Sonic Automotive Inc

NYSE:SAH

Earnings Call Transcript 2022-Q3

[Operator]

Good morning and welcome to the Sonic Automotive Third Quarter 2022 Earnings Conference Call. This conference call is being recorded today, Thursday, October 27, 2022. Presentation materials, which accompany management's discussion on the conference call can be accessed at the company's website at ir.sonicautomotive.com.

At this time, I would like to refer to the Safe Harbor statement under the Private Securities and Litigation Reform Act of 1995. During this conference call, management may discuss financial projections, information, or expectations about the company's products or market or otherwise make statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.

These risks and uncertainties are detailed in the company's findings with the Securities and Exchange Commission. In addition, management may discuss certain non-GAAP financial measures as defined in the Securities and Exchange Commission. Please refer to the non-GAAP reconciliation tables and the company's current record on Form 8-K filed with the Securities and Exchange Commission earlier today.

I would now like to introduce Mr. David Smith, Chairman and Chief Executive Officer of Sonic Automotive. Mr. Smith, you may begin your conference.

[David Smith, Chairman and CEO]

Thank you very much and good morning, everyone, and welcome to Sonic Automotive's third quarter 2022 earnings call. As she said, I'm David Smith, the company's Chairman and CEO. Joining me on today's call is our President, Mr. Jeff Dyke; our CFO, Mr. Heath Byrd; our EchoPark Chief Operating Officer, Mr. Tim Keen; our Chief Digital Retail Officer, Mr. Steve Wittman; and our Vice President of Investor Relations, Mr. Danny Wieland.

I'd like to begin by sincerely thanking all of our amazing teammates, customers, manufacturer, and vendor partners for helping Sonic Automotive achieve another period of record-breaking financial performance, including record third quarter revenues, gross profit, net income, and earnings per share.

Highlights from our quarterly results include record third quarter revenues of $3.4 billion, which is up 12% year-over-year. Sonic also posted record third quarter gross profit of $581 million, up 23% year-over-year. This drove us to achieve record third quarter net income of $87 million or $2.23 per diluted share.

During the third quarter, we continued to see strong new vehicle pricing, consistent consumer demand for new vehicles, and sustained growth in our parts and service business. While we experienced lower new vehicle sales volume on a year-over-year basis due to ongoing supply chain constraints and limited vehicle inventory, we also continued to see strong new vehicle GPU and a sustained pre-order bank.

Our used vehicle volume was consistent with industry trends year-over-year, reflecting ongoing affordability concerns as a result of near-record high used car prices and a rising interest rate environment. I'm happy to say that since quarter-end, we have continued to see stability in our overall business despite macroeconomic headwinds and concerns around rising interest rates, heightened inflation, and ongoing global supply chain constraints.

Our financial results reported earlier today demonstrate the fundamental strength of our diversified automotive model, as well as our teams unwavering commitment to creating long-term value for our guests, manufacturer partners, and stockholders. While we remain optimistic about our long-term prospects and growth trajectory, we realize that we are not operating in a vacuum.

As I mentioned on our last earnings call, this is not the first time Sonic has had to navigate through adverse economic cycles. Our team is well aware of the current challenges we are all facing and is monitoring our operations daily to adjust for any near-term obstacles related to the overall industry and economic environment while maintaining a long-term strategic view for our business. As such we remain adamant in maintaining our strong balance sheet position, which we consider to be essential in today's world.

Our team remains very focused on maintaining high levels of profitability, generating strong cash flows, and proactively managing our cost structure. To this end, we are continuing to take a strategic measured approach to our expansion plans, both with our Franchised Dealerships, as well as with EchoPark as we balance our commitment to long-term growth with our current priority to maintain a strong liquidity position in light of uncertain macroeconomic outlook. Turning now to our Franchised Dealerships segment results.

Third quarter 2022 revenues were $2.8 billion, up 18% from the prior year period. Segment income was $146 million, up 1% year-over-year, and segment adjusted EBITDA was $198 million, up 10% from the prior year.

On a same-store basis, Franchised Dealerships revenues were up 3% from the prior year, while gross profit was up 5%. Parts and service gross profit increased by 10% year-over-year with same-store customer pay gross profit up 12% and same-store warranty gross profit up 7%. Same-store F&I gross profit was down 5% on lower unit sales volume despite an all-time record quarterly Franchised Dealership segment F&I gross profit per retail unit of $2,473, which was up 7% from prior year.

Despite persistent new vehicle demand, sales volumes during the quarter continued to be impacted by ongoing vehicle production constraints. Same-store retail new vehicle unit sales volume was down 6% even as same-store retail vehicle gross profit per unit was up 28% year-over-year to $6,571. Same-store retail used vehicle unit sales volume was down 12%, while same-store retail used vehicle gross profit per unit was lower by 9% year-over-year to $1,669.

As of September 30, our Franchised Dealerships segment at approximately 18 days supply of new vehicle inventory unchanged from the second quarter. Production continues to improve slowly, while demand for new vehicles remain strong, which continues to drive strong new vehicle GPU.

Our Franchised Dealerships segment had approximately 31 days supply of used vehicle inventory, again unchanged from the second quarter. Given ongoing new vehicle inventory constraints, recent declines in wholesale market pricing, and our current macroeconomic outlook, we continue to be disciplined in managing our used vehicle inventory, volume, and pricing.

Now let's turn to EchoPark. For the third quarter of 2022, we reported revenues of $608 million, down 8% from the prior year. Despite this, we reported record third quarter EchoPark gross profit of $49 million, up 88% year-over-year. EchoPark retail sales volume for the quarter was 15,422 units, down 27% for the prior year as we continue to focus on executing our strategic adjustments to include five-plus-year-old vehicles in EchoPark inventory.

Digging a little deeper here, five-plus-year-old vehicles represented 19% of EchoPark retail used vehicle unit sales volume in the third quarter, which was up from 9% in the second quarter of 2022. And our non-auction sourcing mix grew from 25% in the second quarter to 32% of sales in the third quarter.

As we expected from the third quarter, we reported EchoPark segment loss of $29.9 million compared to $34.9 million in the second quarter, and $32.9 million in the prior year quarter. EchoPark reported an adjusted EBITDA loss of $21.4 million in the third quarter, an improvement from a loss of $27.9 million in the second quarter and a loss of $28.5 million in the year ago period. This sequential improvement from the second quarter demonstrates the benefits of strategic shifts in inventory mix and sourcing that I mentioned earlier.

At the end of September, our EchoPark segment had approximately 57 days supply of used vehicles. For EchoPark branded locations though, the days supply was just 40 days excluding new locations opened during the third quarter, positioning us well as we head into the fourth quarter.

During the third quarter, we continued to strategically expand EchoPark distribution network, including a new vehicle - our new delivery center opening in Tulsa, Oklahoma, and retail hub opening near Sacramento, California. Including our new location openings during the quarter, the EchoPark brand now reaches over 50% of U.S. population, on it's way to 90% of U.S. population by 2025.

In addition to growing geographically, we've also continued to expand EchoPark's digital footprint with the continued success of our new e-commerce platform, which was successfully rolled out this past June to 100% of our nationwide traffic at echopark.com.

For the third quarter, omnichannel sales through our new e-commerce platform accounted for 31% of EchoPark's retail unit sales volume, compared to 19% in the second quarter. Further, 7% of EchoPark volume during the quarter was sold end-to-end online as guests continued to utilize our enhanced omnichannel purchase experience with out-of-market buyers representing 60% of our e-commerce sales. We continue to monitor EchoPark's performance and remain confident in this segment's long-term growth prospects, once the used vehicle market returns to normalized conditions in due course.

In the interim, we continue to take steps to adjust our structure at EchoPark to better align with the current environment and target a return to breakeven EBITDA in the second quarter of 2023. We are already seeing the benefits of expanding our inventory offering to include five-plus-year-old vehicles, enabling us to reach additional customer segments, improved consumer affordability, and to source more vehicles from non-auction sources, which will improve profitability. We began to see the benefits of these actions this past quarter and expect to see further improvement in EchoPark losses during the remainder of the year.

We are still in the early stages of these initiatives. Once we have further visibility on future used vehicle market conditions and the effects of the strategic adjustments we have made at EchoPark, we will provide an updated EchoPark model and guidance.

As an update on our share repurchase activity, during the third quarter we bought back approximately 3.1 million shares of the company's stock for approximately $151.5 million. Year-to-date, we repurchased 5.2 million shares, representing 13% of shares outstanding as of the end of 2021 for approximately $245 million.

As previously reported, in July Sonic's Board of Directors increased the company's share repurchase authorization by $500 million. Taking this into account with our recent repurchase activity, this results in a total of $481 million in remaining share repurchase authorization, representing over 25% of Sonic's current market cap.

Now turning to our balance sheet. We ended the second quarter with $488 million in available liquidity including $171 million in cash and floor plan deposits on hand. The decrease in liquidity from the end of 2021 was driven primarily by the share repurchase activity I just mentioned.

Additionally, I'm pleased to report today that our Board of Directors has approved to increase our quarterly cash dividend to $0.28 per share payable on January 13, 2023 to all stockholders of record on December 15, 2022. Our strong sales performance, cash flow generation, and balanced capital allocation strategy continues to allow Sonic to return capital to shareholders through its quarterly dividend and share repurchases.

In summary, our third quarter results reflect another quarter of record financial performance in spite of growing macroeconomic concerns. Looking forward, we will continue to advance our strategic growth plans for both our Sonic Franchised Dealerships and our EchoPark business, taking the necessary steps in the short term to maintain our strong balance sheet so we can continue to reach our longer-term goals, while still benefiting from the strength of our diversified business model. We remain confident in reaching these goals and look forward to delivering further revenue growth, increase profitability, and generating long-term value for our stockholders.

This concludes our opening remarks, and we look forward to answering any questions you may have. Thank you very much.

[Operator]

Thank you. We will now begin the Q&A session. [Operator Instructions] Our first question comes from John Murphy with Bank of America Merrill Lynch. John, your line is now open.

[John Murphy, Bank of America Merrill Lynch]

Good morning, guys, a first question on inventory restocking and grocers and - because you guys have a much heavier luxury in import mix the most dealer groups, I'm just curious what you're hearing there and it's kind of felt like domestics might be catching up a little bit faster than the luxury import brands, but maybe not, I'm just trying to understand what you think is going to happen here, and when we get back to normal and what that normal means?

[Jeff Dyke, President]

Hi, John, it's Jeff Dyke. Yes, the import brands in particular, in Honda in particular, obviously the day supplies are really low 3, 4, 5 days and we expect that to continue for the foreseeable future. The High Line brands are getting better, Mercedes, BMW, our day supply in total is growing there, not as quickly as we'd like, but certainly, it's growing.

I think it's going to continue to get better as we move through the first and second quarter. I think the manufacturers are doing a great job, they're busting their butts, getting inventory to us, but they still have supply chain issues, chips are still a problem, and that's going to weigh on the industry for the foreseeable future.

But days supply, as we look into next year, if we're sitting at 18 days today, day supply next year we're hopeful that 25 days and I don't think it gets to 30 days, but we'll keep our fingers crossed, because that's going to drive and we'll continue to drive front-end pricing down, and that's a big piece of the puzzle for us from an EchoPark perspective.

[John Murphy, Bank of America Merrill Lynch]

And what do you, Jeff, what do you think that means for grocers? I mean, it's still - I mean, to 25 - 18 to 25 days is still pretty damn tight relative to history, does that mean grocers are still reasonably strong or they weigh just a bit?

[Jeff Dyke, President]

Yes, we're seeing just a little compression in this quarter, but not a lot. I mean, I think the grocers certainly from a pre-COVID perspective are going to be really high. If we run in $2,200, $2,300 a copy then, we're well north of $6,000 now. Maybe a return to norm is in the $4,500 to $5,000 range, but I don't see, that's certainly not going to happen this quarter. I don't see it happening in the first and second quarter of next year, grocers continue to remain high from a front-end perspective.

[John Murphy, Bank of America Merrill Lynch]

And you guys did mention of measured approach to growth yet, when I think you just kind of cited the EchoPark expansion by 2025, it didn't sound like there was much throttling back at all there. I'm just curious, particularly around EchoPark, how you think about this macro backdrop of what's going on in the used car market, where it's, it seems like it's going to be shrinking in supply for a number of years to come because we just sold few new vehicles, but it might be challenging to grow in absolute terms, and you're really going to have to go after market share pretty heavily there, just curious how you think about maybe tapping the brakes, a little bit on EchoPark growth or maybe not and this might be a great opportunity to go after some competitors that might be flailing and don't have the capital resources that you do?

[David Smith, Chairman and CEO]

Yes. This is David Smith, as it relates to EchoPark and our future expansion, we're going to - again some of our teammates here will jump in on this as well, but we're going to have a very disciplined approach to that. We're going to get back on track when we're seeing, as we mentioned, some huge progress in some of our EchoPark stores that Tim Keen and the team have been working on, and Jeff Dyke, we're going to see that to fruition before we start rolling out a bunch of other additional locations.

[Jeff Dyke, President]

Yes, so we opened Tulsa and Sacramento in the third quarter, great expansion for us. We're now over 50% of the market. We don't see a problem getting to 90% of the market by the end of '25. But we're not going to open any stores for the remainder of the fourth quarter, first quarter, second quarter, but we're at an average retail or we're at an average wholesale price right now, down from 31,500 to just below 26,000 that we're buying in the auction lanes.

We expect that to continue to drive, John, that's going - the rental car companies are out of the auction lanes, some other competitors are struggling, so we have access to inventory and as prices drop, EchoPark, this is a great time for us because recession happens, it doesn't happen, but things are slowing down and that's when EchoPark really thrives.

So these prices are going to drop, I think that by the middle of next year we'll be buying in the auction lanes, maybe in the 23,000 to 24,000 range and that's where the average monthly payment gets back down to where it was pre-COVID somewhere in that 450 range, last quarter, we - on average customer paid $630 with warranties and everything wrapped in, it's still too close to the new car payment.

So we'll tap the brakes here for a couple of quarters, get back to really focusing on the EBIT situation at EchoPark and what's going to create positive EBITDA is just that average price in the monthly payment for the consumer to continue to drop.

We're really excited, we had an EchoPark senior management team the other day. The team is pumped up. We see the volume coming back. Our big store in Thornton in the month of September made right at $900,000 profit. I don't think there's another single-point used car store in the country that was doing that. We sold 700 cars out of that store.

We will do over 800 cars in October. So the business for EchoPark is coming back. And we always said that it would, we're right on track with where we said we'd be. We'll see an improvement in EBITDA from the third quarter and the fourth quarter. We're already seeing that in October.

So we feel like really exciting times as we move forward. But we're cautiously optimistic, we're going to manage our capital properly and will tap the brakes here for a couple of quarters, not open any stores, and let's see what happens in the back half of next year, which will also include our thoughts on spending our branding - starting our branding campaign and really driving EchoPark.

We really never advertised EchoPark, it's just sort of a price-driven company, and so we've got that on our plate too, but we're going be smart, wait, and we'll see what happens with the pricing in the wholesale market. I would expect that one to four-year-old category comes back stronger in the next couple of quarters. We probably will sell less plus-five-year-old cars as a percentage, but it's certainly helping the bottom line.

[John Murphy, Bank of America Merrill Lynch]

That's helpful, thank you, guys.

[David Smith, Chairman and CEO]

Yes, something that Jeff mentioned, this is David, something that Jeff mentioned there is our advertising, our word-of-mouth advertising really couldn't be better, something we're really proud of is that our guest experience is really an industry-leading five-star guest experience at EchoPark that we don't want to sacrifice that as we get back to growth.

We've got some stores that - we've got some of our experienced guys as we call them, some of our salespeople are selling north of 50 cars and delivering on that guest experience and so we want to make sure that they have the proper training and hiring processes as we continue to roll those the stores out.

[Jeff Dyke, President]

Yes, John, another good point is, prior to COVID our average experienced guy sold 25 cars a month, and we're now at about 23, and in some of our stores are just being overrun, averaging 30, 35 cars a month. So we're starting to hire experienced guys again. The business is coming back and it's a lot of fun for us, obviously, been a tough year from an EBIT perspective, but we've had measured gross this year.

We'll be smart about that over the next couple of quarters and we're excited about where we stand with EchoPark, especially in comparison to a lot of competitive set that sitting out there with real heavy day supply and struggling in an environment like this.

[John Murphy, Bank of America Merrill Lynch]

Yes, it's tough when you have 99 physical lots that you can use, but anyway, okay, thank you so much, guys, I appreciate it. Not for you guys, for your competitors.

[Jeff Dyke, President]

Thank you. Yes, we did and we're watching them very close.

[David Smith, Chairman and CEO]

Thank you for clarifying that.

[John Murphy, Bank of America Merrill Lynch]

Yes, definitely not you, somebody else there. I'll leave it there. Thank you, guys.

[Jeff Dyke, President]

Thanks, John.

[Operator]

Thank you, John. Our next question comes from Joe Enderlin with Stephens. Joe, your line is now open.

[Joe Enderlin, Stephens]

Hi, guys, thanks for taking our question. So on capital allocation - on capital allocation, share repurchase came in, I have our expectations, just wondering if you think we can expect some continued elevated buyback or how are you thinking about priority here versus the M&A environment, given your tapping the brakes on EchoPark growth?

[Heath Byrd, CFO]

This is Heath Byrd, as David mentioned in his opening comments, we always look at capital allocation as a balanced approach. I think we did show that one of the big buckets is returning capital to shareholders, increased the dividend by 12%, and of course, as you mentioned the share repurchase is over 5 million for the year, and as we look at share repurchase, we always look at when it's undervalued and we still believe it's undervalued and so we looked at it from an opportunistic standpoint, balanced with the other priorities, there's not a regular scheduled cadence that will come from us on the share repurchase, it's more opportunistically as we compared to the other opportunities and the EchoPark expansion, as Jeff and David mentioned, it is slowing a little bit, maybe correlated with the market, so you won't have as much capital spend in the next quarter and the first two quarters of next year, so that's going to free up opportunities for other buckets.

And then lastly M&A is - M&A is one of the things it's so hard to predict because the opportunities come along sporadically, but we're in a great position to take advantage of those when they do come up, and so it's really like the share repurchases, no cadence that we could actually predict on that as well.

It's just when they come up, we use it. And then - so those are the big buckets and priorities, and of course, all of that is way against our liquidity and leverage, we're very comfortable where we are in both those categories and so we hope to stay and plan to stay in the same levels, and so that's really our balanced approach.

[David Smith, Chairman and CEO]

Yes, this is David Smith, it's interesting some of our peers have been saying this as well that the prices, Franchised Dealerships while still high, historically, we have seen some signs that those prices are coming down, so it will be interesting to see especially going forward into '23 what prices we're going to see and what opportunities that could come across our desk, but they've got to be - they've got to be extremely - extremely attractive in order to allocate capital towards acquisition.

[Operator]

Thank you, Joe. [Operator Instructions] Our next question comes from Rajat Gupta with JPMorgan. Rajat, your line is now open.

[Rajat Gupta, JPMorgan]

Great, thanks for taking the question. Just wanted to follow up on the EchoPark comment, from the $21 million EBITDA loss to the breakeven by the second quarter, I think, Jeff, you mentioned like volumes was the big driver, right, but could you help us bridge that gap in a bit more detail as to how we get from 21 to flattish, is it just primarily volumes and leverage on that or do you expect GPUs continuing to move higher, any further SG&A actions that are driving that, maybe if you could help us bridge that in more detail would be helpful.

[Jeff Dyke, President]

Yes. Thanks for the question. The fixed - the expenses from an SG&A perspective are pretty fixed at EchoPark that's when we had big volumes, you see the kind of profit we got out of Thorton. If you look back, you look at August, we're a little below 4,000 cars, you look at September, a little above 4,000 cars, you look at October, we're a little above 5,000 cars, we expect that to continue to grow. We're going to do better in November, better in December and it is a volume piece.

Our big stores need to be at that 400 level in order to breakeven and then once they fly pass the dollars bottom line quickly, and again that's what you see happen at Thornton. We believe that the prices on the wholesale market for a one-to-four-year car going to continue to drop.

Like I said earlier, the rental car companies are coming out of the lanes, some of our competitors having a lot of problems, so inventory is there for us and if for some reason the wholesale prices stop dropping, we would have to take some different - different strategical moves in order to get to positive EBITDA, but we just don't foresee that. We've been saying this all year, we've been predicting this is what's going to happen and it's happening, just exactly as we've laid out and we think as we move into the first quarter, we'll see continued drop.

I think by the end of this year, Rajat, we're going to see $24,000 price point at the wholesale loan, which is great for us, that gets us below that $500 monthly payment, and we think that that'll maybe flatten out a little bit and then continue to drop a little more as we move to the latter half of last year.

We get to the 7,000, 8,000 car mark, we're breaking even at EchoPark based on our expense today, but pre-COVID our store set today would be in the 12,000 to 15,000 car a month range. Right now based on the volumes that we had, we expect to go back there, and as those prices keep dropping that's what's going to happen. So that's the bridge, that's how we walk the positive EBIT.

And we think right now, whether it's in the first part of the second quarter, the latter half of the second quarter, even the first part of the third, based on how we see things moving right now in the auction lanes, that's when we'll return to positive EBIT. And we're really excited about it, it's a great opportunity, we've worked very hard on this model.

We're very confident in the model and you see a lot of other models flailing around and it's just the strict inventory management guidelines, sometimes you might miss out on a little volume, but at the end of the day our growth is there, we're going to get back to positive EBIT, that's going to happen in the calendar year' 23 and we think later half of the second quarter, first part of the third quarter is when that's going to happen.

[David Smith, Chairman and CEO]

Yes, this is David, just to remind - something just to remind investors is that prior to COVID some of our EchoPark stores or some of our most profitable dealerships across the board including all of our franchised stores, so it's something to remember that so we - Jeff knows what he's talking about there when he says a return to profitability.

[Jeff Dyke, President]

It's common.

[Rajat Gupta, JPMorgan]

Got it, got it, that's helpful color. Maybe going back to the franchise business and you know you've taken a lot of productivity actions over the last couple of years, what kind of scenario are you planning for into next year in terms of growth in the franchise business, maybe the SAAR environment, the used car backdrop, in that context if there is recession in the U.S., and the GPUs do normalize sooner than expected, both in the new and used cars, where do you see SG&A to grow stepping down for the franchise business for the company? So first like do see that macro backdrop playing out and if not, like know what - how should we think about any guide posts around SG&A to grow next year? Thanks.

[Jeff Dyke, President]

Yes. So we're building our '23 budgets now or in the budget season, from a front-end perspective on new car, I think margins maybe the back half of next year we get to 4,500 box somewhere in that ballpark, certainly not in the first half. It's going to be 6000, 5500, 5300 somewhere in there. We're going to have more new car volume next year just because the supply is going to be bigger.

I think our used car business will be real solid, just real strict inventory management and our gross will be there, it will be solid, maybe on a PR basis we step back a little bit in F&I, but not a lot, I mean if it's 25 bucks a car or something of that nature, but the overall gross revenue is going to grow just because the volume will grow and then our fixed operations business is on fire. We're growing that each quarter, we had a record quarter all-time quarter last quarter and that's going to continue to be good.

So as I'm looking at next year from a gross perspective, it looks a lot like this year to us in total gross dollars. I think that maybe we're up a little bit, I think in our latest budget, we had maybe $12 million more in gross in our budget than we did this year based on how we think this year will end, but it's going to look a lot like this year from a gross perspective, and then Heath has got some SG&A.

[Heath Byrd, CFO]

Yes, I mean, I agree with Jeff. The total gross dollars are going to look very similar nothing materially that we can see that it changed, especially down - to the downside. It's just going to come from different areas [indiscernible] is going to pick up. We're seeing in warranty for the first time in years picking up as well, and so I agree with him on the gross side.

On the SG&A, will be maintaining the same kind of expense reductions that we achieved from the pandemic. We also have automations and online activity that will help overall expense spend and improve efficiencies, but we are going to have some investments in technology and other areas for the future that is going to add to that spend and so you could probably see a slight uptick in a percent of gross and SG&A, nothing that significant, but I do believe that we're going to have some big deal for the future that could impact that and make it grow up just a little bit.

[Rajat Gupta, JPMorgan]

And the total gross dollar comments, flat next year, the gross profit dollars, just for the franchise business, is what you're referring to or as the overall company?

[Jeff Dyke, President]

Yes, just the franchise business. I'm sorry, I thought that's what your question was, on EchoPark gross will be significant.

[Rajat Gupta, JPMorgan]

Yes, yes. No, the reason I asked that is because if you take that into account, maybe in the comment on SG&A and the EchoPark does the better than - does come out doing better than breakeven for the full year, that should mean you should comfortably grow your earnings per share next year with the buyback, right, is that what you're suggesting?

[Jeff Dyke, President]

You're on it, that's how we see it.

[Heath Byrd, CFO]

Yes, that's how we see it.

[Operator]

Thank you. As there are no more questions in queue, I will pass the conference back over to CEO, David Smith, for any additional or closing remarks.

[David Smith, Chairman and CEO]

Great, thank you very much, and thank you, everyone, for joining us on the call today. Have a great day. Thank you.

[Jeff Dyke, President]

Thank you.

[Operator]

This concludes today's Sonic Automotive third quarter 2022 earnings conference call. Thank you for your participation, you may now disconnect your line.