ABG - NYSE

Greetings. Welcome to Asbury Automotive Group's Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now a pleasure to introduce Chris Reeves, Vice President of Finance and Investor Relations. Thank you. You may begin.

Thanks, operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's Second Quarter 2025 Earnings Call. The press release detailing Asbury's second quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com. Participating with me today are David Hult, our President and Chief Executive Officer; Dan Clara, our Chief Operating Officer; and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call 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, forecasts and current expectations, each of which are subject to significant 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 31, 2024, and any 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. Comparisons will be made on a year-over-year basis unless we indicate otherwise. We have also posted an updated investor presentation on our website, investors.asburyauto.com, highlighting our second quarter results. It is now my pleasure to hand the call over to our CEO, David Hult. David?

Thank you, Chris, and good morning, everyone. Welcome to our second quarter earnings call. This is an exciting time for Asbury, and I want to begin my remarks by thanking our team members who make it all possible through their hard work and approach to execution that has helped us consistently lead the pack in operating efficiency. I would also like to formally welcome the more than 2,000 team members from Herb Chambers. And finally, I want to personally thank Herb Chambers for the opportunity to be a steward of this business. We look forward to a bright future together, and we're eager to partner with the Herb Chambers team members to continue growing our presence in the New England market with the high level of service you have been delivering for 40 years. Shifting to our operational performance. We continue to see strong demand in the second quarter as consumers weigh the decision to buy ahead of potentially higher prices from an ever-changing tariff landscape. But we did see the SAAR decline as the quarter went on. We believe the outlook for the second half of the year will be heavily dependent on how various tariff decisions make their way to consumer level pricing. While new vehicle GPUs have been resilient year-to-date, we still see those metrics trending back towards the 2,500 to 3,000 range over time with optimism that we end up more towards that 3,000 level. Used vehicle profitability has remained strong, supported by a constrained supply environment. Based on the limited pool of used vehicles, we have chosen to focus on gross profit, but we'll continually evaluate that approach based on how the used vehicle market evolves. Our parts and service business continued to deliver stable, consistent growth with same-store gross profit up 7% for the quarter. We are continuing to invest in tools and technology that will enable our fixed operations business to operate more efficiently and deliver an even better guest experience. Our transition to Tekion is part of that investment, and we are happy to report that our Koons stores are now 100% converted to the new DMS. As I mentioned at the start of the call, it's been an exciting, but busy time for Asbury. Our near-term focus will be ensuring all of our critical initiatives are executed at the highest level possible. I couldn't wrap up my comments about our operational performance without commending the team for their focus on running the business efficiently. Our same store adjusted SG&A as a percentage of gross profit was 63.2% for the quarter, an improvement of over 100 basis points from the second quarter of 2024 and a sequential improvement from the first quarter of 2025. It is important to note that we still see opportunity to further reduce our SG&A profile over time. Our ability to grow the company through transformative acquisitions while maintaining our operating margin profile is a point of pride for us, but it's just one element of our broader approach to strategically managing our portfolio and deploying capital to its highest and best use. In the second quarter and through July 28, we divested of 9 stores as part of ongoing capital allocation in our effort to optimize our portfolio. The proceeds from these transactions helped to offset some of our investment in Herb Chambers, and we anticipate prioritizing leverage reduction over the next 12 to 18 months as we work to integrate the acquisition and focus on our migration to Tekion. That said, share repurchases are an important component of our capital allocation strategy, and we will be opportunistic in our execution of share buybacks even as we work to reduce our leverage ratio. And now for our consolidated results for the second quarter. We generated $4.4 billion in revenue, had a gross profit of $752 million and a gross profit margin of 17.2%. We delivered an adjusted operating margin of 5.8%, our adjusted earnings per share was $7.43, and our adjusted EBITDA was $256 million. Before I pass to Dan, I want to once again acknowledge our team members for their focus and dedication to the business. Your commitment every day puts us on the path to be the most guest-centric automotive retailer, and we're optimistic about the future. Now Dan will discuss our operational performance. Dan?

Thank you, David, and good morning, everyone. I am going to provide some updates on our same-store performance, which includes dealerships and TCA on a year-over-year basis unless stated otherwise. Starting with new vehicles. Same-store revenue was up 9% year-over-year and units were up 7%. New average gross profit per vehicle was $3,611. Brand unit performance varied widely depending on availability or potential for tariff impact. Our volume for Stellantis was up 15.6% this quarter compared to national sales down 11.5%. Across all brands, our same-store new day supply was 59 days at the end of June. Turning to used vehicles. Second quarter unit volume was down 4% year-over-year. Used retail gross profit per unit was $1,729, which marks the fourth quarter of sequential growth. We continue to monitor conditions on a market-by-market basis for deploying our approach to pre-owned, and we still plan to prioritize unit profitability at this point of the used car supply cycle. Our same store used day supply of inventory was 37 days at the end of the quarter. Shifting to F&I. We earned an F&I PVR of $2,096. The deferred revenue headwind of TCA was a $161 decrease in the same-store F&I PVR number year-over-year. As a reminder, we are planning the TCA rollout to the Koons stores in the fourth quarter of this year following the recent completion of the Tekion conversion at those stores. The timing of this TCA rollout changes the magnitude of the deferral headwind that we had estimated at the start of the year. Michael later will walk you through additional details regarding TCA. In the second quarter, our total front-end yield per vehicle was $4,861. Moving to parts and service. As David mentioned earlier, our same-store parts and service gross profit was up 7% in the quarter. We generated a gross profit margin of 59.2%, an expansion of 53 basis points. In addition, our fixed absorption rate was over 100%, an important benchmark for the strength of the business. When looking at our customer pay and warranty performance, customer pay gross profit was up 7%, with warranty gross profit higher by 16% or 9% on a combined basis. In our Western stores, we grew 15% on this combined metric. We continue to be bullish on the long-term trajectory of our parts and service business. We believe the continually aging car park and the increasing complexity of modern vehicles mean our stores are well positioned to capture future service growth. The average age of a passenger car on the road is 14.5 years old, and the average truck is nearly 12 years old. Additionally, recent and upcoming models have more technology and innovative powertrains, which should create opportunity for our service departments for years to come. And finally, on an all-store basis, we retailed over 9,500 sales through Clicklane in the second quarter, 46% of these sales were new units. Before I pass the call, I would like to once again thank our team members for their commitment to service and to be the most guest-centric automotive retailer. 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 the call, thank you for joining us this morning. And now on to our financial performance. For the second quarter, adjusted net income was $146 million and adjusted EPS was $7.43 for the quarter. In addition, the noncash deferral headwind due to TCA this quarter was $0.43 per share. Our adjusted EPS would have been $7.86 without the deferral impact. Adjusted net income for the second quarter of 2025 excludes net of tax, $4 million of cyber insurance recovery proceeds, $4 million related to the gain on divestitures and $2 million of professional fees related to the acquisition of Herb Chambers. Adjusted SG&A as a percentage of gross profit came in at 63.6%, noting that the Tekion implementation costs are beginning to impact our P&L. We still anticipate 2025 SG&A in the mid-60s, caveating that we are monitoring tariff and trade developments. While we see additional expenses for Tekion rollout and legal fees, we still are optimistic there are opportunities to lower SG&A in the future. The adjusted tax rate for the quarter was 25%. Following the Chambers acquisition, we estimate the third and fourth quarter effective tax rate to be 25.5%. TCA generated $7 million of pretax income in the second quarter. The negative noncash deferral impact for the quarter was $11 million or $0.43 on an EPS basis. As Dan mentioned, we now anticipate offering TCA in the Koons stores in early Q4. The updated schedule of the rollouts, along with the lower SAAR projections versus our original estimate will affect the timing of deferrals in future periods. We have outlined our timeline and estimated impact on 2025 EPS on Slide 19 of the presentation posted to our website this morning. The periods beyond 2025 have not been updated due to uncertainty around tariffs. Now moving back to our results. We generated $334 million of adjusted operating cash flow through the first half of 2025. Excluding real estate purchases, we spent $60 million on capital expenditures through the end of June. We anticipate approximately $250 million in CapEx spend for both 2025 and 2026. However, this is dependent on the impact and duration of tariff policies with adjustments to spending as appropriate. Free cash flow was $275 million through the first 2 quarters of 2025. We ended Q2 with $1.1 billion of liquidity comprised of floorplan offset accounts, availability on both our used line and revolving credit facility and cash, excluding cash at Total Care Auto. Our transaction adjusted net leverage ratio was 2.46x at the end of June. Following the Chambers acquisition, we anticipate that this ratio will be above our target range. We will work down our leverage over the next 12 to 18 months and expect to be below the higher end of our range in mid- to late 2026. On July 21, we closed on the acquisition of Herb Chambers Automotive Group. Full year 2024 adjusted EBITDA for Herb Chambers was $176.8 million, and the transaction was valued at about $1.45 billion. Of this amount, $750 million represented Blue Sky and $610 million was real estate and improvements. Please refer to Slide 32 in our investor deck and the Form 8-K/A filed this morning for more information on the pro forma financials. Upon completion of the deal with our amended credit agreement, our revolver capacity increased to $925 million and our new vehicle floorplan facility to $2.25 billion. This deal was financed through a combination of our credit facility funding, proceeds from a new mortgage facility and cash. As noted in our release this morning, we divested 9 stores with annualized revenue of $619 million since the start of the second quarter. This was done as part of our portfolio optimization strategy, and it allowed us to use the net proceeds of $250 million to $270 million towards reducing our leverage. Before we take questions, I want to thank our team members. We appreciate and recognize your efforts and performance. And with that, this concludes our prepared remarks. We will now turn the call over to the operator and take your questions. Operator?

[Operator Instructions] Our first question is from Jeff Lick with Stephens.

Congrats on a great quarter and congrats on the acquisition. I know that means a lot to you, David, with your New England roots up here. I just want to wonder if you could just walk through as the quarter progressed, kind of the cadence of GPU and also units and just where do you see things standing now as we are into the first month of Q3?

Jeff, this is Dan. So as the quarter progressed, we saw the GPUs started stronger in the first part of the quarter as the SAAR started to level off, as David mentioned in his remarks at the beginning of the call, we started to see adjustment into the GPUs as well. I'll tell you that as things move forward, situation is still pretty fluid. There's been, as you know, a few agreements that have been reached with Japan and the European Union but still trying to see where things are going to fall and how the OEMs will react. But back to the comment that David stated earlier, we see those -- still have belief that those GPUs fall in the $2,500 to $3,000 range.

And that range you've given, that's inclusive of any, say, new kind of dealer invoice to MSRP adjustments and relationships?

Yes. It's -- again, it's still hard to tell where the part is going to fall for a lack of a better term until we start to see how they're adjusting. I will tell you, there's been a few OEMs domestic and some of the luxury imports that have slightly adjusted invoice, but it's still too early to tell to see what the final impact is going to be.

And is it your thinking that most likely all of the kind of major adjustments, if there are any, will really kind of accompany the 2026 model year changeover?

Yes. I think, yes, the 2026 model, when you think about the OEMs going through the transition right now, and this has been going on since the end of the first quarter, they've had plenty of time to strategize, think about it and make the necessary adjustments that are going to come down the pipeline. But you also got to think about that -- anything that has to do from a production standpoint, it takes time to really adjust the parts and the suppliers and what have you. So I do expect that in the 2026 model, there will be the adjustments necessary to adjust to the tariff, but it will take some time when it comes down to the packages and the options that might be available to adjust that accordingly with the suppliers.

Our next question is from Federico Merendi with Bank of America.

So you had a solid SG&A performance during the quarter. And I was wondering, can you talk more about the initiatives that are allowing the SG&A to remain under control?

Yes. I mean the main one is just focusing on that productivity per employee. We just try to make sure we maintain that discipline on the headcount and gain the productivity for the employee side. That's the big one because most of our expenses are compensation. But then also looking at the different outside services that we use and making sure we're getting a good return for that investment. The one piece in that number that we still have in there is there's a couple of million dollars of Tekion conversion cost in there. So that number would have been even lower if we wouldn't have the kind of Tekion conversion cost in that mix.

And if we assume that in the second half volumes for new vehicles will be lower due to higher prices and so consumers want to buy vehicles, I would assume that it will be harder to leverage your SG&A. So how would you plan to offset the lower SG&A absorption?

Again, that productivity for employees is key because a lot of our costs are commission-based and they adjust with either a downturn in volume or PVRs. So that cost discipline is key. But that's also why we kind of said mid-60s. To your point, it will be a little tough to keep that lower number if the PVR drops off significantly or the volume drops off, but that discipline on productivity is kind of the key to keeping that number as low as possible.

Our next question is from Rajat Gupta with JPMorgan.

Great. I just had one first one on just the Herb Chambers acquisition. You now have them under the hood for a couple of weeks. It looks like the SG&A to gross profile for Herb Chambers is slightly better than the legacy Asbury business. I'm curious, have you been able to -- given the couple of weeks you've had, any incremental opportunities do you see to improve like just metrics at the stores, other areas around services or used cars that you see you can bridge the gap to versus Asbury orders versus like broader industry peers that have better metrics. Just curious if you could just give us some more insight into what we should expect to see as the acquisition gets integrated further? And I have a follow-up.

Rajat, this is David. There was a few things that we think about their mix of luxury, over 60%, the name in the marketplace that they have and the scale that they have in the market was most interesting to us, along with the quality people and tenure that they have. So we think we aligned philosophically on how to run the business. The best part about this in any transaction, there's always opportunities to improve. There's opportunities to improve in our same store. There's opportunity to improve with any acquisition that we have. We'll work with the team over time to look for efficiencies to improve upon the business. But this was a strategic market for us. It's a defensive position. New England isn't a growth market, but it's a very stable market. It performs well in a downturn. And with the luxury mix and the presence in this market with the level of service that they offer, we think this creates great stability for Asbury over time.

Understood. I just had a follow-up on parts and services into the second half. We're going to start running into some tougher comparisons when it comes to warranty, specifically recall work later this year. Curious if you think you could maintain the mid- single-digit type growth cadence here as we go through the next couple of quarters? Do you feel comfortable offsetting any of the warranty -- the tougher warranty comps with more customer pay work here later this year? Just curious to get your thoughts on the cadence there.

Rajat, this is Dan. Yes, we feel comfortable with the mid-single digits that we have been discussing as we move into the second half of the year. And we have the throughput in the stores. Obviously, the bay utilization, we have opportunity to grow that as well. So we feel comfortable with that measurement and continue to have and push forward as we go into the second half.

Rajat, this is David. I'll just jump on that, too. It's kind of tough looking at year-over-year with the CDK issue last year. So far against our peers, our warranty growth was about half of our peers. Warranty isn't something that you sell. It's something that you do based upon what's going on with the product. Mix-wise, we're similar. I can only think when we're off that much year-over-year, we must have just done a better job last year closing warranty. But to your point, going into the second half of the year, we're definitely going to have some headwinds on the warranty side, but we're convinced that CP will continue to be stable. And the Chambers organization just does a fantastic job with fixed as well. So we're very optimistic about parts and service in the second half of the year with to your point of question mark, on warranty.

That's helpful. Just one clarification. Are the warranty margins higher than customer paid for Asbury? I know it's higher than some peers, but curious if that's the case for you as well.

Yes. It varies slightly, but overall, it runs higher on warranty than it does CP, the margin.

[Operator Instructions] Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group.

I want to move over to used GPUs. Nice, really strong in the quarter. I guess given the same-store sales performance, it appears Asbury continues to stick with the profitability over volume. But can you talk through kind of the strategy, how you think about the second half and if there's any change there?

Ryan, it's Dan. Our strategy remains the same. As you know, we are facing the lack of supply from the used car inventory in relation to the pandemic. And I don't need to walk you through it, but less lease turn-ins, et cetera, that all took place during the pandemic. So with that thought in mind, our plan stays the same, maximizing gross profit rather than chasing the volume. But as we stated at the beginning of the call, this is something that we assess on a continuous basis, and we're ready to adjust as soon as we see the market shifting and more availability of inventory.

Ryan, I would jump on and say, we can see the rest of this year, the pool is just very shallow. I think we're at our low point to Dan's point about talking about the COVID peak. It starts to improve in '26 with off-lease vehicles. And that will vary a little bit depending upon lease penetration and groups and how much access they have. So '26, '27 certainly get back to normal, and I think you'll start to see increases mid-'26 and beyond.

Helpful. Then just progress on Tekion. Good to see Koons conversion completed a little ahead of expectation there. Multipart question here, I guess, as it relates to Tekion, but one, anything surprising you thus far post that conversion with Koons? Two, can you quantify what the implementation costs for Tekion were in the quarter? I mean you had really nice SG&A leverage, especially comparing to peers in the quarter, even considering that. But if you're able to quantify? And then the last part would just be the conversion timeline for the remaining Asbury stores.

Ryan, I'll start and then Michael can jump in on the cost-related stuff. One of the reasons we chose to go with Tekion was the simplicity of the software and not having as many bolt-ons as we have. We see the benefits and efficiencies with that and making it easier for our teammates to work with the clients. But changing a DMS is like heart transplant. It's the one thing that dealerships never want to go through. And even with planning and execution, you're still going to have a lot of snafus, and we had that throughout the quarter, inconsistency with software applications, stuff going down at moments in times, things missing. It's just normal through it. So to the Koons folks’ credit, it was a frustrating quarter for them having to go through that. The stores that we originally piloted last year are all the way through that and really starting to see the efficiencies of the software. And when we're fully converted, which will hopefully be in '27 is when we really recognize the SG&A benefits but also operating efficiencies. Positive feedback from some of the employees with less screens to utilize. Some of the feedback that we get from leadership, the software is a little bit like a Ferrari. It's got more to it than what we're used to. So we're finding new things every day about it. So it's going to take us a while to become proficient on the software and work through the kinks of normal DMS conversions. But we're very happy and pleased with the progress and quite honestly, how resilient the Koons team was working through it in the quarter was just -- it was inspiring for us to see.

And on the cost front, it's about $2 million in cost in the quarter. About half of that is, I'll call it, duplication and implementation costs with Tekion. And the other half because we're a public company, we have to go through a little bit of pain and aggravation of testing the control environment. And so we have -- we're paying outside resources to kind of work through the audit side of SOS controls with the software. And so about $1 million of implementation and duplicated DMS costs and about $1 million of third-party audit cost.

Our next question is from David Whiston with Morningstar Equity Research.

I was curious how -- I'm sure your Toyota, Lexus inventory is lean, but is it leaner than it normally would be due to tariffs slowing production out of Japan?

David, this is Dan. No, it's lean, but we have not seen a negative effect on being leaner than what we're used to operating. And as you know, we've been operating under that single digit to low double-digit DSI for quite a while. And it's all about the turn, and I feel like our stores are doing a pretty good job with that.

All right. And on the EV tax credit in your EV inventory, do you expect the OEMs post September 30, once the credit is gone to be very aggressive on trying to pressure you on allocation?

This is something that you have been able to monitor and see coming for a while. I think some of the OEMs have done a very good job of planning accordingly and the number of EVs, whether they are in production or allocation or even on the dealer lots has been dwindling down. So I don't expect a tremendous amount of push because they have been preparing for it. And listen, at the end of the day, we're good partners. We are always going to make the best decision to make sure that we return the right level of return of investment to our shareholders, but we're going to be true partners and support our OEMs. But like I stated before, they've been planning accordingly. We've seen the DSI go down in the EVs, and we're monitoring that closely on a day-to-day basis to make sure that we retail the EVs that we have on the ground before that September 30 date.

Okay. And just one last question on your geographic mix. With Herb Chambers, really the one major part of the country you're not in is California. I know historically, you haven't wanted to be there, but are you perhaps thinking more about the West Coast now that you've got the Northeast?

David, this is David. I'll take that question. We don't -- based upon the franchise laws in the different states and the economics in California, we just see there's better investments and better returns in other states. So you can never say never. But for the near term, we divested our 2 stores in California. I think we'll stay outside of California and focus on the markets that we're in. As a footprint now, we're actually in the states that we want to be in and don't want to leave any of the states that we're in currently, that's not the plan anyhow. But we'll look at things as they come. Size and scale matter to us to a certain degree. Buying a store in a smaller state that has $30 million or $40 million in revenue per rooftop is just something that doesn't interest us. We try and look at 10-year economic outlook of markets that we're in, what the franchise laws are and all that kind of stuff. And we think that's what helps our portfolio keep the SG&A as tight as it is. We're not hyper focused on growth as a top line revenue growth, but really being strategic about the capital allocation, where we're buying stores, what our returns are for our shareholders and making sure that we're doing it thoughtfully and building for the future. And while we talk about the headwind of TCA and what it meant to an EPS, I think, $0.43 or so in the quarter, when you look at Slide 19 of our IR deck, when you get out to '28 and '29, you're talking $4.50 to $5.50 per share before we sell a car. So while the next year, 1.5 years is tough on us on EPS, you start to look out a few years, we really look like a solid company and then you add in the concept of fully being on Tekion and the benefits of SG&A. So the next 6 or 7 months might be bumpy as we settle into tariffs and what happens there and stabilizing day supply. But we think the future is really bright, and we're optimistic about it and excited for the future. But for now, California is not on the list, and it's really focusing on the markets we're in.

Our next question is from Bret Jordan with Jefferies.

On Slide 19, I guess, you're pending full visibility in the tariff impact for the estimate reviews. Is there a meaningful exposure on the parts side where you've written warranties that might see a higher parts cost than expected? Or is most of that in labor or just too small in the total TCA portfolio to really make a difference in the next several years?

Yes. I mean it's a good point. We try to bake in inflation into our estimates for what we price the F&I contracts at. So there's some in there. But if you had a meaningful increase on the parts side, to your point, labor is the biggest component of that. And so we have a small impact on the claims, but not a huge impact. On the '26 through '29, what we're really trying to figure out there is where do we think SAAR shakes out. That's the big driver of the TCA runoff, and when kind of that deferral hits you is when that SAAR rebounds. And so once we figure out kind of a better forecast for SAAR over the next couple of years, we'll come back and update those numbers for those SAAR projections.

And Bret, just to jump on that real quick, if you don't mind. When we acquired TCA, their AM Best rating was an A-. We've improved it to an A rating. So we're real happy with the way we're managing the portfolio and loss ratios. And so we're very optimistic about the future for TCA regardless of tariffs.

Yes. Great. And then a follow-up on regional dispersion, I guess. You called out the Western stores having 2x the company average in parts and service growth. Is there anything else sort of interesting from a regional performance either on units or puts and takes geographically?

No. Bret, this is Dan, by the way. No, I don't think that there's anything else interesting. I'll just expand on the double-digit growth in the West, and we've been talking about this for the last, I don't know, 12, 18 months, been a lot of focus on the integration of our West stores and really putting the processes and procedures in place to maximize the opportunity on a day-to-day basis, but more importantly, to enhance the guest experience through technology, even though we know that the employees in the front lines are the ones that create the experience.

I would just add to that. I would say more than geographical brand mix matters. All brands are cyclical. So depending upon your portfolio, it can be a tailwind or a headwind based on what you have. But things are pretty stable. And I think everything is really -- the market is kind of sitting still waiting to see where the tariffs shake up, what the manufacturers end up doing with pricing. And we'll make that onetime adjustment move on. The one thing that's proven true about this industry because I know there's a lot of negative talk about the second half of the year, what's going to happen with tariffs and margins and all that kind of stuff. The public auto space has been public for 27, 28 years now. There's been a lot of negativity over time with it. And as far as everyone looking for the headwinds going forward, one thing that holds true and especially through the recession in '08 and '09, this is a resilient business model, and it's an accordion effect with its expense control, and it always finds a way to perform and continue to go on. The transportation retail business is strong. It's not going to go anywhere. In this business model, not just ours, but our peers in the private cap space will certainly adapt and come out on the other side of this just as strong as they did before.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to David Hult for closing remarks.

Thank you. This concludes our call today. We appreciate everyone's participation and look forward to speaking with you after our third quarter. Have a great day.