Q3 2021 Group 1 Automotive Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to group, one Automotive's 2021 third quarter financial results Conference call.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one using a touch tone telephone.
Please also 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 long shot group, one senior Vice President of manufacturer Relations financial services and public Affairs.
Please go ahead, Mr Dong shop.
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 have 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 of group. One automotive are forward looking statements that are pursuant to the safe Harbor provisions of the private Securities Litigation 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 volume inventory supply due to increased customer demand and reduced Manny.
Actual production levels due to component shortages conditions of markets and adverse developments in 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 in 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 reconciliations of any such non-GAAP financial measures to the most directly comparable.
<unk> GAAP measures on its website.
Participating with me today on the call Earl Hester Berg, our President and Chief Executive Officer, Daryl Kingham, our president of U S and Brazilian operations, and Daniel Mchenry, Our senior Vice President and Chief Financial Officer, I will now hand, the call over to Earl.
Thank you Pete and good morning, everyone.
I'm pleased to report that for the quarter group one generated adjusted net income of $178 million. This equates to adjusted earnings per share of $9.62 per diluted share an increase of 38% over the prior year and an increase of 219% over the pre.
Pandemic third quarter of 2019.
Our adjusted results exclude noncore items totaling approximately $5 million of net after tax losses.
This net amount consists primarily of the loss on debt extinguishment and acquisition costs related to the prime transaction, partially offset by favorable legal settlements recognized during the quarter.
These profit results were largely a result of strong vehicle margins that we're able to more than offset unit sales declines as well as continued growth in after sales and impressive cost control.
Consumer demand for vehicles remains extremely strong heading into the fourth quarter and we continue to sell most units almost immediately after OEM delivery.
This dynamic should continue throughout the fourth quarter and potentially much further out assuming no material change in consumer demand.
As of September 30, we had 2700 U S. New vehicle inventory units in stock, representing an 11 day supply.
Our used inventory situation is much stronger at 10000 units and a 25 day supply.
Daryl will speak more about inventory shortly.
A very encouraging element of our third quarter result is very strong continued recovery in our after sales business. Our U S markets of 15, 5% increase in after sales revenues versus the prior year again, Daryl will provide more detail on our U S results in a moment.
As with the U S consumer demand for vehicles in the UK is extremely strong put new vehicle availability is severely constrained.
We have an order bank, but most of our major UK brands extending into the second quarter of next year.
Strong margins, we're able to more than offset sales declines due to inventory shortages and we're proud to report that we generated an all time record quarterly profit in the third quarter of 2021.
We believe pent up demand built over the past several years due to both Brexit and the pandemic will help drive strong UK vehicle demand into the foreseeable future <unk>.
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 57, 6%. The UK was 64, 6% and Brazil came in at a record 69%. While there are certainly a level of transitory.
Impact due to vehicle margins, we continue to witness very high levels of productivity that will remain after vehicle inventories normalize.
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 as Earl mentioned U S. New vehicle inventory levels finished the quarter at 2700 units and 11 day supply or September inventory receipts were the lowest of the year at approximately 6800 units, we expect to receive roughly the same level in October and November, which we believe will be.
The trough, we do not have much visibility yet into 2022 that based on OEM communications, we expect production to increase over current levels at some point in the first quarter. Our team did a great job increasing vehicle margins throughout the quarter as inventory supply continues to decline and we will continue to adjust our operations.
<unk> as required.
Our same store used vehicle retail unit sales improved by 15% versus the third quarter of 2020 are.
Our team also did a great job increasing gross profit PR use which is a result of increased purchases directly from vehicle owners. We continue to be very aggressive yet judicious with our used vehicle inventory sourcing strategy, which has allowed us to hold days' supply relatively constant while largely avoiding pub.
Click auctions as a franchise dealer we have a distinct advantage over used only operators due to the numerous channels afforded us a sourcing inventory, including our service drives lease returns and OEM closed auctions. The most encouraging profit driver was once again, our after sales performance our <unk>.
Customer pay continues to ramp up following a very strong first half of the year with 19% same store dealership gross profit growth compared to the third quarter of 2019. This allowed us to grow same store dealership after sales gross profits by 9% Despite continued headwinds.
Wins in warranty and collision both of which we believe will reverse in time, we foresee after sales continuing to ramp up over the near term. The final major factor driving our outstanding profit performance was continued cost discipline, our third quarter adjusted SG&A as a percentage of gross profit was 67 six.
Sent down from 59% in the third quarter of 2020 and down from 75% and the pre pandemic third quarter of 2019, a material part of the improvement is due to productivity gains, which we believe will be permanent.
I would like to provide another quarterly update of accelerated our digital retailing platform.
Accelerate is proving again to be a difference maker for our customers in the third quarter. We sold 5200 vehicles through accelerate a 68% increase over last year and since we have very little inventory pre selling incoming new vehicles is critical to our business and accelerate allows customers to finalize <unk>.
Fans actions on in transit units and take deposits digitally in.
In addition to expanding our reach into in transit inventory accelerate is proving to be an exceptional way to grow our footprint in the third quarter, 75% of accelerate buyers will new to group one customers clearly value the superior omni channel experience that accelerate provides which gives group won another avenue to.
Growth incrementally.
The customers, who placed orders online last quarter, nearly 50% uploaded a driver's license and 25% uploaded proof of insurance and additional 36% of the orders had a completed credit application as well.
We believe that giving customers control of completing any or all of the car buying process online as critical to their overall satisfaction and our ability to continue to generate incremental volumes through the platform accelerate is also giving us great advantages in sourcing used vehicles during the quarter, we purchased nearly 5000.
In used vehicles from customers through accelerate either through trades or through individual acquisitions, that's up 30% sequentially from the second quarter, a differentiator for us is our ability to digitally pay customers through zelle nearly a thousand customers out of our 5000 total took advantage of the digital payment feature and.
In addition to remote selling we have increased the adoption of accelerated for customers in our showroom about half of U S vehicles sold in the third quarter utilized accelerate in the everyday traditional sales process in our view digitizing the in dealership experience saves everyone time creates complete transparency and in.
Increases professionalism in September we activated integrated delivery fees at 38 dealerships preliminary results are encouraging about 13% of customers chose delivery upfront and so far 5% are confirming in the final steps the average delivery distances of 164.
Ailes further demonstrating our ability to extend our reach with accelerating we look forward to launching integrated delivery fees and more dealerships soon.
Accelerate the launch of our newly acquired dealerships in Texas, and California, very soon and our accelerated footprint will expand significantly in the northeast with the upcoming Prime dealership acquisitions, we expect to start rolling out accelerate in those dealerships in January of 2022, turning quickly to Brazil.
Despite a nearly 30% decline in industry unit sold versus the third quarter of 2019, our team once again did a fantastic job growing margins across all lines of business and aggressively sending the cost structure, resulting in the lowest SG&A quarter in the region's history for the second quarter in a row.
Our Brazilian team set an all time quarterly profit record, we continue to be well positioned to benefit from a 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 review Daniel.
Thank you Daryl and good morning, everyone.
As of September 30th we had $297 million of cash on hand, and another 335 million invested in our floor plan offset account, bringing total cash liquidity to 632 million. There was also $282 million of additional borrowing capacity on our U S syndicated acquisition line, bringing total.
It'll immediate liquidity to 914 million subs.
Subsequent to quarter end, we issued 200 million of bonds as an add on to our existing 4% notes. Due 2028. This debt was raised to help fund our previously a ninth acquisition of the Prime automotive group, which we expect to close in November. We also plan on raising approximately $180 million in mortgage debt.
To help fund the deal and provide future liquidity flexibility, we generated 234 million of adjusted operating cash flow in the third quarter.
And $210 million of free cash flow after backing out $24 million of capital expenditure.
This brings our September year to date free cash flow to $522 million, which has allowed us to fund the majority of our prime acquisition with access cash on hand or.
Our rent adjusted leverage ratio as defined by our U S. Syndicated credit facility was reduced to one five times at the end of September on a net debt basis, which considers all U S. Cash on hand, our leverage was <unk> nine times at September 30th.
As previously announced when considering the pending Prime acquisition, we do not expect our rent adjusted leverage ratio to exceed two times, leaving plenty of flexibility for further capital deployment.
Finally related to interest expense, our quarterly Floorplan interest of $4 8 million was a decrease of $3 3 million or 41% from prior year due to lower vehicle inventory holding.
Non floor plan interest expense decreased $1 5 million or 10% from prior year, primarily due to last year's bond debt refinancing for additional detail regarding our financial condition. Please refer to the schedules of additional information attached to the news release as well as the investor presentation posted on our.
Our web site.
I will now turn the call back over to Earl.
Thank you Daniel related to our corporate development efforts, we previously announced the October acquisitions of two dealerships in the Dallas Fort Worth Metroplex, and one dealership in California.
And as Daniel mentioned, we expect our purchase of the Prime group in New England to close in November.
Once closed our 2021 total acquired revenues will equal to $5 billion.
Our balance sheet cash flow generation and leverage position, we will continue to allow for further capital deployment and we will continue to seek ways to maximize value for our shareholders as we head into 2022.
This concludes our prepared remarks, I will now turn the call over to the operator to begin the question and answer session.
Operator.
And ladies and gentlemen, with that we'll begin today's question and answer session.
I'll ask a question you May press Star and then one using your Touchtone telephone.
You are using a speaker phone, we do ask that you. Please pickup your handset before pressing the keys to ensure the best sound quality.
So withdraw your question you May press Star two.
Once again that is star and then one to ask a question.
We'll pause momentarily to assemble the roster.
Okay.
And our first question comes from Mike Ward from Benchmark. Please go ahead with your question.
Thanks, Good morning, everyone.
I Wonder if you could provide a bit more color on the U S parts and service in particular.
Up 15, 5% same store if I'm not mistaken that's about double the rest of the group.
What are you seeing the strength is that something that can continue where is that coming from.
Mike This is Darrell kingham.
We're seeing the strength across the board.
We try to.
It starts with our availability.
In our shops and our four day work week that we've had in place for several years, our philosophy around customer scheduling that we want our customers to be able to schedule an appointment and when it's convenient for them nearly 40% of our customers are scheduling appointments online. These days. So we believe many more of them are <unk>.
<unk> us than ever before.
And we continue to staff up and after sales.
So that's where we sit we see it continuing.
So 40% online scheduling that's up from about 30% is that where it was kind of running.
Yes.
Okay.
<unk>.
I'm guessing it is still being weighed down because of.
The lack of trade ins and supply so what's holding back some of the used vehicle sales is that correct. So we could see these double digit type increases on a same store basis continuing into 'twenty two.
Possibly through the year is that right I can't tell you I can't tell you it would be double digit, but we feel really good about the after sales business.
Okay.
The second thing.
Okay. You mentioned the order Bank I think early you said it was like going out into the second quarter of 2022.
In order of magnitude I assume there was a lot of deferment of some of the deliveries of the registrations in September in particular.
Is that where it's coming from.
Are you seeing this.
Absolutely Mike, Yes, most of our brands when we sell a new car or going into an order banks that are in the second quarter next year. So sales now.
Almost entirely dictated by deliveries of what.
Factory can produce because as you know UK dealers don't.
Don't stock new vehicles on site and the vehicle holding centers are basically empty.
It's whatever the flows from the factory.
And so the order banks, great demand is great and it's just how quick can that delta.
I think on <unk> call yesterday, they talked about having orders from dealers from direct from customers for over 100000 units in the U S.
Is that what you are seeing particularly with pickup trucks in Texas.
Well I'll, let Darrell answer that but I believe that's directionally correct, yes, that's what we're saying.
Exactly.
Good time to be a dealer thank you.
It is.
Our next question comes from John Murphy from Bank of America. Please go ahead with your question.
Good morning, guys.
I just had a sort of similar question to Mike on on.
Whats kind of really controllable here on the used side.
I mean given that your.
Looking at tight inventory on the new vehicle side, probably well into next year.
Even through the year.
Youre going to have access to these trade ins that that will flow to you more directly than they will to other participants in the market.
How do you how do you think about the used vehicle business.
Go forward and I think Theres kind of this view that Gpus are are way too high and they're going to come down, but they certainly might not into 2022.
Through 2022, and just how do you think about balancing that volume versus the gross to maximize total profit there.
Well, we feel like in our own footprint.
There is still quite a bit of volume opportunity for us to do.
We also.
A great deal of emphasis even though there are fewer trade ins.
Being sourced from new car sales these days, which is obvious.
The Big advantage, we have John is our after sales business is growing like crazy, which means more opportunities to buy customer buy cars from.
From customers coming to our service drives when you look at last quarter.
14% of our sourcing was from individuals and some of that included service drives. So that's double from a year ago, and we continue to see opportunity there. So.
We don't we don't see the lid on used cars that we see on new cars, because there's other avenues to source and we feel like we're doing a pretty good job.
With that.
And when you think about the gross though.
I mean, I would assume that youre balancing this is if you drop the gross 5% you get a 10% improvement in volume.
Might do it all day long or are you thinking about it that way or do you want the gross to travel around this 21% to $200 range I think it wasn't a quarter I mean, how do you how do you think about that volume versus versus gross tradeoffs.
Yes, John This is Earl the way, we look at it as the market dictates the grosses.
We have always moved our used vehicle inventory.
Every month, whether we have 28 days 32 days whatever it is the.
The key to our volume of sourcing, which is love Darryl to establish the market dictates the grosses.
And.
So we're still moving them likely always move them, obviously, a little bit quicker.
We never had much more than 32 or 33 days in and so if you want to sell more vehicles now and you have to acquire them properly and for every additional one you acquire you will get an additional retail sale.
Okay. That's incredibly helpful. And then just lastly on the F&I.
Pete always kind of promises that you are kind of reaching these asymptotic limit and theres not more opportunity, but there is.
It seems to be sort of this continuous upside in F&I.
How much room do you think there is in F&I, what our penetration rates currently and could there be risk as rates back up.
And volumes ultimately come in and you might start selling at lower price points for this to maybe fade and I don't think it would be next year, but maybe seed in 'twenty three and beyond I mean, how do you think about that level the opportunity and the risk going forward.
John I think the biggest risk we have clearly as interest rates, but when you take a look at our current business, we couldnt be more pleased with the penetration rates you guys.
Take a look at the vehicle service contracts maintenance those penetration rates all increase we're very pleased with the spreads that we have in F&I.
From a compliance standpoint so.
We continue to I think.
Terrific job with our teams in there maybe a little bit more upside, but we're very comfortable where we are today, yes.
Yes, John This is Earl the other point I'd make is we have learned over the last year or two that we're very comfortable now with.
Online retailing.
There is not material not materially change our F&I either.
In terms of penetrations and such so the online the online retailing is.
Is basically.
<unk> holds the same business model for us that the traditional model have.
Okay, I'm, sorry, I'll sneak in one last one the early as you mentioned that online retailing I mean, what youre hearing from the automakers is an increased focus on creating their own sort of digital overlays interaction with the consumer the den funnels into your dealerships right. So it doesn't necessarily disrupt your economics.
Or just any dis intermediate you at all but kind of dovetails the consumer through our branded website into your dealerships.
How do you think accelerate.
Working tandem or maybe compete with that and does that create complexity.
Or does that actually make things easier for you I mean, how is that going to develop over time with your online efforts.
John Darryl again.
We've had discussions with every OEM on this issue.
We are.
Determined not to compete with the Oems on a digital solution.
We work with them on their solutions.
Almost two.
They realize that accelerate as an outstanding solution for customers of that brand and because it incorporates all steps in the buying process and it's generally.
Much further ahead than the Oems are in their own development of these tools and what I see are the Oems.
Letting the dealers take more of this as long as there are certain steps that meet their compliance rules.
And.
I think youll see that evolve over the next year or two with different Oems as well.
That's what we see it's a very close partnership for US great Alright. Thank you very much guys.
Our next question comes from Rick Nelson from Stephens. Please go ahead with your question.
Thanks.
Congrats.
Quarter.
To ask you about the acquisition environment.
Absolutely.
Prime.
I'm curious.
How much more is out.
Per your appetite.
And maybe if you could speak to multiples.
Shane.
Yes, sure Rick Yes, they are still.
There are still many deals out there.
<unk>.
The higher the prices go the more it motivates other sellers to try to get the same price.
So I think there'll continue to be a lot of activity in our case, we're focused on closing the one and that will continue to look opportunistically, because we have the financial wherewithal to continue to.
Take action.
But.
There is there's only so many of these.
Those deals I think that will work out from a valuation point of view and OEM.
<unk>.
I think it will continue for a while I don't know if that tax potential tax changes next year will slow it down but at the moment I still see a lot of people trying to sell their businesses take advantage of.
Some of the more recent pricing.
We can only do them when there.
Accretive and the valuation works for Us and we're we're very excited about prime so well one of them.
Dust settles in and.
We close it we can we can probably provide more more clarity on what we think it will do for us.
Craig Thanks.
How about the pro forma leverage now for prime.
How that looks from.
Relative to your goals.
So in terms of the pro forma rate guys.
And we don't expect our leverage to increase above two times.
So we see the prime acquisition has been accretive from day one.
Sure.
Okay great.
Follow up on.
Hello Rod.
You mentioned.
Yes, and I'll add attachment is just really good overall profitability.
Compares going into the store.
How exactly.
Fine.
Colorado transaction is that.
Somebody who places an order online or somebody that anchors accelerated.
By the Truecar.
Down the road.
Currently online.
Rick This is Daryl we define an accelerated sales somebody starts to accelerate and purchases of car.
And there is many customers that interact with elements of accelerate we don't count them as a quote accelerated sales.
Attachment rates on F&I, I think recovered fairly comparable as well.
Front end PR use R. R.
Comparable as well.
Between accelerate in terrestrial so.
Hello, Rod customer.
Credit.
Or well.
Buyers are.
Are they taking delivery or in store pickup.
So this is Pete there's really no differentiation in one of the reasons and we've talked about it before is we're using accelerated as a tool within the dealership. So.
As we mentioned earlier credit applications are a big piece of the acceleration.
Our models, so because it's a modular type application customers going in and doing their own credit application. So it's really helping the dealership efficiency. So when you look at who is using accelerometers theres not a big difference between credit tiers and the way we haven't set up now.
Regardless of the credit here every customer has an opportunity to get financing, whether they're a high FICO score, although FICO score and then we think that's one of the things that really differentiates our application.
Great Thats helpful.
Thanks, guys.
And good luck.
Thank you Rick.
And our next question comes from David Whiston from Morningstar. Please go ahead with your question.
Thanks, Good morning I.
I guess first are you guys at all concerned about inflation continuing to be a problem in the 2020 to the point that consumers may not either want to buy a vehicle or we will stop opting referring them buying trends they are in such high demand now.
This is Earl David I don't think Theres any doubt that inflation is as a business factor and we've been chatting with the banks about that I don't think we can call it transitory or anything like that.
But there is so much money.
To be learnt.
That no one thinks it will be a massive interest rate hit in the near term.
But the costs are going to go up.
On everything, but the affordability of vehicles is much more dictated.
By retail financing and leasing.
And with high used car values and low interest rates I don't see this inflation raining on the vehicle sales per rate in the foreseeable future, but I do believe that inflation is not not a joke.
We're certainly seeing it in.
And prices of new cars could go up which again will support used car prices.
Yes.
And then Conversely, though.
Supply improves.
Higher supply should help ease the increase in used vehicle pricing and lower residual values, a little relevant 'twenty one right.
Well it someday when the supply normalizes clearly that will occur we continue to be surprised by the duration of the supply shortage and.
I'm told by the top executives of our suppliers.
They don't see it getting better till at least third quarter next year.
Yes, I've heard that too.
In the U K I know consumers there are battling.
Shortages and whatnot is that.
People say I'm not going to bother buying a car right now.
We're buying electric instead.
Well there is a more rapid shift to electric in the UK, that's affect David but it seems to be driven more by taxation, particularly company car taxation.
That is starting to push people from diesel into hybrid or full electric.
That's a fact.
So EV adoption is probably.
Three to four times higher.
In the UK at the moment, but that still doesn't put it much into double digits.
The market the Petro problem and in the UK was primarily delivery they don't have enough what they call lorry drivers, we called truck drivers.
But but yeah, I think we're going to see a quicker EV.
Shift, but there is absolutely no difference in the customer demand dynamic for automobiles in the U K compared to the U S. New and used vehicle demand is very robust and bear in mind that there was a.
Brexit.
Certainty issue prior to the Covid.
Retail demand depression, so theres a lot of pent up.
Vehicle demand in the U K.
Okay.
Here in the U S are you seeing any change relative to a few months ago where people.
<unk>.
Maybe a few months ago. They were more willing to go ahead and take a used vehicle.
They want a new whereas now they are just like forget it I'm going to wait for them.
<unk>.
Are you seeing the opposite.
Desperate.
David This is Darryl.
Luxury customers generally will wait for a car.
Where you see a little bit of.
Switching as in some of the volume mix.
<unk>.
But that's generally what we see but I can't tell you, it's a huge trend.
Generally somebody new car they want a new car.
We did see our CPO volumes bump up a little bit a quarter and that's probably some of that happening.
Okay.
And our next question comes from Rajat Gupta from Jpmorgan. Please go ahead with your question.
Great. Thanks for taking the questions and congrats on a pretty solid quarter and very good execution here.
In the U S, particularly I wanted to start off with like a balance sheet question.
You talked about two times leverage.
We've adjusted.
How much higher can you go.
From here.
Will you be willing to add on more leverage here.
In the near term, maybe for more buyback or maybe more M&A.
Just curious.
The go forward capital allocation.
After after you.
Clearly the Brian deal and I have a follow up thanks.
Yes, sure and I think what we've always always said is that we are happy to go up to 335 times leverage for the right scale and are part of the right acquisition to grow continue to grow the company.
As and when we would see such an opportunity of course, we would be happy to add on that add to our balance sheet.
And of course, then get the supplementary earnings that we went from such an acquisition and I'll turn it over to Earl for the capital allocation part of the question.
Yes.
We're certainly continue continually interested in further external growth through M&A, but we strongly believe our shares are undervalued.
We werent in the repo market the share repurchase market.
In the third quarter, because we had some material nonpublic information but.
But there is a very good possibility that we will be opportunistically in the share repurchase market.
Absent any any near term major acquisition opportunities and we have plenty of financial flexibility to execute both.
Understood that's helpful color.
And just wanted to follow up on.
The productivity comments earlier.
Yes.
We will continue to be surprised by the strong productivity not just for <unk>, but for the overall sector in general.
Curious as to you know has your long term normalized adoption there changed given.
How strong productivity has been so far.
Post COVID-19.
You've given us some targets earlier in the U S, particularly 200 to 300 basis points lower than pre COVID-19.
Just curious if thats changed at all.
And also in the context of just how accelerated adoption has gone up in store and how your store program. We are using that more of like has that also.
Probably.
Increased productivity and maybe gain make you hit your target sooner or even better.
Once we're back to more normal Gpus.
Well, absolutely our viewpoint has changed.
Our operating assumption has changed we've increased the productivity of our salespeople by 30% pre COVID-19 versus today. There is absolutely no reason to go backwards on that.
Selling 13 or more units a month instead of 10.
Same with our technicians, there to at least 25% more efficient so yes, we.
There are a variety of things that contribute to that and Darryl will probably want to comment and certainly online business as part of that it certainly supports being more productive, but yeah. We never intend to go back to those lower efficiency levels in the future Daryl.
You covered it accelerate as a great tool to drive efficiency.
Some of the numbers, we've talked about we see that.
Half of our customers using accelerated for credit applications, and uploading insurance and vehicle appraisals and purchases.
That's all that all enables a transaction digitally.
And we expect that to be ingrained in the future and adds to productivity in the <unk>.
In our shops more more online scheduling.
More.
The support from our parts departments and continuing to press the four day work week all add too.
Productivity improvements.
Got it.
The target you had given before that 200 to 300 bps improvement is that still unchanged or.
Or are you willing to change that number at this point or we want to wait a little longer.
Yes.
Yes.
I think that we would rather get them where end gpus normalize or are we seeing it in a more.
Standard flat basis, but the expectation is that for the U S that will be at least 300 basis points lower and for the UK, probably slightly more on a ongoing basis versus 2019 levels.
Understood.
Helpful. Thanks for all the color and good luck.
Sure John.
And ladies and gentlemen, with that we'll conclude today's question and answer session I would like to turn the floor back over to Earl <unk> for any closing remarks.
Thanks to everyone for joining us today, we look forward.
Updating you forward to updating you on our fourth quarter earnings call.
Q.
Ladies and gentlemen, with that we'll conclude today's conference call with you. Thank you for attending today's presentation.
You may now disconnect your lines.