Q1 2023 Asbury Automotive Group Inc. Earnings Call
Greetings and welcome to Asbury automotive group's first quarter 'twenty to 'twenty three earnings conference call. At this time all participants are on a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Karen Reed, Vice President and corporate Treasurer. Thank you you may begin.
Thanks, Rob and good morning, all and noted today's call is being recorded and will be available for replay later this afternoon.
Welcome to Asbury automotive group's first quarter 2023 earnings call. The press release detailing Asbury as first quarter results was issued earlier. This morning and is posted on our website at investors Dot Asbury auto dotcom.
Dissipating with me today are David Hult, our President and Chief Executive Officer, Dan Clara, Our senior Vice President of operations and Michael Welch, Our senior Vice President and Chief Financial Officer at the conclusion of our remarks, we will open the call up for questions and will be available later.
For any follow up questions.
Before we begin we must remind you that the discussion during the call today is likely to contain forward looking statements forward looking statements are statements other than those which are historical in nature, which may include financial projections forecast and current expectations each of which are certain just subject.
Subject to certain uncertainties.
For information regarding certain of the risks that may cause actual results to differ materially from these statements. Please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 2022, and subsequently filed quarterly reports on Form 10-Q and.
Our earnings release issued earlier today, we expressly disclaim any responsibility to update forward looking statements.
In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call as required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website.
We have also posted an updated investor presentation on our website investors got Asbury auto dot com, highlighting our first quarter results.
It is my pleasure to now hand, the call over to our CEO David Hult.
David.
Thank you Karen and good morning, everyone.
Welcome to our first quarter earnings call.
I am proud of the team's performance in Q1, and the execution of our business model across its diverse revenue and profit streams.
As expected.
We're starting to see trends as the industry begins to normalize.
We are strategically operating within a changing environment and we continue to prioritize profitability.
Yeah.
Over the last couple of years pre owned has been depleted due to fleet levels and lack of leasing.
Overall with this limited availability availability of pre owned inventory.
Unbalance, new inventory by brand, we are focused on maximizing our gross profit streams.
Now to our consolidated results.
As a reminder, during 2022, we divested of 16 stores.
For occurring in the first quarter.
Three in the second quarter.
And nine in the fourth quarter.
These stores contributed $683 million in revenue last year.
Now for the first quarter of 2023.
Yeah.
We generated $3 6 billion in revenue.
Had a gross profit margin of 19, 4%.
SG&A as a percentage of gross profit was 57, 9%.
At an operating margin of seven 7%.
EBITDA was $294 million we.
We delivered an EPS of $8.37 and we repurchased 110000 shares for $21 million.
In addition from the start of the second quarter through yesterday, we purchased 32000 shares for $6 million.
We continue to monitor the marketplace for acquisitions that meet our stringent thresholds for returns.
And that are a fit for the company from a cultural and operational view.
Our mindset continues to be that we are opportunistic strategic and thoughtful and maximizing our returns for our shareholders.
Now expanding to all stakeholders.
I would like to highlight that we published our second corporate responsibility report at the end of March we invite you to read it if you haven't already.
Finally, I would like to thank my fellow team members for a strong start to 2023.
<unk> centric experience begins with you and we are looking forward to what is in store.
I would now hand, the call over to Dan to discuss our operating performance.
Thank you David.
And good morning, everyone.
I'd also like to extend my thanks to all of our hard working team members for consistently delivering an exceptional guest experience.
Now moving to the same store performance, which includes dealerships and TCA unless stated otherwise.
As a reminder, we acquired many stores as well as TCA in late 2021.
Which have now enter our same store results for the quarter.
Also the 16 stores that were divested during 2022 are excluded from same store.
Starting with new vehicles.
Our new vehicle inventory ended the quarter at $643 million, which represents a 30 day supply.
Our day supply fluctuated by segment with domestic being at 63 days import at 18 days and luxury at 28 days.
And vary greatly among brands and models within those segments.
Our new vehicle volume was down 4% year over year, while we grew new vehicle revenue by 3%.
New average gross profit per vehicle was $5184 a decrease of $616 from the prior year quarter.
Turning to used vehicles used retail revenue was down 9% or prior year quarter, mainly due to the drop in cost of sales.
Used retail gross profit per vehicle was $2146 for the quarter, a decrease of $385 from the prior year quarter.
Our used vehicle inventory ended the quarter at $390 million, which represents a 27 day supply.
Shifting to F&I.
We delivered an F&I P. B R $2352, a decrease of $192 compared to the prior year quarter.
Regarding consumer financing in general, we do not see a measurable impact of credit tightening in the quarter.
In the first quarter, our total front end yield per vehicle was $6063 a decrease of $675.
Moving to parts and service.
Our parts and service business was a source of strength in the quarter.
Revenue increased 12% in the quarter.
Customer pay revenue continue its upward momentum with 14% growth and we expanded its gross profit by 13%.
Now turning to Cleveland.
Please note that for clinically we are reporting on an all store basis.
We set an all time record of over 10800 vehicles through click line in the first quarter, a 93% increase year over year, and a 28% increase over the previous best which was last quarter.
Approximately 16% of our first quarter of 2023 total retail sales were powered by Cleveland and we achieved 39% of 2022 annual click link sales in just the first quarter.
We generated approximately $450 million in clinical and revenue for the quarter.
And we are on track for our $2 5 billion revenue estimate for our Cleveland our tool that offers a full omnichannel experience and guest centric features.
Moving onto some kpis from the first quarter.
Average transaction time remained in line with prior quarters eight minutes for a cash deals and for 10 minutes for finance deals.
Total front N P. B R of $3601 and F&I P. B R of $2275, which equates to $5876 of total front end yield.
The average claim customer credit score was 721, which is higher than the average credit score at our stores.
89% of those that applied were approved for financing of which 90% of those customers received instant approval, while the remaining customers require some offline systems.
72% were lender finance sales and 28% were cash sales.
The average distance of a click claim delivery from our dealerships was $18 one miles, which allows us to retain customers you know high margin parts and service departments.
And our journey to become the most guest centric automotive retailer, we recognize that the most important differentiator that we have is the level of service we provide.
Then trust loyalty and retention naturally follow.
I will now hand, the call over to Michael to discuss our financial performance Michael.
Thank you Dan to our investors analysts team members and other participants on our call and good morning, everyone.
I'd like to provide some financial highlights for our company for additional details on our financial performance for the quarter. Please see our financial supplement and our press release today and our investor presentation on our website.
Overall net income was $181 million and EPS was $8.37 for the quarter.
Order.
There were no non-GAAP adjustments to net income in the first quarter of 2023.
Adjusted net income for the first quarter of 2022 excludes gains net of tax.
$25 $5 million related to $33 $1 million gain on the sale of four dealerships and a $900000 gain on a sale leaseback.
This adjusted 2022 first quarter EPS of $1 11 to $9.27.
Our effective tax rate for the first quarter of 2023 was 23, 9% compared to 24, 2%.
For the first quarter of 2022, we estimate our tax rate for the remainder of 2023 to be approximately 24, 5%.
Excluding real estate purchases, we spent approximately $15 million on capital expenditures in the first quarter.
We expect full year 2023, capex to be 200 million as we continue to rollout our planned capex related to our 2021 acquisitions.
Of this 200 million about 20 million is expected to be related to the replacement of leased properties.
Yeah.
For the quarter TCA made $17 million of pretax income, which excludes 3 million of net unrealized gains.
We have rolled out TCA to all of our stores in Colorado, Texas and St. Louis and we expect to deploy TCA into the rest of our stores by the end of 2023.
Due to the deferral of the income associated with the store Rollouts, we expect TCA to generate 25 million of pre tax income for 2023, a decrease from the $80 million in 2022.
Our balance sheet remains strong as we ended the quarter with approximately $1 $7 billion of liquidity comprised of cash excluding cash told Corrado.
We're playing off set accounts and availability availability on both our youth line and revolving credit facility.
Even with our sizable acquisitions in recent years, we have managed our debt levels strategically to support our long term growth our pro forma adjusted net leverage was one six times at the end of March.
For the first quarter of 2023, we generated $244 million of adjusted operating cash flow driven by our strong business model with our robust cash flow generation, we have the flexibility to achieve our strategic goals and be able to seize opportunities. We constantly case the market for potential acquisitions that would.
Further enhanced our strong portfolio.
Versus repurchasing shares to return capital to shareholders.
Finally, I would also like to thank our Asbury team members. Our result is driven by your dedication to the guest centric model.
I will now hand, the call back over to David to provide some closing remarks David.
Thank you Michael.
I'm encouraged by our results, especially from our same store performance.
Aged car, Parc, which still historically depressed saar levels and the complexity of newer cars, such as Evs bodes well for a strong parts and service business.
We have been and continue to be strategic in our philosophy and our actions.
With our strong cash flow and balance sheet, which has grown more robust over time.
We were opportunistic for potential acquisitions and buybacks.
This concludes our prepared remarks, we will now turn the call over to the operator and take your questions operator.
Thank you.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment, it may be necessary to pick up.
Your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Daniel Enbrel with Stephens, Inc. Please proceed with your question.
Hey, good morning, everybody. Thanks for taking my questions.
Good morning, guys have done a great job I feel like on the new vehicle side, especially with some of the elevated production at some of the domestic Oems I guess, one you know other than quick lane or are there things you guys are doing operationally to do to protect that GPU margin or or improve the vehicle sales trends and then second as it related one you know what per se.
A new units are sold on pre order today, and maybe how has that trended as we try to assess the demand backdrop here in terms of what's getting pre sold.
Daniel This is David I'll take it and Dan can jump in.
You know last quarter about 38% of our cars were pretty sold on incoming.
For Q1, it dropped to 33%. So we still think a pretty healthy number but there certainly was a drop there as well.
On the pre owned side. It was sequentially, we actually went up in P V R.
We just determined that it didn't make sense to chase volume our gross profits are not so much about the sale price, but the acquisition price.
Because the market dictates what the selling price is going to be so we weren't aggressive at buying cars from auctions or anything like that we focused on trade ins off lease vehicles.
And purchasing cars direct from consumer we felt it was a better trade off to have lower volume and higher gross profits, which really generated a better EPS for us overall.
Yeah.
David I have nothing to add I think you covered it well and then on that you saw and thank you for that maybe to follow up it's still obviously a point of weakness out there in the market are you seeing any discernible change in that pre owned by or consumer or are you seeing a trade down or are you seeing lower product attachment on F&I and anything that would tell you that consumer is.
Really changing from how they've been the last couple of quarters.
You know you can you can see on our cost of sale it dropped a little bit for the first time in a couple of years. So we see that as a good sign.
Certainly with all the interest rate increases over time, that's put more pressure on the payment.
So I think people are not reacting as quickly and be more thoughtful about taking time.
Biggest challenge right now as you can imagine is is finding the right fit.
I'm really trying to find those cars that people are looking for so you can turn them in a in a quick manner. If you will.
So again, we believe the focus.
Almost 70% of the cars that we're selling right now are trade ins in off lease vehicles and.
And we feel if we can maintain that a we can hold onto margin as best we can which is what our focus is going to be.
Great and then last one from me Michael as a follow up on the financials. I guess, you know 1.1 billion of cash on the balance sheet. You just did the divestitures and <unk> what is the appetite for M&A and are there any certain markets or brands, you would like to fill in or trying to fill and specifically with the with that cash.
Yeah, I mean, we're still out there looking strategically for acquisitions.
We like the markets, we're in and we're trying to find those strategic acquisitions that makes sense for us and then comparing that to the share buyback opportunities.
That are out there in the market as well so I try to balance those two items with the cash with the you know environment, what it is and the uncertainties just in the economy, I think being a little bit just strategic with our cash and wait for the right opportunities is the best approach right now just with that uncertainty in the markets and this is David.
I'll just say, we're seeing a good amount of M&A activity and seeing opportunities come our way.
Just haven't been able to land something that we feel really strongly about.
Great well best of luck going forward and thanks for all the detail.
Thank you.
Yeah.
Our next question is from Adam Jonas with Morgan Stanley . Please proceed with your question.
Hey, everybody good morning.
So my first question is I think in your prepared remarks.
You said that there was no measurable sign of.
Financial tightening during the quarter.
How about after the quarter.
My first question.
Adam This is David.
Not yet.
I would tell you as a reminder.
We we normally state that our subprime as a percentage of our business is about 10% last month in the quarter was just over 7% of our business.
And so are our core customers over 700 credit score we have over 250 lenders that were signed up with so we have a lot of options and we're not seeing any tightening as we sit here today.
Okay. So just to interpret that.
From 10 to seven Navy Navy there is tightening, but you don't see it because it's happening on the lender side right is that a fair.
And interpretation.
Yeah, well so.
Yeah, I would tell you.
Our store locations, our go to market and how we go after business, we're just not aggressively looking for subprime.
So I wouldn't say there is I wouldn't look at it that way as much as you can.
Can imagine with those number of lenders that we have certainly some.
Have tightened up their practices compared to others, but again because of the majority of the.
Hello, I already of the banks that we have available to US. We just don't have an issue seeking lending I got it. Thanks, David just a follow up can.
Can you can you update us on your current percentage of your new sales that our order to delivery or preordered, let's say maybe address.
How that's trended where that was just kind of exiting last year or a year ago, and then any comment on a T P versus MSRP that gap there would also be helpful. Given.
The environment. Thanks.
I hope I get all of it last quarter, the fourth quarter at 22, 38% of our vehicles were pre sold that were incoming.
In Q1, it was 33% so a little bit of a drop off there.
A T P versus them.
I would say percentage of MSRP, it's just like you would expect.
Certain models that have a single day supply is certainly holding to MSRP and vehicles that we have say north of a 40 day supply of vehicles.
We're certainly discounting at this point.
Thanks, David.
Got it.
Our next question is from John Murphy with Bank of America. Please proceed with your question.
Good morning, guys I just wanted to get into.
One thing about.
New vehicle affordability and everybody claims that it it's a it's a real issue you know and it is for for the consumer.
But it may be not such a big issue for you because you're putting up record profits are near record profits.
Things are pretty healthy for you in the business. So as you think about somebody coming in and they are challenged from an affordability perspective and buying a new vehicle.
What's the process and how successful are you in transitioning them too.
Buying a used vehicle.
<unk> transitioning them into a parts and service customer two avenues, where you make you know pretty pretty good profits relative to even the new vehicle side.
John Good morning, this is Dan so.
From the first aspect of the affordability.
Affordability from a new car perspective, we're starting to see.
I would say slowly, but surely and taken a faster pace for lack of a better term the leasing aspect of it so as you see the the.
The challenge in or the opportunity on the price of the new car that leasing coming.
Coming back really allows consumer to to be able to get into that car that they want for a lower payment.
And we all know the benefits that's going to have from a used car perspective three years down the road.
Those lease returns back we know that the the first car that we sell at our dealership is all done.
From the sales department, but the second third fourth and so on is all done through service. So that turnover if I may that we do a transaction wise.
From sales to services is extremely important.
Not just on making sure that that we respect People's time, and Thats why we put so much focus on the cycle time, making sure that when they come in for that first serve as theyre getting in and out and get into our services completed because we know that to the extent that we respect people's time their loyalty is going to continue to grow with us.
And then as I mentioned.
Earlier comment.
If we do a good job into service retention, we're going to continue to sell the cars.
In the years to come.
John the one thing I would add.
That we did see in the first quarter related to pressure on pricing.
Some of our Domestics was really we had an imbalance of inventory in the sense of.
They were heavy content of vehicles that were built during the chip shortage, everyone went with the heavy content in the vehicles.
And in the first quarter, especially on the domestic side people were looking for less expensive trucks.
Than what we had in there was a little.
Slow approach on incentives there so I think.
We're certainly seeing it on the truck side in the sense of people are looking for a little bit less expensive less loss content to truck.
Okay, and maybe if you could follow up on this but I'm curious if somebody comes in and the challenge of finding a new vehicle.
Can you or have you been able to.
Transition those folks into buying a used vehicle that they like.
He can't afford them and what's the success on that I mean, if you don't have the right vehicles to sell them on the new vehicle side, which is harder and harder with pricing and affordability at the moment are you having success in working walking those guys across to the used vehicle department and assign them a vehicle there or is that just fundamentally different consumer.
Yes, John I'll answer it it's not and it's usually a portion of your sales get transitioned to pre owned as you can see we have a low day supply of pre owned than we do new and it's more so about model mix than anything else and overall day supply. So there's no easy answer to your question people constantly flipped from <unk>.
Pre owned but it's about having the right pre owned vehicle that they're looking for in that segment.
So we do it successfully naturally when the availability is there when it's not there. That's that's obviously an issue that we have.
Got it and I apologize I got on the call late on the parts and service side I mean, the same store sales were very strong.
<unk> Tec availability, the gating factor or is there something else if you're looking at it should we be thinking about sort of as the constraint on that same store sales growing there.
Yeah.
This is Dan again.
Take availability, we will take every technician that is available out there for us will know we all know how competitive this labor market is.
We've put a tremendous amount of emphasis not only in having good relationships with the local technical institutes.
We're able to hire.
Future technicians at a very entry level point, if I may and then developing them from within so that has all that is working out well for us in many of our markets.
Certainly.
We are not shying away from are.
Actively going after more technicians, because we have the of the bay capacity.
And we just need to fill it out with more technicians.
John the one thing I would add it's a choppy market and a lot of ways economically.
With the average age of the car over 12 years.
History has shown those folks tend to hold onto their cars and invest in parts and service.
So again, we see parts and service being healthy.
For for many years to come.
Okay, and then just lastly on yesterday and a cost save side I mean, you know how much opportunity is there to take cost out at this point, David or is it really just a function of holding the line on costs and letting grosses.
Improve over time as volume comes back.
One of the several positive things we had happened during the quarter.
All segments, our production per employee went up.
Even though we were a little bit depressed in some of the sales we had.
That's just really working into our efficiencies with software and where we're trying to go.
I would say that the.
The volatility of the market for the next 12 to 18 months will make it difficult to look for a lot of opportunities to be lower than where we are.
But we think a 24 months out with things that we're working on with our omni channel and software approach that theres another level for us to get to from a productivity per person.
Which should create a tailwind down the road for us.
Great. Thank you very much guys.
Thank you.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Our next question comes from Ryan Cingal with Craig Hallum Capital Group. Please proceed with your question.
Good morning.
Just one question for US quickly so when I look at the F&I.
Increased quite a bit more sequentially than the overall business in the quarter I get the underlying kpis are good but what do you attribute the biggest incremental improvement in quick clean relative to the retail dealerships specifically on the F&I piece.
Ryan This is David.
You know it's interesting because we had the same question I think the reality is when you're in the store.
People selling products have preconceived notions about what someone's willing to buy and I've stated it before I'll say it again, it's pretty obvious people love to buy things, but not so much be sold things.
The opportunity for them to shop, the F&I products on their own are still converting at a great rate.
And it doesn't matter if it's used it doesn't matter if it's important domestic or luxury.
We've been very happy.
With the self selection that our consumers are doing because there's there's no asbury employee intervening doing F&I sales. This is solely based on the customer.
Helpful. Thanks, guys. Good luck. Thank you.
Yeah.
Our next question is from Rajat Gupta with Jpmorgan. Please proceed with your question.
Okay.
Oh, great. Thanks for taking the question.
Just wanted to follow up on the on the used car strategy.
You know the volume versus GPU tradeoffs.
I'm curious like how long no you plan to pursue with <unk>.
This approach.
Given you know you lose the opportunity to look up and I know maybe you.
No parts into that work down the line so.
Any thoughts on like you know how long this is going to pursue it.
Or would you reevaluate this at some point.
No no just yes.
Maybe it became a customer of a bunch of them and alcohol.
Or is that this is David we evaluated every month I would tell you. We will continue to have this approach as long as the the inventory availability isn't there.
We think it's a couple of years depressed with Covid.
And we think next year, you'll start to see some of those cars come back and so maybe this entire year, we ride with that philosophy, but if the market shifts and it changes we will adjust quickly to it.
A benefit of that low day supply allows us to be pretty nimble.
I can say.
If we chase volume.
Other than our margin being down our SG&A would have been up in our profitability would've been lower for our shareholders.
So again, we're trying to maximize our returns right now and based upon current market conditions. We think this is a breath best for best approach to give the highest returns and I have a lowest SG&A.
Got it got it good thanks for thanks for clarifying that.
Maybe just you know what.
Thoughts on you know these price cuts from Tesla.
I'm curious you know what.
Like other round of price cuts more recently.
Any feedback you are hearing from the ground you know from the Gms.
No Hudson yards.
I think to add anything you've heard from the Oems.
Oh, no need or plans to counter this.
Just maybe like what you're hearing on the ground.
Your thoughts on the implications of that.
And that's all that.
Okay.
David again, its an excellent question and it really complicated and tough to answer.
Most of the legacy Oems are really coming out with Evs now in scale with models.
Depending upon whether they qualify for the tax credit or not that's certainly a good incentive and a good assessed.
Generally speaking a lot of the cars coming to market now were at a lower price point than Tassos.
So I assume that's part of the reason and what they did.
But not all boats floating equally if you will.
Demand for EV.
Be interesting to see how it plays out over the next year.
Relevant to what gets produced I think traditionally what youll see and we've seen for the last four decades as inventory starts to build incentives will start to increase.
We're hopeful selfishly.
That a lot of those incentives will be driven through leasing.
Because we really think that leasing volume really needs to get back up to speed to get that healthy return or a customer and retention levels.
Got it got it.
Maybe just one last one sorry on the 2025 target.
No they won't be treated well it looks like.
Waco.
It's going to be a big driver.
Well for hitting those targets.
What would be the registration desk.
Now, perhaps extending into next year.
I mean, no are there any like other also know that goods, so getting to those targets about maybe.
More M&A or you know maybe more quickly than your car GPU.
I guess I was curious around you know that comfort level those targets, maybe like just a company that has changed.
What do you call it neutral.
Sure.
This is David again Rajat.
As we stated last quarter.
We're on a large acquisition that fell apart at the end.
We have looked at other things in the market now.
We're not at a point that we would adjust our 25 year target, but we feel as a team.
By the end of the year, we will have a great line of sight to how we're tracking towards that 25 year target we can control.
How we're operating our same store growth within the market that we're in but it's a little bit challenging with inventory levels and other things going on right. Now so I would say look for an update for us at the end of 'twenty five but.
A couple of acquisitions can put us right back on track for that so it's too early for us to make any updates and we intend to do that at the end of the year.
Great. Thanks for all the color and good luck.
Our next question is from Glenn Chin with Seaport Research Partners. Please proceed with your question.
Yes.
Thank you and good morning folks.
One can you can you speak to the divergence in new unit performance by segment luxury import domestic what was it a function of the issue you touched on David.
You know pricing content of vehicles versus what consumers were looking for.
You know that is the fact that some of the domestic Oems were slow to react with incentives.
Sure.
And obviously it varies by market, whether it's southeast southwest and so on Midwest I'd.
As you can see in our.
Our earnings release.
On the import side.
Largest volume brand is Toyota.
<unk> quarter, we had a single day supply.
<unk> it.
It really the hot models, we didn't really have much inventory at all.
Honda was our second we had an extremely most of the quarter single day supply it jumped up towards the end of the quarter closer to mid teens days' supply.
So the demand was there and the volume was there to do more and we think at a healthy margin.
On the luxury side.
<unk> is usually the number one volume.
Again during the quarter, we had a single day supply of Lexus and we know our sales were governed in the quarter and there were more sales available and a lot of cars with pre sold there.
We still see pretty good demand in the luxury side.
Now its model based and it's certainly whether it's combustible or EV.
But as we sit here today.
We think our headwinds are getting our cost structure down on domestic vehicles.
And we think we are fairly well aligned on the imported luxury side at this standpoint.
Alright.
Before when he talked about the creation of David you mentioned that.
The gymnastics, Chris if I were to come to the market with incentives it.
Question is has that changed or do you expect it to change you expect them to come to market.
Sure.
Atlanta is the one that has the biggest impact on us.
We have over 60 day supply is Atlantis.
We also have to stop sale trucks.
And truck markets that make it difficult so that's going to govern your sales as well.
And there are incentives have continued to increase.
But there was slow to come to the table.
So we havent heavily content of trucks with incentives that are catching up and we still have stop sale vehicles as we sit here today.
Okay, and just to confirm David that's primarily still and just you're not speaking of the to date three overall.
Yeah, I would say again from a balance standpoint.
We're seeing a majority of it was for Lantus right now.
Okay very good and then just a quick housekeeping question I'm click Wayne he normally specify the percent of customers that are new to <unk>.
Barry can you share that for this quarter.
Sure Yeah. It was I think it was the same number as last quarter it was 92%.
Yeah.
Okay very good. Thank you. Thank you.
Our next question is from Bret Jordan with Jefferies. Please proceed with your question.
Hey, good morning.
Good morning could you could you gave us an update on the insurance products that you've acquired to the Larry Miller acquisition that I guess is there any obviously it had some internal.
Putting issues, but is that changing the cadence of that rolling out across the broader Asbury network.
Yes.
So.
Just an update on that rolling out through our legacy stores, we've rolled it into Colorado stores, Texas and St. Louis.
We still have our large markets of Georgia, and Florida to go.
Later this year and so we're making good progress on getting that rolled out but it is a you know kind of a steady progress over the remainder of the year. The deferral of that income as we roll it out to our legacy stores, that's kind of a hit we take year, one and then we get to recognize that income over the the product lifecycle and so youll see that here.
A rollout towards the end of the year as we put on some of these larger groups in Georgia and Florida.
We're making good progress I'm kind of on target for what we thought we'd be it's just a slow process throughout the entire 2023.
Okay, and I guess with another quarter under your belt do you have a feeling for sort of the cadence of the GPU trend I think in your prepared remarks, you talked about sort of about a two year.
Trend that whatever the new normal is and maybe lower selling expenses.
But when you think about sort of the mix of incentive and inventory recovery and obviously high rates.
Are we in a world with sustainably higher gpus than pre pandemic or do you sort of see it going back to that.
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That ends.
Hi, Brett its Dan good morning.
No.
To supply and demand.
Proposition and with the current inventory levels that we have.
We see that sustaining.
Sustaining the moment that we see higher day supply come in and do a higher availability of used cars.
Certainly that's going to have a.
[noise] and impact to the Gpus.
I think we're we're we're a little bit of ways I don't know exactly how far away, we are but it's not in the near future.
Okay, but do you think we're structurally higher do you do not expect us to see those pre 'twenty numbers again on new Gpus or or are we sort of trending over the long term back to where we were prior to the surge.
Hey, Brett this is David.
Yeah, I might be pollyanna on this but.
I don't see us getting back there.
The Oems are going to be a lot more efficient and better at days supply.
And I think it will float higher and specifically to Asbury.
Selling off the stores and crown in Mississippi, and with the acquisitions that we had.
We will naturally be higher and again last couple of years depressed SAR cars hasn't been available average age of the car is 12 years as long as we can keep the day supply in check we think we can maintain healthy margins for the next couple of years, albeit they may drop some we don't see 2019.
Coming back anytime soon if at all ever Okay and on that day supply I mean, obviously, it's the latter as you said over 60 is that strategic because they may be the UAW strike.
Example, or are they just producing for the sake of producing.
Yeah, I would say I don't know that answer specifically.
But I would assume they've had less issues getting with their suppliers and getting the necessarily necessary necessary products.
To put their vehicles content together.
We've just been fortunate, but as a reminder, a part of that day supply is stop sale vehicles on trucks that normally turned pretty quickly. So as those trucks sit for a couple of months and we can sell them.
Hurting the day supply.
Okay, great. Thank you.
Thank you.
That concludes today's call. We appreciate everyone participating today, we look forward to talking to you at the end of the second quarter have a great day.
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Okay.
Okay.