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Group 1 Automotive (GPI)

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

Good morning, everyone, and welcome to Group one Automotive's 2021 Fourth Quarter and Full Year Financial Results Conference Call. Please be advised that this call is being recorded. I'd now 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 a this issued presentation include Good The today's related call Jamie. results X's that release adjusted website. have earnings this reconciliations to for you comparison everyone, to been to and call. slide we'll purposes Thank refer the posted on Group to morning and

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

cause and differ Forward-looking services. future markets conditions risks company's are resulting public the vehicles described global the to as economy, to shortages, results developments with with for in statements filings related demand other volume, involve from known materially not Securities unknown in and associated pricing, both risks as supply component due levels crisis demand may new on Commission. the COVID-XX and virus company's inventory well related impacts Those periods the and Exchange and health limited the in and adverse include the to risks to results. used are which forecasted and production of due Those actual risks reduced but manufacturer customer to uncertainties, increased and and

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

Corporate of Financial with on and and Daryl US Vice Gillette, I and hand Executive the to and directly Daniel its financial our Hesterberg, the joining President such Brazilian Earl. comparable would today's Chief over measures Senior most call call, our company the to also us Chief As provides Officer; VP me Chris required Earl Participating Controller. reconciliations like and Kenningham, non-GAAP rules, on by GAAP website. measures operations; Officer; any is applicable to McHenry, SEC President our President of

Earl Hesterberg

morning consistent Group was of good due and in of demand, achieved expense for over continued which and process and income driven and XXXX, Pete, of constraints, for that record strong million adjusted our everyone. personnel share pandemic. year. $XX.XX business growth miles you, This represents to close $XXX by sale per of of both I record control year supply the net XX% as as second another and sales record vehicle per should during pending driven Automotive, likely regions. three is growth XXXX share We double-digit quarter to across Thank strong year-over-year all we benefit adjusted our recovery after strong performance vehicle was realized margins sales efficiencies one during note metrics. the this earnings strong Brazilian in of from the

Prime to preclude beginning X% very repurchases, count. In external the energy are the $XXX This same-store which took addition importantly revenue of further revenues. also these us Northeastern stores of belt not Group and the by in and US acquisition repurchases of Robinsons the of XX% a with November growth place year growth billion the XX% $X.X acquisitions million. in December with initiative early was in our of XXXX annualized driven the Automotive the acquisition profit, gross represented in positive. indications growth new for was record and UK. did to returning of shareholders of XXXX The diversify strong These in share from outside footprint and from strong all the XXXX Group capital share in our the Most predominantly meaningful

in to leverage flow Our allow XXXX. minute continue in cover deployment will Daniel flexibility will and a capital which position, cash for strong significant

is adjusted results. over our earnings report generated to increase inclusive of as for statements. This per per net Brazil, am share quarter $XXX our the to of the equates which $X.XX an diluted operations financial to fourth million classified Turning income prior share, of I of one quarter adjusted now that Group year. discontinued pleased within XX%

sell result These able vehicles extremely out vehicle our we units adjusted largely as non-core almost material of delivery. US were our growth our related change to required primarily our items a strong with on first This $XX million throughout to Our weak balance a XXXX, results supply, of This no were should be control. exchange associated translation the losses. recorded other year to totaling the remaining net the assuming Brazilian consumer and million rate margins OEM potentially most disposal in net historical into earnings and the $XX charges within non-cash entity. profit results costs after than heading due for accumulated more primarily acquisition in offset of charge are of of further operations, Automotive Prime approximately impressive Consumer remains transaction and relate through taken to continue amount sheet as new of demand strong comprehensive sale cost dynamic consists adjustments income business discontinued to the that exclude to after-tax foreign a upon strong continue our of immediately The Group. continued half pending that demand. vehicle aftersales well

US nine-day As vehicle of December inventory in XX, we supply. stock, a units had representing new X,XXX

is cost. situation XX,XXX more of inventory very in speak and Our recovery units used days much at is XX shortly. impressive. aftersales The continued inventory a about Daryl will stronger our business

our Again, same-store in provide year. a XX% an more prior on saw after US sales market moment. US detail will results Daryl revenues versus in increase Our

extremely constrained. US, strong demand vehicles for the vehicle is is and in As UK the consumer with severely new availability

report pent-up of to that demand proud future. major profit due into US We an foreseeable due more over the offset several will years we XXXX. Daryl have To built strong than turn were to We fourth an pandemic margins generated extending provide past quarter the order some fourth able full in to both Strong the well bank believe and over And half sales when most UK year second demand all-time records our shortages. of brands to inventory I'll declines we're on performance, and Kenningham. into our color Brexit to call UK now the the help drive XXXX. quarter vehicle

Daryl Kenningham

productivity. continued growth you, US contributing and result quarter outstanding fourth Thank Factors to on costs Earl. of of our all our controlling business focus were driving segments a in and

Our QX inventory throughout same-store quarter fourth a month the each on grew receipts basis.

being are tight However, and to presold. still inventories a of units majority our led

our it's SG&A more realized retention important strongest selling We us performance. drive cost at part is of business our the relationships to of MSRP some long-term to our our for focus driving in We us, it to sticky in create with aftersales helps term. But As the short a reminder, which on aftersales. direct that kind feeds the our relationships much is customers. stores segment-leading leverage

unit despite of same-store through vehicle XX% decrease focus a number improved the used In XXXX, units. on individuals. versus new and XX% Our X% acquired sourcing by quarter in retail than doubling improved units vehicles from of more more resulted acquiring vehicle sales trades XXXX, the fourth in

including the performance. driver was we a encouraging after distinct returns operators OEM lease options. numerous again have sales our us closed and a advantage available once our service to dealer, profit to As channels due drives, used-only The of sourcing franchise over most

very first same-store business of fourth with year following pay revenue continues to up customer XXXX. to the quarter growth Our strong half the of a ramp compared XX%

the foresee the Our versus same-store same-store collision quarter term. fourth revenues provide and aftersales another acquiring dealerships. XX% despite solution double-digit continuing a platform. XX%. retailing In vehicles aftersales digital revenues digitally we almost over XXXX, fourth quarter. increased including X,XXX I'd wholesale selling over to vehicles to us continues quarterly our improve to increased revenue through at AcceleRide parts Group like headwinds be continued the for by XXXX warranty. grow XX% sold to update on AcceleRide, We and This in allowed XX,XXX critical near of AcceleRide X in

increase quarter year. over a XX% the For last that's

our continue capabilities productivity to structure traditional professionalism complete quarter, and and also and AcceleRide showrooms. XX% deals. much in-person AcceleRide customers of utilized locate sales more. credit In applications employee sales the in team our digitally vehicles, by increase of fourth can using Together, We all deals, for

For Northeast an context over December time. were XX% sold launched AcceleRide We've than X in which acquired mid-January legacy dealerships productivity at coming uptick our salesperson more dealerships in our over per new newly anticipate the dealership vehicles Group seeing in on not we the the productivity, months. on AcceleRide and in

to key payments is vehicles the customers in third used from purchased the It That's a AcceleRide. acquisitions. purchase an trades us. in is ability through provide from paid to quarter, vehicle. for Zelle X,XXX their the up During customers or The digitally under through XXXX, through we X% quarter. individual hour X,XXX electronic Also, nearly for of used differentiator we customers

now expect over advancements, to I'll balance growth efficiencies and CFO, more turn review. unfolds. a We see liquidity Daniel? the to sheet XXXX AcceleRide provide McHenry, call to Daniel and with our as

Daniel McHenry

Thank you, morning, and Daryl, good everyone.

free flow free This and million. million of was $XXX operating million through total XX, cash acquisitions, invested in and bringing million This the in XXXX combination flow million. year brings flow of repurchases $XXX dividends. cash of out hand to As CapEx. capital offset quarter cash cash another fourth of December $XXX floorplan had $XXX adjusted backing we accounts, after deployed in million to a $XX cash million $XX share $XXX our and of of We liquidity full generated

a During This bringing of XXX,XXX $XXX.XX average total for X% shares million to XXXX at of $XXX represented price share total our of count. the million. repurchases spent shares, quarter, our year we spend an beginning fourth million the repurchasing $XXX of X.X

facility acquisition. our leverage of rent-adjusted December, allow strong by end in continue leverage of U.S. at defined exist. inclusive to ratio will the for as X meaningful was deployment capital Prime the XXXX, appropriate credit opportunities times if position Syndicated This Our

expense. interest to related Finally,

holdings. $X.X a to with the year, million, quarterly floor lower to Prime or Non-floor XX% $X.X million million of plan due XX% conjunction prior interest decrease increased prior inventory $X.X debt the interest year, from of or acquisition. primarily vehicle due expense raised the Our from plan was in

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

Earl Hesterberg

Growing our our Thanks, corporate businesses Related and additional efforts, development Daniel. capital U.S. U.K. in find remains opportunities XXXX. we allocation top external our priority. to growth expect to

cash begin operator prepared generation flexible the position support include in likely the question-and-answer addition balance which and will remarks I'll growth. continue concludes However, of This repurchases share approach, consideration capital our the to will serious external our allocation to and Operator? turn over leverage call to now a pursuing session. sheet flow to

Operator

ahead go will with your this session. question from Instructions] the we begin Ward Ladies Benchmark. at time, comes question-and-answer first [Operator today and Please Michael question. gentlemen, from Our

Michael Ward

morning Thanks I'm same-store Good if of And and about very reported talk that reading of reading much. things. out bulk Prime. going Prime. is if in drove to quarter smooth some this so everyone. US if that been I the and that right that take the be you then the right quick fourth a I'm the If Two numbers subtract there's that? correctly? of And things integration Am can I reading the pretty

Daryl Kenningham

New performance everything Prime over integrated ground far. We're and people we everything from Mike standards. the that we IT got in integrated history in day the we to personnel the involved integration XXX from so with And on in really one largest up effort that had was every undertook dealership X our happy England. company's The Group with

And stores And so the up very loss the really pleased retention there very with was performance. transition of we good little really very employee existing in regard. high, was we're very, it the believe that a

Michael Ward

rest what's Was talk through the are doing. roof, Now the I pay and company what were that mean, what bit And there things similar driving services collision performance? that? mean, saw? twice little the is could the parts the of about And there rest of I and to behind is you the market customer the a that?

Daryl Kenningham

our customers driving, our models to philosophical need stores. and to that just available our The legacy philosophically staffing when And our they obviously, approach our want is payments business. for do be customer what's we

for parts leveraging week. quarter. work business. our still four-day And that obviously and do and in are stores service work was some still of we in so the their legacy performance have stores. most our to Prime We're But Earl? with we -- the And pleased

Michael Ward

same… And the -- up Prime well picked

Earl Hesterberg

in more I time Mike, in operation there this take legacy our you to don't -- Yes. have four-day hours operation in No, of those certain us little of hours us do enable will of will a is some of our Earl stores, need to it is And of get stores. degree because the the Prime stores, the we that a installed large week techs a those that. to expand many think in key shop to then match each extended number work which

Michael Ward

Thank you. Thanks very much.

Operator

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

Rick Nelson

Thanks a lot. Nice quarter.

question that? optimization asset sell guess, decision So, what And cards? about in here Brazil. led the a to I there to the more you is

Earl Hesterberg

Brazil. Yes. Rick, reasons, this Two in Very to divest Earl here. is we simple. decided

The one We it a could Germany exchange never translate world down be it. was make rate would we'd every more and profit X:X, and was first exchange is in of into fourth when bigger the market But in now It is to outrun biggest dollars. car market less more currency huge the someday. going local year X:X went rate. we still than the there. X:X and it's Brazil like

Brazil tires that we dealerships. now of kind the enough thought liabilities. in requiring have like externally, just couldn't grow just to we do planned we of take the assume would that we acquisition the XX platform and to just do that we legally beyond we But could sellers. types liabilities And from was we'd we shareholders, US. the grow to by our And process not XX discovered too we're the tax could And dealerships. employee we of business that the many for And original not spinning XX So be there. asset deals because in

we'd factor to was deploy that fact deciding leverage that capital couldn't we scale final the the make grow and of So, like where in it that can we bigger our faster. kind

Rick Nelson

for SG&A? some overhead you your that. that Okay. it That Thanks to related to And continue makes to Is sense. carry all going be Brazil have in that… to

Earl Hesterberg

a wasn't there Brazil. support. accounts Rick, of some with IT overhead and frankly consolidated here Obviously, Quite provided lot working we

savings the consider but So little at to would be headquarters not that be here. a yes, there will material I

Daniel McHenry

limited an Rick, going but it Daniel will it's basis. onward On very here. some we'll information, still have be basis ongoing to consolidate an on

Rick Nelson

Okay. that. yet meaningfully I Thanks forward? to used outsized Do improved Looks like you're push to you inventory able is that would Also continue think like going really as for address we to these has sustain GPUs. inventory.

Daryl Kenningham

Unused Rick…

Rick Nelson

Yes. Yes.

Daryl Kenningham

the the obviously is PRUs super they thing good Daryl. the we we keep We're about market of This our is inventory And very used because The dynamic. model. able at the manage our is, inventories -- are to changed level sourcing our tightly.

know the pricing react know change. don't So, point very forecasts be I that quickly. be it's moderate stay any I if any where in know later. is react the we the to when it's But external changes don't up going read it changes feel this to business in when. year, to can do some set is, some year. I going what we've environment and week it or outside like but very I've suggests change will sooner our to later will in to able last it's I at it,

this at know we what that's point. So

Rick Nelson

on finally, time to to in and to are acquisition appetite here guys if your going the soon? Prime, here market take And Okay. deals relatively more some you environment or I are you digest do could the ask

Earl Hesterberg

is this Rick Yes. Earl.

just commented ago, a degree As very few to integrated Daryl already. Prime minutes a we've large

So that can is is over those the to but course impede ability heavy going to or grow. there. our improve of not continue stores lifting desire to We

I'm sense to and will acquisitions. because in to this these are on interested like continue we quite value careful margins things yes, need some you execute be current based that that. So stores can't make definitely confident We we year.

valued were that with we but Prime. conservative -- said we -- very So and how

growth I see the in I'm given it when looking in traditional acquisitions. But also repurchases. US. spend look we're the vehicle shares We this as with have we capital be the But We're nature in likely at the to on also just external this to us undervalued more our more going think I certainly If will shareholders to -- of I today. interested but year margins think returning for UK, yes, year share US. money at I it's

year. I shareholders growing be returning think yes, and So to this we capital will

Rick Nelson

good luck. hear. and to Good Thanks Great.

Earl Hesterberg

Thank you.

Operator

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

John Murphy

Good morning guys.

the I got first numbers. I think head. about I've dealer at my question industry of around we're inventory of But start at we now and don't we top three Just were a over large unit on million have about Earl. apologize last your units. numbers the million of units year, inventory one just

huff and inventory course the about to it's think near the if as hard automakers don't on normal year puff, even believe get exist. the So going we this they're to chips and anywhere of

the on GPUs unlikely. it. very Because Because in think environment that's float they're now. is return your what GPUs? relatively forward? good seems fair really is from a in And driving history, it's go in sense What GPUs higher. about discipline it might this to mean way before remain like talking the like obviously what seems amount the And you levels do at is of it go there's the least when as don't normalized the implications versus coming So automakers back strong normalizes? we are as not If for the but short of

Earl Hesterberg

let to still. another with is delay comment predict this Earl. inventory not I'm Well, on be is I well. to all. the one Daryl been John, any to Clearly, no able shocked. subject going at every accuracy But have as And month. I recovery continue month this to And seems building

in pre-COVID was before below the still Prime -- added XX,XXX acquisitions groups those up. other units were that I where year. terms and or other we We're or of building and more So mean last we

– were believe we course But of get. Toyota long as now what selling by interruptions some to inventory and and Nissan a well what warnings with time in -- week some that. to we're sell we and of month units it take beyond seem And are issues or it because and this continue seems Honda maybe chips So I it's there there say, to add XX,XXX to shipping excess interruptions every it back does Toyota. XX,XXX that things going was like COVID let's

all So of vehicle the of first months. I happen half will the see remain don't half would in left severe I it in shortages. the certainly I year five second first can't know going even is recovery in five seem keep of reasons. stated the new next don't year. with with the inventory to half year track of Daryl? the what But months the any material the But

Daryl Kenningham

anything have to don't I that add Thank you. to Earl.

John Murphy

I become XX days mean land? low to sorry, with as they're your do the just they mean, will as I think the you of days you where record industry well. automakers it unconstrained build think normal back be context to I'm the making and mean to can what all-time XX at XX Is opposed days these knowledge inventory? I profits days? do very XX volumes when

So you you've I'm you curious in lot think know a do I long just that? about mean mean time the it. about how industry how -- what been -- I a I

Earl Hesterberg

things as hope like on I have as far Toyota no for build because days had trucks would operated the combinations full-size has never and below could variation that missed one well days tell. And, that. -- always would ever domestic much and the decades historically business I that big dealers Well, of of XX well of But go these the course, over XX again. over

in days see go benefit way that that can corporate will try XX to be we can to as this days. hopefully manage And brands forward. most and OEMs XX memory also operate think I So the a there

that's start share the discipline large any However, when these time erode. companies for can market auto fighting

John Murphy

you could good second on question. to that going year basis redeploy. going to in year Okay. may lot it's time level Over And a a whatever be they capital land given you're year argue and I to last normalize at layer mean Prime. least a then as going then you a on to core have that's at. GPUs this But as will of what's just

may not So -- be the give an going be should but flow should to significantly ask or assume higher. be would cash to will I number million would think outlook, higher. you exact I'm that a in I free mid-$XXX lot level

great and that of benefit of this it is the now So got can you cash be redeployed. all

your earnings that be about business service might there's capital capital enough XXXX? to is think in offset the structural used acquisitions enough you earth grosses. pressure parts mean what or is there and that of XXXX and to the I on and some As of added the here normalization to business plus redeployment through continue grow growth

Earl Hesterberg

We really no to I people out of business I that's right incredibly way continuing looking there's it right? that with And Yes. and can in is of in on know to XXXX we're for than at is our part be Absolutely. the get going doubt Once vehicle So we're this lot strong the of that XXXX a to And and regard. course you control. now. think And anything add they our collision we're that's US profit. can't we XX% more to a warranty more at growing soft. is on the and what look we that that focused supply, service is our very capture business. of predict core very, that control And to growing And sales after scale pretend when new our XX% business business. this gross and can our XX% XX% bodes XX% because business what this the like now. can corporation. but We're dynamic backwards continuing focused of That's in well us. yes, But

Daryl Kenningham

add pay John, on of the was this business up would customer also is versus – our same-store from XX% Daryl. business. fourth XXXX, quarter I

John Murphy

Yes. That's very helpful.

and level or acquired efficient existing vehicles your get if the XX% folks to about sales your up made just of this your being to can room on last core folks in I'm sales there's efficiency you curious, acquired stores more year. versus this of sales folks efficiency. more just comment lastly, increase Just fast selling core one your how XX% you

Daryl Kenningham

question, we – believe part Daryl. be up new get fairly to stores, quickly. is we'll the able second think your We them the of This

good a have those We very started stores. execution with mid-January that in plan plan, in launch place we

I is thing legacy room can't second room in you much John. tell how The I store, there believe is. is there

think for more the I productivity. think stores that by customers and adoption there digital better inside the I is our is

John Murphy

Great. Okay. much, very Thanks guys.

Operator

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

David Whiston

it good wanted morning. that if Earl, comment to with ago I breaks in about few were won't, how can and it they start market going taking made are pushback you much push to Thanks, factories? force – on the hopefully, a allocation, if do are And or to you you share scenario, much it it happen have if a the minutes we on you? too out

Earl Hesterberg

on pushback sorry? much on I'm factories How what?

Daryl Kenningham

allocations, allocation. On vehicle

David Whiston

If start increase. they to

Earl Hesterberg

in right it been It's can that out, or more. had that it's leaned long driven the better over inventory businesses The so Well it. really a much bad I lesson for the OEMs how And that them the we take to they the to excess do no back. remember for our what to to. inventory. too shareholders. both distribution being and don't that And cost as bad think is push home think in I US we're of the been And regard. always have also. I – years that. have And and it's to yes OEM But OEMs our much now since us run channels see we they not most profits have is UK decade And of for more the for for them. understand for sophisticated going you become overstuffed get does to now

to back be have targets. much we vehicles. have And turn the And so position a And in we're ever will our to inventory should I to we we down going think going get better forward. them

Daryl Kenningham

David, Daryl. I Earl's on this is one thing comments. add would

push on the inventories But determine We will best back for gross our shareholders. based supply market-based able our what's the to profit will manage to be own outlook.

do the in – on go if too determine happens so grosses far marketplace. the to overproduction the OEMs what the will that And

David Whiston

lot Congress this in introduced worried – basically non-issue? all a Massachusetts is to got repair legislation, moving Are or I really that you on on Massachusetts. And bill a to expanding presence know in about at a scenario Okay. you've right nationwide. it there's of

Earl Hesterberg

around bill repair better Massachusetts for that of has particular that aftermarket has been for been and threat around access that Well, time. issue a many for or years long

see So, to I we as that living. do what material a don't for

have capture. And we loyal get as more business available shops. customers in us can and to our is our make of to customers continue much We goal service as to our back our

So, is than more for the that I issue for an assume OEMs us.

David Whiston

Okay. at a negative and being we a get to who And vehicle. XXXX, on Perhaps looking lot for be these so high eventually. it should rid down of equity in could of come consumers pricing want perhaps

willing equity -- they a more what's recently? than lending Just loan for the your equity partners new of in a on would given loan that negative are vehicle. past you curious, put a traditionally how be roll willing to negative to into new And do happened think they maybe

Pete DeLongchamps

of that concerned will customers is we've piece the years, about three with partners. to, it, our substantially two these lead DeLongchamps. value. equity. overcharging I will the negative that our that ratios, of to not equity and when XXX% we've lenders Daryl But customers. is you loss manage for been loan the Sure had one not lenders pay is lending that negative we're David. and we This price our Pete go with that to up to over And other alluded something Because look to that company our very back, you is sticker tell our in And way disciplined concerns

transactional So, view. we're our long-term managing a today with pricing

very the cars. I've So, have right their the be But in lenders in remarkably now, continues appetite equity to conversations low had people loss with because have the ratios, lenders, strong.

David Whiston

Okay, great. Thank you.

Operator

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

Rajat Gupta

that maybe the on automotive Thanks do you scaling of talk integration have about how general, see how also And like XXXX? Great. questions. that? share? When And Any -- do you Thanks. follow-up. Prime delivery progress Good And progressing? in the the AcceleRide have on can volume can think for you the a taking you the the I the overlay can targets rollout integrated morning. curious targets you AcceleRide, on you platform with in any Maybe fees? that network, that's

Daryl Kenningham

had AcceleRide the is speak. we've -- in that new it AcceleRide the about expect of the And January. is be network we to this as -- for into stores the we acquisition adoption England, out of we And have rest And the We by advocates Daryl. AcceleRide. in the Prime we in started integrated in execution first the much -- Rajat, out it really continue previously rolled we of and it Delivery a didn't plan quickly. all have to are quarter of we fees, fourth we what huge fully and strategy. and in we'll feel out we And good that stores digital because a those we third -- New like through rolled of have it XX have in rolling quarter in out in we'll that stores a those some roll there, expect be week there. end

How and what feel of like like a was rest the things advantage. then, about that. we targets it's real So, And your question?

Rajat Gupta

Yeah.

Daryl Kenningham

since But, growth can we more bigger see business. back to We XX,XXX still at if there we and targets continue per I launched a target it, our have but year. piece kind think look AcceleRide become forward. a it moving that feel We I obviously haven't expect mean upside there's bigger I set with with externally you growth we we same from units se. will did of last that -- to think you share it. our of and don't And like

Rajat Gupta

impacting very a Understood. in inflation. obviously to the debt. more you how inflation personnel the SG&A your has to to my thoughts start that wage see that How more do impacting on mean expenses. curious lot been in your near term? just But medium to any offsetting your into know of like the a strong cost business, creep in starting Thanks. profitability see inflation I of see productivity you're in a your from get lot but general question salespeople, you of an highly managers, standpoint? if broader curious, We variable maybe just like nature And

Earl Hesterberg

vast But is support This some it Yeah, Earl, seen are our costs employee as productive you the people. of positions. Rajat. we've majority mentioned, in

structure. they And Where but be is some staff creep no interest that the see part be our some of will we center support like going to that is not in – there's they start produce. not cost paid so increases are too. and to call doubt that biggest will And – inflation by in people. what is and and But it here rate things there's

Daniel McHenry

interest that out swapped rates thing of the add floating interest increase, rising changes or I'll a on one our we've mitigate to debt. part rate large Rajat,

increase So about for every points our in year that negatively LIBOR basis per $X.XX. earnings share by XXX would only impact full

forward. So going helpful that's

Rajat Gupta

helpful. on it. Maybe last Got it. That's just one allocation. Got capital

year. You mentioned you if Is put of numbers to do take That Any excess returning What could that? leverage add? capital Just free that? earlier back willing us – be this around you a give flow cash leverage to to it sort or you that you curious you will using more range are can some on to of kind the shareholders will just be around that? willing are

Earl Hesterberg

we fit geography and financial with we to requirements our per acquisitions capacity think clearly, find have. that the we I and that easily think way. planning comfortable as are $X shares debt But want And that that if to year. we revenue brand acquisition do. we billion pretty And we relative undervalued. just comfortably we're to we volume have year, with the it. But We severely capacity, need can have of said more last add then

investing in And a either. thing own do – acquisitions to so our bad isn't buying

and I'm confident avenues this But clearly, both pursue which terms quite of share is. we're are going our price dynamic those this of what to in available a So market acquisitions is year.

Daniel McHenry

Rajat, again. last year. we response leverage it's In Daniel to the added revenues of $X.X billion question,

three is and times, leverage XXXX. three I for half times extending the as to right out of perhaps right we leverage comfortable company for ratio short times, a for Our coming acquisition, think acquisition. feel And two or period around a the at would our

where that. we guidance So are you some will that give on with

Rajat Gupta

for color Thanks luck. and good the Understood.

Earl Hesterberg

Thank you, Rajat.

Daniel McHenry

Thanks.

Operator

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

Earl Hesterberg

Thank today. for you look to you. We to call everyone April. on updating forward us Thanks in quarter Okay. first earnings our joining

Operator

gentlemen and call. that, ladies with today's And you conclude for conference we'll We attending. thank

your disconnect lines. now may You