Earnings Call: Q3 2017

Oct 24, 2017

Good day, ladies and gentlemen, and welcome to the Asbury Automotive Group Q3 2017 Earnings Call. Please note that today's call is being recorded. At this time, I'd like to turn the conference over to Mr. Matt Pattoni. Please go ahead, sir. Thanks, operator, and good morning, everyone. Welcome to Asbury Automotive Group's 3rd quarter 2017 earnings call. Today's call is being recorded call is being recorded and will be available for replay later today. The press release detailing Asbury's 3rd quarter results was issued earlier this morning and is posted on our website at asburyauto.com. Participating with us today are Craig Monahan, our President and Chief Executive Officer David Holt, our Executive Vice President and Chief Operating Officer and Sean Goodman, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open the call up for questions and I will be available later for any follow-up questions you might have. Before we begin, I must 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 our filings with the SEC from time to time, including our Form 10 ks for the year ended December 2016, any subsequently filed quarterly reports on Form 10 Q and our earnings release issued earlier today. We expressly disclaim 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, we provide reconciliations of any such non GAAP financial measures to the most directly comparable GAAP measures on our website. It is my pleasure to hand the call over to our CEO, Craig Monahan. Craig? Good morning, everyone. Despite hurricanes Harvey and Irma impacting more than half of our stores, we are pleased with our results for the Q3. We are reporting EPS for the Q3 of $1.48 We believe that our results were adversely impacted by approximately $0.15 associated with the hurricanes and the CEO transition announced just in August. Excluding these events, our EPS would have been $1.63 or 7% higher than last year, reflecting strong operating results and a declining SAAR environment. Notwithstanding the impact of the hurricanes, we were able to achieve a gross margin of 16.2%, 40 basis points higher than last year and an industry leading operating margin of 4.4%, 20 basis points higher than last year. Looking forward to the Q4, assuming that the SAAR holds at current levels, we continue to expect to deliver low single digit EPS growth. I will now hand the call over to Sean to discuss our financial performance. Sean? Thank you, Craig, and good morning, everyone. I'd like to start by giving you some color on the events that impacted us this quarter. Note that our earnings have not been adjusted for these events. Hurricanes Irma and Harvey impacted dealerships in Florida, Georgia and Houston, Texas. Our extensive emergency readiness program plus some good fortune resulted in very limited property damage. Our teams did an outstanding job and our total loss from property damage ended up being less than $500,000 However, given the closure of our stores for a number of days, we did incur significant business interruption. In the case of Hurricane Harvey, the negative impact of the hurricane in the month of was more than offset by a very strong performance in September when our Houston store generated record profits. Overall, from a financial perspective, Hurricane Harvey turned out to be a net positive event for us this quarter. While we expect the strong performance of our Houston store to continue through the beginning of Q4, it is only one store and the impact to the Q4 will therefore not be material. In the case of Hurricane Irma, although we had very limited property damage, stores in Florida and Georgia, our 2 largest states, were closed for an extended period of time and we lost business that we do not expect to recover. Unlike the situation with Hurricane Ken Harvey, this storm did not generate meaningful vehicle replacement demand. Overall, we estimate that were it not for these hurricanes, we would have sold well over 1,000 more vehicles, our pre tax income would have been at least $3,500,000 higher and earnings per share would have been at least $0.10 higher. During the quarter, we recorded an expense equivalent to $0.05 per share associated with the CEO transition that we announced in August. We also expect to book an expense of approximately $0.03 per share associated with the CEO transition in the 4th quarter. This charge is associated with the accounting treatment of equity previously granted to the CEO. The amortization period for such equity is being reduced so that amortization will be complete by December 31, 2017. We are pleased with our operating performance in the Q3. SG and A as a percentage of gross profit increased by only 20 basis points compared to last year. This is a significant achievement considering our continued investments in digital technologies and lead management initiatives, the adverse impact of the hurricanes during which we continue to pay our employees whilst the stores were closed and the CEO transition charge. If we normalize only for the hurricanes, we would show a decrease in SG and A as a percentage of sales compared to last year. This reflects our continued focus on efficiency in operations and cost control. For the full year 2017, despite the impact of the hurricanes and the CEO transition charges, we continue to expect SG and A as a percentage of gross profit to be approximately 70%. With respect to capital deployed, we repurchased $5,000,000 of our common stock and spent approximately $10,000,000 on capital expenditures this quarter. We continue to plan for approximately $50,000,000 of CapEx this year and expect to hold CapEx around the $50,000,000 level in 2018. Note that these amounts exclude potential lease buyout opportunities that we consider to be financing transactions. Our balance sheet is solid. From a liquidity perspective, we ended the quarter with $3,000,000 in cash, dollars 75,000,000 available in floor plan offset accounts, dollars 92,000,000 available on our used vehicle line and $237,000,000 available on our revolving credit lines. We also have unencumbered real estate with a value of around $120,000,000 Our total leverage ratio stands at 3.1x and our net leverage ratio is 2.5x, which is within our targeted range of 2.5x to 3x. I'll now hand the call over to David. Thanks, Sean, and good morning, everyone. As we have mentioned, since over 50 percent of our business was impacted by the hurricanes, there is significant noise in our results. Given the impact of our hurricanes, I will for this quarter limit my remarks to only metrics that are meaningful to our true operating performance. My remarks will pertain to our same store performance compared to the Q3 of 2016. Looking at new vehicles. We are starting to see some stabilization in gross margins. Consistent earlier this year, margins in the Q3 were 40 basis points lower than last year. However, sequentially, margins were up 10 basis points from last quarter to 4.7%. This marks the 3rd quarter of new margin stability. Our total new vehicle inventory was $674,000,000 In an environment where inventory levels are building across the industry and despite the hurricane impacts, we are very pleased that we're able to reduce our day to day supply by 2 days to 72 days. Turning to used vehicles. Our gross profit margin declined 60 basis points from the prior year to 7.1%. The decrease in margin was driven by a combination of aggressive new vehicle pricing and the continued inflow of off lease vehicles. As I have mentioned in the past, used vehicle sales provide incremental profit opportunities in both F and I and parts and service. We reduced our used vehicle inventory to 35 day supply, which is 5 days lower than last year. Were it not for the hurricanes, our day supply would have been even lower. Turning to F and I. Our team continues to deliver strong results. Total F and I gross profit increased by 5% and gross profit per vehicle increased by $142 to 15.47 These gains helped drive our total front end yield up $10 to $31.38 per vehicle. Looking at parts and service. Despite the hurricanes, we were able to grow both our parts and service revenue and gross profit. Gross profit margin increased by 80 basis points to 62.2%. We believe that our parts and service gross profit growth would have been in line with previous quarters had it not been for the hurricanes. Before we open up the call for questions, I would like to share some initial thoughts on the retail environment and our outlook for 2018. Given the current volatility in the market, it is too early to make a prediction for the 2018 SAAR. However, we believe new vehicle margins are finally starting to stabilize around current levels and our inventories are in good shape. We have opportunity to continue to grow our parts and service business as well as our used car business. We have a culture of efficiency and cost control. This is reflected in our industry leading margins. We will continue to ensure that our organization and cost structure is right sized for the business environment, allowing us to continue to invest in the business and generate attractive returns for our shareholders. We will continue to pursue acquisition opportunities and our recent acquisition Indiana shows our willingness to venture outside of our current geographic footprint. However, we will remain disciplined and only acquire value accretive stores that make sense for our business and our shareholders. Talking about acquisitions, we expect to close the deal by Q1 2018, which we anticipate will provide over $100,000,000 of additional revenue. In addition, we continue to have positive discussions with other potential sellers. As we transition to a new leadership team, I want to confirm that our strategy is not changing. We will continue to focus on being outstanding operators and intelligent capital allocators. We will continue to seek the highest returns by investing in our existing businesses, acquiring new stores or returning capital to our shareholders. I believe that we are well positioned for success in 2018 and beyond. In closing, on behalf of all of our employees, I want to thank Craig for his leadership over the last 9 years. Our company is significantly stronger today because of you. We will now turn the call over to the operator and take your questions. Operator? Thank you. Perfect. And we'll go first to Rick Nelson of Stephens. Thanks. Good morning. Good morning. I have to follow-up on David, your comments about the new vehicle margin stabilization and what you think is driving that? Rick, I'm sorry, I missed the first part of the question. I heard new vehicle margins. Yes. Yes. Just to follow-up on your comments here, David, about new vehicle margins that you're seeing stabilization. I'm curious what you see as the drivers of that stabilization? I think we're finally getting to a point where inventory levels are starting to get under control. The pressure is coming off pushing some of the inventory the way we have. We're still seeing significant pressure on our midline imports from a margin perspective, but they're really starting to stabilize well for us in luxury and domestic. And the takeout of product related to the hurricane, do you think is that a driver? It's hard to say. We certainly missed some incentive monies because of the hurricanes that would have impacted the margin in a positive way, but it's really tough to predict how much of an impact it would have had. Got you. Also, I'd like to ask you about F and I. That was a standout this quarter, declines in some of new and used unit sales, but same store in F and I was up 5% and per unit show growth. How you were able to accomplish that? 2 main pieces to that. Really a credit to our associates in the field and their production has really increased at the store level. And we've also seen the benefits of renegotiated contract with our vendor partners. And any comments on sales post the hurricane? Are you seeing a pickup there in demand? Rick, in Houston, I would tell you it's significant. I mean after the hurricanes, the results were fantastic with all the cars lost there. We haven't seen any of that in Florida. That was mostly wind and not so much flooding and didn't see a lot of total loss of vehicles. So that really is just truly lost business down there. Got you. Thanks a lot and good luck. Thank you. Thanks, Rick. We will now go to Brett Holston of KeyBanc. Good morning. Good morning. Couple of quick questions here. The $0.05 for the management and then the $0.10 for the hurricane that you called out, on a go forward basis, I assume the $0.05 goes away and then the $0.10 it's a question of how much much of that potentially reverses as we move into the Q4. Am I correct? Yes. Hi, it's Sean. The $0.05 is one off in Q3. As I mentioned in my remarks, there is an additional $0.03 in Q4. After that, it goes away completely. The $0.10 I joined the call a little late, so I apologize. Sorry, yes. The $0.10 is the net benefit sorry, the net negative impact that we had in Q3. And there is nothing that comes back in Q4 subsequently. As David just mentioned, Houston was very, very positive, and Houston is only a single store and therefore the impact in Q4 is not going to be significant. And in Florida, we're not seeing any incremental demand associated with that hurricane. So when you think about the $0.10 impact, was it primarily front end or back end? It was buzz. Okay. And even as I mentioned, we You didn't split between the 2? This is David. I'll jump in. It's a little bit difficult to predict. When you think about fixed operations, you have those hours available for that day to sell. When you lose all those days and you open back up, you can't replace those hours. It's not possible. From a sales perspective, we can see when the activity decreased and then when it went to 0 and how long it took before it increased. So we can certainly see the lack of sales or how many sales we missed, really difficult to quantify the split between the 2. But I would say, generally speaking, it was more impactful and fixed. Yes. Okay. So I mean, in my mind, you're not going to likely have down days due to hurricanes in the Q4. So you're more than likely just sequentially going to get that back. And then the question is, do you get any kick up as a result of maybe some delayed new car purchases or insurance payments or something along those lines? It's just sequentially the $0.10 reverse itself, it seems like largely. I don't see any reason why it wouldn't. Would you largely agree with that or disagree with that for some reason? Well, this is Craig. I'll jump in there. I think like David I'd go back to the points that David made. And I think we have to separate Houston from Florida. So maybe I could start there. Houston was a net positive for us like we mentioned. The store came roaring back. We had record results in September. That will carry right through maybe to a well, it will carry through, but to a much lesser degree in the Q4. So we can put that one to the side. Florida is the old empty seats on the airlines. I mean, it's the majority of it would be lost fixed work. There was we mentioned it, but probably 1,000 lost vehicle sales overall between both locations. But they're gone. Our experience is once you lose that opportunity, it doesn't come back. If you want to look quarter to quarter, yes, we're $0.10 down this quarter. We don't expect to a $0.10 drag next quarter. Yes. Can you switching gears, what's our current thinking on the Q Auto operation? And again, I apologize, if you mentioned this earlier, I just missed the opening part of the call. We're completely out of Q Auto. Just done. Okay. Done. Thank you very much, gentlemen. Thank you. We will now go to Bret Jordan of Jefferies. Hey, good morning. Good morning, guys. Good morning. Hey, on your comment about seeing new margins stabilize, would it follow that used margins might stabilize if some of the downward pressure on used with the higher incentives abates? Or is the off lease volume just going to continue to put pressure there? It's very tough to predict. But based on what we know is coming in 2018 2019 for off lease vehicles, it's hard to imagine that the margin will grow a lot. Your cost of sales tends to go up every year. So it will be competitive to keep the PVRs consistent with maybe some upside, but the margin pressure will stay in my mind will stay consistent. Okay. But would you think it goes down further or do you think it just goes sideways in this environment? Yes. I don't I hate to predict this because I'm usually wrong, but I don't see it declining for us. But our goal is to certainly try and increase it, but if nothing else maintain it. Okay. Thanks. And then I guess on valuation on the M and A side, I mean you talked about certainly looking at some broader scope. Are you seeing any thoughts on the sellers, either more flexible or less flexible? I think we're seeing more sellers. And I think with that comes a little more flexibility. We're very happy with the transaction that we completed earlier this year. We felt like that was very fairly priced and the store is performing very well. We've got another transaction we hope to finish towards the end of this year or early next year. And again, that's another what we believe it's a good deal. And there are other conversations that are happening behind that, but like anything else until the deal is closed, we just wait have to wait and see how things play out. Okay, great. And then a final on the storm comment on Florida, you mentioned that there was really a net loss on that. Would you say that the service business benefited at all? I mean, obviously not enough to make up for what you lost in unit sales, but was there any silver lining in that cloud? No. Unfortunately, it's empty hotel rooms that you didn't fill for the night. So even when the business comes back, you can't duplicate the production in that shop. Okay. Thank you. Thank you. We will now take a question from James Aberdeen of Consumer Edge. Great. Thank you. Good morning. I hope you can hear me okay. Apologies, calling from the mobile. If I may, F and I PVR, I don't know that that question was asked. I apologize if I'm asking underlying the growth in PVR there. Underlying the growth in PVR there. What has changed? Or what are you seeing consumers gravitate more that's helping enable that this quarter versus prior quarters? Jane, I'll jump in. This is David. The success of F and I is a 2 part. First part, the store level performance certainly increased, more focused on product sales. We're continuing to see our product sales as a piece of our PVR increase percentage wise compared to finance reserve. And the second piece of it is renegotiated contract with our vendors. But we've been very disciplined and focused on training. We're lucky to have great talent and leaders in the field. So it's a combination of the 2. This is Sean. I would just add. Sure. I'd just add one thing to that is that the next quarter we'll be anniversarying the new contract and so growth may be moderated in the Q4 relative to the prior year. So as a follow-up based on that Sean and when we think about certainly with the growth in used vehicle supply coming and the presumed growth in used vehicle sales, to what degree should we anticipate sort of holding this level or is a modest decline sort of more prudent to bake into our models at this point given the mix shift to use from new? I believe that there should be a modest increase in the Q4, but again just not at the same level as you saw in the Q3 just given the anniversarying of the contract renegotiation. Understood. Appreciate that color. And then if I may just say a strategic question. With the closure and sort of abandonment of the Q auto strategy, it seems there's a premium now on dealers, on companies throughout auto retail to try and brand around a strategy related to digital driven growth? You've got some acquisitions you've talked about. You said sellers are conversations are going well and there are more sellers. How should we think about your differentiation when it comes to the digital strategy, looking ahead into 2018? And what's the reason to sort of own Asbury in an environment that's going increasingly digital relative to your peers? Jay, we talked about a little bit last quarter with our omni channel approach. We're really focused on creating that transaction online, really getting consistent with our processes there and increasing sales that way. Our investment continues. We're pleased with what we see so far and see that as a core strength for us. Our goal instead of creating more expense in brick and mortar is to really create larger throughput through our stores with centrally assisting the stores digitally and enhancing the transactions online. Very good. Thanks for taking the questions and best of luck in the next quarter. Thank you. Thank you. We will now go to John Murphy of Bank of America. Good morning, guys, and congratulations to both Craig and David. Really great stuff for both of you. Just a first question, given this is the Q1 where Q Auto is now technically shut that down. I mean as you think about sort of the resources both capital and human capital that were used to sort of try to drive that business, Has that had any sort of net impact on the used vehicle business inside your dealership 4 walls? Or is that really an opportunity to potentially maybe refocus and grow the used vehicle business inside of the existing dealership base? John, this is David. I'll jump in. And if I don't hit it right, please come back. Naturally, when you have a project like that on the side, it is a distraction for some of our leadership team to focus on that business. And there's also cooperation with our stores from a shared inventory standpoint. Now that the focus is back on our core stores and our core business, both from a leadership perspective and keeping the units within the stores, we see this as opportunity to again increase our throughput with our current stores. If I could go a step further than that. That would be great. In addition to the talent in the stores, a lot of our technology people, especially our we've got about 25 people in a digital department, that was spending a fair amount of time on our Q initiative. And that energy has been refocused and redirected to how we can compete tomorrow in the digital world. We'll be we'll share more with you in the future about that. But that's really where that initiative has refocused our digital our approach to digital transaction in the future. And maybe to try to follow-up on that and maybe push it a little bit farther. Craig, now that you've kind of mentioned that and it's something we've been thinking about. Now you have the inventory and you've got to have the stores. If you can open up the virtual storefront and push that opportunity or that inventory through that incremental digital storefront, I mean, is that a real material opportunity that makes a lot more sense existing sort of leveraging your existing assets and inventory management in a way that's much more asset efficient and maybe reaches a much broader set of eyeballs or consumers than you would with a physical store? Is that a fair way to think that this might be going? Yes, I think that's very fair. I think it's part of what we're trying to do is drive much more productivity in the stores, improve the customer experience, let that customer's first interaction with us be very professional. We've got plenty of brick and mortar. That's not the issue. It's how do we take advantage of that? How do we make this transaction much more so much more efficient, so much less time consuming in the world that we're going to be operating in tomorrow. Yes. And I would jump in. As we sit here today, 4% to 5% of our sales currently are being sold online now completely. We're continuing to see progression in that area. It is opening up our channels in a lot of respects. But again, it's still to push the traffic back down to the store and the transaction there. We're delivering it at the store, delivering at the people's home. Progression has been solid the last few months and it continues to grow in that area. Okay. That's helpful. And then just a second question on acquisitions. I think David you mentioned I think it was you David that you mentioned that the environment was getting a little bit more favorable or maybe valuations were getting a little bit more reasonable. What has kind of changed there? I mean is it just sort of some succession plans going on in families? Or is there something you think changed in the market environment? Or is it interest rates going up? Or is it political uncertainty? I mean, what do you think is driving this sort of incremental availability, it sounds like, of deals? From my perspective, I think it's a continually continuing decline of SAAR all year. It's certainly making dealers that don't have succession plans rethink about how much longer they want to deal with this and handle things the way they are. So it's created a lot of opportunities. It's a lot tougher a couple of years ago when the Sara was climbing and everyone wanted the moon for their stores. Now they're being more reasonable understanding the environment that we're in. So I think it's created a lot more dialogue. There have always been stores out there for sale, but the conversations were usually short when you heard some of the expectations. Okay. And then just lastly, we've heard mixed stories on the pricing environment, although it sounds like most automakers now are sort of commenting that the competitive pricing environment is a bit tougher than they would have expected with a sales rate that's running in the 17,000,000 unit range right now. Just curious what your view is on the pricing environment generally? And given your stabilization in new vehicle grosses, is there any risk as the pricing environment potentially gets even more competitive a SAAR actually really does start to fall? I guess I'll base it on history not knowing what the future holds. Usually in downtimes it's a great time to really grow your business and there's always opportunities out there. And I think one of the strengths of Asbury's is we've always been very opportunistic. I think there'll be great opportunities coming in the future for us. What they are, I'm not really sure. But we'll stay very disciplined in our approach and how we look at a transaction and really make sure the ROI is where we need it to be for that transaction to make sense for us. Okay. I'm sorry. And but also any comment on the pricing environment, the new vehicle pricing environment? I apologize, I switched gears. I'm sorry. It's hard to say after what we've just been through with the hurricanes and where we are going into the Q4. We like what we're seeing so far in the quarter. But when I look back at July August September and the difference in those 3 months, it's certainly been unpredictable. Okay, great. Thank you very much. Thanks, John. We will now take a question from Armintas Sinkevicius of Morgan Stanley. David, I know you've been around for a while, so it's nothing really new. But perhaps you could talk about how you think about the new role at the company and anything you would do differently at the margin going forward? I would say Craig has done an amazing job for Asbury and created a real disciplined approach in how to run the business, which I fully align with. As I said in my remarks, really don't see anything changing. We want to be the best operators we can possibly be and we really want to be intelligent with how we handle the capital. And I don't see anything changing in that sense at all. Got it. And then a question around the storm impact. Given the sort of the different impact in Florida versus Houston, more wind damage in Florida, I know you said the business isn't coming back, but is there a chance that we see more parts and services business in the Q4 than we would otherwise expect? I've probably done a poor job of trying to explain this. But it's when you think about it when the shop opens on a given day, you only have so much capacity that you can handle for that day. Even when you're closed and there's say pent up demand, the shop all of a sudden can't handle twice the amount of work that it was handling before. So yes, I'm sure there is some demand, but it tends to get pushed out over time than all come in at once because your capacity can't handle it on a daily basis. Okay, great. Well, thank you so much for the questions. Thank you. And we'll now take a question from Chris Bottiglieri of Wolfe Research. Hi, thanks for taking the question. Question on capacity utilization parts and services, trying to think that you probably lost like what 6 selling days in some of those markets. So what is the capacity utilization of parts and services? Related to follow-up on October, what you're seeing there. 1 of your independent peers has seen trends weaken in October on customer pay. I know it's a slightly different end market. We wanted to see what you're seeing there and maybe we could explain that. Thank you. Let me take a first shot and then maybe David will jump in behind us behind me. When we think of capacity, we think of it really in 2 ways. There's physical capacity within the stores, how many lifts do we have, how much bond can we handle with our fixed assets essentially. And broadly speaking, we have far more physical capacity than we have demand. Then the second way we look at capacity is in terms of the technicians. And that's really the limiting factor today. We could use more technicians. There's tremendous demand for technicians in the market. The wages that we pay technicians continue to increase and that's truly the limiting factor. David might want to add more color to both of those. No, I agree. The only thing I would comment, you made up asked the question about customer pay. Without getting into too much detail, it's fair to say we're very pleased with what we're seeing in October for customer pay. Got you. Okay. And then, a quick question on kind of the segment level detail. I know there's probably some nuance coming here, but it looks like volume versus profits in domestic, it looks like volumes decelerated meaningfully, especially on a tier basis, I'm looking at this correctly. Do you over index the domestics in those kind of affected markets? Trying to understand what could cause that or if you maybe just decided to walk away from incentives that were in the environment? So, if I don't get it right, please come back and correct me. When we look at our domestic portfolio, we're heavy with Ford. In past, meaning last year, there were a lot of stair step programs that were incentivizing to chase volume to earn the incentive. They would change their approach this year and gotten away from stair steps and put the money in different categories. So that in and of itself would probably pull back some of the volume. Got it. Is that more like a Q3 event than Q2? It looks like it kind of got worse in Q3 relative to Q2? Well, generally speaking, Q3 is your sell down quarter and model year changeover. The program didn't change for that manufacturer until end of Q4 last year. Got you. Okay. That's really helpful. Thank you a lot for taking my time. Thank you. Thank you. Our next question will be from Brett Holsten of KeyBanc. Thanks for the follow-up guys. Appreciate it. You talked about not really making any major changes in the strategy. However, it sounds like the M and A environment is becoming more appealing. So how should we think about dividing your free cash flow between share repurchases versus acquisitions? I guess the simplistic answer would be, we continue to remain opportunistic. And it really becomes a decision based on the time on the deal transaction where it could be and where our stock is at and what we think is the best return for our shareholders. So at this time, there's not really a conscious thought process of we're coming towards maybe the back half of the cycle and valuations are coming down, let's really move into a growth mode. It's just kind of more of the same. I would generally say, Brett, every day we're very focused on running the business and looking for opportunities to increase our value, whether it be through buying back stock or acquiring stores. So we kind of go into it the mindset is what's the best approach. Okay. Very good. Thank you very much gentlemen. Customer pay being positive. Are you doing anything, I guess, different promotion wise? Years ago, you used to run the tire programs to drive traffic. Is there anything different you're doing now? Brent, it's it really it drives back to almost 2 years ago when we really started this digital initiative in fixed and created that service CRM and trying to bring a lot of our service business online. We really are getting comfortable with the software. We're seeing gains both in the dollar and revenue side and the efficiency standpoint culmination of everything that we've been working on. No specific program, just really focused on retaining our customers, growing our customer base and operating our fixed operations as efficiently as possible. Okay, great. Thank you. Thank you. Well, that was our last question. But before we go, I'd just like to say a couple of words. This is my last earnings call before I retire. And I want to take an opportunity here to thank all of our employees, our partners, our stakeholders for their support, our shareholders and everyone that's been part of Asbury over the last 9 years. I feel like we've achieved a lot. We couldn't have achieved it without all of you. So a big thank you. At the same time, I'd also like to congratulate David on his promotion to CEO. The company couldn't be in better hands, and I look forward to seeing the success of the future. So with that, we'll wrap up the call. And I'm sure David and Sean will look forward to talking to you next quarter. And with that, ladies and gentlemen, that does conclude today's call. We thank you again for your participation. You may now disconnect.