earl end the car in them start I new normal the this think on see of the we'll side, And -- the Rick, to quarter, see end of we'll inventories I'm I through sorry, start fourth ease probably. towards more then quarter. to

the we're that a we'll And environment On expect what that to -- trading. will driving or on now. that, that based right the side, days. be days normalize used bit And able a I that's to the I XX our and expect would acquisitions probably seeing next XX over anyway lot of XX is so, pricing

Rick Nelson

Great.

you So profit to contribution June from from was step that the about dealers Curious are a profitability or about a standpoint big June in June. maybe rate total in could SG&A, if standpoint? the saw in talking what exit talk change you quarter full a quarter the SG&A in

John Rickel

gross kind is clearly, to done June into averaged than Kind SG&A quarter. I the And better months. I month-by-month was of Rickel. for that. percent sense. of Yes. makes we get what a want best X exit on But never rate down was the the we've Rick, weak. of details was the because this and of John April pretty don't as mean, shut

definitely strong cost really exited month in the than and average SG&A lower a best the of was combination the June of margins rate that and June meant the the at for So of quarter. quarter, reductions the kind

Earl Hesterberg

XX%. company. didn't the that disaster And on completely 'XX We know we money as in quarter, April in in down in much a 'XX business And U.K., even model. actually, volume in a again statement, reinforces even this an pretty where never U.S. a terms make one lost you down and was of operating But I I think Rick, can that shut quarter. the basis money lose with April

U.S. even of with U.K. were week March. pretty a significant we a So loss the able we cut to costs overcome is because strength, which abruptly last in

Rick Nelson

Also That's some parts. great color.

be getting things of sequential growth able are in segment? why mid- discussed to on get we that that shouldn't the comp back single-digit sounds Any trends better. some It reason like You there.

Earl Hesterberg

business which the warranty, people term, of with, do degree, drags like some the collision are But coming to mileage. just people recalls. out are whether been driving things the there's our for that In elect near less on comfortable to also has part business, Rick,

collision a you year-over-year. part it's weakest probably look of so when at overall. it which And our our massive business, But isn't business the

anything? is to don't As customer pretty I much to know levels. want previous the Daryl if business back mentioned, add you pay

Daryl Kenningham

right. I think that's

I business think miles goes to back business. like up, the will it's been, oldest is of the generally the ever a park age things the degree. which that service service for as come markets driven car good open And and is more the

Operator

question come Stanley. Morgan with next Sinkevicius will Our Armintas from

Armintas Sinkevicius

a pleasure. looks And as of like, it's John, flavor congratulations hard -- I guess the the be the rest to the year five to it's seems you, year but of know else, everyone day been what targets. to we

in the touch five digital, how and about years, Brazil, outlook looking your business for cetera. talk allocation the can envision U.K., you you capital maybe on So et

John Rickel

opportunities me acquisition. let this John. Armin, is start, mean, clearly, will think through to grow to continue So yes, I be we there

a target. go always a there on if away can they the acquisition want we out specific appropriate sure the buying target, you're to and you're team the get that returns have getting because putting from you assets. But right make shied number specific give capital We invested

to shape, be the sheet to Clearly, balance opportunistic. is levels. in the want continue we great cash So

going capital there appropriate on out offer we're thrown Wall good returns for we're opportunities be get that that going to arbitrary to to about hit We're positioned, look disciplined investors to it. So numbers street but excited. instead the of are trying just

there will to are think opportunities the that through plenty -- longer-term think grow we of I be is plan still acquisition. So

we've office scale, it's the competitive in efficiencies ability it that It's where right, getting independent whether tougher much. place. we it's the and whether have If our it's to back inbound be omnichannel a that with scale in what so really and center, tougher smaller matters whether call dealers the for world at you done really AcceleRide, does look to service the matter, do

we're return disciplined way we're we sense capital. opportunities but patient, will So for there grow to grow and it do think be shareholders if invested and on do that going and a makes to significantly, the in for

Daryl Kenningham

And this is Daryl.

to that. from our terms starting of online service digital, be and like websites addition we're years scheduling support Artificial back-end of and And work and and AcceleRide five we'll bill some more with now. digital centers to like that. that certainly call things In online intelligence, things pay our with things and our in in like with

to us to part bigger it who say look are, X certainly our I hard So it's where it. continue of that of helps become much certainly more And will are. will that but a take lower that will will in we It's that ways it cost, exactly bet we all a years, part helps for who trend. and if of customers, will we be advantage we bigger of

John Rickel

There in and to great area. work continues The huge amounts focused We've will that week, leadership the well is business the fabulous of done key be model. That organic done call to just center. the We've has continue thing as other inbound of job. in opportunities on that we've stuff got parts the our add be on and we that service. would been X-day part service I a Armin, service. parts to

part focus our the continue So to growing will business. organic of internal that the for be

Operator

the Okay. David At Morningstar. Great. Whiston question come from will next with

David Whiston

on John, congratulations a career. great And

First and on question is delivery. home AcceleRide

Just AcceleRide want delivery store to overall, end home customers still the are process? how do doing Or prefer customers come the home of the many at delivery? and do they into

Earl Hesterberg

We Most store, the up store. to about prefer And we'll that at X coming give during quarter. XX% were into the We prefer option the to David. point still come into to everybody.

David Whiston

meant? XX%, is was delivery than that what you home The

Earl Hesterberg

At one point, the quarter, during yes.

David Whiston

in they I to how increases able to And currency Brazil, of they headwinds price need automakers through about because the hear foreign are are the talking and put have.

the the absorb on there ground these are Brazilian guys consumer with price though. Can consumer increases? the You

Earl Hesterberg

that. their lot customer X in is So increases Honda, massive all are. Yen, help. whatever few and seen the than ago and price price Dollar, go it deterioration which And Real impacted of today there. They're like Rover Yes, luxury the in last increases prices years. a increases depends cars we've on upper the very how businesses buys less because won't our localized because the of smaller BMW but issue, now it was volume seems price prices bit, X most who heard doesn't from or the income now. Toyota, those impact much OEMs goods historically, up Land on by the it Well, market that on Brazilian are make on of of they Euro, vehicles The quite increases years a The we've a versus

the but in X. the has headwind The sure there material another big it spread So last been the round I'm there. virus hasn't or coming, is been a issue of month

David Whiston

That's and I next-generation if then heard helpful. you feedback was the finally, customers just And Oklahoma from Texas F-XXX? on early Okay. curious any your

Earl Hesterberg

the and new going absolute Bronco run. to is it F-XXX is be an hit a home

Operator

like session. ahead, question-and-answer back our to over any concludes This I Hesterberg Earl remarks. turn conference Please sir. to for the closing would go

Earl Hesterberg

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

Operator

for Thank today's concluded. attending presentation. now you has conference The

may You disconnect. now