Sonic Automotive Inc

NYSE:SAH

Earnings Call Transcript 2017-Q4

[Operator]

Good morning and welcome to the Sonic Automotive Fourth Quarter 2017 Earnings Conference Call. This conference call is being recorded today, Tuesday, February 27, 2018. Presentation materials which management will be reviewing on the conference call can be accessed at the company's website at www.sonicautomotive.com by clicking on Our Company, then Investor Relations, then Webcasts & Presentations.

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 risk and uncertainties that could cause actual results to differ materially from the statements made. These risk and uncertainties are detailed in the company's filings with the Securities and Exchange Commission.

I would now like to introduce Mr. Scott Smith, Co-Founder and CEO of Sonic Automotive. Mr. Smith, you may begin your conference.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Thank you and good morning, everyone. Welcome to Sonic Automotive's fourth quarter of 2017 earnings call. I'm Scott Smith, the company's Chief Executive Officer and Co-Founder. Joining me today on the call are David Smith, our Vice Chairman; Heath Byrd, our CFO; Jeff Dyke, our Executive Vice President of Operations; and CG Saffer, our Chief Accounting Officer.

I trust everyone has read the documents released earlier this morning. I'll provide some brief comments and then turn the call over for questions.

For the quarter, we generated $1.42 per diluted share from continuing operations on a GAAP basis and $0.84 per diluted share diluted share on an adjusted basis. These results contributed to the annual amount from continuing operations of $2.12 per diluted share on a GAAP basis and $1.85 per diluted share on an adjusted basis. Results for the fourth quarter and the year of 2017 contained a tax benefit of $28.4 million related to the change in the corporate tax rate in future periods from 35% to 21%. Please see our earnings release for a discussion of this and other non-GAAP adjustments in the quarterly and annual periods.

From a top-line revenue perspective, for the fourth quarter, we experienced nice growth across all revenue categories. Gross profit also increased across all categories except for pre-owned vehicles where front-end gross was sacrificed to achieve the increases experienced in F&I. Pre-owned gross profit was also challenged by declining used vehicle valuations during the quarter. Nonetheless, we were able to drive overall top-line revenue growth of 4.3% and associated gross profit growth of 3.3% in the fourth quarter of 2017 compared to the prior-year quarter.

We were also pleased to see very good performance in adjusted SG&A which declined 340 basis points to 72.6% for the comparative prior-year quarter. The combination of these items contributed to an 18.3% increase in adjusted operating income for the 2017 quarter and 20.1% increase in adjusted pre-tax income before taxes from continuing operations. We continue to drive towards the milestone of owning 50% of our properties as the year of 2017 came to a close. We own 46% of our dealership properties and we continued to execute this longstanding strategy to control our properties where we conduct our business. We anticipate that we'll be very near the 50% milestone by the end of 2019.

In 2017, we also continue to return capital to our shareholders. We invested approximately $37.3 million in share repurchases to repurchase roughly 2 million shares at an average price per share of $18.42. This represents a significant level of capital returned to our shareholders. Combined with dividends, we returned approximately $46 million to our shareholders in 2017. Subsequent to the end of 2017, we increased our quarterly dividend 20% to $0.06 per share, further demonstrating our commitment to return capital.

Our growth strategy continues to be concentrated in increasing the footprint of our pre-owned business. We opened our first Texas EchoPark stores at the end of the fourth quarter 2017 and the first quarter of 2018. These two stores are located in the San Antonio market. A third San Antonio market store is expected to open by the end 2018 as is our first EchoPark store in Houston and two stores in the Charlotte market.

Our outlook for 2018 anticipates a stable new vehicle environment with opportunities in the pre-owned and fixed operations component of the business. We expect the 2018 SAAR to range between 16.75 million and 17 million units. We project our consolidated diluted earnings per share from continuing operations to be between $2.21 and $2.45 per diluted share. This includes an expected loss related to our pre-owned business ranging from $0.08 to $0.12 per diluted share.

At this point, we would like to open the call for your questions.

[Operator]

Your first question comes from Rick Nelson with Stephens. Please go ahead.

[Rick Nelson, Stephens, Inc.]

Thanks. Good morning. That's Stephens. Question for you, I've got some follow-up and some more color on the used car margin erosion, if you could speak to that and what the GPUs were specifically in the pre-owned stores?

[Jeff Dyke, Sonic Automotive, Inc.]

Hey, Rick. It's Jeff Dyke. So we experienced some market adjustments October, November and December when it came to our brand mix in the pre-owned segment, cars coming off lease, what was going on in Manheim et cetera. Given that, we pushed our pricing down which caused a margin erosion. We further saw that in January as well, but that's the cause of that. Our system automatically prices our vehicles. And as we have shifts going on in the marketplace, you're going to see some margin reductions. And we've experienced that over the last couple of years. That's nothing new to us. If the market's going to move lower, we'll adjust. If it moves up, we'll adjust and does all that automatically. So it doesn't mean that we don't have a human on top of that watching it, but that's what the system's guided our pricing to do, and that's what we did. And as a result, we're sitting in pretty good shape, inventory-wise. But that's what caused that.

[Rick Nelson, Stephens, Inc.]

Okay. Thanks for that Jeff. EchoPark specifically, I think you reported the GPU in the past. I don't see it with the materials today if you could speak to that what...

[Heath R. Byrd, Sonic Automotive, Inc.]

Yeah, Rick. This is Heath. It's $2,137 which includes front and the F&I gross.

[Rick Nelson, Stephens, Inc.]

Got you. And can you separate the F&I from the GPU?

[Jeff Dyke, Sonic Automotive, Inc.]

Rick, this is Jeff Dyke. So you'll see us as we move forward just reporting the combined number. Depending on the markets that we're in, the aggressive nature that we have on the front end of the business and what's going on there. You'll just see us provide you with a combined number of front end and back end. And our goal and it always has been to be somewhere in the $2,300 range, a little lighter than that in Q4. But I think if you see the revenue growth there and the gross growth there, we had a very successful quarter. As a matter of fact, from the pre-owned segment at the store level, I'm proud to announce that we were actually store level profitable. We made a little over $400,000. We had pre-tax cash flows in the $1.8 million range and after-tax cash flows in the $1.2 million range. So we're very excited that was our best quarter yet and it really sets us up for a great year. We're expecting in or around 25,000 vehicle sales through our premium segment in 2018.

[Rick Nelson, Stephens, Inc.]

And how many EchoPark stores are embedded in that guidance?

[Jeff Dyke, Sonic Automotive, Inc.]

You've got the current stores that are open today which is six in Colorado, two in San Antonio. You will add one more in San Antonio. You will add another in Dallas, another in Houston and two more in the Carolinas.

[Rick Nelson, Stephens, Inc.]

Okay. Got you. And finally if I could ask about what you saw in Texas, specifically the Houston market this quarter and do you see any of those benefits continuing or is that behind us?

[Jeff Dyke, Sonic Automotive, Inc.]

I assume you're talking about the hurricane and no. I think that we all did this. The hurricane ended. We had a great four to six weeks' worth of sales, and then the sales normalized. And so, we overloaded the market with inventory. We've got that all straightened out now, but that certainly played a role in our margins towards the end of the fourth quarter.

[Rick Nelson, Stephens, Inc.]

And OSOE – I'm sorry, I got one more. On OSOE, where you are with that and the roll out?

[Jeff Dyke, Sonic Automotive, Inc.]

Yeah. Sure. We can update you there. We've rolled out obviously all of our Charlotte stores, our stores in Pensacola which is a Honda and Audi location, Birmingham a couple of stores, five in California where the technology is in place. And so we're slowly but surely rolling the technology out. But I will tell you, Rick, our primary focus is to get EchoPark with the results that we're seeing to get EchoPark rolled out as quickly as we can in the markets that we've identified for this year and to begin to strategize the markets for 2019. That doesn't mean that we're not working One Sonic-One Experience, we are. It's the exact same experience whether you're at EchoPark or the One Sonic stores. It's just there's a lot more profitability and a lot more volume and a lot more upside we're finding on the pre-owned side. And so that's where our primary focus has been. We did not add a single One Sonic-One Experience store in Q4.

[Rick Nelson, Stephens, Inc.]

Got you. All right. Thanks a lot and good luck.

[Jeff Dyke, Sonic Automotive, Inc.]

Thank you.

[Operator]

Your next question comes from John Murphy with Bank of America. Please go ahead.

[Aileen Smith, Bank of America Merrill Lynch]

Good morning, guys. This is Aileen Smith on for John. First question, just following up on Rick's, is there anything that would prevent GPUs on EchoPark to reach the level of your franchise dealers or even exceed them? And as you've opened these stores over the past few years and you've seen some of the stores mature in the Colorado market, has there been a consistent or rough timeline or period where these stores reach similar profitability as your core stores?

[Jeff Dyke, Sonic Automotive, Inc.]

It's a couple of different questions there. In terms of the frontend PUR, we're buying more than half of our cars at EchoPark. So, naturally, you're going have a lower frontend PUR than the amount of cars that we trade for on the Sonic side. The business is just not as mature. So, I would expect – and you'll hear us say this over and over and over again – the way we've got to get you to look at our pre-owned segment is a combined front and back number. We're going to be hyper aggressive on our frontend pricing. So, margins are going to swing all over the place. We make great margin in terms of the backend. And really, it shouldn't matter whether you're getting it on the front or you're getting it on the back, the combined number is somewhere in that $2,300 range is the number that we're comfortable with and where we think we're going to get the most volume and the most gross.

So, that's how we've got to kind of train you guys and the Street and everybody to think about EchoPark and our margins there. Don't focus in on that frontend margin. Don't focus in on the backend margin. Focus in on both of them combined. And as a result, I think you'll see the total gross numbers that we've been seeing in the performance we've been getting, especially what we got in the fourth quarter.

[Aileen Smith, Bank of America Merrill Lynch]

Understood. That's very helpful. And as you're assessing the integration of the Florida AutoMatch dealers that you're transitioning over to EchoPark, do you have a preference for acquiring and transitioning over existing businesses, or building out EchoPark stores from the ground up? Are the returns between either substantially different?

[Jeff Dyke, Sonic Automotive, Inc.]

It just depends. If we find a opportunity to buy a pre-owned dealer that their culture matches what we're trying to accomplish with EchoPark, then we would do that. And so you're going to see us over time build stores from the ground up. You're going to see us buy dealers that are out there that match our culture. The upside is just too great on the pre-owned side to ignore that. And there are lot of great pre-owned dealers out there that are just like we would look for an acquisition on the new car side, make a great acquisition for our pre-owned segment. And our expectations are that our pre-owned segment's going to be bigger than our new car segment. It's significantly bigger.

And so if you kind of look out there and look at all the publics, look at CarMax, they are the biggest, by far, and we just think there's just so much upside in that particular category. And EchoPark is off to such a great start. That's why you see us ramping up even harder and faster in 2018. And you'll see us come with even a more aggressive schedule in 2019 as these stores continue to get more profitable and more cash flow comes in. We're very excited about where we are with the brand. The results are starting to show up now. We're right on target with where we said we'd be. And so more focus on EchoPark is what you'll hear out of Sonic Automotive as we move forward.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Yeah. This is Scott. I think if you look at the history of CarMax, when they started, they had a number of years that they lost substantial amounts of money. And I feel like we are ahead of where they were at this time. We aspire to be a little bit more like them. They're pretty smart over there and they've got a $13 billion, $14 billion, $15 billion market cap. And one of the reasons why I like the pre-owned market so much is, one, it's a much larger market than the new car business. And we don't have barriers to entry for us. We have the knowledge, we've got the technology. We can develop these stores because we have a predictable, repeatable and sustainable model. As they continue to mature and the volumes go up, the cash flows we've seen are improving, and we'd project ultimately down the road that EchoPark would be substantially larger in Sonic Automotive than our franchise business.

[Aileen Smith, Bank of America Merrill Lynch]

Great. And one last question if I may. As you think about tax reform and the windfall you should get from a free cash perspective, obviously, you remain very committed to EchoPark and OSOE. But could this potentially increase the likelihood of more aggressive acquisition activity from your end of traditional dealers, especially as returns on invested capital may look a little bit more attractive under tax reform?

[Bryan Scott Smith, Sonic Automotive, Inc.]

Yeah. We're opportunistic in acquisitions but when our stock price is trading where it is relative to going out and buying franchise dealerships, buying our stock looks like a better deal to me. And when we look at acquiring or developing our pre-owned business, those multiples are significantly better than what's out there in the franchise business. So there are a lot of bright and shiny objects out there, a lot of deals that are available. But we are staying focused on expanding EchoPark right now. We've got a couple of luxury open points that we're continuing to develop and I think you'll see the franchise side grow more so through the open points than through straight-out acquisition.

[Aileen Smith, Bank of America Merrill Lynch]

Great. That's very helpful. That's it from my end. Thank you.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Thank you.

[Operator]

Your next question comes from Colin Langan with UBS. Please go ahead.

[Colin Langan, UBS Securities LLC]

Oh, thanks for taking my question. On the slides it mentioned, that you see upside F&I per unit, but it seemed to be quite strong. I mean any target numbers there that we should think about in terms of F&I?

[Jeff Dyke, Sonic Automotive, Inc.]

Colin, this is Jeff Dyke. At the end of the day, we've sort of been a little bit behind the pace of the rest of the frontrunners on the public side in terms of that PUR number. And I think – as we told you a few quarters ago, with the introduction of JM&A on our team now, we're doing some catch up. The upside, we're going to continue to see a growth. I mean mid to upper 1,400s now. Hopefully, well over $1,500 for 2018. And I think that number can grow into the $1,600, $1,700 range as we move forward. So it's a matter of execution, getting the right training, the processes in place. But lots of upside for us from an F&I perspective.

[Bryan Scott Smith, Sonic Automotive, Inc.]

And Colin, this is Scott Smith. I would throw out that each of the publics provide different products that are available in F&I and our aim has been to provide good quality products that people want to buy. And if you notice our reserve rates tend to be a little bit lower, and that's primarily because we believe that if we sell a product rather than charge a higher rate that it will lower, and I think if you look statistically at the group we're among if not the lowest in charge backs for people refinancing early. So if we can tweak our offer in (00:19:54) market to what consumers are really wanting to purchase with their vehicles, I think we'd be successful and get those numbers that Jeff is talking about.

[Colin Langan, UBS Securities LLC]

Got it. And you came in at the low end of your guidance. Any color on what maybe came in a little shy from what you were thinking from your last update?

[Heath R. Byrd, Sonic Automotive, Inc.]

I mean, I don't think the SAAR was as strong as we thought it was going to be. At the end of the day, we had an exceptional fourth quarter. So a little bit of that was the slowdown in the third quarter. A little bit of that was us pushing new and pre-owned inventory into Texas and not getting the bang for our buck there. That cost us a bunch of money in November and December. And so just the combination of those things.

[Bryan Scott Smith, Sonic Automotive, Inc.]

And I think when you look at manufacturer incentives, they didn't come on strong until the fourth quarter. So we were pushing a rope there with a lot of these brands in the first half of the year. So I think they came on very strong in fourth quarter and allowed us to really score deep.

[Jeff Dyke, Sonic Automotive, Inc.]

And, Colin, I'll add to it, as you know, in our portfolio, BMW is more than 30% of our profit structure. And so with the 15 stores that we have, they really suffered in August, September and October, but then November and then in particular in December that they really got their incentive structure going and took off, and we just had an unbelievable quarter with them.

So hopefully that continues. They've got a bunch of new – I'm just back from Germany at their new product launch from their world conference, and their product setup, from my perspective in my career is the best it's ever been. And so, we're real excited about the brand and where it's going.

[Colin Langan, UBS Securities LLC]

And I also noticed CapEx is guided to be down year-over-year, but you're still expanding EchoPark. I mean was it abnormally high this year? I mean why the decline in CapEx?

[Jeff Dyke, Sonic Automotive, Inc.]

So this is Jeff Dyke, again. That's the difference between building an EchoPark store and building a brand new manufacturer-driven store. We can build EchoPark stores for a whole lot cheaper, and we're just not going to go out and build the $30 million, $40 million, $50 million facilities any longer without a significant return on investment because of the return that we're getting at EchoPark. So again this is just a material shift that you're seeing from Sonic Automotive moving towards the pre-owned side of the business because the barrier to entry, as Scott said earlier, is much lower. And there's just a lot more that we can do.

It's a bigger market, bigger opportunity, more profits. And we're just not going to get caught up in the game of building these facilities like we've been asked to build in the past. We're just not going to make those investments unless the investment warrants it and we're not going to be bullied into that situation either. So we have an outlet now and we're pursuing that outlet as quickly as we can with EchoPark.

[Heath R. Byrd, Sonic Automotive, Inc.]

And, Colin, if you actually look at the breakdown year-over-year, our pre-owned CapEx spend is going to be a little bit higher, but relatively the same as 2017 and our franchise side of the business is about $80 million less planned in 2018 compared to 2017.

[Colin Langan, UBS Securities LLC]

Got it. All right. Thank you very much for taking my question.

[Jeff Dyke, Sonic Automotive, Inc.]

Yes, sir.

[Operator]

Your next question comes from Irina Hodakovsky with KeyBanc. Please go ahead.

[Irina Hodakovsky, KeyBanc Capital Markets, Inc.]

Yeah. Good morning, everyone.

[Heath R. Byrd, Sonic Automotive, Inc.]

Good morning.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Good morning.

[Irina Hodakovsky, KeyBanc Capital Markets, Inc.]

Gentlemen, a quick question for you on the used vehicle segment. On a same-store basis, gross profit per unit was down. I believe you mentioned there was a need to push some inventory. But then the same-store used volume was also slightly down. So, I'm wondering if you can just guide us in terms of the outlook. How should we think about same-store volume growth versus gross profit per unit outlook?

[Jeff Dyke, Sonic Automotive, Inc.]

Yeah. Irina, thanks for the questions. This is Jeff Dyke. That came really primarily in December in the fourth quarter. Had we just had (00:24:10) kind of a flat December year-over-year we'd have been up for the quarter. And a lot of that had to do with the amount of pressure that we put on the new car side, in particular with BMW, Toyota, Honda, driving our new car business, which is all fantastic.

The percentage of certified pre-owned as a mix of our total mix was too hot, so you just didn't have that breakdown between new, nearly-new, and pre-owned. Those are corrections that we're making and that we've made in the first quarter, and so obviously our traditional growth. I think this fourth quarter was, maybe the first quarter, and I think the year was maybe the first year that we've been backwards in pre-owned volume, maybe the first time in the last 13 years or so. So, a little bit of a strategic shortfall there, and we've got that corrected, and you should expect Sonic to return to its normal growth patterns from a pre-owned perspective for 2018.

[Irina Hodakovsky, KeyBanc Capital Markets, Inc.]

Understood. Thank you.

[Operator]

Your next question comes from Bret Jordan with Jefferies. Please go ahead.

[Bret Jordan, Jefferies LLC]

Hi. Good morning, guys.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Good morning.

[Jeff Dyke, Sonic Automotive, Inc.]

Good morning.

[Bret Jordan, Jefferies LLC]

I guess if you look at sort of benchmarking yourself to a CarMax or somebody who obviously is differentiated with the captive finance business, would you think about doing captive finance? Or I guess obviously AutoNation taking a run at used with a service initiative, is there something that you'd think about sort of adding to the economics of the transaction, either on the finance or service side? And I guess to follow up, I think I ask this question every quarter, but are you seeing any growth in customer pay service in the EchoPark channel?

[Jeff Dyke, Sonic Automotive, Inc.]

Yeah, Brett. This is Jeff Dyke. The problem that we've had is that we've been selling so many cars, it's taking up all of our recon capacity. So you're going to see us make a move in Denver, Colorado this quarter where we're going to actually have EchoPark Service-only centers – service and purchase centers, so that we can begin to focus more on the CP side of that business. It's there. It's there for us to get. So you'll see a sort of divide and conquer there. We'll have our retail centers, but we'll also have some EchoPark Service centers to go along with that.

Is there an opportunity finance-wise down the road? Maybe, but we did not build our model. And if you look at the CarMax model, a large portion of that model was built on the need for that – for the financing piece of the business. We didn't built the model that to be sustained by a bank. And so we're very, very excited about where we are and how we're positioned with EchoPark because from our pricing and the way that we're focused on pricing, from the inventory management that we've got in place and the guest experience which is our mantra, what we really follow on, those are the things that are driving the business and the success for EchoPark, and we expect that to continue to drive that success.

The added benefit of having the fixed operations piece in the Denver market, we'll see how that goes. If it goes as we planned then you can expect us to open not just a retail center in the marketplace that we go into but also EchoPark Service. There's an opportunity for an EchoPark body shop down the road. There's just a lot of things we can do to expand this brand as we begin to get you know our legs underneath us and that's what's starting to happen. It happened in the fourth quarter with profitability for that at the store level and real good positive cash flow. And we expect to see more and more of that as we move through 2018.

[Bret Jordan, Jefferies LLC]

I think a few quarters back you talked about critical mass maybe being 25 units. Is that something that you're still thinking? I'm just sort of trying to get a runway to EPS accretion from the EchoPark strategy, when we might think about that?

[Jeff Dyke, Sonic Automotive, Inc.]

Say that again? I didn't quite hear the question.

[Bret Jordan, Jefferies LLC]

Yeah. A few quarters back, I think you were talking about 25 EchoPark units being sort of a critical mass level and I was trying to get a feeling for the trajectory to EPS accretion from this strategy. You're talking about $0.08 to $0.12 expense in 2018. Are we thinking maybe this is large enough to be profitable as on an EPS basis in 2019?

[Jeff Dyke, Sonic Automotive, Inc.]

Yes, we are. And that's – yeah, I don't know that we have to get to 25 stores at this point. That was kind of our original goal. But as we've matured, we're building fewer stores in the marketplace, bigger stores. We're driving more volume. That's less expense. And so, I'm not going to call that out for 2018 obviously. But it is certainly our intention to be able to begin seeing an EchoPark standing on its own two feet without the need of Sonic Automotive as we move through 2019.

[Bret Jordan, Jefferies LLC]

Okay, great. Thank you.

[Operator]

Your next question comes from Grant Jordan with Wells Fargo. Please go ahead.

[Grant Jordan, Wells Fargo Securities LLC]

Hey. Thanks for taking my questions. Just had a couple of follow-ups. One, you guys have done a fairly sizable M&A deal back in Q3, if you could give us some more details on that. And then I just wanted to clarify, did you give CapEx guidance for this year? I think you said maybe $80 million less.

[Bryan Scott Smith, Sonic Automotive, Inc.]

Do, you want to answer?

[Heath R. Byrd, Sonic Automotive, Inc.]

Yeah, we did do an acquisition in Q3 of 2017, approximately $225 million in revenue. Pre-owned dealership fits perfectly into our EchoPark strategy. So they've been with us for the last four months. And the second question, did give guidance? On page 36 of the deck, you can see our CapEx guidance for 2018.

[Grant Jordan, Wells Fargo Securities LLC]

Okay. And then on the M&A front, do you feel like there are more opportunities like the one you did in Q3 of that size?

[Jeff Dyke, Sonic Automotive, Inc.]

Hey. Grant, this is Jeff Dyke. We'll see. Right now, like I said earlier, there was a previous question if there's an opportunity for us to buy a pre-owned business that fits our culture, that's really important here because there's a lot of pre-owned business out there for sale that don't fit the culture and we'd rather hire and train it than to try and go and buy it because the model is so specific.

But this particular dealer group in Dallas they fit our culture very well and they've molded in really, really well. They're doing a great job and so that's all converging into EchoPark as we speak. And so sure, if there's an opportunity down the road to pick up a pre-owned dealer and if it fits our culture, then absolutely we would consider that.

[Grant Jordan, Wells Fargo Securities LLC]

Okay. And what – can you give us more specifics on the culture comments you commented on, is it like a type of customer that you're going towards or the type of operations?

[Jeff Dyke, Sonic Automotive, Inc.]

No, that's just internally. It's just fitting our culture, how we operate, just the same way we talk One Sonic-One Experience, the way that we go to market, how we believe in terms of pricing. All of those things that are – things that we talked about in the past, a traditional pre-owned dealer just won't fit this culture.

[Grant Jordan, Wells Fargo Securities LLC]

Got it. Okay. Thank you very much.

[Operator]

That is all the questions for today. Back to you, Mr. Smith, for closing remarks.

[Bryan Scott Smith, Sonic Automotive, Inc.]

All right. Well, I'd like to thank everyone for joining us today and we look forward to speaking to you on the next call. Have a great day.

[Operator]

This concludes today's conference call. You may now disconnect.