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Group 1 Automotive (GPI)

Participants
Peter DeLongchamps SVP, Manufacturer Relations, Financial Services and Public Affairs
Earl Hesterberg President & CEO
Daryl Kenningham President of U.S. Operations
Daniel McHenry SVP & CFO
John Murphy Bank of America
Rajat Gupta JPMorgan
Daniel Imbro Stephens Incorporated
Adam Jonas Morgan Stanley
David Whiston Morningstar
Michael Ward Benchmark
Rajat Gupta JPMorgan
Adam Jonas Morgan Stanley
John Murphy Bank of America
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Group 1 Automotive's 2022 Second Quarter Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the floor 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 on we slide that And call. to a this Jamie. adjusted the presentation earnings the Group purposes The issued include posted call you, for morning, refer have welcome everyone, today's related results comparison Thank we'll to been to to related this website. morning X's

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

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

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

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

Earl Hesterberg

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

business, Our adjusted should largely continued sale in double-digit year. our able new for of Consumer exclude of million weak same-store units demand OEM recent to record after-tax that were supply, vehicle results continued resulted the control continue the offset totaling franchises significant items $X margins the noncore most strong to sell remains after more results gains, quarter. exiting setting growth from we due our continue primarily strong which in These the contributions throughout two approximately cost than aftersales from almost and impressive quarter, immediately This dynamic vehicles and to delivery. second acquisitions. were

and the for demand constrained. U.S., in vehicle to availability continues still the new As consumer remain U.K. with vehicles strong is

months half Our than six new of more backlog bank unit a represents units based order on first sales. XX,XXX vehicle

collectively vehicle to outperformed We call believe near-term vehicle strength of lockdowns also believe pent-up Brexit Kenningham. both built The some and in the our aftersales U.K. this continue well continue profitability. for We're the color pandemic our strong company. of reasonable We for the vehicle sales, years in over both our turn over environment. taxes, and U.S. quarter market the To growth, to seeing U.S. and Company Texas. second trends business advantage tailwind living, be strict friendly state to net positive growth a provide help to the longer-term a population performance, to demographic Texas drive demand sales, will XXXX. used the I'll due and Daryl cost now is due a on low continued past into same-store very new total demand several

Daryl Kenningham

Thank business. the U.S. in overall performance you, pleased We're Earl. of our

performance. standout and again, both once outstanding aftersales F&I incremental generating were Our

units an 'XX. in inventory of As XX was flat new December supply which day June we stock XX, roughly of U.S. representing vehicle have from XXXX

inventory presales in X%. orders in the customer same-store significantly consistently used discernible retail quarter declined aging. are no due XX% sales staid pipeline sales with change strong Our have fewer Despite only in car a trade-ins decline or new to

Our organic from vehicle stronger including AcceleRide sourcing acquired of used efforts day individuals XXXX inventory through expected than units to led XX supply.

As returns, franchise us, channel drives, due only distinct front and deals, a only the service OEM have a to used we advantage lease our numerous available options. to including operators over resourcing

recruiting XXXX. once by delivered again. headcount retention same-store As our second increased quarter I versus mentioned, technician of we efforts, and Through aftersales technician performance our XX% our the

compared business grow pay overall generated very this growth strong year aftersales course revenues allowed part of our were a the up ago. revenue rest increased aftersales second XX% This to foresee revenue XX% continuing a continued warranty the of declines We despite XX% also the a quarter same-store 'XX, XXXX to work. business us be same-store Following versus customer in by XXXX. XX%. revenues strength to our over Collision of

outstanding per was seeing the up performance and discipline. business factor product Our cost across $XXX The improved nearly driving in was continued major penetrations final our profit unit trend quarter F&I we're the board.

gross sequential reduction Second XX% quarter was the SG&A XX%. as from in The down and a quarter of profit XX% percentage second first pre-pandemic of and XXXX. from quarter

U.S. aftersales who local convenience in to which customer opportunity customers choose on our XX% by delivery customers dealership the second an providing an XX% all-time sales, our choose that Acceleride them through option quarter, as yes sold say We service record to of our every to happy of vehicles maintain are vehicle a future over We this us U.S. all-time I'm our Acceleride. outstanding continued gives operations. XXXX and through record. the in Lastly, vote offer

enhancements to Acceleride. to continue As enhancements continue to we make and make we

over sheet overview. websites call our to the to as software. Daniel? for our quarter, McHenry into now more liquidity more Acceleride our integrate will well integrate and started software balance Acceleride our fully provide our to and credit also we This to I'll the and as desking begun we've transparent CRM faster During Daniel CFO, our and customers. with provide turn transactions

Daniel McHenry

And you, morning, Daryl. everyone. good Thank

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

$XXX had also This million. immediate half the backing $XXX first share and of received capital on free to was million flow cash $XXX million generated million not sale of Brazil amounts we out dividends. These acquisitions, through flow which million adjusted repurchases XXXX, finalized the acquisition from borrow did of We the operation bringing a of operating cash combination expenditure. available July Through our of of cash deployed after $XXX capital $XX liquidity to include our line, X. in available and

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

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

related Finally, expense. to interest

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

through As a has fixed been swaps. reminder, rate our the interest of debt majority

increase million in overnight the for is annual every rate rate XX% the point only interest is XX, and plan floor instrument. impact June which Therefore, are mortgage plan $X.X $X.XX floor fixed. of and referred of to basis XXX in other super a our was to EPS As benchmark funding in debt debt our

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

Earl Hesterberg

markets. Growing existing top scale a remains to growth of had U.K. and U.S. are quality five million find growth allocation our Thanks, expected U.S. XXXX. on external businesses and These capital dealerships opportunities generate dealerships Daniel. in our of with annual In in continued Albuquerque, expect focus and purchase actions Austin, XXXX, we've to we or our priority revenues. $XXX high external additional that Shreveport

repurchased count. Operator? to I'll now his addition to Since a the over cash to leverage capital serious of remarks. pursuing our However, call our approach repurchases the growth. and have will answer over to include representing million will flexible allocation November which continue consideration support we share further generation prepared sheet shares in likely external turn operator outstanding balance session. concludes XXXX, and position share our XX% of begin question X.X the flow

Operator

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

John Murphy

up most that of that back lot a XX% stood up And most. thing and The what's you're saying for parts you're out know in guys. things in it service, morning probably stood curious stood was seems the the you you're out then in I know parts the what driving we're mid-teen. that tax the good surge looking wholesale were to I'm good routed even means there. just but Hi, out

So it it's resurgence there. going a other Is is than how the tax seems sustainable levels hiring XX% are? and anything think like on there these you real

Daryl Kenningham

a centers is collision collision pieces. to lot this collision in recovery service business. outside the obviously part to Yes, Daryl. recovery. this The own John, of we wholesale the speak Hi our well different I'll as And as two business speaks general, in

So driving that's increase. and parts there wholesale is that's collision the recovery of some an industry happening

our capacity and little at that possible. not is can on focus and point limit service, as we have customers. operation that, of capacity the as That's hours in tend hiring think the keep ability thing appointments. drive available or will a and different staffing a familiar day then convenient that week pay They appointments our that of On to it's our we customer the high rather many is our in to appointments shops. to work what how do the which pressure for then important high available we'd puts be technician whether our We our this and hours do. operation of with, some on you're and very availability our us will And to customers is four more we industry

that's probably is. the difference largest say would I So,

so the cars. work to to of As well some these done age as be car is continuing and more park on there's

happening that's well. as So,

John Murphy

Okay. on there. to out upsides, I us not of Could give of maybe just just the of lot F&I PVR, And sceptic in maybe but you F&I compositions high then, on follow-up idea of this where call continues a could F&I remind if the best-in-class just side. potentially are a go an the people so the can to and kind average understand what of versus surprise on can the us the the PVR PVR average sort obviously to

Peter DeLongchamps

DeLongchamps. Sure, John. This is Peter

continue seeing just at less slightly look than it just see contracts, You XX%. and when there. pre-COVID the if and the XX% look partnerships the there's our we're are when a overall strong return lending. of products, There's finance at with healthy about levels discussion lot with penetrations we'll take delinquencies you what's some down, a we're break And at results. And clearly to kind a know, you but are service charge-offs banks. you of also for increases seen we're to And delinquencies pleased in still appetite happening the marketplace, we've of

F&I to team we think the for is that high there performed us. continue and has So, a ahead very level opportunities some

Operator

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

Rajat Gupta

through, maybe down the unpack do is Great, if gross it improvement, those. Thanks. SG&A give you flattish improvements levels. I just it still and grosses of a this instore units the Could GPU go normalized help an your services one was gross, pre-pandemic us to perhaps particularly sequential despite thanks SG&A the drop or for updated the could and productivity to to drivers once or continued on U.S. just the questions. taking follow-up. you And under had pressured. metrics, back AcceleRide On parts from view productivity sequentially

Daryl Kenningham

chime advisors further well seeing that higher driving still F&I is our constrained for may aftersales answer that's per Rajat, improve sales in we're manager, Daniel connected have in we're technicians productivity. my it person, I'll issues productivity drive people productivity higher productivity, sales as sales productivity even AcceleRide inventory, yes, believe as our with will of to add. generally is may sales of terms In mates well. inventory manager. to and in. for -- on something higher team among continues this of one is the and loose. then the store sales Daryl. to part among decide seeing to I With

Daniel McHenry

to of essentially cycle, been level And your return answer would if of said in second of we've above the expectation terms to be percent that we return growth. profitability What a as part that new SG&A our not of XX% question. that and is would XXXX new

Rajat Gupta

number Got CRM, would? Is integration AcceleRide's apps, the et changed kind into that it. despite And that baked view credit has the in some that of the cetera. not of with improvement, or

Daniel McHenry

expect think we've a further I see what SG&A. think implemented, as those is would get that in to we discussed reduction

Daryl Kenningham

We're on just launching you as that. know Rajat set on first the stores our of testing

Operator

Our comes with ahead Daniel go Incorporated. Please question Stephens next from Imbro your from question.

Daniel Imbro

on any that expanding And order talking old Are the vehicle. they've was a that and in down. Line you good I that on said about and is bucket or Value growth talking strategy Hi, our potential your I kind for We've pressure. consumer -- others wonder change Congratulations results giving questions. historically that morning there within outside trade of are you guys. taking if strategy been think just side there offering, you've vehicle, segment? seeing the your the Earl, any about thanks heard plus into

Earl Hesterberg

with This the would economically but into But used lever yes the and and is both that flexible out Earl particularly customers. challenged detail. to car our try demand in to brand in point. let We're environment the down the seeing because start of average business that of in more this class the to advantage lower used I'll on as you and I'll U.K. and we volume push model, that. he's pull price our And for chime applies U.S. the the Well, type price Daryl expect with shift middle vehicle inventory of

just scarce Line if buy the is problem the you Daryl, they times. We but my used more cars, in all they're lot we in lot normally add would be difficult countermeasures do price used that's could cars a most these observation. to Like want are more. The very Value So, are one scarce these lower source. we the cars anything? with a selling to of that take

Daryl Kenningham

wholesale about volume of Value our thing is the fastest saw Yes, supports as you are And own is preserve Earl's sub-$XX,XXX segment inside data Line. XX%. and cars effort turning to as That's our down in to are cars. our cars that leanest good. one considerably that part And are Daniel, in all our many comments sub-$XX,XXX inventories system know, our obviously possible.

Daniel Imbro

then it. there Got follow-up. for thanks That's great, And a helpful is color.

Just steady like some this quarter to the morning U.K. a and kind over economic reopening. to feel side. continent. That seems couple of We were now more seeing across economic quarters be the COVID more last kind of disrupted I uncertainty of given

what and teams September they're So, your team do half the operational to for preparing or registration and field back the that saying expecting as we the month? year look of

Earl Hesterberg

supply I there just March. there month vehicle Yes. they're been big have just think new same don’t as will with registration a September is limited. Because historically, all be

a XXXXX in script, in this two vehicle mentioned I units. of the And each bank we a of we have first quarters, retailed As new over order XXXX. little

of the backlog. prices average market supply utility big conditions, see because U.K. down. or And brand in increasing used U.S. than occurring as And in prices of is It's we're customers seeing you U.K. new the the these and vehicle. the are in from is a of lack U.S., And dynamic used market the normal we're points pretty lot the the vehicle vehicle is in of market the sold up market. that's class used newer pressure normal food volume so under price the much actually U.K. in the dried go nearly can that in new So, vehicle cars same middle

U.K. But forth. our so increasing, cars we're cost, reconditioning continually priced selling used lower prices in So, older the is and

little the are our U.K. a and is used brands of XX% which So, that's our But a U.K. brand Volkswagen, factor in the margins. on vehicle newer luxury business in overall, that's pressure luxury another put

our of majority the to So, higher business more consumers. income continues be in

Daryl Kenningham

Earl it's one I what has say. just thing Daniel, to would to add

you which quarter one I two one at of be quarters to think for effectively. and some at over you balanced think quarter the so really together number two look closures the quarter two, if XXXX, if the of both needs results quarter significant to in I need year-to-date the look was comps

Operator

from comes next Adam Morgan your ahead go Please Our from question. question Stanley. with Jonas

Adam Jonas

good everyone, thanks Hey morning.

I some and similar follow-up. the U.K. how a the bank a long how of useful we in terms bank, provided in a big or on ago in Could how color that number terms believe stability. backlog two the get I order for the You backlog. is have order U.S. might to compare the quarter And of

Daryl Kenningham

this Adam, is Daryl.

you you look our quarters. our couple been about high in range. it's volume And change look XX%. some as where that presold. the any at domestic last luxuries, is XX% imports, business, right it's And We When all. half material at as When of when our it's haven’t of our you look at for pipeline XX%, the at seen is

Adam Jonas

Any are I And investing have then out use kind of capability where priority finance and on of of a That's didn’t of your in know investing that on amazing. particularly a business the acquiring, the some capital. help thoughts roll I order that was that follow-up. market. and competitors are used capital or your requiring

Earl Hesterberg

Yes is watch but our company taking near-term now. there are that just Earl. we us willing who to kind not we say any support are so in benefit don’t talk well right our we you what step. Adam, in have Obviously this to It's lending. never lenders with many list so the retail others doing, never about see And for of

can vehicles plan. or sell through our we more XX% that used existing of think physical also volume We

to And add right Group And X used trouble right anything doesn’t right additional vehicles so, sourcing to frankly, Daryl, that. want have And cost investing in now. we fixed additional for quite now. you seem

Daryl Kenningham

it. that No, was

Operator

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

David Whiston

of if the On is, more problem sell buy serious more for too bidders a that is real now? about problem coming problem like is many lot now could the know cost just I what's you, more. or back chip rental impact Thanks, are agencies there's of new. high you shortage because I'm the But is issues you asking right I I how it of not acquisition so that right more used, what talk mean, used guess with morning. could there's overpaying you used in the because good is on

Daryl Kenningham

that's -- in be Daryl. the I overpaying and would And dynamics on you our, because company. probably our actually. largest That's a also to work doing careful better price of would the is our it's over this months, say, price'al issue accuracy in say we're market about the of lot say there. I of the last would few I have

David Whiston

it Earl I got to to Okay. said buyback. think you're looking And that serious was more and get consideration

How You've company doing want do already much lots. buy you been long-term? of to the

Earl Hesterberg

our that. any a We don’t it's What have on board. with of discussion and allocation capital continual goal that's something dynamic that's process is

So, the course stores to balance versus from Toyota they any us we such made also acquisitions in material Austin have have buybacks the of to have returning either. we in just the risk that, as say the to I'll accretion don’t shareholders available made we and risk. buybacks that quality acquisitions via any like think accretion and the of the that are and execution capital things don’t execution Albuquerque

shareholders. simultaneously both quality we're the been return allocation in actions growth of capital we of investments ability So, we've external with and to in do position like things the terms best think those to ever capital also

Operator

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

Michael Ward

curious bear I'm your Thanks. are. at what the everyone. that is curious thoughts group morning, on just the dealer we're just peak Good earnings. Earl, case

Earl Hesterberg

beauty peak the to That's our don’t or a what to do, demand the driving we aftersales believe pre-COVID more a lot I we and momentum. And and strong ago. Well, and comps is growth everything capture and of are in aftersales new And like some these can sales against to but everyone. think Group near work. a And me factor the going I starting that to we're companies Because the are And from business margin vehicle volume more revert offset for our it maybe of a over X putting right. of auto volume opportunity think year comps is business so. now is down see have any key of have us for the correction. now market time pretty revert a used our supply And I manufacturers anywhere that's you to I for to half opportunity see and think balance model and of being over think of were year vehicles, bit I incorrectly where year flexible back there don’t what makes on is that I a model all I for predicted this able up aftersales room XX%, to a lot degree when great is would sustainable see stabilizes. that and for there so were that now And model on new cars. a

Daniel McHenry

Mike, follow-up said. And what to a just Daniel Earl here. as

the to in seems remember share where the EPS We've You It XXXX. billion I by company that's all it saying to structurally into need think our done that repurchases we've to grown going that forward. revenues. that help and is going in different company $X was

Michael Ward

both But levels next that to getting that I and AcceleRide six It of behind an those inventory reading two as does a XX% mode by does of up wrong? and for result it. it's a two, years kind follow-up. get use to new in we're $XXX more it's am we're people just service your that AcceleRide definition AcceleRide and a that more We're the pre-orders an usage of that like a think at deliveries forward. going to is XX, goes like push and Like Page going and order sounds F&I better understanding, going I to showing months increased out, service be normal when knowledgeable, expected the additional these of going seems inventory people like look it and up. have of these least when for like a next Chart build have my push help I over record over at As going see F&I an growth, goes on

Daryl Kenningham

is Mike, Daryl. this

that Customers I and outside a lot reading that in And our to has dealership of use for of shop to into on. think nothing And compensation and customer or of a it through it's for I that have and on implications right. of staffing areas. now they to shop kinds today the appointment because our expect business business. The do people we're a and seeing wander implications and tools can with vehicles And away waiting grow. AcceleRide exactly all leverage that us. and we're days all business it but now with digital XX% customers doing the with we're that the going you're

Earl Hesterberg

Mike. build made continue crack of new had inventory XX is fact we I were And less dealerships that and that you versus Group to that. inventory in company, don’t I staggering Earl. comment think remind XXXX XXXXX we we on pre-COVID myself think. at I company. This we we want X. we new just much follow-up when I the were in Yes, XXXXX Four some vehicles vehicles smaller On smaller a to don’t a And had yet. inventory

staggering inventory that's I don’t by inventory. it think have I to think shocked in overnight. admit pretty a going must I builds the but build So, been this happen hole I

Operator

a our Gupta Rajat question And follow-up follow-up. from Please from your with next go is JPMorgan. ahead

Rajat Gupta

maybe if on us you You Texas help other in you maybe shipments of thanks. what in? of you the in some us markets that regional the Could could or metrics provide taxes it's are present incoming meaningful, divergence question. maybe consumer another giving of some other know for between help you and understand thanks market versus And Great. other percentage resold could provide commentary

Daryl Kenningham

to on start energy Well, in like trend business correction companies then Texas shifting up never was I'm energy were even And a but some with weed. that price doesn’t even come I low Texas. to if going out a Texas only to renewable forms energy. oil monthly. the macro these basis. and when stop. know economic energy market prices course is these data the organizations business there recovered stopped through COVID, the And global were development a can grow and macro for the the is in such, newer continue Daniel involved appear of to And and and Texas moving still to that you. is if forces energy that's I'll be with of because just don’t But of not some

So, you have of I think best Texas. in the worlds both

You have have and in in and community energy of like probably Houston of even its just medical growth have then business you Austin And to growth. of periods place industry medical there. the huge natural Dallas research a stronger we and that's back one

the in best business. just So, company is that Texas combined the legal environment, with it's found place a business we in environment to do

Rajat Gupta

Got it. Great, thanks for the color.

Operator

your follow-up. Adam Jonas Please Stanley. with go Our next follow-up from question is ahead from Morgan a also

Adam Jonas

guys, keep your what when of leverage target, is? debt X.X your kind opportunity. Remind but us us to give about your you're capacity net the and thinking M&A your ability and just follow-up thanks for Hi EBITDA buybacks the cap ranges

Daniel McHenry

Adam. Sure,

allows terms leverage to ratio. to credit Our go facility of X.Xx in us

another at saw go we than even as but ideally big Prime company, we acquisition, far as the a a X.Xx. would like we'd possibly X.Xx X.Xx bigger As acquisition to as stand

Adam Jonas

Thanks be if were a your you're need business obviously there. gives tightening be. what or yes seeing terms to lot. in use. showroom a traffic Any opportunity that else And it's cohort credit mean auto like just I the some a any way, signs in softness follow-up impacting know cautious anything watching in credit an dint I particular you or of But in you

consumer Thanks. so credit? you telling what's rate or And on your

Peter DeLongchamps

increases addressed whatsoever. we're head Peter the the well I in comments. in when performed its XXXX DeLongchamps. in the But for bit I the the robust. class companies, and pre-COVID my When And Sure 'XX. to asset a no about talked you that little Adam, think I earlier tightening very I and seeing historic appetite finance on end part are is that car back to lower loans these of as delinquency seeing said of is some its But but lows reassuring the losses they're levels. think

the So, car we business of credit. of lost not because any have availability

Operator

Bank our Murphy Please a also next question from ahead follow-up of go is John from And follow-up. America. your with

John Murphy

understanding for the Hey about and that SG&A, thanks my has follow-up. pay On that this is guys, variable, quick chunk that a variable ones. the is is for A fixed half the transfer sales big of people. half few half is of

constructed curious as onto them vehicle come you plans just of efficient, a I'm will headcounts. for under you are making essentially SG&A that that comes pay lot more inflate I and it have concern How say grosses pressure are and the just is lower will or the a back have sales come pressure. normalize mean the So, AcceleRide why lot folks, I of pre-sold you

how I how are SG&A plans in about think we So, back, mean as the should pay constructed. re-inflation comes volume of that

Daryl Kenningham

Daryl. John, will you'll think compensation to think moving that on And things: accommodate plans I see on, And plans change and see forward are two based gross unit pay Unit with the that negotiation I dynamic change changing, get as business going that. bit. a see profit you sales because less perhaps you'll as per variable Historically our of generated. nature the I what of Hi think margins

John Murphy

is units comp is the that going becoming portion with the to or one not once that sales because Meaning inflate Okay. pressure. sales gross is

door So, leverage go back then be the come of some That appears have? should there even forth. real didn’t

Earl Hesterberg

to see We to. we hope hope would that but

John Murphy

it you a been and of acquisitions go surprised your acquisitions on maybe said about about the to acquisitions that then something seems I integrations speed, to where second I Okay. might you just the a just the make mean, are that on just in becoming a like it release well skeptical in Earl, at follow-up. little concerned integrating bit forward. pleasantly press very And became the What a you've how you with know you're maybe kind and that. clearer surprised extreme has been say appetite surprising these past so side lead positive go these were

Earl Hesterberg

to with Well, center also to team. into AcceleRide all once XX the done Daryl's was challenge at forth real and so integrate our incredible speed stores accounting take but Prime was by

day. is Austin, And these And we in like these do store are the do it the huge recent of some first we Toyota acquisitions way it dealerships.

I've doing tell us came growth. in Daryl XX that did impressed the a imagined. some short it you're would was of more what or Daniel's think benefits of bring to And I you. But kind really and operations really the than number not those much And dealerships, quickly dealership those seeing yet. operations of I our time. big a in aftersales very doing so teams have just and with that same-store to obviously did And of that's create I the will But some standardize our strain period rest taxed with

Daryl Kenningham

Daryl. is this John,

those store had every acquisition teams a that was detail in ground were we from a huge of a those to were took sales, And there they there. with ours the been a real and us Just on they the our huge key that Employees from that a X.X just and weeks. for of XXX had difference just East parts day the bit the new flew time, stores. country with each a was the with over with assigned all the service, and We that acquired, of AcceleRide on we one disciplines, processes. people uptake with stores to the around North over were made have acquired more accounting, F&I, that difference maker. technology teams our we long about working And

Operator

gentlemen, question back turn to like closing end of today's I'll to and over And answer ladies any we and the remarks. for have session. management the floor reached

Earl Hesterberg

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

Operator

do ladies will with gentlemen, conclude thank today's and And We for joining. that you presentation. call and conference

now lines. your may disconnect You