Q4 2019 Earnings Call
[music].
Good morning, and welcome to the Sonic automotive fourth quarter 2019 earnings Conference call.
This conference call. This mean recorded today Wednesday February 19 2020.
Presentation materials, which management will be reviews on the conference call can be accessed the company's website at www dot Sonic automotive dotcom by clicking on our company.
Page and Investor Relations.
At this time I'd like to refer to the Safe Harbor statement under the private Securities Litigation Reform Act of 1995.
During this conference call management may discuss financial projections, informations or expectations about the company's products, all market or otherwise make statements about the future.
Such statements are forward looking and subject to a number of risk and uncertainties that could cause actual results to differ materially from the statements made.
This risk and Adjacencies and detailed in the company's filings with the Securities and Exchange Commission.
In addition management may discuss certain non-GAAP financial measures as defined by the Securities and Exchange Commission.
Please refer to the non-GAAP reconciliation tables in the company's current report on form 8-K filed with the Securities and Exchange Commission earlier today.
Likes introduce Mr., David Smith, Sonic and Echopark, Chief Executive Officer, Mr. Smith, you May begin your conference.
Thank you very much a good morning, everyone and welcome to Sonics fourth quarter and full year 2019 earnings call.
Again, I'm, David Smith Company CEO, joining me on the call today's our President Jeff Dyke in our CFO Heath Byrd.
What to think our teammates customers vendors are manufactured partners for helping us achieve an all time record fourth quarter and an all time record full year 2019.
As we continued to successfully grow but our core franchise stores in our Echopark pre owned vehicle business.
So I'm a fourth quarter highlights include an all time record quarterly earnings per diluted share from continuing operations.
Dollar for for the fourth quarter 2019, 104%.
All time record quarterly consolidated total revenues of 2.7 billion.
Gross profit of 393.9 million in fourth quarter 2019.
I could part revenues.
Were a record 308.6 million up 52%.
Record Echopark retail volume of 12667.
Units up 45% for the fourth quarter of 22.
Record Echopark segment income, which was up 145% over the fourth quarter last year.
Same store franchise dealership operating results for the fourth quarter revenues up 8.5%.
Gross profit up 9.4% compared to the fourth quarter 2018.
New vehicle unit volume up 7.5%.
New vehicle gross profit per unit up 1.4% to 20 $213 per unit.
Retail used vehicle unit volume up 9.7%.
Retail used vehicle gross profit per unit up 2.6% to 1200 $69 per unit.
Parts service and collision repair gross profit up 6.2%.
Customer pay gross profit up 10.2% compared to the fourth quarter of 2018.
Finance and insurance gross profit up 13.7 per cent compared to the fourth quarter 2018.
An all time record quarterly ethanol gross profit per retail unit of 1800 $9.
Total so on a consolidated basis.
Some full year highlights we had an all time record full year.
Yes from continuing its continuing operations of $3 or 31 cents up 171% compared to 2018.
All time record full year consolidate consolidated total revenues.
About 10.5 billion and gross profit of 1.5 billion compared to 10 billion and 1.4 billion respectively were 2018.
Record <unk> Echopark revenues of 1.2 billion.
66% from 28 team.
Record Echopark retail volume.
49520 units up 68% from 2018.
Record Echopark segment income.
Of $9.1 million up 117% compared to 2018.
Fiscal year 2019 debt reduction of $238 million.
From an expense control perspective, as Tonight as percentage of gross profit excluding certain items of interest was.
76.9%, a 210 basis point improvement from the prior year.
Same store franchise dealerships operating results, we had revenues are up 5.5%.
Gross profit up 6.7 per cent compared to 2018.
New vehicle unit volume.
0.6%, usually at the gross profit per unit, a 0.4% to $2083 per unit.
Retail used vehicle unit volume up 7.7%.
Retail used vehicle gross profit per unit down 1.8% to 1200 $72 per unit.
Parts service and collision repair gross profit up 6%.
Prepaid gross profit.
8.2% compared to 22.
That's an aren't gross profit.
10.3% compared to 20 team all time record annual economic gross profit per retail unit of 1700 $43, a total consolidates on a consolidated basis.
Some additional echopark highlights.
In mid December we opened our Echopark long Beach, California store, our ninth location nationwide in our first in California.
On opening I support long Beach sold over 450 vehicles within our first 45 days of operation.
This is an excellent start next and it speaks to the strength of our unique Echopark business model.
And our industry, leading guest experience, which continues to draw customers from over 140 markets across the United States.
That's was only nine existing locations.
Sample, while our traditional new vehicle franchise store sells about 100.
Free on vehicles per month, our average echopark stores cells.
Well over 500 pretty on vehicles per month.
Echopark experienced record runs the 2019 and always prefer the record growth and 2020 as we capitalize on opportunities to expand echopark nationwide, which we expect to include three new stores by the end of 2020.
Turning to the balance sheet as I highlighted earlier in December we took advantage of favorable favorable market conditions to complete the early retirement of all $289 million principal amount of our 5% senior subordinated notes, which were due to mature in 2023.
As a result of this another efforts during the years Sonic reduced our total debt in 2019 by $238 million.
Additionally, this debt reduction has significantly improved <unk> financial position going into 2020.
Reducing interest expense and improving our debt to EBITDA ratio.
Lastly, we are also police report their board of directors approved a quarterly cash dividend of 10 cents per share payable on April 15th 2022, all stock stockholders of record as of March 13 2020.
In closing our team remains focused on driving strong performance in our franchise stores and increased profits from parts and service and that's an eye, while continuing to expand our echopark footprint nationwide.
And execute on our plans for omni channel selling in other digital initiatives.
Following this course, we will continue to grow our business and create long term value for shareholders.
Given sonics record performance in 2019, we believe 2020 sets the stage for us to achieve our long term goal of achieving $20 billion an annual revenue this decade.
We're very excited with the progress we've already made and are well positioned.
To achieve this goal as we continued to execute on our growth plans for Echopark and our franchise stores.
This concludes our opening remarks, and now we'll be happy to take your questions.
Thank you Sir as a reminder to ask a question you would need to press star one on your telephone to.
To withdraw your question. Please press the pound key please standby, while we compile the came in a roster.
Our first question comes from John Murphy from Bank of America. Please go ahead.
Good morning, guys, you're down signed on for John [laughter] first I want to go to the new long Beach Star, which seems to perform very well in the first month and a half can you talk about telephonic actions you've taken there that have helped drive these performance and maybe some of your key learnings for the new stores in 2020.
Oh This is Jeff Dyke, Yeah, obviously, if we don't think more stores, we get better it execution from the store openings. This is our nine stores. So we're not talk better than we were the first went from the first or we open but do you can look at it like that and we got off to a fantastic start as we said all along the long Beach.
Curious, though one of the largest geared up for you all markets in the country and for us to open with that kinda pace well ahead of our goals.
You know shortens the links that it takes to get these stores up and running and profitable and we're very excited will take those learnings on from a long beach to our next opening which will be in Tampa in the first part of April.
Okay. This is David this is David the a and just to highlight again, but you know when you look at 450 cars in the first you know 45 days when our average traditional franchise stores sells about 100 used.
In a month, it's just that it's just crazy.
Okay. Thank you and that's just a quick follow up you said the first I want to opening in one Q can you provide a timing for the other two stars got to be into first half or the second half of the here.
I can towards the end of the first half of the year I'm open our second market for this year and then towards the beginning of the fourth quarter will open our third I'm. So you'll have the Tampa market in April early April you'll have an additional market not towards the middle of the your June July and then beginning in.
In the fourth quarter, and we'll have our third market.
Great. Thank you and and well Chris Your line is that your long term I'm talking up 20, sorry, yes.
Well I think it's important to note and for everybody to remember that as we open those stores. We've got about a 2 million dollar drag on each location. So you can think about opening long beach at the end of December you'll have a little bit of a carryover of that drag into this year those three stores, so probably for everybody's a forecast someone.
$7 million to $9 million worth the drag well that will have a but those stores will also generate along with the growth of the current said 500 million 2 billion in revenue for this calendar year.
Okay. So we got behind how should we think about this gionee next year, just given you guys.
It's pretty of all this quarter and you're taking a bunch of actions to reduce cost and just given your continued investment in echopark should stay relatively the same or maybe slightly.
Yes sure. This is Heath Byrd you look at our year over year comparison for the full year Echo Park was running like 77.9% S. United for Ciena grows, which is 3600 basis points better franchise was at 76.8%, which is 80 basis points better so the total.
Enterprise for the year was 76.9 210 basis points better we think we have opportunity on the franchise side were there was a hyper focus on expense reductions. So we think we had 50 to 80 basis points opportunity on the branch I saw the business.
[noise] Echopark, obviously, the drag that I'm, just mentioned 79 million depending on the timing is going to impact on risk DNA, but that will be offset by the maturity of our new stores and so I expect a little bit of an increase yeah, 40 50 basis point.
Based on the Echopark side.
Opportunity on the franchise slide four redemptions and so overall, we're looking at a flat SG in a year over year with some potential upside on some reduction on expense reductions that we have currently underway from 2020 and this is Jeff Dyke I'd also add on top of that if.
You look at our two most mature markets in Denver, Colorado in Dallas resting any numbers are running a below 60% both of those markets last year generated $12 million or more in profit. So the faster we ramp the other maturing markets this being Charlotte in Houston, a near term to the three year, mark or we can get into that.
60% or below range and we only have three stores on the franchise side did actually in that SG nine range. So its funny accretive were really kind of mashing down on the gas pedal. If you will not to begin the growth mode again at Echopark. After we took a year and really proved out our profitability picture, which we believe we've done that.
Now, it's time to get back into the growth mode and grow Echopark and we can do that now also profitably because we have matured in stores and we needed to get that done before we really turned on the growth mode. Again. So when you combine all that the outlook for 2020 and beyond 21 up to it from our perspective is fantastic yet I think you keep didnt see the game I think you keep.
In mind expense structure of Echopark is so dramatically different than the franchise stores that the the throughput once you get to a certain level of maturity is so much greater instead of as Jeff mentioned, we have stores that are sub 60.
As soon as a percent grows and as these others mature in hit that in Echopark becomes a higher proportion of the entire portfolio. Obviously is going to have a significant impact on the total enterprise as teenagers and the gross.
Okay, great. Thank you very much.
Thank you. My next question comes from Rick Nelson from Stephens. Please go ahead.
Thanks, Good morning.
To this morning warning.
Oh part.
Hi.
Units are ramping.
Relevant to your own expectations, I know that slide deck.
Refers seasonality we did see.
Back in number of units from Q3 into Q4, but once you do have expected.
Seasonality up his early store ramp.
Yes, Rick this is Jeff Dyke <unk>, that's exactly how do you have to looked at it you can't really look at the used car business sequentially, especially to Echopark is zero to four year old cars were competing against the new car segment, we only see a huge new car a quarter in the fourth quarter, but if you look at the year over year numbers, we beat our expectations in terms of volumes significantly and we.
Expect that same sort of seasonality trend to happen as we move forward. So you really want to look at the fourth quarter to fourth quarter growth.
When you're looking on a same store basis, which is which is important as we move forward. So that's how you gotta look at that that's why you see the sort of cyclical move in the fourth quarter from the third quarter and we expect.
And to have a great big Q1, because of new car business slows down a little bit used car business takes off I'm. So you'll see that same analogy that we had last year at the same examples last year, you'll see it again in 2020, and you're starting off that way.
Okay.
Got less mature stores like Charlotte and Houston are you seeing the seasonality there.
Is the ramp.
Those stores upsetting the seasonality I.
I mean, you certainly you're offsetting the seasonality because those stores continue to ramp, but theres still seasonality built into the marketplace. So there you know we're going to sell seasonally more in the first quarter than we did in the fourth quarter because of what happens on the new car side, but both of those stores are ramping nicely and and really when you get into first quarter, they're taking off.
Even faster so and that's the seasonality kicking in and we're seeing that across the board, but because of those stores are at that level of maturity and that your first year and a half.
Level, they're ramping faster than everybody else other than long Beach was just taking on its own fire.
Then Rick this is David Smith, I think you know as Jeff mentioned, there about long Beach, and you mentioned that yes, our ninth location, we're getting nine times better that.
And our execution and opening new stores so.
I'm seeing that we're we're training our training is getting better our.
Our acquired locations and openness locations is getting better and faster and in our ability to achieve profitability quicker.
Is what we're seeing so it's I think we're as Jeff mentioned, we're getting better and better and I think we're going to see that with these new locations that were open. It's Jeff again. It is is we did as we move faster in terms of profitability that could allow us to open up more stores than we're projecting so depending on how those stores ramp.
Tampa asked the same way long Beach is acting in Houston in Charlotte continued to grow at the level, we have the capacity in the ability to do more than what we're calling out but right now we're calling out those three stores like we said in the beginning.
One question, we didn't want.
Echopark is.
The concept of replicable.
If you could address that I picked up.
Yeah. So it's a great question, we get it all the time to rough and go by the competition, let's talk the at the end of the day. If you look at in the deck I think we have a slide that shows our day supply. If you look how we handle our day supply the secret sauce, that's inside of that that's going to be real hard to replicate the guest experience is also going to be difficult.
Replicate but managing that day supply to the levels that we do a where you have pretty much of 20 based upon the frontline and another 10 to 13 days in the pipeline and buying my car transporting it I'm buying at the right price doing all the things that we do but to make that happen effectively and efficiently that's not going to happen overnight, that's going to take 10.
So with millions or it's not $100 million worth of investment in terms of technology and people in training and it's going to take years to be able to do that I know there a lot of companies out there that may think if they can but that just doesn't happen overnight and I think you've seen a lot of businesses sort of get into our environment and get out or get in and quick growing or not have a story of Phil.
That's just not happening here, our ability to buy the inventory never had a problem doing that our ability to transported to reconditioning get ready for the frontline and turn it quickly we do that I think as well or better than anybody in the industry and the numbers show that I think it makes it very very difficult to replicate you've got to.
Have a structure in the stress is far from day, one to be able to do that are you've got a lot of embedded cost it make it very difficult. It's all the cars with the prices that we saw now to drive to the guest experience that we do to drive the backend the way, we do and to manage the inventory at the levels that we manage so.
I'm not saying, there's not there's not a bunch of bright people aren't the only company I'm trying to they're not going to snap your fingers are doing overnight and we feel like we got a really good head start in this segment of the business and Rick. This is he just to add to that yeah I get that question all the time and.
When we do Investor days at an Echo park and individuals that are not.
In the industry and don't understand the difficulty of putting that number of cars through for example in Dallas, We're selling 1500 cars per month, well times, a year and the logistics in the process that it takes not only is.
Logistics of game the car the recon merchandising the settling in analytics that we used to take advantage of the auction markets. Those are things that are high capital intensive and a record level. That's for tease that is just not.
They're not anyone has that level of expertise and red Jeff again, we keep blowing through you know what we say, we're all kind of our target sort of pop targets for these markets Denver, Dallas, just keep exceeding our expectations. When you have a some store for stores in that in those markets that are you're running combined below 60% questionnaire.
We're making $12 million not a lot of retail stores out there island <unk> stores out there to do that and the discipline that goes along with that its just its exceptional and so it makes it all very hard to replicate.
And the Great news, a Charlotte Houston or just comment on their field, we can see it happening there growing.
In long Beach has started all better than all of a bit. So we feel like we're poised to have a great. Great 2020, and 21 grows even faster. So we're looking forward to the remainder of this year like I said, we'd gotten off to a great start Mitch that got to continue in the this is David as.
Yeah, we're seeing and as mature markets Iden Dallas is a very high percentage of repeat and referral customers, which is encouraging so it makes it a lot easier as wonderful.
Thanks, that's helpful.
Hi, can I was kind of franchise.
So I'm stores.
This year book, some nice gains.
How you're thinking about.
Current portfolio.
You know the in the markets that we sold stores in the manufacturers were asking us to do huge facility projects and as we looked at the returns and then you look at the Echopark returns. It made a whole lot of sense to pull the trigger on those stores not invest the money investing echopark.
But that doesn't mean, Rick that if there's oh, you know store out there that fits our portfolio fits in a market do we want to grow and there were not going to be buying franchise stores either so it just depends on on the brand and the market that we're in it also doesn't mean that if we get asked to go spend a bunch of money on a facility and the returns don't look like.
They match up to what we can do it and Echopark and we won't sell that facility. So it's just we'll see how we go through the year, we don't have any big plants, a softening stores and we don't have anything on the radar screen right. Now there were buying we got a couple endpoints that we're looking at that we've been offer.
And so we'll see how things go from a franchise perspective for the rest of the year and they weren't making investments in our in our franchise facility is going to big BMW store going up in Houston, Texas right now that we're real excited about this is going to add a lot of a lot of revenue and growth talk to the company. So.
What we'll see how things go for the remainder of 2027 and Rick. This is David it and we want to emphasize to that are you are paying down is that debt does not slowing us down from growing echopark, we can still grow that as fast as we.
Ken It's just when it's a big number to grow that many stores when you're talking about that but kind of output per store that were there were making so that we just wanted to emphasize that would suggest then if you think about it we sold 656 million in annual revenue, but we still grew the franchise business significantly and we did almost $10.5 billion in revenue.
New which as I said, we'd never broken 10 billion in revenue before in our company's history. So we think we've got a great wanting to revenue a great story to tell when it comes to Echopark and the franchise business and we're managing our franchise business better than we've ever managed it before our relationships with our manufacturers are better than they've ever been before and so there's plenty of upside there.
For us and our ops team I think we're doing just a fantastic job growing growing up part of the business.
Right Okay.
Thanks, and good luck.
Thank you Sir.
Thank you.
Next question comes from Rich I go stuff from JP Morgan. Please go ahead.
Hey, Good morning, and then thanks for taking my question just just wanted to go back to Echopark.
I mean, you had 21 million or so in EBITDA in 22 in 2019.
No the maturity profile expecting for the nine stores that are already open.
We appreciate the color on the seven to 9 billion drag from new stores, but.
You know as those nine stores continue to mature.
We would we see this 21 million EBITDA going to into any 20, I mean is would it be unreasonable to expect.
Something below 30 million before the full year you know just based on the maturity profile that you've seen and the ramp you have seen from 2018 to 2019.
No I have a couple of follow ups.
Okay. This is Jeff I think the way you got to look out against as they were going to grow red hubs in the 500 million to the billion range.
And we are going to have that drag of the 79 million. So theres going to be some the franchise stores that are already open up the franchise stores with the existing echopark stores that are already open they're going to cover a majority of that drag, but I can't tell you also how many stores, we're going to open other than the three we continue to see the progress there.
We're making in long beach, and we see that happened in Tampa, where did open some more stores and so that opportunity could change that profile. So what I would tell you. This is that you've got 21 million EBITDA and 2019.
Hoping that we're going to be somewhere in that ballpark again in 2020, but it's going to be dependent upon how many of those stores that we opened when we get them open how much drag is there. The the market's played a big role in that as we finalize purchase or lease options on on real estate and so theres just a timing effect there so.
You probably have another year and 20 of having a little bit of the drag from from opening in terms of EBITDA and its growth, whether you opened stores or not.
But but.
It's going to be somewhere in that in the same realm of the ballpark that we were in 2019.
Oh, so it's a flattish year over year, I mean that seems a little.
I mean, because I mean, you would still like you on what I mean, you you did like 11 million in like the second and third quarter Threenineteen in a seasonally.
Strong a strong quarters I mean.
Why would that.
Why when do you expect a bigger inquiries on you know the stores that have already opened I mean, you grew from 20 eating the dream 19 pretty significantly and the older just coming off the smaller base.
Just a you know just trying it just seems a little low to me I mean, but but I appreciate the color.
I'm not I mean, we're not we're all at the end of the day, we're being conservative is we can be and making sure that we provided you guys with the number that.
We feel comfortable in getting and again it plays a big role when we the timing of when we open. These numbers we have profitability is real important to us and we've got to make sure that we time the store and the purchase of the real estate along with the growth of the current nine stores that we have and make that all come together.
So I don't see that Oh, I don't see the $21 million Overstretching, obviously, there's theres certainly some some opportunity there, but a lot of it again just depends on when we open new stores, how fast we moved to get those up and it plays a big role with only nine stores being open and rather this is heat.
What we did in 2020 was we prove this model I'm asking me 2019, we proved this model. It is profitable and 2021 is our for excuse me 2020 is our first year.
Ramping and growing and it sets us up for 2021, you start hitting that tipping point, where we've got enough stores at the level maturity. So 2021 is when you're going to see a significant increase in the EBITDA. So we're at this point I think we're going to be flattish round up from 2020, but.
Trading that growth in that number.
In EBITDA for growth and expansion of the brandon's into locations and this is David we also want to make sure we continue to deliver to deliver that.
Outstanding guest experience that we're delivering in our other stores were very passionate about that so the quality of the opening.
And I was going to emphasize is we have proven that similar to like Starbucks cannot than a Starbucks store kind of anywhere we've proven that we don't have to build.
You know a brand new Greenfield Echopark, we can go into.
Markets anywhere and put these stores.
In various different facilities that are existing facilities. It so it really opens us up to.
Open source a lot faster than we've done in the past.
Got it said that's helpful color and edgy and into growth. If we just look at the franchisee stores.
You know when adjusting for one time it looks like as you need to gross profit was off roughly 80 basis points in the fourth quarter.
What were the drivers of bad I mean, you talked about some investments you're making it then I believe you also have you know.
The physical once stopped father coming into this quarter.
Could you just break that down and then as a follow up to bad the 50 to 80 Bips decline you won't be we're expecting on a franchisee side on 2020, I mean, what where we're at the cost cuts.
Coming from <unk> could you could be held dissect that those buckets as well thanks.
Just to see those let's focus on the Q4 compare first that's really doing if you look at the full year for the franchise, we were better by 80 basis points. The difference between Q4, 19, and 18 was basically compensation.
Because of our performance in 18 to compensation was dramatically lower compared to our performance in 2019.
So that's the reason you see would you do.
Year over year for Q4.
Going forward the opportunities they wouldn't be well our franchise stores, we actually had they a task force that has.
And how would you go into the stores and identify I mean, we did we literally.
Tenants compensation yesterday $30000 per month per store is over 20.
These accretive.
So we had them out there looking for every opportunity on the franchise side.
On the corporate side, we are just starting our journey down automation robotic automation. So there's some opportunities there as well and using AI in those technologies.
To make us more efficient and we've already proved that concept and we think that there is an opportunity for reduction at corporate and regional back office is kind of functions on utilizing these new technologies.
[laughter].
Got it and just as one last one for me I saw that comes in San Antonio.
Your father thing to one two liter away goals. They are worth is typically want before that you've been doing it most stores.
What drove the change in thinking there or you know like I also like I was I was had been so far.
Oh the pilot programming is there has there been.
Any issue or any restrictions in terms of like how much you're able to source in the one to four year. When we go that drove that change. Thanks that will be all no. No. This is Jeff Dyke actually the market drove that we saw a big requirement for cars between that five an eight year old range, a lot of customers coming in asking for.
Got it and we don't have that in the other markets and so that market in particular drove that we've got a lot of trade ins that come in at the Echopark stores. So we're just moving that inventory from Houston, and Dallas down to those stores and supporting got environment and then we're buying some of the inventory taking some of the trade from the Sonic stores, but at the end of the.
Hey, procuring market driven we started in the San Antonio market here within the last 45 to 60 days in the early results are fantastic.
Which is which has been great for us. So we'll see how that goes here for the next six months or so we're very excited about that move in and an opportunity for us to take on some of the trades that we're taking at echopark to put into that marketplace and take advantage of a customer base its asking for that.
Got it that's helpful. Thanks.
Thank you as a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound cake.
Our next question comes from Bret Jordan from Jefferies. Please go ahead.
Good morning, This is mark Jordan on for Brett.
Hi, Mark.
Good morning, I'm, just thinking about Echopark here, and then kind of.
One on some of the sourcing as it has there been any changes in the sourcing mix or is that still predominantly from a from auctions and have you seen any increases in some of the car cash purchases off the street.
This is Jeff Dyke now I mean, we're just getting into the car cash app in the rollout of the car cash, which you will start primarily in the San Antonio market here in them and the coming month or so but.
But not it's primarily sourced through the auctions.
Again, we opened the long beach market without any issue plenty of inventory I mean, we don't really ever see not being an issue for us and it never has been over the decade and a half that we've all been doing this at Sonic we had never had in any issue sourcing inventory based on our systems and our technology and.
And so right now we're still sourcing.
You know in the 90% range somewhere in there, 85% to 90% range of inventory through through the auctions.
Okay, great and.
And then thinking about like Echopark total gross profit per unit continues to grow here are you seeing any you know improvement on the front ends or is it mostly being driven on the backend.
It's actually for the fourth quarter. It was a majority of the front end was the improvement I think it was.
Maybe 70, 580% of the improvement there something like that but overall, we're going to bouncing around that minus 100 to zero number on the front end and will will bounce somewhere around the 2100 2200 dollar number on the back end and so we'll stay kind of in that range as well.
Long as the markets and the pricing or in that range, we adjust with the market. So we keep our below market pricing intact, which is driving just a significant amount of traffic and if you've been in one of the stores that you would see just the amazing amount of traffic.
An independent leads that we're getting our location a good examples that is our Dallas flotation gets about 10000 independent leads per month.
Which is just in say, it's more leads that we'd than we can handle at times and so we believe our pricing strategy is working our inventory strategist work and everything is up and running long.
Okay, great. Thank you very much.
You bet.
Thank you.
Showing no further questions in the queue at this time, Sir I like to turn the call back over to Mr., David Smith, Sonic and Echopark CEO for closing remarks. Please go ahead.
Thank you everyone. We appreciate your time and have great.
Ladies and gentlemen. This concludes today's conference call. Thank you for participation you may now disconnect.
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