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Group 1 Automotive (GPI)

Participants
Peter DeLongchamps SVP, 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
Mike Ward Benchmark
John Murphy Bank of America
Daniel Imbro Stephens
David Whiston Morningstar
Rajat Gupta JPMorgan
Glenn Chin Seaport
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Group 1 Automotive's 2022 First 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. Peter DeLongchamps, Group 1's Senior Vice President of Manufacturer Relations, Financial Services and Public Affairs. Please go ahead, Mr. DeLongchamps.

Peter DeLongchamps

reconciliations good release and and to we slide website. that and call. to the on Chuck, adjusted to presentation earnings the the 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 X morning Group

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

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

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

comparable to Financial any with the such over of Chief U.S. rules, I'll its the SEC to provides hand Earl. the President McHenry, Earl Vice GAAP Officer; Daniel our non-GAAP directly Officer. our Kenningham, me Hesterberg, and today, measures Senior measures financial Participating call President Chief on Daryl by of Operations; reconciliations and website. most President required applicable Executive now As Company

Earl Hesterberg

from This I'm increase earnings everyone. share over X morning, the to XX% all-time and year an operations. continuing income the Pete, pleased Thank million an you, for of diluted quarter, Group net record. adjusted to equates quarterly and share, of adjusted $XXX generated that good per report $XX.XX prior per of

supply, double-digit U.S. year. adjusted after continue that we were OEM exclude after-tax strong of items continue most gains, $XX vehicles a Our Boston, Consumer resulted able vehicle continued first contributions real the impressive weaker units of the delivery. vehicle in the approximately almost from recent should our the U.K. totaling sell to well sale after-sales These to largely margins franchises noncore were results as two million growth business results estate strong in acquisitions, cost to record-setting control. throughout from which remains and as and more in quarter, continued dynamic due performance, U.K. our significant offset than for extremely exiting This immediately demand excess

for As vehicle in severely consumer new U.S. and is extreme U.K. constrained. with the is the demand availability vehicles

the key seven more to new luxury built the Audi, for right pent-up tailwind on some major We Brexit foreseeable believe strict with past brand now BMW, focused brands demand a and We color very We will quarter both for taxes, low same-store is total strong after vehicle both meaningful company. our pandemic I'll a is our our believe on near-term seeing this some performance, which as also our We're a our Company to longer-term company. order and sales, trends Rover in vehicle drive U.S. U.K. tailwind net growth, Land lockdowns living, a now friendly of Daryl growth turn our used Mercedes To due positive U.K. continue a years advantage continued market the now strength U.K. We provide be outperformed the cost XXXX. and orders than sales, vehicle is business in of vehicle for help into to exposure, population the call of future. demographic over profitability. have state Kenningham. luxury Texas. into several first collectively and The believe models and extending for environment. U.S. sales of Texas such due bank over reasonable the new months to total demand

Daryl Kenningham

segments contributing of Earl. on controlling combined very U.S. the business, our were driving in you, factors the outstanding the vehicle supply. and again, all face limited great growth costs with to continuing Once quarter of focus Thank in our productivity

of X,XXX which supply, vehicle year-end. in stock, U.S. XX, representing As new we was flat from nine-day units inventory March had a

used inventory Our stronger XX at days. situation is

which sales by in from declined the Improved XXX% was XXXX. XXXX. to same-store vehicle quarter directly through first vehicles unit resulted significantly due fewer versus decrease AcceleRide, vehicle from more X,XXX increase in retail XX% a Despite acquiring the of new sales. a focus sourcing individuals quarter nearly first X% Our used of on than unit trade-ins

vehicles In as wholesaled addition, retail bit X,XXX on units PRU. during inventory. we building a lower quarter are carry Those focusing retail the fewer we

However, After increased XX% profit pay of And same-store driver customer XXXX. our believe attractiveness we trade-off once schedule, a most quarter and recruiting versus grew We've as our strong week versus of technician year our the on our F&I was by technician our a XXXX, additional same-store important the of again headcount first the on based attachment ago. performance. first rate retention. is high. emphasis very revenue quarter placed after work We four-day sales the XX%

declines grow after sales over the versus after This year allowed work. discipline. Our same-store continued performance to ago by a cost sequentially despite the and foresee major factor of The our We wholesale in XX% was outstanding to continuing year. collision revenues XX% increased continued warranty increased total improve sales revenue driving profit course final revenues parts same-store XX%. us

as part quarter down the XXXX improvement XX% a of they X,XXX productivity our through gains, quarter first customers is representing permanent total to of from to as the profit which quarter will vehicles continue AcceleRide. And do we percentage want of results due with benefit. be the couldn't sales over sold of material XX%, and AcceleRide over Our to now from first U.S. We quarter, retail down SG&A adjusted sales. X,XXX first first gross up were A be that These a X% demonstrate fourth the XXXX. the to to sequential our in XX% AcceleRide, of business in in quarter online happier was XX% increase XXXX. of

of Acceleride are responding. is more simpler, sales we've and And In in AcceleRide of teams. to and faster addition, customers professionalism It's new launched our our all level a new acquisitions. bringing transparent

are AcceleRide. our customers Group X, to Aside drive value increases, more provide loyal and enhancements AcceleRide to lifetime and us to F&I more make continue volume to we profit from higher

we Daniel? our option McHenry, continue will salesperson launched operations. we us Daniel choosing offer those AcceleRide, in AcceleRide. And now the to sheet some In quarter. future In this customer to depressed environment. provide call are I new a used U.S. As nearly and giving this now see say to dealerships inventory to dealership. an yes our to in during the provide delivery way, balance interactions results CFO, first delivery every the turn even over through short, local, quarter, productivity customers outstanding of the XXX liquidity because convenience to after customers in an continue review. first example, AcceleRide XX% our XX% of and customers service We chose opportunity sales outstanding our

Daniel McHenry

and Thank you, morning, Darryl, good everyone.

million. to As and bringing $XXX offset to we total had cash invested XX, liquidity accounts, million $XX of of our cash March in million $XXX another floor plan

During quarter, term. facility the first we credit five-year and our extended U.S. amended syndicated for another

our we million. capacity $XXX amendment, this to million As part from acquisition of increased line $XXX

after of We total generated operating liquidity to on the cash of $XXX combination March CapEx. This $XXX in first backing of out million repurchases, capital of cash $XX million. free and dividends. had million $XXX As borrow $XXX share million we of through acquisitions, XX, line, to was and flow the acquisition bringing million a quarter immediate deployed available adjusted flow

an our during year approximately beginning shares spent price first we count. of of previously repurchasing $XXX.XX. share $XXX quarter, the XXX,XXX million represented As of X% announced This at average

past repurchased two shares. XX% of nearly the Over our quarters, we

Our position This the of rent capital appropriate credit allow for if meaningful by adjusted facility end leverage was leverage to XXXX U.S. March. opportunities exist. as continue defined in our ratio will strong deployment X.Xx at

interest our to expense. related Finally,

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

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

Earl Hesterberg

$XXX These U.S. Austin are external XXXX. and external and high-quality on large focus Growing expected our the of dealerships continued our find our U.S. opportunities priority revenues. have of markets successful scale expect actions we and additional U.K. existing XXXX, stores. purchase add in remained growth and allocation highly the top in our two Albuquerque we capital businesses generate In Daniel. to to Thanks, growth annual with to million Toyota

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

Operator

Thank you.

Instructions] And question [Operator the with Mike will Benchmark. ahead. come first will Ward begin We question-and-answer now Please session. from go

Mike Ward

you you that I about Prime things? appointments, in and of U.S. wonder, And Warranty folded If is done if it same the those it. pay store Customer sorts service, has you best as paying was in mean up. could activity what digital have service heard? your so that looks of was How the in is not Is I'm the the then as mistaken, I talk also, far like digital just can about And what some with the acquisition? down. talk the the I far parts group off.

Daryl Kenningham

integrated. completely has Prime

and we All of stores there. every tool Prime appointments of through live have. Digital that integrated process months live resource there the the in digital went service are February. AcceleRide and are at January, completely

warranty, is are of quarter bit year. we those, seeing same in see, of growth the a growth the in down And first and So, I strong. right traction and the was warranty kind CP for rest we'll the very and about expect CP you're the

Mike Ward

are now? done formats percentage digitally service what of the Now

Daryl Kenningham

Almost quarter, I it XX%, XX%, was believe, Mike. in the

Mike Ward

And these integrated. that as continue of some other acquisitions are will to grow

your inventory the nine Second I correct? the ground inventory, on days, thing front, that's on U.S. inventory think

Daryl Kenningham

can we yes. what touch ground, ourselves, the and On sell see,

Mike Ward

going that your truck? coming you have in Are just sales basically have sold are they How that percentage and Okay. being your of -- a and out? off do the

Daryl Kenningham

north as some brands XX%. depending XX%, somewhere Basically, of north high somewhere but on as it's or -- it's the brand, XX%

Mike Ward

are allocations Okay. your XQ? versus how QX And in

Daryl Kenningham

Hard say. to

about the are as you, availability can press to the You've tell seen in forward and honest some anything I things with out be reliable as those you.

Operator

The next with John go from America. question Bank will of Murphy come Please ahead.

John Murphy

over that's net And made going you improved you to another wanted a structurally $XXX diluted EPS you indicate Fourth real your you allocation little forward. quarters. simply plus net the that very the take that just that count understand to hit in power But first you power at if earnings X%. that look buybacks power to acquired, here EPS we a the And in that quickly. the last I and similar quarter sold, on would of used weighted if you executed the by average two cap earnings have what in X% assume calc. quarter the you just acquisitions

on? going So there we're misunderstood through executing structural keep used keep in not this just EPS cash that's your seem actually improved can in maybe generated. something appears might very by can It Is the be of something cap you've think the that over-earning, the the doesn't think all of it your plowing like even XX%. -- north up Because portions you your of it's reallocation, and course you I is business you forward. quarter

for a wrong that your I of of are its anything what should redeployment, with little is. like and reallocation missing overblown. process say, general But or of... -- a thought kind structural think I sort is there it or earnings that's bit math Daniel, or power there's cash people redistribution probably of means it seems

Earl Hesterberg

XXX% you're think John, I in your terms of math, correct.

We've think different a over things that billion one $X forget so the count. It's far of company. added it share revenues of XXXX. our companies versus XXXX. compare people that I structurally We've into reduced to

I come just be Company just correct. going growing company. as As much pandemic buybacks. through the additional think a flows XXX% the The we structurally were company, then a cash we've math is think and choose is further or I that reinvested, currently we to different we're out generated your the of whether that do forward, stronger can Company

Earl Hesterberg

mean Yes. find same last with time, undervalued. Earl. couple is Toyota able of path. shares we've incredibly this at year. the Prime dealerships high-quality last clearly, some But continue other to these been with down acquisitions John, remain and same I much our plan very We the And to bought dealerships, we year

So, on in is we execution execution and no risk really see there's incredibly acquisitions compelling, math the risk. don't buyback share the the and

we're getting allocating capital think moment. accretion the tremendous we from way we're at So, the

John Murphy

Sure Yes. and I underappreciated. it seems guess thing. second widely like the

there to I showrooms understand in But ups hear car bit bizarre I from into of anything given you it or You're mean the seems the what they're like in is weakness folks in ground? things. that different I of market, and rumblings certain where hear. used walking kind good is seeing a even you're some in on car hearing auto we mean, which talking pricing in give potential or getting new some something like you're pretty people mean, is shape consumers from generally are these there's about as the What most on demand? seeing we I in folks consumer a today. general, pricing hearing might AcceleRide, the what But demand, weakness little pause. seems thing

Earl Hesterberg

just businesses particularly the to And luxury businesses a and Toyota business brand the And going may with last But way we start U.S. U.K. customers, is the closer clearly, hit such good that, there demand. let then Darryl gap on sectors is the But for a a degree much you don't in that less core know U.S. vehicles a lower before of the months for And got while don't it activity in supply operations. the and anywhere And it new been we're I'll supply. and inflation come stores our forth want in because would on long demographic have have ideal, into and I'll close he's large market our consumer, all, as the in such it's down never massive has but in that yet. that massive XX of data gap Darryl, to... if Honda our so not I between seeing first. be and U.S., John, jump first shows demand of to our the such to

Daryl Kenningham

Agreed.

inventory average During in ability. price consistent selling up in very John, very held the saw the strong the quarter, gross saw quarter our terms We through we pricing profit used. continued lead counts of and and per

So we it but seen every we We haven't it haven't seen that day, watch yet. yet.

John Murphy

mean, demand volumes levels. fair last that to characterize I in and talking Would it's aggregate you but be so make it fair. the and as those know for 'XX. I'd calendar on a a characterization? U.S. levels to But time. it's industry transpire not ask two in what for the new that the don't almost the that going level demand, characterization, the for maybe necessarily given on a on industry Earl, XXXX years fulfilled, necessarily about the been for like recession going the year been I seems economics, in right for you in vehicle the the recessionary you've long third has probably levels, it's not could essentially Is least a if and out And to fair at in maybe itself, year not that argue you specifically or we've of volume right? seen a

Earl Hesterberg

million, mean recession. Absolutely. historically a Absolutely, XX I SAARs, that XX million was

COVID. all get the and talk lockdowns not a to there's in of still for is market, purchasing And credit-sensitive that the spend consumers, market, pent-up a inflation market not particular, sectors price-sensitive car and right? the to is. That's large business but trying demographic fact. that's And our in that the you That's good of very power subprime yes, are where any still of demographic if from But a economy. And sector the we're from never money. is it consumer just so I lower degree. People -- lot used lowest about

John Murphy

then sticky anything to service, on quantify? this kind But about we hey, of expect saying them of things sort vehicles of you're long term of can On kind their And is on just, parts on mean, that maintenance to because that sort on it on I of more you year. maintenance, deferred bit of a like of going longer, some pent-up remain on that's demand? strong a there sort just about you and willing seems and it lastly just holding structural a here. maybe they're term accelerating. on little more than going talked I more think you really they're there through course short the there's lot as mean kind this there's to people and I'll

Daryl Kenningham

is Daryl. customer but counts QX, QX seen per John, average in also in the saw what is We've the we up, well. similar the to is are customer as trend this up spend

So that's we've last in of couple seen what quarters. not and with inconsistent the

we've expect So, that seen will continue. I it continue.

John Murphy

you you more. to hire this point? have no, tax a lot Or enough Do at need

Daryl Kenningham

want happy We're last increased to the our We've XX% continuing our hire hired in -- continue to base hire we've with we've XX% tech we're hired. of number year, to and but the week we our brick-and-mortar. good be like can there's to there. more flexible and adding our without the our us shops maximize four-day thing productivity opportunity with work of growth is And allows scheduling, we the

John Murphy

you're stalls? for a that is looking Or cap at, Daryl? your something You have number

Daryl Kenningham

have we that We have four-day have in stalls, tech can several more week, work with we the dealerships. and physical actually, we than

have. go stores. yet we physical techs, physical at like So, the of but could by we're the we stall week, that work that. And buy our do number on we We're number stalls not feel we in with of limited four-day that don't a limit

stores. in We more tech do a of stalls have several number than we

Operator

Imbro from Please The come Stephens. will next with Daniel question go ahead.

Daniel Imbro

want on Congrats Daniel, start strong quarter. to business. on I the a AcceleRide

I online? the sold measuring what's X,XXX that those what of What getting does count it then what guess, on part quarter. units online? were online? said done are attached? think percent you in guys of units you that I sold are how traded you just a Is And fully

Daryl Kenningham

AcceleRide Those Daryl buy X,XXX AcceleRide Daniel, it of was. this to come through a like of people hop point people are the start in AcceleRide process a and that. some and business, then continue up out start units, or buying something that at process that's in The are may Kenningham. end drive X.X% a test car But car. They us. car to that where those from AcceleRide is numbers, and and our

whether how inventory define driver's are XX% we So AcceleRide that's they online in there's customers in upload trade insurance AcceleRide then, AcceleRide, of that. whether car touch our that's whether AcceleRide of And XX% that. shop way or or over through that some trade using customers of or our and value using doing they they a AcceleRide license information and for

Daniel Imbro

that And add I the to F&I. wanted Got then into it. just

vehicle a broadly, I about we per that think you compare made taking rising customers does F&I how it unit? products should in-store to is to an a F&I comment, And Daryl, rise, then guess sold? rates rates Or driving harder more F&I? step going how back, that per more get each to just are as I think attach unit. impacting to AcceleRide

Daryl Kenningham

rate are a seen then, continuing seeing the to there's term And that believe portion rate forward. to the then our AcceleRide will impact that there's that of over is about that answer we on and can customers with on those FX moving our I more monitor F&I. F&I that more and be long AcceleRide Peter impact we're answer we've on I'm the seeing Pete rates that will start customers quarters. sorry. attachment for answer of attachment AcceleRide, interest and PRUs. we're several that What DeLongchamps in Go ahead. and And

Peter DeLongchamps

is Pete. this Daniel,

in-store. a Daryl's consumer -- on AcceleRide it's versus far is up as on And at monthly Following rates, it $XXX payment. rising looks higher answer, the the as about a

up, that could there's risk that product some a So rates affect certainly if penetration. go

that. the traditionally, is there BMW, too always whether to seen I'd they're The to things you rates, the companies, haven't support incentivized remind dealers. Financial We Toyota they've Services And like get captive or win come finance or it's with high. rates that Toyota

So we're our very pleased with product penetration.

we're executing go. that our to show think numbers on we now, continue for But the think plan. I I

Daniel Imbro

patch prices as could Great. down commodity year one drilling move impact I And guys And up just activity the any in will then oil it if sneak up if in. seeing more, you not, show discernible picked think Are in that this you do yet? in the Texas? in

Earl Hesterberg

areas. companies help Yes, Clearly, couple prices West in this Yes. is Earl. a of lot Houston oil of areas and the Texas, high the energy of these Texas, a other

really are of I there's other wouldn't gotten invasion been the that Texas now of Ukraine exploded or have that's month lean. last gets this and since the of our that. these thing the these that has in is markets power our energy and the And XX% good. leading investment LNG here. the thing activity new is future centered very if of other But believe is within potential forms from more all in wind can you the efficient also So energy. say companies companies drilling transition

on think this go to is some I trend likely LNG So for investment time.

LNG, toward it's of and going here. So our then, that be to degree of all of And and centered for large movement energy around bodes renewable the energy the combination transition move a America, the toward higher well still to prices this markets. the

Operator

go Whiston from Please next will call The David ahead. come with Morningstar.

David Whiston

acquisition inventory on some with other high costs despite raising some and guess trend buck was compared more on to dealers other curious, I I seem you used, high recently your aggressive those to first offset some fight -- up to costs prices just saw players. guys very in GPU that procurement the

Daryl Kenningham

had our we David, in some opportunity, like felt We PRUs.

at way acquired source profit vehicles, drives, could vehicles vehicles service have more through buying lot is the the keeping AcceleRide. outside Those were out auctions all. we're we're we of vehicles. potential higher outside. We're all more a our for go from on than anything We're that X,XXX so, And sourcing We're of vehicles. trading more relying not

And so, improvement. incremental I would PRU say that's what's driving our

David Whiston

is So coming trades. the XXX% majority from of

Daryl Kenningham

No, well auction. is being organically -- XX% than far north though. sourced than less from less penny of There's XX%

David Whiston

a deck. in was there slide the And

was retention it at customers is that XX% higher are think was from than just I XX% already than a consumers from that It guys? running higher of it traditional. rate. says bought AcceleRide Or XX% you after car it a have portion just buying traditional is AcceleRide maybe curious. or mean AcceleRide Does another I'm coming for service platform?

Daryl Kenningham

-- two time AcceleRide customers. fully we've the deployed, had After to back of us those of with the coming XX% customers the years, in XX% are time versus other

David Whiston

just with all EBIT Okay. the dealers And X% pricing finally, X%, margins. doing on

curious, years. relationship Just XXX past extra bps of adversarial there's us. pre-COVID seem and that or some come an said, ever to it you're and to basically few margin guys EBIT like of XXX the been you the that to belongs have tension factories mean, doing than I doesn't

Daryl Kenningham

term these back. We we them a cars have years, public want we Well, been now. transactions their the to them releases we three from like at Philosophically, in years you've a to all customer. equity to in vehicles long year, MSRP. seen they've dealers sell and and very factories, two with look would own come want at believe that it in their And the they relationship that clear

the did it add And philosophically see clear. bit, quite we to something so in a that regular quarter we MSRP to have we you We've that's way factories why been selling and very approach have And communications. this our seen But do. at that? Earl, the

Earl Hesterberg

specialty I'm our customer had haven't sold MSRP, that we from we both agree vehicles these in No, have few that regard. of a no. MSRP is, only them, we've very our above is most we're with OEMs cars we that don't have policy at market The if selling would been and our communication prefer it's feedback saying these our positive that. markups with in that. But of and area, our not and it's they

Operator

Gupta come JPMorgan. from Rajat with The ahead. next will Please go question

Rajat Gupta

Like term. And of some possible frame on maybe levels. to could for uncertain Great. Stay F&I, help in that I Obviously, given like you've a like Could maybe are context lot. how out key And that's going of your over GPO of normalized mean, and the GPU you The I factor, ASPs two SG&A is are a ratio come so like there happen them? gross but That questions strong. longer -- how peers. the outside just scenario, in Can that realistic should can with of quarter. you get to number sense margins going should not understand is the like a changes are the to continue two will like then be contract earnings to the your think in all. your to thinking trying People what company scenarios? what's we F&I time look that new GPUs crush give terms vehicle obviously every XXXX productivity the do a to produced what's what obviously, back us with scenario, that evolved comment like look F&I. Your service you seen you each and what penetration. it turns happen on to be how has to gross of on a areas, remain

Earl Hesterberg

Well, that could and also interest just higher this likely let not rate clear per unit go in to the me indefinitely, a look. that with are start F&I kind environment, high margins of down. penetration macro stay It's

a adjust in and is that we to gross flexible to COVID proven profit And that what advantage continue are other generation to we've model And is So our and someday. one model. cost, reduce go reduces, when profit when we could prove have is our times, recessions in our -- business business have And cost structure. cost of gross numbers those flexible have down that's that a structure. we the we both like have but we

coincide margins, should should increase. F&I with the to in start timing perhaps start whether to or volume gross that factor vehicles such decline, other the time as The it's on

the there's vehicle all And volume know new so, in we future. upside

At leverage. the F&I maybe less used selling incremental reduce are cost the So at well, to of And to right, volume. have get either we power offset. finance in that's and or we and quite margins simplistically. two you're getting really point we how those vehicle in $XXX is down up have our volume, it more bit, powerful that's a turns have when cars, time it more a an factors we to softened make And from clearly, look the but a new if that unit,

Peter DeLongchamps

kind the at I trends training you through to over words execute times, is whether our and last will your hard on our financially it. if thanks for continued -- we've and We've comments through I'll that compliance our we process F&I XX look support to of it's Pete. have John, it. this but years, place crushing for the relationships our that got could in our terrific it, the in processes that Ear's affect piece company macro But execute. lender it. continues echo

Daryl Kenningham

We're We're seeing not ASPs it's -- seeing driving that's better too. product the up. PRUs just penetration,

Operator

question Glenn next The Seaport. will Please come go ahead. Chin with from

Glenn Chin

a of quick been my of follow-ons. answered, maybe Most questions couple Congratulations. but have

that it's prices? like supply if but apparent? from tight apologize I you've yet benefited even I say feel Or Earl, not the did it, you missed So you is rarely record so energy

Earl Hesterberg

overall, energy. core One great But that is I market. That's amount. just factors Texas Texas couldn't articulate and other you in by I transition, however, tell alternative point state, some largest markets -- That's investments our tell tell market don't making. in energy to it prices, a energy in our did was all I anything I that for the could diversified our we only is energy you. But attributable I in outperform quarter. could think things sources. macro and retailer Texas in the thing LNG Houston by the in very you being benefited the these was I so couldn't these

Glenn Chin

Right, historically, have was Is I -- that but lag think time it it thought to three is quarters? two fair? to been

Earl Hesterberg

prices hammered Yes, I gas care. That's strong. That's down, when prices of there's to get is lag time oil that a Nobody just know go directionally and seems yet amount. correct. correct. and some we one

Glenn Chin

I care.

Earl Hesterberg

Glenn. to want I what that's Okay, hear,

Glenn Chin

cares. And I'll everyone then, sure make else

Earl Hesterberg

That's the spirit.

Glenn Chin

use of your A auctions self is follow low. sufficiency use and on granted, very your

high. impressively very is sufficiency self Your

in space, less in guys one future to from right, M&A them to reason, to wholesale likely the auction acquiring ADESA. buy or given your you any of either them? Are the use with Just competitors

Earl Hesterberg

likely in use less the to we're future. ADESA Yes,

Glenn Chin

mean then Do function is going it And question Pete. Thank penetration peak grow proliferation of to for or see thought you. or increased I be the for it a room headway for both? back we further, Peter? Okay. product would that this just continues and F&I to a or step just still higher. to lastly, years And maybe you

Peter DeLongchamps

we going product We've of on X% which with. So, we're think is the remain to increases -- from any are additional rate, a come we spread got penetration. comfortable

you're penetrations seeing increases to customers, up are and So increased on penetration. on we're product XX%, XX% with and

to got audit -- training. closely with terrific executing. finance nine really compliance to to directors we're regional So, works team Daniel's back go the got I'll a operations that's department we've do sure in of job a good and make we've

don't and think can So, I have the expect them increase rate upside. there's a interest And if level. we I continue high penetration to still at headwinds, perform to

Operator

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

Earl Hesterberg

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

Operator

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

disconnect. You may now