NYSE:ABG Asbury Automotive Group Q1 2024 Earnings Report $224.99 -0.87 (-0.39%) As of 05/9/2025 03:59 PM Eastern Earnings HistoryForecast Asbury Automotive Group EPS ResultsActual EPS$7.21Consensus EPS $7.76Beat/MissMissed by -$0.55One Year Ago EPS$8.37Asbury Automotive Group Revenue ResultsActual Revenue$4.20 billionExpected Revenue$4.26 billionBeat/MissMissed by -$62.96 millionYoY Revenue Growth+17.30%Asbury Automotive Group Announcement DetailsQuarterQ1 2024Date4/25/2024TimeBefore Market OpensConference Call DateThursday, April 25, 2024Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Asbury Automotive Group Q1 2024 Earnings Call TranscriptProvided by QuartrApril 25, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Greetings, and welcome to the Asbury Automotive Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Reeves, VP of Finance and Investor Relations. Operator00:00:29Please go ahead. Speaker 100:00:31Thanks, operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's Q1 2024 Earnings Call. The press release detailing Asbury's Q1 results was issued earlier this morning and is posted on our website at investors. Asburyauto.com. Speaker 100:00:54Participating with me today are David Holt, our President and Chief Executive Officer Dan Clara, our Senior Vice President of Operations and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call for questions and we will be available later for any follow-up questions. Before we begin, we 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, which may include financial projections, forecasts and current expectations, each of which are subject to significant uncertainties. For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10 ks for the year ended December 2023, any subsequently filed quarterly reports on Form 10 Q and our earnings release issued earlier today. Speaker 100:01:56We 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. We have also posted an updated investor presentation on our website investors. Asburyauto.com highlighting our Q1 results. Speaker 100:02:28It is my pleasure to now hand the call over to our CEO, David Hult. David? Speaker 200:02:34Thank you, Chris. Good morning, everyone. Welcome to our Q1 earnings call. I want to start by saying, I am proud of the hard working efforts of our team members who delivered our first ever quarter of more than $4,000,000,000 in revenue. As we continue to progress along our growth strategy, it is important to reflect on the performance of all of our team members, leaders and platforms that are powering our path forward, including our first fully operational quarter with our new team members from the Coons Group. Speaker 200:03:08Thank you all very much. In our Q2 2023 earnings release, we said there would be integration related headwinds to our parts and service business that would extend into the 3rd and 4th quarter before improving in Q1 of 2024. This quarter's performance shows we are progressing and expect this portion of the business to grow at mid single digits or higher through year end. In the Q4 earnings call, we discussed our commitment to a more aggressive stance in our pre owned sourcing. We maintain same store PVRs quarter over quarter and increased same store unit volume by more than 9% or 2,700 units versus the Q4 of 2023. Speaker 200:04:02Now for our consolidated results for the Q1. We generated $4,200,000,000 in revenue had a gross profit margin of 17.9 percent and our SG and A as a percentage of gross profit was 62.5%. We delivered an operating margin of 6.3%. Our earnings per share was $7.21 and our EBITDA was 259,000,000 dollars As part of our multiyear capital allocation plan, we repurchased 240,000 shares for $50,000,000 in the Q1. We continue to be opportunistic with our capital deployment, prioritizing the most strategic and accretive use of capital. Speaker 200:04:54We continuously evaluate the performance of our portfolio, making acquisitions or divestitures where it makes the most sense. We divested a Lexus store in Delaware during the Q1 per our OEM framework agreement and we will monitor opportunities to make other changes to the portfolio throughout the year. Looking ahead, there are factors like our brand mix that may influence our volumes on new and lead to near term headwinds on performance. We are still in a tight market when it comes to sourcing quality used vehicles efficiently we will continue to prioritize profitable growth. I'd also like to highlight that we published our corporate responsibility report this month. Speaker 200:05:44We invite you to read it if you haven't already. Now before I hand the call over to Dan, I want to say thank you again to our team members as together we strive to be the most gas centric automotive retailer. Now Dan will discuss our operational performance. Dan? Speaker 300:06:02Thank you, David, and good morning, everyone. I'll join David in also thanking our team members driving our strong results and delivering a best in class experience. Now moving to same store performance, which includes dealerships in TCA unless stated otherwise. Starting with new vehicles. Overall, we were pleased with our new vehicle PBR performance given current market conditions. Speaker 300:06:29Same store revenue decreased 1% and new unit volume was flat to prior year. New average gross profit per vehicle was $3,988 and the new vehicle gross margin was 7.8%. Our same store new day supply was 53 days at the end of March compared to 43 days at the end of the 4th quarter, a trend consistent with industry wide growth in inventory. We continue to manage to an appropriate day supply and volume in new cars given our brand mix. Turning to used vehicles. Speaker 300:07:08Used retail revenue decreased 4% for the quarter as we expected due to lower cost of sale. Unit volume while down less than 2% year over year increased on a sequential basis as David mentioned earlier. Used retail gross profit per vehicle was $16.47 roughly in line with the Q4 of 2023. We appreciate the progress of the team's performance on volume and gross profit in such a challenging environment. Our same store used DSI was 25 day supply. Speaker 300:07:45We still view 2024 as a challenging year to acquire pre owned vehicles until supply returns. Shifting to F and I. We delivered an F and I PVR of $2,218 in the quarter, holding resilient amidst continued pressure on consumer payments. On a consolidated all store basis, our PVR was $2,259 The deferred revenue headwind of TCA contributed $67 of the $85 decrease in consolidated F and I PVR number year over year. And we anticipate this headwind to be impactful throughout 2024. Speaker 300:08:27In the Q1, our total front end yield per vehicle was $5,080 Moving to parts and service. Our parts and service gross profit grew 6% and we earned a gross profit margin of 56.9%, an expansion of 2 13 basis points versus prior year Q1 despite weather issues in several of our markets. The last several quarters, as we mentioned, were impacted by integration efforts and it is encouraging to see our fixed operation business returning to growth. The hard work of our teammates and leaders is paying off and we expect even better performance in the quarters ahead. Finally, on a same store basis, we retail 10,832 units through Click Link or about 16% of overall units. Speaker 300:09:21New vehicle represented 5,186 of these units, a 14% increase in new volume over the Q1 last year and those vehicles are making up a larger portion of click lane transactions versus the Q1 of 2023. Consistent with recent trends, over 90% of customers are new customers to Asbury and we remain committed to this key differentiating omnichannel tool. I will now hand the call over to Michael to discuss our financial performance. Michael? Speaker 400:09:54Thank you, Dan. To our investors, analysts, team members and other participants on our call, good morning. I would like to provide some financial highlights for our company. For additional details on our financial performance for the quarter, please see our financial supplement in our press release today in our investor presentation on our website. Overall, net income was $147,100,000 and EPS was $7.21 for the quarter. Speaker 400:10:21There were no non GAAP adjustments to net income for the Q1 of 2024 or in 2023. SG and A as a percentage of gross profit came in at 62.5% versus 61% in the Q4 of 2023, driven by higher service loaner costs, elevated advertising expenses and several Q1 specific costs, namely share based compensation. For the year, we expect SG and A as a percentage of gross profit to be in the low 60s. Tax rate for the quarter was 24.9 percent and we estimate our tax rate for the full year 2024 to be approximately 25%. TCA generated $19,500,000 of pre tax income in the Q1 and we anticipate full year results to be between $30,000,000 $45,000,000 on a Speaker 200:11:08pre tax basis. We plan Speaker 400:11:10to offer TCA across our remaining stores in Florida and Coons later this year. For the quarter, we generated $209,000,000 of adjusted operating cash flow, a portion of which was used to our previously mentioned share repurchase activity. Excluding real estate purchases, we spent $26,000,000 on capital expenditures in the Q1 and we anticipate full year spend to be $200,000,000 to $225,000,000 Free cash flows of $183,000,000 for the quarter. We ended the quarter with $712,000,000 of liquidity comprised of floor plan offset accounts, availability on both our used line and revolving credit facility and cash excluding cash at total fair auto. While we will continue to use our floorplan offset account to manage interest expense, we expect floorplan costs remain relatively flat through the year as we balance the impact of rising inventory levels with the opportunity cost of deploying the cash for more accretive activities. Speaker 400:12:10Our pro form a adjusted net leverage was 2.6 times at the end of March and we will continue to be opportunistic in our capital allocation approach across share buybacks, M and A and organic investment opportunities. Finally, I would like to join David and Dan as we thank our valued team members and leaders for a strong quarter and start to the year. Thank you. This concludes our prepared remarks. We will now turn the call over to the operator and take your questions. Speaker 400:12:36Operator? Operator00:12:40Thank you. And our first question comes from the line of John Murphy with Bank of America. Please proceed. Speaker 500:13:07Good morning, everybody. Just one quick question on the store that was sold per framework agreement. I'm just curious if you can sort of discuss what that brand is or was? And how the framework agreements are potentially morphing or easing as you guys are on the acquisition pace and others are on the acquisition pace or maybe not changing at all? Speaker 200:13:33Sure, John. This is David. I'll take my best shot at it. The store we divested of was Alexis store. We are limited in every framework agreement we have with every manufacturer is different. Speaker 200:13:47And we're limited to only own 8 Lexus stores in the U. S. And that's consistent with the brand, whether you're public or private. So whenever we buy a group that has a Lexus store and if we're capped at 8 and we have 8, it's always going to include a divestiture at some point in time. There's extreme differences within framework agreements between all manufacturers. Speaker 200:14:13So there's no easy way of stating it, but I'll tell you our framework agreements haven't changed in a while. Some have been updated in the last couple of years. And based upon our geographic locations of our stores and our brand mix, we're not governed at this point to grow other than with specifically the number of Lexus stores we have. Speaker 500:14:35Got it. Okay. That's very helpful. And then the used environment, it seems like challenging from a supply standpoint. Given that we've sold so few vehicle new vehicles in the past really 3 or 4 years, When is your expectation of that supply actually improving? Speaker 500:14:53It seems like that's more like potentially even a 'twenty six event as opposed to a 'twenty five. And what can you do in the interim to deal with that shortage? Speaker 200:15:03Generally, we've been focused on gross profit over volume. And as we said in the Q4, we're going to kind of pivot a little bit. Historically, our company purchases about 10% outside of our structure, cars to bring in to sell. Last quarter is about 20%, which obviously put pressure on our PVR. To your point, really since COVID began up through 3 years forward, there's really a depletion of multiple millions of vehicles that didn't hit the market. Speaker 200:15:35So we're in that pool now where this year and I believe next year too is going to be a more challenging year. I think this is the toughest year. I think you get some relief next year with some fleet business from rental car companies and that stuff. But I would think normalization would be early 'twenty six, potentially end of 'twenty five. Speaker 500:15:56Got it. And then just one last one on parts and service. I mean, 6% was great. It was actually up against a somewhat tough comp. As we think about the rest of the year, the comps get a bit easier. Speaker 500:16:05It sounds like you're making progress in acquired stores that are going into the base. Could we think about a 5% plus parts and service or sort of high single digit parts and service same store sales comp maybe for the remainder of the year and potentially maybe even beyond that? Speaker 300:16:23Good morning, John. This is Dan. I'll start and then David can add on whatever I missed. Yes, we're very happy with the progress that the team members are making and have shown over the past few quarters as we integrated the new acquisition. And answer your question directly, yes, I think that that's a realistic target as we continue through 2024 meaning the 5% growth. Speaker 500:16:52Great. Dovany? Speaker 200:16:56No, John, I really don't have anything to add. I would tell you we're pleased with the margin increase. Like everyone else, in the Q1, we suffered some shutdown of some days in the Mountain States because of heavy weather. Between Colorado and Utah and Idaho, we have almost 40 stores, I think 38 stores to be specific. And we had multiple days that we were shut down and you just can't make up for those fixed days. Speaker 200:17:20But as Dan stated, the progress is certainly good. It's continuing into this quarter. And to your point, the second half of the year is our comps get easier. So, we should certainly see a minimum of 5% or greater. Speaker 500:17:33Very helpful. Thank you guys. Speaker 200:17:35Thank you. Operator00:17:39Our next question comes from the line of Rajat Gupta with JPMorgan. Please proceed. Speaker 600:17:46Great. Thanks for taking the question. Just had a question on SG and A first. It looks like there were some deleveraging here in the quarter because of some of the weak domestic brand unit sales and maybe still a little slower growth in service business. But curious as the service business now returns to mid single digit type growth and whatever you're embedding in terms of new GPU expectations for the course of the year? Speaker 600:18:17How should we think about that SG and A to growth ratio moving forward from these levels? Speaker 300:18:24I have a quick follow-up. Thanks. Speaker 400:18:25Okay. This is Michael. On the SG and A side, we'll have the continued decline in new vehicle gross profit, which will put pressure on the SG and A. But to your point, the return of fixed ops to good growth and then a few items that are unique to the Q1 that we're going to be able to cut some cost out later in the year. We think we can hold these kind of low 60s levels for SG and A percentage of growth going forward. Speaker 200:18:49And Rizat, I'll just add to that. While the domestic volume was not great, I still think PBR like $3,900 is extremely healthy and certainly you can maintain SG and A costs in that market. Brands are cyclical as far as how they go. We have a heavy mix of Stellantis and it was a tough quarter for Stellantis as everybody knows and certainly was for us as well, but we know over time that will change. Speaker 600:19:20And what's the kind of like GPU decline Like you're still assuming like the same pace for the rest of the year, like just on the Q1 or? Speaker 400:19:29Yes. Our assumption is $300 a quarter, but you could have a plus minus in any given quarter with kind of that natural trend of kind of $300 over the next few quarters. Speaker 600:19:41Got it. Got it. And just a follow-up on capital allocation. You mentioned earlier, unlike using the floor plan offset as like a lever to manage those floor plan expenses. But you did buy back some stock here in the Q1. Speaker 600:19:55Like how should we think about that decision between buy versus M and A in the current backdrop and what you're seeing in your pipeline for deals today? Thanks. Speaker 200:20:08This is Dave Rajat. I would say, our opinion, we're proud of our business and our operating margins and we think that our multiple is low. And generally when you look at that, it seems like it's a better return to potentially look at stock buybacks. In the current market that we're in, there's certainly a lot of stores on the market from an M and A standpoint. But I think we really want to be extremely selective. Speaker 200:20:37It's never been about the growth for us and how large we get. It's really about returns for our shareholders and how well we run our business. So every month we're constantly evaluating what's the best use of capital. But I would say from an acquisition standpoint, it would have to be something that was accretive for us and really interesting for us at this stage. Speaker 400:20:59And on the floorplan expense side, the increase in inventory over the rest of the year and then some of the cash will be able to put to the offset account. We think that floor plan expense number for the Q1 will continue through the rest of the year. Again, increased inventory and then a little bit of cash going into the offset account. Speaker 600:21:17Got it. That's clear. Great. Thanks for all the color. Speaker 200:21:21Thank you. Operator00:21:26And our next question comes from the line of Ryan Sigdahl with Craig Hallum Capital Group. Please proceed. Speaker 700:21:32Hey, good morning guys. Speaker 200:21:34Good morning. Operator00:21:34I want to Speaker 700:21:35say on the used side, so you have challenges on the used vehicle supply that's obviously across the industry. Your GPU was down sequentially despite favorable industry seasonality, your peers being up, etcetera. So I guess curious to dig a little bit deeper on your takeaways kind of an early metrics positive and negative from leaning more into volume relative to your internal expectations when you made that strategy pivot? Speaker 200:22:02Yes. And I mentioned it earlier. I would say, percentage wise, we doubled the number of cars we purchased. We make significantly less gross profit on a vehicle that we have to purchase because we're competing to buy it within the market. When we trade in a vehicle, we're still north of $2,000 a vehicle and we think that's very healthy. Speaker 200:22:24Some of the benefits, I'm sure our peers have discussed it in the past, is your parts and service increased business from reconditioning costs and the F and I income that you pick up as well. But there still has to be a healthy balance and you really have to make sure you maintain what we would consider a healthy front end margin on pre owned. Dan, I don't know if there's anything you want to add. Speaker 300:22:47I'll just add a little bit more color. And yes, we saw sequentially dropping I think from 16.66 to 16.47 from a PVR standpoint back to your point. But then from a new car, I mean from a used car standpoint, believe we increased it 9% sequentially quarter over quarter. And that just goes to validate the strategy adjustment that we made that we announced at the end of Q4 in 2023 that we were going to get more aggressive go after the volume because we know back to what David stated, the benefits that it brings to our internal gross profit in parts and service, F and I, and then obviously putting another unit in operation out there that we can service down the road. Speaker 700:23:37Helpful. Anything else on from a regional standpoint? I know you called out some weather impact, but anything Southeast, Southwest, Texas to call out? Speaker 200:23:47No, I would say, I mean for us it was fairly stable. We saw a little bit of hit for us in full size trucks from a year over year perspective. But the imports performed extremely well. We have a very low day supply of them, probably could have done better there as well. We had a tough headwind for Stellantis, but the other 2 domestic brands held up pretty well in the quarter and luxury is very stable for us. Speaker 200:24:17So all in all, based upon the market and what went on in the Q1, we're pleased with what the team did from a performance standpoint. Speaker 700:24:27Thanks. Good luck, guys. Operator00:24:29Thank And our next question comes from the line of Bret Jordan with Jefferies. Please proceed. Speaker 800:24:47Hey, good morning guys. Speaker 200:24:48Good morning. Speaker 800:24:50New GPUs, I think you talked about 300 a quarter for the next few quarters. Is it reasonable to think then that 3,000 ish Speaker 300:24:58is what Speaker 800:24:59you expect to be the new base level for new GPUs? Speaker 200:25:06Yes. Brett, this is David. It's really tough to navigate. Will it be rate drops throughout the year? How aggressive do the incentives get? Speaker 200:25:18It's the old adage of supply and demand. Right now the demand is high on imports. The day supply is low. So the margins are holding up really well. In the near term, we don't see that dramatically changing. Speaker 200:25:30So we think that holds up pretty well. Even back in 2019 and before, our domestic gross profits were always pretty healthy because now the amount of domestic stores we've added out in the Mountain States, we anticipate that will do well and certainly above what 2019 did. And luxury is going to be mixed as well, but that's a pretty resilient market. Our margins are still really high. There may be some fall off there, but we think wherever the fall off is, it's significantly above where it was in the past, which gives us a good edge into keeping our SG and A down. Speaker 300:26:05Okay. Speaker 800:26:05And then on Clicklane, you talked in the past about those transactions usually pretty physically close to the selling dealership. Is that still the case? And I guess what are you seeing in F and I attachment in those online transactions? Speaker 300:26:19Good morning, Brett. This is Dan. Yes, we are still seeing the average delivery distance in Q1 of 2024 was 49 miles. So pretty consistent to what we have in Q4 of 2023 that was 51 and then just as a reference point Q3 of 2023 was 40 miles. So pretty consistent with what we're seeing there. Speaker 300:26:40From a F and I PVR, we are looking at for the Q1 of 2024, we finished around $2,190 a car, which is slightly below about 1.3% below sequentially and about 3.7% behind last year. So, we are happy with the numbers. Like I stated in my script earlier today, we're committed to this omnichannel and we strongly believe that it is going to continue to enhance the guest experience. Speaker 800:27:21Great. And I could slip on more, Ian. I guess, what are you seeing on OE lease promotions? Are they ramping up lease focus in the lines where inventory is building or is that pretty stable? Speaker 300:27:33We are starting to see, yes, increasing slightly. And obviously it depends by OEM as well. But to answer your question directly, yes, we're starting to see a slight increase. Speaker 400:27:47Okay. Speaker 800:27:47Thank you. Speaker 200:27:49Thank you. Operator00:27:53And our next Speaker 900:28:02First, a 2 part question on consumers' willingness to spend. Unit volume for luxury was down just a little bit, whereas as you noted, import is doing quite well still on the volume side. And so is there any hesitation with not getting a vehicle option they would have a few years ago or not doing TCA or not getting an not getting a vehicle option they would have a few years ago or not doing TCA or not getting an F and I product attachment they would have earlier? Speaker 200:28:33Yes, David, it's a great this is David. It's a great question. I would tell you with any new hot luxury vehicle that comes out regardless of the price point, they sell right away, they're pre sold. So I think it's more of a timing issue. From our perspective, we view the Q1 as being stable and we actually thought it was pretty good. Speaker 200:28:57There's still some transitioning within the luxury brands with model mix and timing and you never have enough of the SUVs and you might have a few extra EVs and that's balancing out as well. But I think it's pretty healthy there and that luxury customer is pretty resilient. When you get to the import side and even domestic and Dan could add more color to this than I can, but you're reaching a price point with those interest rates where they are, it's affecting the F and I numbers a little bit, it's affecting the cost of sale. You've seen it's come down. I think our cost of sale on used, it was back in 2022 at a high of like 32.5. Speaker 200:29:37So it's down dramatically and it's continuing to come down. But on the new side, it's only coming down slightly, because the build probably hasn't caught up yet. So there is a little bit of pressure, but still again on the import side, if there's a new product coming out, like anything else, the demand is higher than supply and the margins are holding up well. So the market we feel has been pretty resilient. We don't think that we can sustain another rate increase or 2. Speaker 200:30:07I think that'd be a little painful for us. But so far, I would say generally speaking, the customer base has been fairly resilient. Dan, is there anything you want to add? Speaker 300:30:16I agree. I have nothing to add. Speaker 900:30:20Okay. Thank you. With the on the balance sheet and capital allocation, there's buybacks and M and A, but there's also possibly debt reduction. With earnings normalizing, do you feel the need to accelerate debt reduction at some point this year? Speaker 400:30:36No. I mean, our stated range is kind of 2.5% to 3%. If we don't find anything good returns and we debt by that will be good, but share buybacks, acquisitions are good allocations. But we don't need to get it down kind of into the below 2.5, but we'd like to be in this kind of mid-two range with the EBITDA coming down or the gross profit coming down on the new vehicle side. Speaker 200:31:01And I would say with the stacks we have out there with the bonds, you can only chip away at so much of it. And the big stack that's in 26 is really mortgages that considering the rates in the market, significantly lower than what the market rates are. So it's really tough to justify taking that capital and paying off 3% debt. Speaker 900:31:27Actually get even one rate cut, is that going to matter in your opinion this year? But if we were to actually get even one rate cut, is that going to matter in your opinion this year? Or do we need multiple rate cuts for the consumer to feel better? Speaker 200:31:36Yes, this is just an opinion. Obviously, no way of knowing, but I don't think one rate cut is going to it's a nice spark and it'll probably do well for the market for the day or so. But from our standpoint, it probably needs 2 or 3 rate cuts for us to really what I would call a tailwind for us. Speaker 700:31:56Okay. Thank you. Speaker 200:31:58Thank you very much. Operator00:32:02Thank you. Ladies and gentlemen, this concludes the question and answer session. I would like to turn the call back to David Holt for closing remarks. Speaker 200:32:11Thank you, operator. This concludes our call today. We appreciate everyone's participation and we look forward to speaking with all of you at the end of the Q2. Have a great day. Operator00:32:23This concludes today's conference. You may now disconnect your lines at this time. Enjoy the rest of your day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAsbury Automotive Group Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Asbury Automotive Group Earnings HeadlinesAsbury Automotive Group, Inc. (ABG): Among Billionaire David Abrams’ Stock Picks with Huge Upside PotentialMay 10 at 5:20 AM | finance.yahoo.comNEUBERGER BERMAN GROUP LLC Reduces Stake in Asbury Automotive Group IncMay 10 at 4:38 AM | gurufocus.comThink NVDA’s run was epic? You ain’t seen nothin’ yetAsk most investors and they’ll probably tell you Nvidia is the undisputed AI stock of the decade. In 2023, it surged 239%. And in 2024, it soared another 171% on the year… But what if I told you there was a way to target those types of “peak Nvidia” profit opportunities in 24 hours or less?May 10, 2025 | Timothy Sykes (Ad)Analysts Have Been Trimming Their Asbury Automotive Group, Inc. (NYSE:ABG) Price Target After Its Latest ReportMay 3, 2025 | finance.yahoo.comAsbury Automotive Group, Inc. (NYSE:ABG) Receives Average Recommendation of "Hold" from BrokeragesMay 2, 2025 | americanbankingnews.comAsbury Automotive Group (NYSE:ABG) Reaches New 12-Month Low on Disappointing EarningsMay 1, 2025 | americanbankingnews.comSee More Asbury Automotive Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Asbury Automotive Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Asbury Automotive Group and other key companies, straight to your email. Email Address About Asbury Automotive GroupAsbury Automotive Group (NYSE:ABG), together with its subsidiaries, operates as an automotive retailer in the United States. It offers a range of automotive products and services, including new and used vehicles; and vehicle repair and maintenance services, replacement parts, and collision repair services. The company also provides finance and insurance products, including arranging vehicle financing through third parties; and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, prepaid maintenance, and disability and accident insurance. Asbury Automotive Group, Inc. was founded in 1996 and is based in Duluth, Georgia.View Asbury Automotive Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Why Nearly 20 Analysts Raised Meta Price Targets Post-EarningsOXY Stock Rebound Begins Following Solid Earnings BeatMonolithic Power Systems: Will Strong Earnings Spark a Recovery?Datadog Earnings Delight: Q1 Strength and an Upbeat Forecast Upwork's Earnings Beat Fuels Stock Rally—Is Freelancing Booming?DexCom Stock: Earnings Beat and New Market Access Drive Bull CaseDisney Stock Jumps on Earnings—Is the Magic Sustainable? 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There are 10 speakers on the call. Operator00:00:00Greetings, and welcome to the Asbury Automotive Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Reeves, VP of Finance and Investor Relations. Operator00:00:29Please go ahead. Speaker 100:00:31Thanks, operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's Q1 2024 Earnings Call. The press release detailing Asbury's Q1 results was issued earlier this morning and is posted on our website at investors. Asburyauto.com. Speaker 100:00:54Participating with me today are David Holt, our President and Chief Executive Officer Dan Clara, our Senior Vice President of Operations and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call for questions and we will be available later for any follow-up questions. Before we begin, we 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, which may include financial projections, forecasts and current expectations, each of which are subject to significant uncertainties. For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10 ks for the year ended December 2023, any subsequently filed quarterly reports on Form 10 Q and our earnings release issued earlier today. Speaker 100:01:56We 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. We have also posted an updated investor presentation on our website investors. Asburyauto.com highlighting our Q1 results. Speaker 100:02:28It is my pleasure to now hand the call over to our CEO, David Hult. David? Speaker 200:02:34Thank you, Chris. Good morning, everyone. Welcome to our Q1 earnings call. I want to start by saying, I am proud of the hard working efforts of our team members who delivered our first ever quarter of more than $4,000,000,000 in revenue. As we continue to progress along our growth strategy, it is important to reflect on the performance of all of our team members, leaders and platforms that are powering our path forward, including our first fully operational quarter with our new team members from the Coons Group. Speaker 200:03:08Thank you all very much. In our Q2 2023 earnings release, we said there would be integration related headwinds to our parts and service business that would extend into the 3rd and 4th quarter before improving in Q1 of 2024. This quarter's performance shows we are progressing and expect this portion of the business to grow at mid single digits or higher through year end. In the Q4 earnings call, we discussed our commitment to a more aggressive stance in our pre owned sourcing. We maintain same store PVRs quarter over quarter and increased same store unit volume by more than 9% or 2,700 units versus the Q4 of 2023. Speaker 200:04:02Now for our consolidated results for the Q1. We generated $4,200,000,000 in revenue had a gross profit margin of 17.9 percent and our SG and A as a percentage of gross profit was 62.5%. We delivered an operating margin of 6.3%. Our earnings per share was $7.21 and our EBITDA was 259,000,000 dollars As part of our multiyear capital allocation plan, we repurchased 240,000 shares for $50,000,000 in the Q1. We continue to be opportunistic with our capital deployment, prioritizing the most strategic and accretive use of capital. Speaker 200:04:54We continuously evaluate the performance of our portfolio, making acquisitions or divestitures where it makes the most sense. We divested a Lexus store in Delaware during the Q1 per our OEM framework agreement and we will monitor opportunities to make other changes to the portfolio throughout the year. Looking ahead, there are factors like our brand mix that may influence our volumes on new and lead to near term headwinds on performance. We are still in a tight market when it comes to sourcing quality used vehicles efficiently we will continue to prioritize profitable growth. I'd also like to highlight that we published our corporate responsibility report this month. Speaker 200:05:44We invite you to read it if you haven't already. Now before I hand the call over to Dan, I want to say thank you again to our team members as together we strive to be the most gas centric automotive retailer. Now Dan will discuss our operational performance. Dan? Speaker 300:06:02Thank you, David, and good morning, everyone. I'll join David in also thanking our team members driving our strong results and delivering a best in class experience. Now moving to same store performance, which includes dealerships in TCA unless stated otherwise. Starting with new vehicles. Overall, we were pleased with our new vehicle PBR performance given current market conditions. Speaker 300:06:29Same store revenue decreased 1% and new unit volume was flat to prior year. New average gross profit per vehicle was $3,988 and the new vehicle gross margin was 7.8%. Our same store new day supply was 53 days at the end of March compared to 43 days at the end of the 4th quarter, a trend consistent with industry wide growth in inventory. We continue to manage to an appropriate day supply and volume in new cars given our brand mix. Turning to used vehicles. Speaker 300:07:08Used retail revenue decreased 4% for the quarter as we expected due to lower cost of sale. Unit volume while down less than 2% year over year increased on a sequential basis as David mentioned earlier. Used retail gross profit per vehicle was $16.47 roughly in line with the Q4 of 2023. We appreciate the progress of the team's performance on volume and gross profit in such a challenging environment. Our same store used DSI was 25 day supply. Speaker 300:07:45We still view 2024 as a challenging year to acquire pre owned vehicles until supply returns. Shifting to F and I. We delivered an F and I PVR of $2,218 in the quarter, holding resilient amidst continued pressure on consumer payments. On a consolidated all store basis, our PVR was $2,259 The deferred revenue headwind of TCA contributed $67 of the $85 decrease in consolidated F and I PVR number year over year. And we anticipate this headwind to be impactful throughout 2024. Speaker 300:08:27In the Q1, our total front end yield per vehicle was $5,080 Moving to parts and service. Our parts and service gross profit grew 6% and we earned a gross profit margin of 56.9%, an expansion of 2 13 basis points versus prior year Q1 despite weather issues in several of our markets. The last several quarters, as we mentioned, were impacted by integration efforts and it is encouraging to see our fixed operation business returning to growth. The hard work of our teammates and leaders is paying off and we expect even better performance in the quarters ahead. Finally, on a same store basis, we retail 10,832 units through Click Link or about 16% of overall units. Speaker 300:09:21New vehicle represented 5,186 of these units, a 14% increase in new volume over the Q1 last year and those vehicles are making up a larger portion of click lane transactions versus the Q1 of 2023. Consistent with recent trends, over 90% of customers are new customers to Asbury and we remain committed to this key differentiating omnichannel tool. I will now hand the call over to Michael to discuss our financial performance. Michael? Speaker 400:09:54Thank you, Dan. To our investors, analysts, team members and other participants on our call, good morning. I would like to provide some financial highlights for our company. For additional details on our financial performance for the quarter, please see our financial supplement in our press release today in our investor presentation on our website. Overall, net income was $147,100,000 and EPS was $7.21 for the quarter. Speaker 400:10:21There were no non GAAP adjustments to net income for the Q1 of 2024 or in 2023. SG and A as a percentage of gross profit came in at 62.5% versus 61% in the Q4 of 2023, driven by higher service loaner costs, elevated advertising expenses and several Q1 specific costs, namely share based compensation. For the year, we expect SG and A as a percentage of gross profit to be in the low 60s. Tax rate for the quarter was 24.9 percent and we estimate our tax rate for the full year 2024 to be approximately 25%. TCA generated $19,500,000 of pre tax income in the Q1 and we anticipate full year results to be between $30,000,000 $45,000,000 on a Speaker 200:11:08pre tax basis. We plan Speaker 400:11:10to offer TCA across our remaining stores in Florida and Coons later this year. For the quarter, we generated $209,000,000 of adjusted operating cash flow, a portion of which was used to our previously mentioned share repurchase activity. Excluding real estate purchases, we spent $26,000,000 on capital expenditures in the Q1 and we anticipate full year spend to be $200,000,000 to $225,000,000 Free cash flows of $183,000,000 for the quarter. We ended the quarter with $712,000,000 of liquidity comprised of floor plan offset accounts, availability on both our used line and revolving credit facility and cash excluding cash at total fair auto. While we will continue to use our floorplan offset account to manage interest expense, we expect floorplan costs remain relatively flat through the year as we balance the impact of rising inventory levels with the opportunity cost of deploying the cash for more accretive activities. Speaker 400:12:10Our pro form a adjusted net leverage was 2.6 times at the end of March and we will continue to be opportunistic in our capital allocation approach across share buybacks, M and A and organic investment opportunities. Finally, I would like to join David and Dan as we thank our valued team members and leaders for a strong quarter and start to the year. Thank you. This concludes our prepared remarks. We will now turn the call over to the operator and take your questions. Speaker 400:12:36Operator? Operator00:12:40Thank you. And our first question comes from the line of John Murphy with Bank of America. Please proceed. Speaker 500:13:07Good morning, everybody. Just one quick question on the store that was sold per framework agreement. I'm just curious if you can sort of discuss what that brand is or was? And how the framework agreements are potentially morphing or easing as you guys are on the acquisition pace and others are on the acquisition pace or maybe not changing at all? Speaker 200:13:33Sure, John. This is David. I'll take my best shot at it. The store we divested of was Alexis store. We are limited in every framework agreement we have with every manufacturer is different. Speaker 200:13:47And we're limited to only own 8 Lexus stores in the U. S. And that's consistent with the brand, whether you're public or private. So whenever we buy a group that has a Lexus store and if we're capped at 8 and we have 8, it's always going to include a divestiture at some point in time. There's extreme differences within framework agreements between all manufacturers. Speaker 200:14:13So there's no easy way of stating it, but I'll tell you our framework agreements haven't changed in a while. Some have been updated in the last couple of years. And based upon our geographic locations of our stores and our brand mix, we're not governed at this point to grow other than with specifically the number of Lexus stores we have. Speaker 500:14:35Got it. Okay. That's very helpful. And then the used environment, it seems like challenging from a supply standpoint. Given that we've sold so few vehicle new vehicles in the past really 3 or 4 years, When is your expectation of that supply actually improving? Speaker 500:14:53It seems like that's more like potentially even a 'twenty six event as opposed to a 'twenty five. And what can you do in the interim to deal with that shortage? Speaker 200:15:03Generally, we've been focused on gross profit over volume. And as we said in the Q4, we're going to kind of pivot a little bit. Historically, our company purchases about 10% outside of our structure, cars to bring in to sell. Last quarter is about 20%, which obviously put pressure on our PVR. To your point, really since COVID began up through 3 years forward, there's really a depletion of multiple millions of vehicles that didn't hit the market. Speaker 200:15:35So we're in that pool now where this year and I believe next year too is going to be a more challenging year. I think this is the toughest year. I think you get some relief next year with some fleet business from rental car companies and that stuff. But I would think normalization would be early 'twenty six, potentially end of 'twenty five. Speaker 500:15:56Got it. And then just one last one on parts and service. I mean, 6% was great. It was actually up against a somewhat tough comp. As we think about the rest of the year, the comps get a bit easier. Speaker 500:16:05It sounds like you're making progress in acquired stores that are going into the base. Could we think about a 5% plus parts and service or sort of high single digit parts and service same store sales comp maybe for the remainder of the year and potentially maybe even beyond that? Speaker 300:16:23Good morning, John. This is Dan. I'll start and then David can add on whatever I missed. Yes, we're very happy with the progress that the team members are making and have shown over the past few quarters as we integrated the new acquisition. And answer your question directly, yes, I think that that's a realistic target as we continue through 2024 meaning the 5% growth. Speaker 500:16:52Great. Dovany? Speaker 200:16:56No, John, I really don't have anything to add. I would tell you we're pleased with the margin increase. Like everyone else, in the Q1, we suffered some shutdown of some days in the Mountain States because of heavy weather. Between Colorado and Utah and Idaho, we have almost 40 stores, I think 38 stores to be specific. And we had multiple days that we were shut down and you just can't make up for those fixed days. Speaker 200:17:20But as Dan stated, the progress is certainly good. It's continuing into this quarter. And to your point, the second half of the year is our comps get easier. So, we should certainly see a minimum of 5% or greater. Speaker 500:17:33Very helpful. Thank you guys. Speaker 200:17:35Thank you. Operator00:17:39Our next question comes from the line of Rajat Gupta with JPMorgan. Please proceed. Speaker 600:17:46Great. Thanks for taking the question. Just had a question on SG and A first. It looks like there were some deleveraging here in the quarter because of some of the weak domestic brand unit sales and maybe still a little slower growth in service business. But curious as the service business now returns to mid single digit type growth and whatever you're embedding in terms of new GPU expectations for the course of the year? Speaker 600:18:17How should we think about that SG and A to growth ratio moving forward from these levels? Speaker 300:18:24I have a quick follow-up. Thanks. Speaker 400:18:25Okay. This is Michael. On the SG and A side, we'll have the continued decline in new vehicle gross profit, which will put pressure on the SG and A. But to your point, the return of fixed ops to good growth and then a few items that are unique to the Q1 that we're going to be able to cut some cost out later in the year. We think we can hold these kind of low 60s levels for SG and A percentage of growth going forward. Speaker 200:18:49And Rizat, I'll just add to that. While the domestic volume was not great, I still think PBR like $3,900 is extremely healthy and certainly you can maintain SG and A costs in that market. Brands are cyclical as far as how they go. We have a heavy mix of Stellantis and it was a tough quarter for Stellantis as everybody knows and certainly was for us as well, but we know over time that will change. Speaker 600:19:20And what's the kind of like GPU decline Like you're still assuming like the same pace for the rest of the year, like just on the Q1 or? Speaker 400:19:29Yes. Our assumption is $300 a quarter, but you could have a plus minus in any given quarter with kind of that natural trend of kind of $300 over the next few quarters. Speaker 600:19:41Got it. Got it. And just a follow-up on capital allocation. You mentioned earlier, unlike using the floor plan offset as like a lever to manage those floor plan expenses. But you did buy back some stock here in the Q1. Speaker 600:19:55Like how should we think about that decision between buy versus M and A in the current backdrop and what you're seeing in your pipeline for deals today? Thanks. Speaker 200:20:08This is Dave Rajat. I would say, our opinion, we're proud of our business and our operating margins and we think that our multiple is low. And generally when you look at that, it seems like it's a better return to potentially look at stock buybacks. In the current market that we're in, there's certainly a lot of stores on the market from an M and A standpoint. But I think we really want to be extremely selective. Speaker 200:20:37It's never been about the growth for us and how large we get. It's really about returns for our shareholders and how well we run our business. So every month we're constantly evaluating what's the best use of capital. But I would say from an acquisition standpoint, it would have to be something that was accretive for us and really interesting for us at this stage. Speaker 400:20:59And on the floorplan expense side, the increase in inventory over the rest of the year and then some of the cash will be able to put to the offset account. We think that floor plan expense number for the Q1 will continue through the rest of the year. Again, increased inventory and then a little bit of cash going into the offset account. Speaker 600:21:17Got it. That's clear. Great. Thanks for all the color. Speaker 200:21:21Thank you. Operator00:21:26And our next question comes from the line of Ryan Sigdahl with Craig Hallum Capital Group. Please proceed. Speaker 700:21:32Hey, good morning guys. Speaker 200:21:34Good morning. Operator00:21:34I want to Speaker 700:21:35say on the used side, so you have challenges on the used vehicle supply that's obviously across the industry. Your GPU was down sequentially despite favorable industry seasonality, your peers being up, etcetera. So I guess curious to dig a little bit deeper on your takeaways kind of an early metrics positive and negative from leaning more into volume relative to your internal expectations when you made that strategy pivot? Speaker 200:22:02Yes. And I mentioned it earlier. I would say, percentage wise, we doubled the number of cars we purchased. We make significantly less gross profit on a vehicle that we have to purchase because we're competing to buy it within the market. When we trade in a vehicle, we're still north of $2,000 a vehicle and we think that's very healthy. Speaker 200:22:24Some of the benefits, I'm sure our peers have discussed it in the past, is your parts and service increased business from reconditioning costs and the F and I income that you pick up as well. But there still has to be a healthy balance and you really have to make sure you maintain what we would consider a healthy front end margin on pre owned. Dan, I don't know if there's anything you want to add. Speaker 300:22:47I'll just add a little bit more color. And yes, we saw sequentially dropping I think from 16.66 to 16.47 from a PVR standpoint back to your point. But then from a new car, I mean from a used car standpoint, believe we increased it 9% sequentially quarter over quarter. And that just goes to validate the strategy adjustment that we made that we announced at the end of Q4 in 2023 that we were going to get more aggressive go after the volume because we know back to what David stated, the benefits that it brings to our internal gross profit in parts and service, F and I, and then obviously putting another unit in operation out there that we can service down the road. Speaker 700:23:37Helpful. Anything else on from a regional standpoint? I know you called out some weather impact, but anything Southeast, Southwest, Texas to call out? Speaker 200:23:47No, I would say, I mean for us it was fairly stable. We saw a little bit of hit for us in full size trucks from a year over year perspective. But the imports performed extremely well. We have a very low day supply of them, probably could have done better there as well. We had a tough headwind for Stellantis, but the other 2 domestic brands held up pretty well in the quarter and luxury is very stable for us. Speaker 200:24:17So all in all, based upon the market and what went on in the Q1, we're pleased with what the team did from a performance standpoint. Speaker 700:24:27Thanks. Good luck, guys. Operator00:24:29Thank And our next question comes from the line of Bret Jordan with Jefferies. Please proceed. Speaker 800:24:47Hey, good morning guys. Speaker 200:24:48Good morning. Speaker 800:24:50New GPUs, I think you talked about 300 a quarter for the next few quarters. Is it reasonable to think then that 3,000 ish Speaker 300:24:58is what Speaker 800:24:59you expect to be the new base level for new GPUs? Speaker 200:25:06Yes. Brett, this is David. It's really tough to navigate. Will it be rate drops throughout the year? How aggressive do the incentives get? Speaker 200:25:18It's the old adage of supply and demand. Right now the demand is high on imports. The day supply is low. So the margins are holding up really well. In the near term, we don't see that dramatically changing. Speaker 200:25:30So we think that holds up pretty well. Even back in 2019 and before, our domestic gross profits were always pretty healthy because now the amount of domestic stores we've added out in the Mountain States, we anticipate that will do well and certainly above what 2019 did. And luxury is going to be mixed as well, but that's a pretty resilient market. Our margins are still really high. There may be some fall off there, but we think wherever the fall off is, it's significantly above where it was in the past, which gives us a good edge into keeping our SG and A down. Speaker 300:26:05Okay. Speaker 800:26:05And then on Clicklane, you talked in the past about those transactions usually pretty physically close to the selling dealership. Is that still the case? And I guess what are you seeing in F and I attachment in those online transactions? Speaker 300:26:19Good morning, Brett. This is Dan. Yes, we are still seeing the average delivery distance in Q1 of 2024 was 49 miles. So pretty consistent to what we have in Q4 of 2023 that was 51 and then just as a reference point Q3 of 2023 was 40 miles. So pretty consistent with what we're seeing there. Speaker 300:26:40From a F and I PVR, we are looking at for the Q1 of 2024, we finished around $2,190 a car, which is slightly below about 1.3% below sequentially and about 3.7% behind last year. So, we are happy with the numbers. Like I stated in my script earlier today, we're committed to this omnichannel and we strongly believe that it is going to continue to enhance the guest experience. Speaker 800:27:21Great. And I could slip on more, Ian. I guess, what are you seeing on OE lease promotions? Are they ramping up lease focus in the lines where inventory is building or is that pretty stable? Speaker 300:27:33We are starting to see, yes, increasing slightly. And obviously it depends by OEM as well. But to answer your question directly, yes, we're starting to see a slight increase. Speaker 400:27:47Okay. Speaker 800:27:47Thank you. Speaker 200:27:49Thank you. Operator00:27:53And our next Speaker 900:28:02First, a 2 part question on consumers' willingness to spend. Unit volume for luxury was down just a little bit, whereas as you noted, import is doing quite well still on the volume side. And so is there any hesitation with not getting a vehicle option they would have a few years ago or not doing TCA or not getting an not getting a vehicle option they would have a few years ago or not doing TCA or not getting an F and I product attachment they would have earlier? Speaker 200:28:33Yes, David, it's a great this is David. It's a great question. I would tell you with any new hot luxury vehicle that comes out regardless of the price point, they sell right away, they're pre sold. So I think it's more of a timing issue. From our perspective, we view the Q1 as being stable and we actually thought it was pretty good. Speaker 200:28:57There's still some transitioning within the luxury brands with model mix and timing and you never have enough of the SUVs and you might have a few extra EVs and that's balancing out as well. But I think it's pretty healthy there and that luxury customer is pretty resilient. When you get to the import side and even domestic and Dan could add more color to this than I can, but you're reaching a price point with those interest rates where they are, it's affecting the F and I numbers a little bit, it's affecting the cost of sale. You've seen it's come down. I think our cost of sale on used, it was back in 2022 at a high of like 32.5. Speaker 200:29:37So it's down dramatically and it's continuing to come down. But on the new side, it's only coming down slightly, because the build probably hasn't caught up yet. So there is a little bit of pressure, but still again on the import side, if there's a new product coming out, like anything else, the demand is higher than supply and the margins are holding up well. So the market we feel has been pretty resilient. We don't think that we can sustain another rate increase or 2. Speaker 200:30:07I think that'd be a little painful for us. But so far, I would say generally speaking, the customer base has been fairly resilient. Dan, is there anything you want to add? Speaker 300:30:16I agree. I have nothing to add. Speaker 900:30:20Okay. Thank you. With the on the balance sheet and capital allocation, there's buybacks and M and A, but there's also possibly debt reduction. With earnings normalizing, do you feel the need to accelerate debt reduction at some point this year? Speaker 400:30:36No. I mean, our stated range is kind of 2.5% to 3%. If we don't find anything good returns and we debt by that will be good, but share buybacks, acquisitions are good allocations. But we don't need to get it down kind of into the below 2.5, but we'd like to be in this kind of mid-two range with the EBITDA coming down or the gross profit coming down on the new vehicle side. Speaker 200:31:01And I would say with the stacks we have out there with the bonds, you can only chip away at so much of it. And the big stack that's in 26 is really mortgages that considering the rates in the market, significantly lower than what the market rates are. So it's really tough to justify taking that capital and paying off 3% debt. Speaker 900:31:27Actually get even one rate cut, is that going to matter in your opinion this year? But if we were to actually get even one rate cut, is that going to matter in your opinion this year? Or do we need multiple rate cuts for the consumer to feel better? Speaker 200:31:36Yes, this is just an opinion. Obviously, no way of knowing, but I don't think one rate cut is going to it's a nice spark and it'll probably do well for the market for the day or so. But from our standpoint, it probably needs 2 or 3 rate cuts for us to really what I would call a tailwind for us. Speaker 700:31:56Okay. Thank you. Speaker 200:31:58Thank you very much. Operator00:32:02Thank you. Ladies and gentlemen, this concludes the question and answer session. I would like to turn the call back to David Holt for closing remarks. Speaker 200:32:11Thank you, operator. This concludes our call today. We appreciate everyone's participation and we look forward to speaking with all of you at the end of the Q2. Have a great day. Operator00:32:23This concludes today's conference. You may now disconnect your lines at this time. Enjoy the rest of your day.Read morePowered by