Q2 2021 Group 1 Automotive Inc Earnings Call
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And then.
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Yeah.
Good morning, ladies and gentlemen, and welcome to group 1 automotive.
2021 second quarter financial results conference call.
Please be advised that today's conference call is being recorded.
At this time I'd like to turn the conference call over to Mr. Pete The Longshore group one's Vice senior Vice President of manufacturer Relations financial services and public Affairs.
Please go ahead, Mr Dong Shah.
Good morning, everyone and welcome to today's call. The earnings release, we issued this morning and a related slide presentation that include reconciliations related to the adjusted results. We will refer to on this call for comparison purposes.
Had been posted a group one's website before we begin I'd like to make some brief remarks about forward looking statements and the use of non-GAAP financial measures, except for historical information mentioned during the conference call statements made by management and group..1 automotive are forward looking statements that are pursuant to the safe Harbor provisions of the private Securities litigation.
And the Reform Act of 1095 forward looking.
Statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include but are not limited to risks associated with pricing and volume inventory.
<unk> due to increased customer and Dan and reduced manufacturing production levels due to component shortages conditions of markets and adverse developments and the global economy as well as the public health crisis related to the COVID-19 virus and resulting impacts on the demand for new and used vehicles and related services those and other risks are described.
Scribed and the company's filings with the Securities and Exchange Commission over the past 12 months copies of these filings are available from both the SEC and the company. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call as required by applicable SEC rules. The company provides.
<unk> reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.
Participating with me today on the call Earl <unk>, our President and Chief Executive Officer, Daryl Kingham, our president of U S and Brazilian operations, and Danny and Mchenry, Our senior Vice President.
<unk> Financial Officer, I will now hand, the call over to Earl.
Thank you Pete and good morning, everyone.
And I'm pleased to report the further quarter group 1 generated adjusted net income of $190 million. This equates to adjusted earnings per share of $10.31.
<unk> per diluted share.
And increase of 173% over the prior year.
And an increase of 264% over the pre pandemic second quarter of 2019, our adjusted results exclude non core items totaling approximately 8.
And she thousands dollars of net income and 4 cents of earnings per share. This income consists of gains on dealership and real estate transactions and a tax benefit related to the revaluation of deferred tax items and the UK.
Partially offset by a non cash loss.
Associated with certain interest rate swaps due to decreased vehicle inventory levels piece.
<unk> profit results were largely the result of a strong recovery and vehicle unit sales.
Vehicle margins and after sales activity and all 3 of our markets.
Along with continued impressive cost control.
Troll and consumer demand for vehicles remains extremely strong heading into the third quarter and we continue to sell most units almost immediately upon receipt.
Dynamics should continue throughout the third quarter and.
And potentially much further out assuming no material change and consumer demand.
As mentioned and our July 8 pre release, we believe our June 30th New vehicle inventory levels have just about trough at 5004 hundred units and a 16 day supply our used inventory situation is much stronger at 12800 units and a 29 day supply.
Daryl will speak more about inventory shortly perhaps the most important element of our second quarter results as the very strong recovery on our after sales and business.
And which suffered throughout the pandemic from less driving and a variety of lockdown conditions and all of our markets Our U S markets on 8.
4% increase and same store gross profit versus the pre pandemic second quarter of 2019 again, Daryl will provide more detail on our U S results in a moment relative.
Relative to the U K market, which was finally allowed to reopen and mid April we saw.
And after sales revenues increased sequentially throughout the quarter.
With the month of June sing and 11% same store increase over June 2019.
And that's what the U S. We expect to see continued sequential growth throughout the second half of 2021 has.
U S consumer demand for vehicles and the U K is extremely strong we retailed nearly 18000, new and used units and the second quarter, a 31% sequential increase from the first quarter we.
We believe pent up demand built over the past several years due to both Brexit and the pandemic.
And what will help drive strong UK vehicle demand into the foreseeable future.
Finally, I want to acknowledge the impressive work all of our regions have continued to do on cost control our U S. Adjusted SG&A as a percentage of gross profit was 55, 9%.
<unk> the U K was 63, 4%.
And Brazil came in at 68, 8%.
Well there is certainty on level of transitory impact due to vehicle margins. We continue to witness very high levels of productivity that will remain after vehicle inventory.
Normalized.
To provide some color on our U S and Brazil second quarter performances, I will now turn the call over to Darryl Kingham.
Thank you Earl and.
Factors contributing to our U S. Second quarter were result of outstanding growth and all segments of our business. Our teams also executed very.
Very well and our relentless focus on cost compared to the pre pandemic second quarter of 2019, our same store, new and used sales increased by 11% and 12% respectively. Our team did a great job of increasing vehicle margins throughout the quarter as new vehicle inventory supply continued to.
A decline we anticipate that new vehicle inventories will remain tight and we will continue to adjust our operations as necessary. Our same store used vehicle unit sales improved by 12% both sequentially and versus the second quarter of 2019, our used inventories are and much better position than new.
New because of our aggressive sourcing we continue to be very aggressive yet judicious with our used inventory sourcing strategy, which has allowed us to hold day supply relatively constant while largely avoiding public auctions. This approach is also evidenced in our outstanding used vehicle <unk> level of 2005.
$56 and increase of 62% year over year, and example of our sourcing effectiveness and June we sourced over 3000 used vehicles from our service departments and through individual purchases and other significant profit driver was our after sales performance our customer pay business continues to ramp.
Ramp up following a very strong first quarter was 17% same store dealership gross profit growth compared to the second quarter of 2019 that allowed us to grow same store dealership. After sales gross profit by over 8% versus the second quarter of 19, despite continued headwinds and warranty and collision both.
<unk> hundred which will reverse and time, we foresee after sales continuing to ramp up over the near term the third major factor driving our outstanding profit performance was continued cost discipline, our second quarter adjusted SG&A as a percentage of gross profit was 56% down from 70% and the pre pandemic second quarter.
<unk> thousand 19, a material part of the improvement is due to productivity gains, which will largely be a permanent benefit our service departments are over 20% more productive and our vehicle sales departments were over 30% more productive compared to the second quarter of 2019, I would like to provide another update on accelerating.
<unk>, our digital retailing platform, our customers continue to vote, yes on accelerate our employees also vote, yes on accelerating we continued our upward trajectory and the second quarter by selling a record 5600 vehicles through accelerated more than double the prior year, we continue to advance the customer and employee.
Experience with accelerate our customers find our process differentiated and several ways most of them due to our flexible and dynamic nature of accelerating. Some examples include customers are seamlessly able to switch from our new CPO or used vehicle transaction without re entering their information.
And with today's tight inventories, that's a tremendous benefit true.
Trade valuations and soft credit pulls transition automatically to any vehicle that a customer selects accelerate has modular buying flow, allowing customers to complete as many actions as they would like in any order they would like and custom.
Employers have the ability to place a down payment within the software lastly, our sales people utilize the exact same software as our customers. This makes the shopping process perfectly transparent for customers and extremely efficient for our employees, where and the process of piloting video chat and screen sharing capabilities along with integrated delivery.
Customer base there'll be more to come on these topics and the weeks ahead.
And we're already seeing tremendous benefits from CDK as acquisition of roadster and the ability to electronically and instantly transmit information from our digital retailing software into our CRM and Dms has started to come to fruition and we will see.
Continuous evolution there.
And this integration is huge and will allow us to spend even less time working on a car deal that is great news for customers. Another recent efficiency is streamlining our credit applications through accelerated and the second quarter of 2021, nearly 50% of all group 1 credit.
<unk>, where digital that's an incredible convenience for customers and a huge time saver lastly, since group 1 dealerships are utilizing accelerate now and theyre everyday traditional sales process, including penciling deals running credit applications and any other action and the software. This can be done with customers who started on the third.
Website, or someone who calls or visits to the dealership and the future. We will report accelerated uses on that complete basis, rather than just the 8% of customers who may have started their journey on accelerated when incorporating all steps of the sales process nearly 30% of our customers are using accelerated turning quickly.
Brazil, despite a nearly 50% decline and retail units sold versus the second quarter of 2019, driven by tight inventories and additional COVID-19 lockdowns. Our team once again did a fantastic job growing margins across all lines of business and capitalizing on our lean cost structure. This resulted.
Part of our first ever sub 70% SG&A as a percentage of gross profit quarter and the region's history.
After a record first quarter performance and 2021, our Brazilian team easily set a record for their most profitable all time quarter and the second quarter of 2021, we continue to be well positioned to benefit from our sales.
Rebound coming out of the pandemic I will now turn the call over to our CFO, Daniel Mchenry to provide a balance sheet and liquidity overview Daniel.
Thank you Daryl and good morning, everyone as of June 30th we had $199 million of cash on hand, and another 326.
Million invested in our Floorplan offset accounts, bringing total cash liquidity to $525 million that was also $255 million of additional borrowing capacity on our U S. Syndicated acquisition line, bringing total immediate liquidity to $780 million.
We also generated.
$103 million of adjusted operating cash flow and the second quarter on $178 million of free cash flow after backing out $25 million of Capex.
This brings June year to date and free cash flow to $312 million.
During the second quarter, we repurchased approximately 100.
<unk> and chairs and an average price of $148.79.
For a total of $18.6 million.
We have $150 million of our authorization remaining on our share repurchase program.
While the first priority for capital allocation remains M&A.
We.
Third 'twenty to be open to returning cash to our shareholders and the form of both share repurchases on an increase and our quarterly dividend our rent adjusted leverage ratio as defined by our U S. Syndicated credit facility was reduced to 1.7 times at the end of June.
Leaving plenty of flexibility for capital deploy.
Containment.
On a net debt basis, which considers all U S cash at hand, our leverage was 1.2 times as of June 30th.
And finally related to interest expense, our quarterly Floorplan interest of $8.8 million was a decrease of $1.3 million or 13%.
<unk> from the prior year debt.
Quarterly expense included a noncash charge related to certain interest rate swaps of $2.3 million due to the decreased inventory levels.
Non floor plan interest expense decreased $2.5 million or 15% from prior year, primarily due to last year's bond debt.
Deploy financing our balance sheet and liquidity position have never been stronger which provides a good platform to support our top priority of external growth.
For additional detail regarding our financial condition. Please refer to the schedules of information attached to the news release as well as the Investor presentation.
Tentation posted on our website.
I will now turn the call back over to Earl.
Thank you Daniel.
Related to our corporate development efforts, we've previously announced through July and acquisition of mine franchises and the UK.
It's increased our UK franchise count to 75, and we will contribute.
Debt $300 million and incremental annual revenues.
We also expect to announce from U S acquisitions and the months ahead.
As Daniel mentioned, we continue to prioritize external growth and our capital allocation process and we are optimistic that we will have beneficial opportunities.
The price of the year progresses.
This concludes our prepared remarks, I'll now turn the call over to the operator to begin the question and answer session operator.
Ladies and gentlemen at this time, we will begin the question and answer session.
To ask a question and maybe perhaps.
And then why do you think your Touchtone telephone.
And all your question and you May press Star and 2.
If you are using a speaker phone and we do ask that you. Please pickup your handset prior to price in the numbers to ensure the best sound quality.
Once again that a store and then 1 to ask a question.
Yes.
And on our first question today comes from Mike Ward from Benchmark. Please go ahead with your question.
Thanks, and good morning, everyone.
Last night on Ford's earnings call, they talked about moving more towards a.
Order to build type model, suggesting that dealer inventory levels would be much.
While we're going forward.
Which is I assume great news for the dealer group.
How does that change your model and maybe specifically does it have any specific and quick on pickup trucks, which typically tend to carry higher inventory.
And Mike This is Earl and I'll, let Daryl.
And what he would like.
I think that would be a massive improvement.
And with our geography, where very big truck retailers and also very big look forward and the other domestics.
And you traditionally have to carry a pretty high day supply of those domestic brands because of the proliferation of models.
And on full size pickup trucks and in particular, so if we could run a leaner distribution system. It would really reduce our inventory carrying costs and our land requirements and I think.
And we'd all be excited about that approach going forward.
Yes.
Okay.
1 of the other things if you look at going through the data on a regional standpoint.
It looks like 1 of the biggest differences between the variable gross between the U S and the U K is the F&I.
On a per unit basis, and it looks like the U S about double what the FDA a little more than double.
F&I.
And then and the U K can the UK gravitate more towards the U S model on that regard.
Well I think there are some.
And some kind of legal.
And market differences. So I believe we can improve our performance and the.
U K, but I don't.
Them to ever.
And b nearly equal in terms of the financial contribution per unit and I'll, Let Daniel gave you a little more color on that I think in addition, 1 of the key differences between the UK and the U S market, particularly in the luxury sector, where we largely compete.
<unk> cycle and a lot more regular and.
And the UK and our average customer will change their vehicle within about 24 months and.
And so I think whenever you look at the life effectively of the vehicle and the UK versus the U S. You'll find that the PR unions are more similar.
And.
And just 1 last thing on the SG&A.
And how much of that is sticky and the savings that you've had.
And like everything and it sounds like the third quarter is going to be similar and performance to the second quarter.
And thats pretty much exactly what I was going to say on the basis of where our margins are currently I wouldn't expect.
Okay on a significant change in SG&A and price this quarter too.
Yes.
Thank you guys. Thanks very much.
And our next question comes from John Murphy from Bank of America. Please go ahead with your question.
Hi, good morning, everybody.
Just a first question around acquisitions, I mean, you've been on.
Relative hot streak here year to date doing 420 million Earl you mentioned.
Might be some more on the come in the U S and in the coming months.
Run rate is pretty high and and for 'twenty and the first and the first half of the year.
Yeah.
And we're hearing from some of your peers these multi year large targets.
But you're run rating.
At levels that are similar to if not higher than them. So just curious if you may.
Start communicating.
And more round targets about where youre going with these acquisitions.
And so where are you going to remain a little bit more conservative and reserves and take things off more opportunistically and you're trying to understand how we should think about.
Inorganic acquisition growth over time, and where it will land.
Yes, John.
No I don't think we're going to govern numeric targets clearly.
And financially we we continue to have the ability to do a $1 billion, a year or more and annualized revenues, but.
The acquisition market is probably as frothy as it's ever been.
And of course, it's best if our acquisitions are accretive if you know and on me.
And so.
We're going to continue to keep that as our top priority for capital allocation and I think things will settle down and we're coming up to this oh.
And what's going to be perceived as a different tax environment on January 1st and.
And I think the market will start to normalize a.
A little bit and I'm on.
And I'm confident we're going to be able to grow the company and externally and we're going to continue to try hard to do that but you know.
It seems to me that if you get too hung up on a target then you start putting pressure on yourself to do deals that may be financially you shouldn't so what we're trying to keep some some distance.
Discipline financial discipline for our shareholders.
Okay, and then just a second question around the used vehicle opportunity and <unk>.
And also from some of your peers.
And increased focus on used sometimes outside the 4 walls and the business or the AST and the franchised.
Ownership.
It exists, but with accelerate is there an opportunity to maybe sweat or state leverage your existing assets and drive increased used unit growth.
Typically with value.
Vehicles, and our other sort of maybe market share gains that you could drive through et cetera.
Out, creating a whole new channel or burden and yourself with incremental assets I mean, what is the opportunity there, particularly as accelerated.
Takes off.
Hi, John this is Daryl.
The short answer to that is yes, theres opportunity to leverage accelerated to expand.
Arrived with used vehicle business through our existing footprint.
And we're doing that in some ways through acquisitions right now and.
And the quarter, we acquired almost 4000 units through accelerated.
And that was.
A lot of markets that we're not in today.
And we're.
And our centering, how we might stretch accelerate and the markets, where we're not I don't see us going nationwide or anything like that but.
And that's certainly something we look at it on a regular basis.
Okay, and then just lastly on on parts and service and we're seeing a recovery here whats.
Whats your gauge on how much pent up demand there is to be released.
Yes.
Over time and and also just curious if you are back to 4 week work with your with your tax or.
Service based flow enough to run that kind of efficient.
Work schedules again.
This is Daryl again lots of pent up demand is what we see.
It gives me.
Lots of.
Opportunity going forward, we see strong second half for after sales.
We are.
And back.
We converted many of our stores back to the 4 day work week, we're about halfway through that now and.
And we see that.
<unk> is critical to expanding our capacity and be able to manage that so.
I guess the short answer to your question is.
Lots of lots of growth ahead, and yes, a 4 day workweek is coming back with a vengeance.
Okay, and just 1 last question I'm, sorry on the inventory side I mean early you mentioned that you thought this would be the kind of on the bottom on new.
Vehicle, the new and vehicle inventory crunch, yet youre kind of getting conflicting signals from automakers and.
Semi.
Chip manufacturers.
It seems like through the second half and there might be some sequential relief, but not.
And it would be that material I mean, <unk> got the announced this issue so there.
Theyre stepping up because on that specific issue, but other automakers.
Forecasters appear to be looking at something Thats, just very barely improving sequentially through this year. The rest of this year and then maybe getting a bit better early next year I mean, what is your.
View on on on sort of what's in insurance vehicles and transit.
And what your deliveries are going to look like over the next few months, where you have some visibility and maybe your longer term longer term and rest of the year and into next year thoughts.
Well I'm continuing to listen to those announcements like you are drawn and.
And I do keep getting the impression that this is going to last longer and longer and longer than I.
And you expected, we are kind of bouncing around the bottom right now.
Question is how long are we going to bounce around the bottom.
And that's another reason, we really have to put a lot more emphasis on our used vehicle business because we're able.
And.
True to maintain.
Okay.
On close to a normal inventory level and that part of our business and we can actually control that we're the tail on the dollar and on the new vehicles and so it.
It doesn't seem that it's getting worse, but it doesn't seem that it's getting better.
And the near term so.
And I think it will take a long time.
To fill up the big hole.
Been created in our inventories, we had 29000 new vehicles and inventory.
On March pre Covid.
And.
And the bouncing around the low fifth of that so.
So we've got a long way to go before and.
And we start to build any meaningful amount of inventory. So it's clearly going to go through this year.
Okay. Thank you very much.
Yeah.
And our next question comes from Rajat Gupta from Jpmorgan. Please go ahead with your question.
Great. Thanks, and thanks for taking the question.
And just had a follow up on you know like towards commentary yesterday around their order bank model.
And you know with inventory is likely to be leaner than pre pandemic.
Yeah, you know my math would suggest that generic on the pork on basis you know.
On a per car basis, and we're looking at F&I.
And for a car you know not adjusting for penetration and just looking at the retail GPU knock roughly $4000.
And it seems like Youre, making roughly 7 to $8000 upfront on a car.
And doing all of the F&I.
Now with the auto buying model and leaner inventories and how much.
On the 7 to $8000.
Would you expect to retain you know once you know these Oems you don't move to more of like a reservation model and you know where consumers can and will probably pay online or finance online to their website.
And fulfill the transaction through the dealer. So just curious like do we expect any change to.
That.
To that commission per se that you're making are they just curious on how that ultimately shakes out and I had a follow up thanks.
For a job this is Daryl I'll take a stab.
And don't don't really.
No exactly how it might change our margin structure.
Hum.
I think a positive of that model is more disciplined supply.
And which I believe a lot of the Oems are trying to embrace.
Moving forward on a long term basis, which I think will only be good for margins and for for dealers and the health of the network and for customers.
Structure, so there'll be less less.
Desperation, selling I guess would be.
Supply side selling so.
And I believe it'll be good how good we don't know at this point and no Oems and I've talked to us about any changes and any kind of structure or anything like that.
And so on it.
Got it got it and.
And this scenario like this really proliferate the crack like no other Oems.
You've taken out a lot of head to head count over the last year.
Do you think you know force similar level of volume you could operate with and even lower.
Level of head count that the stores.
And this order bank model just doesn't become a lot more prevalent.
And I think there's a couple of things there I think in terms of and headcount for sales and I think certainly has accelerated and on.
Online platforms continue to gain traction and I.
Think that.
You could see and further headcount reduction within sales and sales management and a.
Clearly 1 of the things that Daryl as expressed earlier on and the call was that our parts and service business is very buoyant and my expectation would be I could see some head count and increases in terms of technicians.
But thats.
The exception.
Got it got it and just lastly on and on capital allocation. You know you talked about like the 14 multiples for deals.
And you hinted in the range that you know while you know M&A remains a priority low and you could you could consider doing more buyback so.
You when should we expect like you just did.
And the existing free cash flow with your excess free cash flow being more aggressively.
And the board and to buyback and the near term and you know given where given where M&A multiples are.
Well I would say that it's clear that share buyback.
And backs have been on our second priority 1 were non April.
To find acquisitions that meet our financial return hurdles. So.
That's a dynamic situation that our board determined but that would my operating assumption right now would be that would be our second priority if we can't execute.
Positive growth for the company externally.
Got it great.
For the color and good luck.
Our next question comes from Rick Nelson from Stephens. Please go ahead with your question.
Okay.
Good morning.
I would like to circle up on inventory.
And how big decline.
During the quarter and if you could talk about where are you at all.
Supply and debt.
Do you think you have enough inventory.
And to sustain Ah Ah moment and talking about moving.
And 2 in Q.
Are you asking about new car inventory used car inventory risks.
Well.
And with both.
Thank you.
Yeah.
And simple.
New car inventories are still lean.
Lean on it.
A day supply basis, we're about the same as where we ended the quarter.
And we expect them to stay lean used car inventories are in much better shape and.
And they're continuing to be fairly steady because we've.
We've established and new sourcing practices that we've seen some.
From success in and.
Quoted.
3000 units and we were able to source net of our service drives and from individuals and the month of June and that continues to be a focus for us to make up for the units were losing on trades because of the new car market.
New cars.
Okay, great. Thanks for that.
So.
Oh and Europe.
Okay.
Oh.
Rick Rick you're breaking up.
And here's your question I'm sorry.
Alright.
Yeah Yeah.
And he era.
T O.
Engaging and agency model and a return.
Go in direct to consumer with electric cars.
On carriers.
Carriers have you see that.
Our potential.
And K Mart kit and what.
And it shows that.
Uh huh.
Yeah, we've we've had some discussions directly with a couple of Oems on a potential agency model its not.
It's not the same day deal and the U K and Europe and it is here because quite frankly, you don't have much land with your facility.
Is there anyway.
And the real.
The real key there is.
And if it is implemented as designed it would become a demand pull system.
Which assuming that the fixed commissions for the retailer where appropriate.
And would not be a bad model.
Sales of the U K has suffered for many years.
Pre COVID-19.
And with the distribution channel and it's been over stuffed and Theres been a lot of self registered vehicles, a lot of fleet vehicles and have them.
And some really bad practices by more than just a couple of OEM. So.
A demand pull model.
It seems to work a lot better for the retailers and it's not like we're sitting there with 5 or 10 acres of land on our U K dealerships that we are that we own and wouldn't be used dip.
If there was an agency model.
Mhm.
And thanks for that Earl.
Oh you were.
<unk> got some major Oh I'm sorry.
Hum.
Thanks.
On that day in fact worldwide.
Yeah cause small all right.
Tighter inventory or.
Until we go back to the past.
And our practices.
Well I have my doubts of course.
Clearly.
There's a higher probability of that discipline and with luxury brands.
Volume brands that push for market share is generally where the risk.
And where the risk comes into play.
And for the commentary and good.
Good luck.
And our next question comes from David Whiston Morningstar. Please go ahead with your question.
Thanks, Good morning.
Earlier, I think I heard you say you don't want to go nationwide with accelerate and I was just curious what.
Is that purely a financial issue or just what would stop what's stopping you from wanting to do that.
1 is this is daryl.
1 of the things that we tried to do is leverage on local brands and.
<unk>.
Cars, most vehicles are still bought.
Locally and.
And.
The profit model on local purchases is much better.
And the opportunity locally is still significant.
And.
Some degree when we launch a separate brand and go out and advertise.
And to a great degree youre competing with yourself at least that's our view that's on other views and we understand that but.
Our view is if we were to go launch accelerate out there and compete with ourselves and.
And several.
All of our markets and we're trying to support 2 brands to feed them to the same physical plant and we.
We don't know that Thats, the most efficient use of our capital so.
For now.
That's where we are we feel like there's still so much opportunity with accelerated inside our current platform and we continue.
To see that debt.
Sales volumes keep growing the engagement keeps growing every month and.
R R.
And we see more stickiness with it every month. So if that starts to change and then perhaps we'll start to look further David but.
To this point, we feel like there's still a ton of opportunity.
<unk> inside our own markets and set our own store.
Okay.
On.
And I guess, what I don't understand them as if they're if youre doing it because there is lots on opportunity within your own stores aren't you're competing against those local brands.
We're not advertising accelerators and separate brand.
Selling process and retailing tool.
Okay. Okay.
And just major transaction today and just what it does.
Okay.
On the build to order discussion.
I'm just curious what your thoughts are on that.
And so <unk> and consumer to be willing to wait on.
And they are used and securing application going into the store.
While history tells us that the American consumer does not like to wait.
And in a way that is generally addressed.
And the U K market 1 is strong.
Online functioning as the new vehicle inventory is held at central holding centers.
And our owned and operated by the Oems and.
And they generally and guarantee unit.
You can have the vehicle and then 5 working days and.
And normal.
And the emissions that can fill a very high percentage of the orders.
And the U S.
And can.
We can deliver cars much more quickly because we can get instantaneous insurance and temporary tags license plates and things.
You can pay your sales tax later when you registered the car sales.
We have a system and the U S debt will.
That will support almost instantaneous retailing, it's just a matter of the logistics and.
And 1 of the vehicles.
Volume to be located.
Okay and.
And can do the Atlanta and lightning.
And then I'm, just curious, especially on your Texas, Oklahoma stores, and what kind of feedback are there.
Desire to get that vehicle or a lack of desire youre hearing.
And from truck customers and large truck markets.
Feedback from customers has been terrific interest is very high.
And.
All of our Ford stores from the Lightning.
Okay and just a last question from me for Daniel.
And I know, it's a bit early to ask this but the bite and administration may raise the corporate tax rate I was just curious if you can give any.
Rough estimate of for every 100 bps increase and the rate.
How does that impact group one's tax rate.
I think whenever we look at it and we.
We anticipate that the tax rate could go up to perhaps 28% and.
And the U K tax rate is has also increased.
25%, So I think.
On the.
And that the UK 20 percentage of the company and and the U S.
As approximately 80 day expectation as the blended tax rate will be something around 27%.
Okay. Thank you.
Okay.
Okay.
And ladies and gentlemen, with that we'll be ending today's.
And and answer session I would like to turn the conference call back over to management for any closing remarks.
Thanks to everyone for joining us today, we'll look forward to visiting with you on our third quarter earnings call and late October.
Yes.
And ladies and gentlemen, with that we'll conclude.
Today's presentation, we do thank everyone for joining you may now disconnect your lines.
Okay.