M&A Announcement

Jul 7, 2020

Good morning, everyone. Welcome to Asbury Automotive Group's Investor Update Call. Today's call is being recorded and will be available for replay later today. The press release announcing Asbury's proposed acquisition of Park Place Dealerships was issued yesterday evening and is posted on our website at asburyauto.com. Participating with us today are David Holt, President and Chief Executive Officer and Patrick Guido, Senior Vice President and Chief Financial Officer. At the conclusion of the company's remarks, we will open the call for questions. Before we begin, the company would like to remind you that the discussion during the call today is likely to contain forward looking statements. Forward looking statements are statements other than those which are historical in nature. All forward looking statements are subject to significant uncertainties and actual results may differ materially from those suggested by the statements. For information regarding certain of the risks that may cause actual results to differ, please see the company's filings with the SEC from time to time, including their Form 10 ks for the year ended December 2019 and any subsequently filed quarterly reports on Form 10 Q. The company expressly disclaims any responsibility to update forward looking statements. In addition, certain non GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, they provide reconciliation of such non GAAP financial measures to the most directly comparable GAAP measures on our website. I will now hand the call over to David Holt. Mr. Holt? Good morning, everyone. Asbury's vision is to be the most guest centric automotive retailer. Last night, we announced that we renegotiated the transformational acquisition of Park Place. We entered into an agreement to acquire 8 of the Park Place dealerships, 2 collision centers and 1 auto auction, all of which are in the Dallas Fort Worth market. This acquisition does not include the Jaguar Land Rover Open Point in Austin or the ultra high end premier collection. Before I discuss the Park Place acquisition, I'd like to give you an update on our business. We were significantly impacted by the COVID-nineteen pandemic beginning in the second half of March. As we saw business decline, we acted decisively to fortify our business to prepare for the inevitable slowdown. Unfortunately, this included terminating the original Park Place acquisition, furloughing employees and reducing salaries and benefits. We also acted quickly to right size our business, reduce expenses, defer most capital expenditures and negotiate significant discounts with certain vendors. We were able to cut monthly expenses by approximately $15,000,000 These actions along with our omnichannel initiatives that we started 4 years ago helped us achieve year over year monthly increases in pre tax profit in May June. I would like to call out one number specifically. For the first time, 20% of our used vehicle sales were transacted online through our PUSHSTART application. We have seen our new and used volumes sequentially improve each week with significantly higher profit per vehicle. Our June new unit sales were down 16% versus prior year. Part of the decline was a strategic decision to preserve inventory because of our low day supply. This also gave us the ability to increase new car margins. Our used unit sales were up over prior year. Our parts and service business recovered in June as the economy gradually opened up. We ended up flat against prior year. In March, we had to step away from the transaction due to lack of visibility surrounding COVID-nineteen. But after seeing the rebound of the April low and delivering strong May June performance, we decided to renegotiate the acquisition under more flexible financing terms and more favorable pricing. We are pleased that our business model and performance has allowed us to navigate the current environment and reengage in this highly strategic acquisition that we believe will make us an even stronger company. Park Place is one of America's largest and most predominant luxury dealer groups and they are regarded as one of the best and most efficient operators of luxury stores in the industry. Barclays has a strong base of loyal clients and long tenured teammates. We have had great success acquiring large, well run stores and we fully expect Park Place to be equally successful. We believe Park Place will transform our company over the long term for the following reasons. 1st, this acquisition is intended to meaningfully scale our business, increased our revenue by approximately 25% and transformed our revenue mix from luxury of 36% to 49%. Luxury segment has historically delivered strong and stable margins that are significantly above those achieved by midline imports and domestic brands. Luxury stores are most resilient in downturns, have higher and more stable margins, have fewer dealers nationwide and derive a higher portion of gross profit from parts and service. 2nd, this transaction is expected to increase Asbury's geographic mix to 28% of its revenue derived from Texas. Texas is the 2nd largest car market in the country. The Dallas market has a 30% higher penetration of luxury new vehicle sales than the national average. Dallas is home to 24 Fortune 500 Companies and has had some of the highest population growth over the last decade. I've lived in Dallas and is one of the best, if not the best luxury car markets in the country. 3rd, the combination of Asbury and Park Place is intended to build a company that derives approximately 50% of its gross profit from parts and service. Currently, Park Place generates 56% versus Asbury's 48%. Huge amount of our focus over the last decade has been growing our parts and service business. Because there's a higher margin business, is more stable in downturns, has a higher gross profit flow through to income, has more organic growth opportunities and the customer is 70% more likely to buy their next car from you. This acquisition is expected to enhance these opportunities and improve our margins and the resiliency of our business. 4th, in addition to synergies and performance improvements identified, there are opportunities for organic growth. We have a strategic growth opportunity to build out the Park Place Auto Auction and their 2 collision centers. 5th and most important, the people. Park Place built large award winning stores with exceptional reputation for delivering an unparalleled guest experience. It takes long tenured dedicated team members with strong processes to achieve these results. We believe that bringing together what Park Place does best and what Asbury does best will drive significant shareholder value and it will bring us closer to achieving our vision to become the most guest centric automotive retailer. Finally, I look forward to welcoming all the Barclays team members. We look forward to working with you. I also want to thank all the Asbury team members and our outside partners who have helped us with this transaction. We truly appreciate your support. I would now like to introduce our new CFO, PJ Guido. PJ is new to the team, but has already made a huge impact on this deal and to our entire team. We look forward to him making a meaningful impact over the coming years. Welcome, P. J. J. Haley:] Thanks, David, and good morning, everyone. I'm excited to be part of the Asbury team and look forward to getting to know our investor and analyst community. I've spent the last several weeks getting up to speed on the company and one of the most impressive things I've seen is the strength and flexibility of the Asbury business model and pace at which we have been able to adapt to the current environment. David briefly touched on performance, but I feel it is important to call out that given a variable expense structure and proactive cost management, we have seen positive earnings and cash flow in each month since the COVID-nineteen pandemic began. With better visibility and good performance, we can confidently move forward acquiring some of the best luxury stores in the market today. Moreover, we believe that buying the Park Place stores, which have attractive margins and operate in one of the largest and fastest growing markets in the country will make us a stronger and more diversified company, even better equipped to succeed in the current environment and well beyond. Acquiring the Park Place dealerships is expected to add an estimated $1,700,000,000 of annual revenue or 25 percent top line growth based on 2019 revenue. We are also buying attractive EBITDA forecasted to reach $95,000,000 within the next 3 years after factoring in estimated run rate synergies of at least $20,000,000 The purchase price excluding inventory of approximately $735,000,000 includes $685,000,000 of goodwill $50,000,000 for parts and fixed assets. This reflects a 7.7 times multiple on the expected $95,000,000 of EBITDA $20,000,000 of run rate synergies. In addition, we expect $10,000,000 in annual cash tax savings from goodwill amortization, which equates to approximately $80,000,000 in present value. The acquisition terms also allow for us to lease real estate assets worth approximately $217,000,000 for an initial term of 10 years with options to purchase. Assuming a closing sometime in Q3, the transaction is expected to be accretive to 20.20 earnings per share. Net accretion includes pretax transaction costs of approximately $0.20 per share in Q3 2020. These costs are mainly related to legal audit and other outside consulting related fees. The transaction is expected to be funded through a combination of existing credit and mortgage facilities, seller notes and cash on hand. Net leverage at the time of closing the transaction is currently forecast to be approximately 3.6 times, above our target of 3.0 times. Although we anticipate that leverage will fluctuate over the coming quarters, we believe the accretive nature of the deal, the improved combined cash flow generation, the increase in luxury parts and service mix, combined with Asbury's organic growth will allow us to proactively manage our balance sheet and get back to our target leverage of 3 times within 18 months. Before closing, I would just like to offer some additional insights on Q2 performance. On a same store basis, we have seen new and used volume progressively improve throughout the quarter. In June, we saw new volume reach close to 85% of the pre COVID period from a year earlier and used volume actually grew by 1% compared to the same period last year. We've also seen parts and service traffic increase with Cune gross profit reaching the same level as last year after falling by 47% and 37% in April May respectively. I would also like to point out that we expect SG and A for the 2nd quarter to be approximately 63 percent compared to 68% for the same period last year. Our SG and A for April, May June also included guaranteed payments we made to our active employees and healthcare benefits paid to our furloughed employees in order to support and retain them during this period of uncertainty. While we are still finalizing all June results, we are estimating $40,000,000 of pre tax income in June, which is actually over 100% higher than last year. We expect to report a total of approximately $65,000,000 of pre tax income for the full quarter, a net increase of 4% versus Q2 of 2019. For additional details on the quarter, please refer to our press release dated July 6. We look forward to providing you with full details in a few weeks on our earnings call. In closing, we are extremely excited about the Park Place acquisition and its potential to create long term value for our shareholders. We will now turn the call over to the operator and take your questions. Thank We'll take our first question from Rick Nelson with Stephens. Thanks. Good morning. Nice quarter. Thanks, Rick. Thanks, Rick. I'd like to ask you about the cost cuts. You talked about $15,000,000 monthly coming out of the business. How much of that do you consider to be a permanent cost reduction and how much is likely to come back? Rick, I'll answer it as best I can. For years, our whole space has been saying we can perform well in a low SAAR or high SAAR environment because we have a collapsible business model. I think we just proved that the dramatic drop to an 8,000,000 SAAR and what happened in that timeframe, how quickly we reacted and I'm sure our peers did the same. We took all those costs out to run the business at that time. Since then, we originally furloughed 2,300 people. We brought back about 1,000 people at the end of May to run our business. So what I would tell you going forward is, there's a fair amount of that expense that will stay out. I really don't want to quote an exact number because we're going to stay flexible to the business environment. But I think hopefully our track record will show that we'll be very disciplined in managing it. Great. Thanks. Also Park Place, if you could help bridge the EBITDA. Previously, you had talked about $100,000,000 in an opportunity there. Now it's $95,000,000 but you're not buying the real estate. If you could help us there, any insight into the lease terms? I know you mentioned that was 10 years with an option to buy, do you have to rent out factor there? Yes. Hey, Rick, it's P. J. I'll take that one. At a high level, there's obviously some ins and outs, but I'll just walk you through the bucket. So from your $100,000,000 number, obviously we take out the EBITDA associated with the Open Point as well as the Premier stores or the Premier business. We adjust for the trend, the current trend in new and fixed gross. Then there's reductions in leases and rent costs. There was some dissynergy or some expense associated with the Select business, which we're not taking on. And then additional cost reductions across the business, which include things like headcount, but other costs that we found additional synergies. So those are the that's what comprises the difference between the 2. And just to add to that Rick, I would say open points when awarded by the manufacturer you don't pay for. In this particular circumstance, we paid goodwill for this deal for that specific store and we didn't have it making money for the 1st couple of years. OpenPoints are tough to get up and going. So we prepaid for the land, we prepaid for the goodwill and we didn't really factor in any returns for the 1st couple of years. The ultra high end luxury happens to be on very expensive dirt. It's low volume. It wasn't a significant contributor to the EBITDA. So that too played a role in it as well. Got you. And you could speak to Texas and Florida, I guess, late June into July, any commentary there since we've seen this recent COVID outbreak? Yes, I'll do my best. I don't think anyone on the call has the answer to this one. We're living through this time. We're not naive enough to think that through this by any stretch. We see that the country is opening back up. We see the cases getting higher. We see the hospitals doing a better job at treating folks and turning them out of ICU quicker. But we're still in the middle of the pandemic. Our business is still affected. You can still see it in the SAAR. I think people are a little bit more resilient and want to come out. We've proven that this model is essential and oddly with what's going on in the world, private ownership of vehicles certainly seems to be a preference right now and the propensity for people to spend in automobile as seen by our numbers and our peers is certainly there. Great. Thanks and good luck. Thank you, Rick. Thanks, Rick. We'll take our next question from John Murphy with Bank of America. Good morning, guys, and congrats on some great short term performance here in getting this deal done. It's pretty miraculous stuff, all things considered. I'm just curious, just to maybe follow-up on Rick's question on the cost side. When you look at the SG and A, the gross in June at 55%, That's a great number. Traditionally, you kind of run-in the mid to high 60s. Just curious how you think about that SG and A to gross going forward? Is that the kind of thing that this you've been sort of enlightened maybe by the great performance in June and there might be some other things that you or actions that you could take structurally going forward. I mean, just how should we think about that sort of percentage to gross over time and what kind of opportunity could there be? Sure. I'll start it and then P. J. Will come in. The 55% number looks pretty strong, but it's really not sustainable at that level. We've had a tough year in the country with all things going on, but we had things line up for us in June. We've always said that we're a Southeastern company. What I mean by that is we're not in the high rent district, so our fixed expenses are low. And that gives us a lot of flexibility to really get our expenses down with low fixed costs. In the month of June, you had quarterly money ending from the OEMs. You had high margins on new and used, high margins in parts and service, low inventories, benefits from SG and A, cost floor plan expense, everything just lined up really well for us to deliver such a strong quarter to include lower healthcare costs in the quarter as well. So everything just went our way. It's not sustainable to stay at that number. We would probably still guide to the 66% to 68% range. But again, we're still in uncharted waters to know what's going to happen going forward. P. J? J. Rice:] Yes. I think David said it well. At 55%, we don't anticipate that to continue. We are picking up significant benefit from things like we have lower inventories to lower floor plan costs, interest rates remain significantly lower. So as those rise, obviously, floorplan costs would rise as well. So I think 55% for June, 65 percent for the quarter. The 67%, 68% range is a good target, but they'll still we'll always look for opportunities to improve upon that. Okay. That's very helpful. And just a second question on new vehicle sales. It sounds like you were inventory constrained and managed to help out future months. I'm just curious as you look at the demand there relative to inventory, if we're going to see sort of months that are constrained and sort of is down 16% in June is something that probably might be more indicative in the next few months or if you're being restocked with inventory from your OEM partners. Just curious how that's going to play out? Sure. I mean everyone's back in production and we see cars coming down the pipeline. July is going to be tight. It's going to be tight for everyone in the country and the numbers might be a little deceiving. My opinion as of today is the demand out there is much higher than the supply. So that should certainly benefit margins, but it's also going to be deceiving and cost us unit sales. I'm sure as August rolls around, certain brands will catch up with inventory, not to the levels that you'd want, but certainly from a replenishment standpoint. And hopefully, we'll have a stable Q3 and then get back to normal inventory levels by Q4 is kind of the way we see it right now. Obviously, that can vary slightly by brand. And then that's helpful. And then on the used side as far as inventory, I mean, it seems like you're at the will of the market as far as what you're paying. Obviously, you're doing a good job with strong grosses. But I mean, as far as the inventory on the used side, I mean, is it available to you? And can you keep the strength of used going if the demand keeps going there? Sure. What we saw in March April, I think we saw a 14% drop in valuation of used cars and I've never seen that kind of drop in my 34 years of retail in that sort of period of time. Some people chose got nervous and fire sales inventory. We didn't. We sat on it because I just knew the valuations weren't real. And I don't think this is a game for us that we're going to chase volume on used. It just doesn't make sense. Our ability to make money on a car is solely going to be based on the acquisition of a car, because the market dictates the price. So we're really focused on profits and returning profit. So we're comfortable if we can continue with margins like we're showing the last couple of months and volumes flat, we're more than okay with that. We're trying to be creative sourcing cars out there, but there's a fine line between sourcing what you need for inventory and getting aggressive and overpaying for inventory. Overpaying for inventory and creating lower margins isn't going to benefit anyone. So we're thoughtfully looking at this every day and going store by store being strategic as to how we can acquire inventory. From what we've done in the quarter and what we see currently, we feel comfortable that we can continue on with our current pace. Okay. And then just lastly on the deal itself, I'm just curious as you went down from 19 to 12 dealerships, how that was actually reset in the thought process there? I mean, I can understand it was sort of the premium luxury or the ultra high end that was taken out of the deal. I'm just curious how you decided to reset things and what remains with the owners of Park Place as they stand right now? And then also, David, it looks like framework agreements, particularly around Lexus, are being loosened and you're giving being given some kind of preferential treatment, at least on Lexus, but it seems like on some maybe some other brands as well on national framework agreements. So just curious what is changing there as well? John, if I missed something, please let me know and I'll answer it. Regarding Lexus, we have a great relationship with Toyota and Lexus. We deal with all our OEM partners and we value the relationship and partnership. I certainly wouldn't say preferential treatment and we'll certainly have to work with them again on all these transactions to see what the outcomes will be. We're confident that everything will transpire and transact and close in this quarter. And we'll certainly listen to our partners and certainly let them guide us as to what to do. As far as the deal structure, there's two sides and I don't really want to speak for the seller. We're thankful that they reengaged with us. They were engaging with other folks as well. We spent 8 months with them getting to know each other. I met all their employees in 33 different meetings. We felt strongly about the assets, but we also had to be realistic about the current structure in time that in right now and what's going on in the world. And we tried to work together thoughtfully to create a win win situation where the seller and really making sure we structured the deal to make sure we can weather it in all times and that it was going to be accretive and add value for us. And we think we accomplished that. We see this as a very strong deal. And it's really when you look at the prior deal at $100,000,000 EBITDA and this deal at 95 dollars and the price reduction, I think we perceive it as favorable for us. And maybe just last one real quick on the deal. The $20,000,000 in synergies to get to the $95,000,000 of EBITDA. I mean, that basically means you're starting with a base of $75,000,000 in EBITDA and getting $20,000,000 in synergies, which seems like a big number relative to that $75,000,000 I'm just curious what are the major buckets of that $20,000,000 Yes, I would tell you, it's a private group and it's a large private group and large private groups have large cost structures. We also have national vendor relationships and insurance costs that are significantly lower than what they have. So well over half the synergies there is just in taking out the compensation and corporate expense and SG and A expense that just isn't there in our business model. We actually see more potential in growing the business in other areas and we called that out in the IR tech that we sent out of additional operational income output. So when we looked at this the first time around, we said $20,000,000 it's $20,000,000 now. There wasn't a lot of synergies with an open point that wasn't open yet and the small ultra luxury stores and we still got the core base. And they too like we did furloughed a lot of associates as well that we didn't have gone in the first model. Okay. All right. Thank you very much guys. Thank you. Thank you. We'll take our next question from Bret Jordan with Jefferies. Hey, good morning guys. Good morning. I guess if you look at the parts and service mix being higher at Park Place, could you talk about how the margins compare in luxury parts and service versus your company average? They're higher in all categories. Okay. Sort of order of magnitude higher or just should we think about it just being higher? We had pretty good June numbers as you can see. I would say if you go off our historical numbers, they typically run 4% or 5% higher in margin in parts and service and they're higher in new and used car margins as well. Our F and I numbers are larger than theirs. Okay, great. Thanks. And then on you talked about the auction business in your prepared remarks. Is that something that you think about expanding in your legacy Asbury operations or getting broadening the wholesale auction business? The auction business is a very profitable business. The seller chose to open this auction to facilitate the sale of his used vehicles. He only chooses to run the auction one day a week, and he only chooses to allow his cars to run through it. We see some opportunities with our stores to run the auction more days and to grow that business. As far as where it goes from there in the future, we have a lot of experience acquiring cars at auctions and doing business with auctions, but not running auctions. We want to learn, run this one, see what it looks like, see what the potential is and then make a decision moving forward if this makes sense to expand this model or not. Okay. And then a final question. You mentioned that 20% of your used vehicles were online transactions. Is that something you think is sort of a continuing trend? Or was this a shorter term reaction to the pandemic and a bias back to physical interaction? Yes, I think it's a combination of all of it. We've been focused on this for 4 years. We've been quoting 10% numbers each quarter as part of our business. I think we jumped on it earlier than most. It's been a sole focus of ours and we're certainly in the middle and have been for months at trying to enhance it from what it currently looks like online now. So we're very competitive in this space and it's something that we're aggressively looking at and focused on. Okay, great. Thank you. Thank you. We'll take our next question from Armintas Sinkevicius with Morgan Stanley. Great. Thank you for taking the question. Just to piggyback off the last one, to your point, you've been more aggressive on digital in the early days than some of your peers. 20% seems to be comparable to what we've seen from others in this environment. What has to happen for you to push this even further? Is that expanding the footprint more nationally? Or are there other dynamics that you're focused on with regards to expanding the digital? Yes, we're focused on the process of the online experience and what enhancements it needs that it doesn't currently have and that's what we're working on. Okay. Any comments with regards to the growth that digital is adding to your same store sales? Yes. I mean, look, as you could see, we spend the lowest ad dollars in our space. We're digitally focused in every area of our business. That's where predominantly our money is spent. So naturally it equates for a large part of our business. But just like our peers in every private group out there, 90%, 95% of the traffic starts online. We see that enhancing. We're very focused on mobile. We're very focused on payments online, documents online. I think we're all chasing the same goal. And then just a quick one on parts and services. There was a nice recovery there in June. How do we think about the glide path into the rest of the year, assuming there's some pent up demand from the shutdowns in March April, should we see the pent up demand coming back in the Q3 and then stability in the Q4? Or how are you thinking about the return of parts and services? Sure. Again, 34 years of retail and running stores have been through cyclical downturns many times. This one is unique because in all the other downturns parts and service doesn't take a hit. Clearly parts and service took a hit this time because of the pandemic. We're still in the middle of it. We see that it's going to be choppy in the next 6 months, potentially choppy in the fall and we certainly plan for that. And we plan to see it choppy in the Q1 of 2021. But then after that, we think it opens up and we get back to, I don't want to say normal state of business, but a growing stable state of business. Okay, great. Much appreciated. Thank you. We'll take our next question from Rajat Gupta with JPMorgan. Hi, good morning. Thanks for taking my question and congrats on the quarter and the deal. Thank you. Just wanted to follow-up on the online question. The 20% that's online, that's a June number? Or is that more of a run rate exiting the quarter or just want to make sure? Yes. That's our total used cars sold in the Q2 that was the percent that was transacted online. Got it. And when you say transacted online, like how much of that is like home delivery or is that more express pickup? Like how should we think about when you say 20% online, like is that like how are the transactions like taking place at the end for those transactions? Really flexible based upon the consumer. They can sign some of the documents online. They can have delivery at their home. They can come into the dealership. Generally, the financing and the trade and the pricing and everything is done online. And then sometimes customers choose to do some of the documents online, some want to come in and some want it at their house. So there's not an easy answer there. That's a combination of all those items. Got it. That's helpful. And then on just the cost structure, you said you could be back to the 66% to 68% 67% to 68% range. Just curious as to like with a lot of these transactions slowly moving towards online, I mean, do you see any efficiencies there from a productivity perspective? Or you think some of those efficiencies are probably going to get offset by more advertising dollars, just given like there's just so much increased competition from the digital retailers out there. Just curious as to why that ratio could be lower or higher versus what you have had Margins play such a huge role in Margins play such a huge role in your overall SG and A numbers. I would tell you, we have a vision of opportunities for lower SG and A in the future as the model changes and more transactions and inefficiencies happen online. We're certainly not there. We certainly have a lot of work to do. We believe the only differentiator we have is the level of service. So how do we engage with the consumer whether they're 20, 40 or 80, at what level do they want to engage with and how do we transact the way they want to transact in a timely manner. I think the history of our company shows that we've been very disciplined in SG and A and we tend to have the lowest SG and A in the space. That won't change. And last year was a $17,000,000 SAAR at 68% SG and A and this year maybe a $12,000,000 $13,000,000 SAAR at a 63% SG and A. So I think that the main takeaway is this is a solid model. It's a proven model. It will withstand whatever comes up or down and it will generate a lot of cash and really create a nice return. Got it. And just one last one for me. With a lot of these digital retailers out there, online only players potentially moving into listing 3rd party inventory on their websites. Is that something you think Asbury would be open to participating in? Or did you see the economics working out if that will happen? That will be all for me. Thanks. I apologize. I missed the first half of the question. I was just saying a lot of the digital online only retailers out there on the used side, they are looking to slowly expand into listing 3rd party inventory on their website. Just curious as to if Albury would be open to participating in any such program in the future. It's hard to say. As long as it creates a return for our shareholders and its value for our company, we would open we'd be open to anything. We aggregate our inventory now and it's generally by market. But we're constantly moving inventory from state to state and moving it around and we're selling like everyone a lot of cars from consumers out of states that we don't even do business in. So it's certainly a possibility. But right now we're kind of focused on taking care of our own. Got it. Great. Thanks for taking the questions and good luck. Thank you. Thank you. We'll take our next question from Stephanie Benjamin with SunTrust. Hi, good morning. Congratulations on the deal. Thank you. I just wanted to follow-up on my questions have been answered, but I did want to follow-up on the digital capabilities. Can you speak to actually Park Place's digital capabilities at this time? Are they similar to the companies? Or will they easily be able to be transitioned to what Ashbury has already created over the last several years? And then also on the same vein, what are from what you've seen, the propensity for those Sure. Sure. Stephanie, please, if I miss something, come back. It's more than fair to say we've been more focused on digital than Park Place has been. And we look at this as an opportunity to help them and enhance their business. What they do best is the guest experience and the level of service that they deliver and they do it exceptionally well. So we're looking to give them some tools to help support that and enhance their capabilities as best we can. And I think you had a second part of the question. Mostly just in general, the luxury vehicle buyer, do they tend to transact or have you seen in the last couple of months, I know it's a short amount of time, the same propensity to kind of shop digitally or is there any segment just based on domestic import or luxury we should be aware of from a digital purchasing standpoint? No, it's a great question. It's very equal. We've sold brand new Bentleys online, a lot of high end used vehicles online. I would say percentage wise, it's every bit the same as it is domestic and import. We're all consumers. That phone and the computer makes it really easy to sharpen look for what you need. And I don't think that that is governed by any income bracket. So it's wide open and continues to grow and performs every bit as well as the other segments. Got it. Yes, that was me who bought the Bentley online. I'm just kidding. But I did have a follow-up just quickly on the synergy target. The $20,000,000 that you did mention that a lot about were just some costs that are come out of the business. So should we think from a cadence standpoint, some a decent chunk of synergies that are realized kind of in the 1st year of the 3 and then kind of more gradual? Just how should we think of the sequential realization of those? Thanks. Yes. I would say that a good chunk of it's in the 1st 12 months. And there's good opportunity in several areas to grow the business. Got it. Well, that's all I had. Thank you so much. Thank you, Stephanie. Thank you. We'll take our last question from David Whiston with Morningstar. Thanks. Good morning. On the revenue acquired, your presentation talked about Park Place having $1,700,000,000 last year. But is $1,700,000,000 for the whole group or just the 8 stores you're acquiring? Just the stores we're acquiring. Okay. And can you talk in any detail on how much consideration here is debt versus cash on hand because you had a lot of liquidity going into this in terms of cash on hand and floor plan offset, but you're also talking about doing seller financing? Yes. Hey, David, it's P. J. So a significant portion of the deal will be financed with cash on hand. We do have very strong liquidity right now. A smaller percentage will be coming from the seller financing as well as from our internal credit facilities. But a large portion of the transaction will be financed with cash. Okay. And on the tax rate, you called out the $10,000,000 annual tax savings before this announcement. I think you were talking about a tax rate this year of 25% to 26%. Are you able to give any projection now on what a long term tax rate would be going forward? Would it be significantly less than the 25% range? Yes. We're hesitant to give forward guidance on that, but 25% is a good number. Okay. Thank you very much. Thank you. This concludes today's discussion. We look forward to speaking with you in a few weeks to discuss the quarter. We appreciate your participation today. Thank you.