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Group 1 Automotive (GPI)

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

Good morning, ladies and gentlemen. Welcome to Group one Automotive's 2021 First Quarter Financial Results Conference Call. [Operator Instructions] 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. Please go ahead, Mr. DeLongchamps.

Pete DeLongchamps

related morning, we welcome the issued presentation include Good The today's related Jamie. results. that release adjusted earnings this reconciliations you, everyone, to and call. slide Thank the to morning and

We will for have posted been this Group website. comparison X's purposes to to refer on call

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

in in unknown desire of expense maintain and Also, Copies risks COVID-XX materially on Exchange vehicle known authorities affect economic other oil demand new impact extent to ease impacts elsewhere as filings will statements timing, of impact to risks vehicles such differ Uncertainty in are services. and U.S. of well as and may on risks chain the future from related the which, vehicles related of the and these the recovery of both forecasted Forward-looking public and demand developments future and results. liquidity transportation, the results crisis Commission in adversely from pricing, economy inventory the and to operate. supply our and and effects but service. turn, of with the the the used new and uncertainties, activities. markets, to, which from periods risks and to for duration limited sufficient U.S. both obtain our of filings can involve Uncertainty Also, the vehicles adverse international for oil resulting regarding disruptions, and and current Those months. COVID-XX travel, future are SEC regarding margins our the and to restrictions an its and impacts may Securities not used unknown in last current severity for health and prices, impacts and implement Those to cause various pace and on commercial COVID-XX ability to controls and the have conditions an likely which volume, include, associated actual with the the and time on company's global economic time. are and XX of ability company's from and described maintain company. the maintain occur available over risks and producers unknown

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

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

Earl Hesterberg

an of of an $X.XX for morning, over increase XXX% prior net share that diluted the XXXX. per This increase over pre-pandemic pleased year adjusted and the report earnings XXX% I'm $XXX Group adjusted one Pete, the quarter, and of to generated first everyone. Thanks, to quarter equates income of per good share, of million.

represent from fact and partially February and dealership particularly that $XXX,XXX a XX% around were $X.X after-tax exclude our the weather results of items noncore to legal our results transactions. winter after-tax impacted were due after-tax an which offset Texas a disaster given record-setting February settlements to Our during pay of adjusted benefit income impressive typically million couldn't severely who provided closures employees profit on net of These revenues, event. work store $XXX,XXX total operations, real estate gain our net Texas by

revenue equivalent is largely a XXXX, all deferred first of in likely a to and used entire improvement U.S., shop full trend quarter. UK in With of growth. of This about stores sales over Our increases throughout in Therefore, available line. months, quarter increase lockdown was vehicle total were our our the generate It many hours difficult permanently vehicle business. lost. week revenue that lost was into welcome markets XX% the the in quarter. was under but by so were in remained first revenue it our XX.X% in the Also, well effectively new first restrictions the improvement the the service driven subsequent consolidated the in

course, and vehicles an strong that did remains in last of U.S. half March should during the for even consumer to about the Of we the to and extremely true is that will hampered start impact to low levels. fact hit speak situation inventory important our this traffic pandemic have shortly. that is certain by and remember second the But be demand March. will support negatively sales higher But year. in sales inventory continues margin above-average more year degree Daryl It a levels.

likely new the spring versus customer period. the especially a have gross the in pre-pandemic On provide pleased profit both U.S. profit has variety less open. also are will that are Relative and mandatory moment. very very quarter. returned increased all enjoy Like to to XX. November These now They our to completely results detail XXXX. lasted our Daryl selling began and same our business will for UK, business on aftersales April this been continued throughout lockdown we on more improvement increased the our since But gives have first encouraging in X, gross our total of UK have basis, of a from Daryl, as U.S. through levels. U.S., U.S., pre-pandemic that the UK heavily lifted U.S. XXXX will and over and driving entire the our very a first In signs us in X% now are and U.S. the facilities online to paid results March. XXXX, service provide the Limited XXXX, have lockdowns same-store shifted physical operations new via were summer during to drives, platform our XX% been of XX,XXX but for points not markets. able aftersales test vehicle in the Despite in more basis as quarter we during used and those same-store having time margins confidence In to and by that XXX increased availability our conduct benefit service particular, new detail. great of X.X% quarter. deliver aftersales we parts suffered exploded this Again, January showrooms Acceleride quarter. departments, strong since five in months. first slowly closed started February, sales ability Our vehicles or conditions over the vehicle the and pandemic business the our

the last increased XXX work with our as after strong to to work an year, X,XXX-basis margin most of until the combined margins by UK strong dealerships over same-store evidenced chose closed routine discipline, improvement profit XX.X% level almost SG&A aftersales was points point aftersales at meaningful generate cost service despite in basis a defer maintenance showrooms. enabled and us to vehicle The Our by repair new lockdown. as heavy customers

To I XX, seen levels during some were strong gives service and color on provide permitted back to dealerships. again we high open to XXXX. This the call us in As we've very will our remainder Daryl sales of a performances, and April confidence Brazil the business Kenningham. quarter over of turn showrooms our U.S. in our traffic first on now level UK

Daryl Kenningham

the namely, of used operations continued U.S. new supply. same-store new sales cost This XX% a inventories by days inventory aftersales vehicle Earl. continue factors of increase unit and number increased outperformed tight anticipate the and growth used strong to our Thank as pre-pandemic results, at to necessary. quarter the quarter XX,XXX units, in XX% Compared the new all XX new our industry. our and finished to discipline, retail you, continuation which X%, We of second and levels we'll half adjust U.S. of quarter vehicle A sales remaining and respectively. XXXX. trends first outstanding the of XXXX, of growth, are contributed from first

same-store by with vehicle sequentially constrained along inventories Used XXXX. well. a of sales quarter first unit XX%, Our remain improved the X% used growth as over

However, and we've processes higher of a acquisition reconditioning return. changes number made in merchandising, and our in that resulted inventory better sourcing, have velocity

in of units deal around XX monthly rooftop, believe core to quarter, in sold a our Although dealerships great there we going we in the used forward. vehicles is of continue levels opportunity record are high

but February, and still January driver we second was March. The in very were depressed improvement most collision sales our Warranty in and and profit performance. saw encouraging aftersales

Our very strong. customer pay is business

grew allowed profit same-store aftersales CP As up despite reverse to XXXX. gross offsetting in counts saw XX% same-store of March, RO count the March order the quarter in was XX% XXXX. X% We in quarter, gross in mentioned, versus Earl significant traffic customer declines. a ramp-up of This by time. warranty term. versus headwinds grow RO first the the expansion gross and We us repair levels, profit versus pre-pandemic to our aftersales both per profit collision, continuing pay significant which total foresee In will increased pay customer in our near and of

profit performance cost discipline. was factor major outstanding The third driving continued our

of part fully percentage profit was improvement to to we pre-pandemic be Our down is XXXX. first the a first due as of don't is to certainly adjusted the productivity vehicle a due XX% decline XX%, the gross material of in of Part margins, gains. quarter which SG&A but from believe permanent, quarter higher

are of would techs, of structure. on more permanent flat us For significant ongoing retailing our Acceleride, productivity another productive. mix, will quarterly allow are platform. our for to our Because of mix reduction salespeople These digital cost the in like I our gains update Acceleride, tools our example, higher provide because of a techs rate productive. like examples more

of upward our higher total trajectory to the record an choosing in and a continue year sold. X,XXX close We over of selling first Acceleride, through a X% sources. quarter XXX% than much prior Customers Acceleride units our rate at increase continued the vehicles other retail by

to like platform. we will make I with a share enhancements you to Additionally, would the number made have soon Acceleride of or

payoff integrated First, platform. within loan quotes the real-time we've

Apple Android we Second, our launched App in addition an existing to App.

and will of amount the dynamic English live be ability to payments customers the next down Spanish. app. between ability fees and months, in to over remain process We're as industry, them with a toggle And enhancements delivery improvements at customer also within now also and will workflow. introduce now on This to the monthly to for introduce believe fifth, process provide payment we the addition delivery couple digital vehicle any card, customers through forefront appropriate. updates able we of the the through customer's have and retailing will in calculation second future reserve address. continue the fees credit our delivery directly fourth, We a process the in in Third, to this have based include And technology. making numerous to working earlier the is transformative the other none

Turning seasonally job a aggressively well a positioned entire liquidity pandemic. of the growing Daniel call eight industry a COVID to now the the Group of driven most profitable rebound first quickly tight turn a in very to structure to quarter quarter profit realize Daniel? to McHenry, Despite additional over We in are did provide cost quarterly the and review. balance of decline lockdowns, of what our margins from ownership new the and sheet strong is record and sales X's years easily to the coming vehicle tremendous X% inventories over out CFO, thinning team in benefit our Brazil. weakest the I'll for order a and by year. a sales set

Daniel McHenry

Thank morning, everyone. Daryl. you, good And

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

cash operating out backing after quarter adjusted million cash of in flow and the million first of free $XXX flow generated also We $XXX CapEx.

of leverage March, X.X adjusted times which credit to March all XX. On syndicated rent Our of flexibility was basis, as plenty leverage two a cash hand, defined U.S. facility on which the of end considers for by as our times capital ratio net U.S. leaving our reduced at deployment.

expense XX% a primarily was Finally, the million related interest floorplan inventory our first decrease of million interest expense, decreased to lower $X.X due quarterly levels or or quarter interest debt from refinancing. year's from the primarily million $X.X $X.X driven This related by Non-floorplan to of by of bond prior and decline XXXX. borrowings. last XX% was year,

our manage continue a we reminder, As interest conservatively. risk to

averaging in We through place million $XXX have floorplan XXXX. swaps

on debt our considering are rates. also bond We at mortgage our XX% of fixed debt, is swaps over

only result, a $X.XX on annual point a approximate interest EPS. in increase our XXX-basis impact negative have As rates would an

and Our balance liquidity growing look the have we never to position forward company been sheet stronger, through and M&A.

strong year. seeing to a and potential entering closing this into are flow We or deals contracts dealerships acquire additional anticipate of

detail additional please refer will call to Earl. financial to our news schedules well additional For over as attached website. posted of regarding the the investor back presentation our the condition, to the I on release information now turn as

Earl Hesterberg

$XXX Daniel. our acquisition in on Toyota development of new two March corporate Cod stores will annual platform announced ten contribute Thanks, incremental the our efforts, England to revenues. Related to previously increased that we million franchises Cape and

January Worth market. the March Cadillac a the El a franchise completed since also disposition and and We've dispositions the the the mini April. in area of UK Ford Kia announced previously the also franchise market of franchise Paso of termination the in Dallas-Fort franchise in in We Mississippi

Daniel concludes call our question-and-answer optimistic to we that prioritize will to in the have remarks. year the I'll the growth we This As external our as Operator? capital operator opportunities prepared and continue the now process progresses. begin allocation session. we're beneficial turn over to mentioned,

Operator

will comes begin with question-and-answer from question. question Instructions] Please ahead and now And Benchmark. go Ward today from gentlemen our your we session. Michael Ladies [Operator the first

Michael Ward

seem is thing that levels the to it levers I'm about the Thanks, few profitability seen you resilience talk good wondering the if the that morning just as quarters? relates of group, always elevated to miss, some we've dealer model. everyone. the can you pull over business of I One last the to at keep the can

Earl Hesterberg

get shuffle. that a to And the Sure, good sometimes in seem Earl. it is is Michael. This does point. Yes, lost

whether tougher then crisis, model think And because is lockdowns years the particularly the and backbone going real to This for is flexible. the a by or And I going extremely is which had parts didn't and again, service, regular as year is last the XXXX which shift inventory and driving lockdowns, to be it was suppressed people financial to into the over the during U.S., far bloom that really starting and maintenance focus. we're little how such. to now now the of out, was really and good they our going have we weren't like UK situation. learn feel

And year that the pressure on you've of of when used market months. not and able do other whole couple the or the then generally to used is cost much that to structure. the market adjust The And to carry So flex try in progresses next which down. and businesses jump into is inventories some either that going levers going that responsive we're on are way have we world our is vehicles, and our way to offset lean many vehicle vehicles, hence, obviously, and inventory ability, we're heavily thing bigger. here the the lower key is up pricing the the new be we're as seen to the on see conditions, to real

the so business cost been to structure people adjust returns. and last able April, down to And you we've we upward our much that have and of extremely March is as flex been have quickly seen, able

key So, are I our success. the think those levers levers to

Michael Ward

service? about of up parts and have easy service It year? I'm can expect March. comps from rest you the release, for So, the parts most in year for the talked sorry? we of should the in the What XX% being U.S. and

Earl Hesterberg

and traffic of can't specific expect we tell the good I of rest Earl. but out number, see for the building. parts you We things year. counts is this the service a Mike

reporting, is they're last gross of adjustments with we've are pandemic we to quite months. this – added improve productive the Our – selling for our during XXX we XX trying over RO three in on good the base to we're technicians our And the better We're approaching about shops. technicians. dealership want back that as productivity is made some skills customers. inspections, better And we've better

technicians, put helps as technicians, So which more few to flat be a us so very hourly we more through throughput productive be productive good rate that expect to can footprint. vehicle things our and in less than continue and driven an And as business, more. people become supplies miles issue, we will tend to if be hold And their cars increase. will do our shops on they

Michael Ward

the parts services to of in reasonable gains for XXXX it's So, anyway? and assume double-digit rest

Earl Hesterberg

chance or quarters. the Yes, bit is I good. But double-digit business of strong weak. get very that pay don't is been warranty, this is a and The bit recent increases weak being double-digit has Earl. customer if will control and very, has Warranty in of know in a don't terms it warranty been we to extremely not.

But going is going to this So I that's I'm how don't know the business around. be to year, move confident. quite strong customer pay

Daryl Kenningham

In it's It piece in level came last back. the was collision our March, business as a business, March, almost but our Mike, of smaller same March.

Just business that the so [indiscernible] return seeing well. as we're

Earl Hesterberg

collision been been soft warranty, which quarters, It's recent had Mike. over and Yes.

Michael Ward

Certainly Thank good news. you, everyone.

Earl Hesterberg

Mike. Thanks,

Operator

our question. ahead of John And from question America. comes go next Bank with Murphy your from Please

John Murphy

Good morning, guys.

yourselves, comments, your date, To wanted been doing constraints about the hitting dealers much impairing the good faster follow-up sales and yet. inventory potentially in really have to of Just very a sales. not turning Earl, job, on including inventory the beginning

second starts from pretty get of to night the of half So on I to on some hit second think year. a what last wondering actually before And sort the sequentially quarter inventory was what to sales. with outlook heard it going level Ford dire you was just we into need the relatively we

we thinking of are second year? the relief going really isolated How you be constraint does real second a on become this? And about in problem to the this see quarter some is then sales? where the to it and So half

Earl Hesterberg

in of John, recent seem amazes people guess than don't model this that the quickly be continued shipments of point, back to quarter. me. so we'll quarter, much get on do sales normal just that going you levels the a into the new use. half a go part It inventory. pretty sell more cars level vehicle of But fastest. I does always to only through resilience the I half how the we have and forth. is same in I've the that where with and a read than impressive ever really And rates OEMs more from our of than it we second of sales seems Mike's Earl. he are the the the about less all the of I months, with the they're would more to as the levels. Kind in amazed constrained going second adjusted. to we're inventory to ones maintain know made, our in that's vehicles declining into or third have been inventory. get first maintaining the we've press little But because little Also, We're shop a just sudden, moving sales it's the making

come go right they truck, when off retail a customer. So the they to

to we'll hit, mitigating think, are into But volume all the get So trying are know, things problem. the But in all in I a biggest third that this quarter. as get there prolonging into the yes, first latter quarter. there our we world address will the are of some as the start of And we the probably part carry that to part second bit. companies

expect will. I later, or sooner So they

John Murphy

is Earl, the the there. I is And trillion-dollar a this mean question demand follow-up, is

something looking disruption. supply that's we're So at a

ability very thing a to and shown So it's through scary from macro you've not standpoint, well. such manage it the a

been lower of lessons that is up, the the here things the at given and I to at been the this and few think side on some higher. is you other last lessons been and this sticking potential profitability kind you up and for at of run been should be putting it's now and absolute way dealer the as get saying, automaker level. from the of forced. inventory, have looking the are and the potentially We've automakers of level of So higher hey, decades this profits all you've the record sort are throughput Do putting certainly this there with some learned here? learned the mean,

like think? should seems it what So you they but be, do

Earl Hesterberg

sell sure system think and make And lessons like learned do lower to of a some we've used our faster. technicians. the carried of there's learned supply day getting In here. vehicles. through them increased through, salespeople, to words, with other being more And going we're on things I process efficiency that able

trying Ford a learn to I'm think the third So dire straits I profit we're When in second to in supply and those Again, profits lessons of talk about are money. you've with and but lower And it more they're some comes vehicles obviously of these inventory. able some when those bad demand, sure the balanced quarter, OEMs the in vehicles going produce And and very carry quarter. you to wasn't permanently auto being heard manufacturers that operate yesterday. through. first saw make the to

think when change be works a the so in the the And there the distribution I will settles. way OEMs network dust with material

we'll I productive more efficient. and be think both

John Murphy

good is negative if leverage what really absorb understand. but to understand will seems coming starting to that there's trying maintenance you'll there return? released? technicians, it that's off have thing, you like get to like be quickly? going backlog capacity any the – there's down to can on that any to gets mean Got and deferred parts as you operating seems to that's be or surprises just at I'm I then and you a a up Or just just friction do here? the think Meaning you. positive on going released. It reasonably you've staffed you it build Is And strong service, get trying staff

Daryl Kenningham

those on affecting but you'll is as be but be brands. Daryl. now. handle more technician the we And there some get capacity, warranty – I volume. business our freed, to get once warranty week that ability to for our is progress will numbers the isolated this drive those to tend we'll John, and And more come four-day to once right continue – in think business. and work our relates shortages, be. what's to and We're with – those of And and pleased ready see can it certain able we rehiring back, the We're parts

So have concerns about we don't any that.

John Murphy

Okay. And just lastly, Page acquisitions the the X obviously, then growth are for top growing first And or of of this priority the capital listed, is on is deck, list. strategy through acquisitions.

You've but been but a I to you you're putting other like white. of acquisitions seems the industry. heading alluding that mean, that It started go, folks the black to lot in to you're and that there's doing room it relative in in given direction, pace more

when we bit you the to the going of high see are getting some side. getting twitchy a a Just little because acceleration? that bit little on are valuations Are

sort actually So are off of that. how we do it might see I think about get we harder thinking – the – But And this? mean And the on? lift you'll when – about levels think we you execute point? to do that should about should what how how

Earl Hesterberg

you way than the else. market. in of car come It's cars, many Yes, I paid When away moment lot think John, is our not to buyers going more kind that bit of with like everybody It's intent, the buyers auction. on the to valid you Earl. also clear It's of the at made most frenzy you there's used it's this the I there's the with a little but a – and clearly mean, too people points.

disciplined pocket. will So burn be trying this. good be time. to let about we're And in to money me a history But successful hole we tells very it's your over never

very So work is But that to I'm for unique confident shareholders. environment. going after, find we're market Group stay fairly one our we'll this things and that and a acquisition

the fact, years. seen in In I've most unique it's XX

frenzy bit and calm will now, little I'm it sure a of there's So a down. right

John Murphy

much you guys. thank very Okay,

Operator

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

Rick Nelson

what winter cost storms, you quarter? might quarter. it? ask about morning. storms, the way would another Thanks. to on for any like not, Good the to been, those that quantify you have Congrats think I What great if in results

Earl Hesterberg

try lose later Central Earl. I of it. the those of kind business expect bits Oklahoma, car and picked a did in week sales. If is to U.S. didn't It's this Rick, quarter. kind of the of hard. we we quantify I shop We quarter, We not, really South in didn't is of up Louisiana, we'll most this And those guess it's And $X.XX, on would calculated them but try haven't business number a $X.XX will figure out and that. it's but the work, to hours hard so lost that. they what we put Texas to get dynamic, it be – already or

Daryl Kenningham

the Rick, Daryl. volumes our for were quite markets of it performed quarter. those stand, some We that of in well studied some hard to vehicle

mentioned, because shop gone side, I aftersales the side, affected Earl so very total those that know And maybe don't hours are variable well in held a those on quarter on the variable as side forever. basis, up that us The a on markets. lot

Rick Nelson

think especially declined since down seeing what XXXX. April, April the like quarterly Also reopened market? in overall Great. decline, the that the new, Great. you XX%. on well. stores to follow-up you're UK I'd The unit as to compared How

Earl Hesterberg

a a Yes. anomaly. of up you that's on Rick, number picked bit little

we to some we change had fleet accounting an Our on and – sold basis. some units agency for

So to very we this if are is factory the market. the consumer And think obviously of cube strong growing going in performed a But quarter. be that year strong market. for the vehicles. in into the I we're UK in take the demand. I fourth the the the the into and the – And underlining many as There's would customers supply with key going OEMs quarter and there. I come can And order would back is in line the same UK. we The say – there's third is say position that these underlying out demand. orders that strong the about U.S.

still And very U.S. is so well settling that's out. But UK demand the as there in as strong the customer

Rick Nelson

Great.

Finally, follow-up Acceleride. on a could I if ask

Toyota big Toyota their own SmartPath, now digital that dealer. Lexus own investments making the OEMs the their Acceleride how Lexus you're that strategy. With were dovetails there? got has launching I'm curious that has

Earl Hesterberg

And and OEMs a one always a that made was It's a go We've be brand. pursue to business. that's retailing that in the only would that them anticipated of haven't reasons we thing like Acceleride for tool. digital natural this marketing we felt the

Our come customers to the interface get us. the Rick. I to we're is tool with to great have if a some couple payments of on things will with support integration by they of do easier enable to like things a And functionally prepared used it's And up that. we a and think be their our able finance And and headed, ahead that. transaction cars And that. down same, to and when years, and is do certainly point great I that more them much where like and we're goal have believe OEMs to and that's tools and

go that's want we're We Monogram. just where week We we're really we prepared shy that's don't SmartPath And we – OEMs going don't one and on away of day, and it. from not last So mentioned to But them head and backwards. with that. we going to talk you to to for every the a them. meeting had believe

Rick Nelson

luck. good Great. a And Thanks lot.

Earl Hesterberg

Rick. Thanks,

Operator

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

Rajat Gupta

just you – Obviously, progress deployed to the to and as pricing But sheet. balance I Or Great, wanted on the that I pull earnings the environment trigger that? the the to building on used cash and on think the quarter. strong on Will and a still should that question. And deal year, the for see will cash? to the the allocation would follow-up get you you you're just like done do that congrats very you to everything. we some comes till cash top capital about being just how timing buybacks? back a on of as of Like Or through? right into when have follow-up. curious we sit it's then

Earl Hesterberg

always Earl. the couldn't is shareholders returning we conscious deploy this it cash very and Yes, have to Rajat, business. grow been we to of

grow to forget this to use So continue we time single in that business. day. as our we capital at the best stated, we a don't is have point believe that But of the for

to over time, ways continues should that But look of some return extended able not priority. execute shareholders. our So to be we'll to to that it period at be we

Rajat Gupta

you Where front, it more Got acquisition it. the area? targeting? your of the discrepancies? that? Any valuation seeing Texas are color are typically more of like you most And in kind assets Is just the it regions? around Is what on on

Earl Hesterberg

pretty outside we Central do we're but believe can South in of more footprint Well, from diversify wide company, open the geography we if expand U.S. we to most of from benefit our our the terms

and Texas the founded, somewhat we company Oklahoma, discussed winter of concentrated in when because were Just the storm. way as was we the mentioning we're

toward if we outside states U.S. Southeast our it's can within Gulf diversify Southwestern U.S., So the U.S., us best the the of around the Gulf states Coast, for footprint the within – the in East

Rajat Gupta

if it. could it. I And April. just Got follow-up Got on

color helpful? versus mentioned been and about unit really You and the recovery has and both April on there services. you be UK? rough parts Any how the also Any give color tracking U.S. in can would us used side, new

Daryl Kenningham

on is on U.S., U.S., this In new Earl Daryl. April the the used the and Rajat, comment on comment both can and pleased the with we're side. UK. the I'll

Earl Hesterberg

open Yes. In saw a of the movement areas of UK, tend massive to the were course, And to again. the showrooms service obviously, within allowed places we showroom. UK, the we be in business after our write-up into our back

out in normal couple the And back weeks, UK. So the we're lot business first our in to a in been of customers there's businesses. of back

Rajat Gupta

it. Got

XXXX ahead So as I comps in are curious is Just as well well? tracking? levels of to mean, U.S., the those how April

Earl Hesterberg

to would on the give you you I'd last see is the public out guidance SAAR, Rajat. I probably few Well, point there, that the publicly that's days and have been what of forecasts some just the you

Rajat Gupta

provide? Got the we lastly, rest year rough That's it. persisting given to just to strong I on And of I gross the the full through think to tailwinds year. all the the Got When range expect had. Any the SG&A it. to really the gross, margin you could start likelihood, SG&A [ph] gross land? should year

Daniel McHenry

I current I with think importantly, at and current if think level, more continue in the line we're be margins SG&A volumes where currently will the at level continue operating.

Rajat Gupta

it. Got it. Got

Okay. luck. That’s good helpful very Thanks. and

Earl Hesterberg

Thanks, Rajat

Operator

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

David Whiston

Thanks. Good morning.

asked Or whatnot. more money you I've I'm inventory? Earl, talk and are But dealers same how making you ask want more thing so inventory of everyone's to things you about the to are all back going you is happy Going really which do and kind now? the with far,

Earl Hesterberg

to where that Well, point we're if say problem, would the not at getting I inventory is a very this moment soon.

the a because days But XX you at us truck of of below little the the as days have different in we're very our having market. And we So we're – over trouble XX. When far that when actually you when it's together. you And XXs. XX customers fine ended many big supply, we saw, get of mix ideal quarter about all is – truck brands for supply the want. configurations

And more it XXs if to operated of for go starts so XXs. below to brands. a XX get back our days, for decade Toyota you that's some or little where and dealerships the challenging a

off we're where little incoming a so getting truck the brands And things. bit need we more kind trains But that sell and of to and back inventory. the trucks

David Whiston

Okay.

And how somewhat U.S. the the was only able curious is was when vehicle a to in related to in XX% guys X%. get were just ASP that new you up GPU new I increase vehicle then

mix favorable that shift? all just is So a

Earl Hesterberg

demand or that and and of Well, situation. is may that else. supply a drives oversupply, basically part demand supply demand margins. those mix when higher drives in – are shift that, than I but what more be mean margins that's the favor anything it's balance is a Is

David Whiston

lot both UK delivery? they given do lows between Okay. consumers, the home have behavior big And Brazil their in of consumer a the quarter? UK, And in in the source was and there did you difference any

Earl Hesterberg

of home shop, Well, lot other deliver was UK, did in awful our only which place relative could the delivery. repair a to we And the work legally well. car we very an out doesn't

a we delivery we the the UK of five yes, in months. So over lot home were last – did

David Whiston

really an But is option? not Or... in Brazil, that

Earl Hesterberg

some. do We

have Brazil as showrooms bit well. been Our a quite in closed

the are what are volumes Brazil do And we unit – selling in we so quite small.

We delivery. are selling a lot of home this

David Whiston

Texas last the just then right you store really And Okay. given catalog curious I market to good sold be was Dallas, question. seems a now? economically in why

Earl Hesterberg

investment on never it return hurdle situation rates. reached was just that our a Well,

within campus. So located BMW – was our it and

generating there. site in return financial to be our enough wasn't worth disruption it So a

David Whiston

Okay. Thank you very much.

Operator

we'll the conclude today's And conference ladies I'd Hesterberg session. to and that, question-and-answer over for like turn call Earl gentlemen, any back to with closing remarks.

Earl Hesterberg

updating Okay. Thanks, our call earnings to everyone, in today. forward for look us We second quarter you July. on joining

Operator

And everyone with thank conclude today’s ladies will We call. do for and conference that, gentlemen, joining. we

disconnect now lines. may your You