Matt Pettoni - VP and Treasurer Craig Monaghan - President and CEO Keith Style - SVP and CFO David Hult - EVP and COO.

Rick Nelson - Stephens Inc. Brett Hoselton - KeyBanc Bill Armstrong - CL King Bret Jordan - BB&T Capital Markets Elizabeth Suzuki - Bank of America Merrill Lynch Steve Dyer - Craig-Hallum James Albertine - Stifel Nicolaus Paresh Jain - Morgan Stanley David Whiston - Morningstar.

Good day and welcome to the First Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Vice President and Treasurer, Matt Pettoni. Please go ahead sir..

Thanks operator and good morning everyone. Welcome to Asbury Automotive Group's first quarter 2015 earnings call. Today's call is being recorded and will be available for replay later today. The press release detailing Asbury's first quarter results was issued earlier this morning and is posted on our web site at asburyauto.com.

Participating with us today are Craig Monaghan, our President and Chief Executive Officer; David Hult, our Executive Vice President and Chief Operating Officer; and Keith Style, our Senior Vice President and Chief Financial Officer.

At the conclusion of our remarks, we will open the call up for questions, and I will be available later for any follow-up questions you might have. Before we begin, I 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. All forward-looking statements are subject to significant uncertainties, and actual results may differ materially from those suggested by the statements.

For information regarding certain of the risks that may cause actual results to differ, please see our filings with the SEC from time-to-time, including our Form 10-K for the year ended December 2014, 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. It is my pleasure to hand the call over to our CEO, Craig Monaghan..

Thanks Matt. Good morning everyone, and thank you for joining us today. For the first quarter, we are once again reporting record results, with diluted EPS from continuing operations of $1.30, an increase of 26%.

Our stores continued to produce excellent operating results, by maximizing new and used vehicles sales opportunities, improving F&I/PVR; pursuing incremental service pops and controlling expenses. In total, first quarter revenues were up 14% and gross profit was up 11%, and we achieved an operating margin of 4.7%.

These results and our strong balance sheet enabled us to employ over $100 million of capital in the first quarter and former share repurchases. Looking forward to the remainder of 2015, we believe automotive sales will remain healthy, and we continue to plan our business for a high $16 million SAAR.

We will continue to execute our two-part strategy, driving operational excellence and deploying capital to its highest returns. We are extremely proud and thankful for our team's hard work to achieve these outstanding results. Now, I'll hand the call over to Keith to discuss our financial performance.

Keith?.

Thanks Craig and good morning everyone. This morning we reported record first quarter EPS from continuing operations of $1.30. This represents a 26% increase from last year, and there were no adjustments to earnings for the first quarter of 2015 or 2014. For the quarter, same store revenue increased 8% and same store gross profit increased 7%.

Controlling our expenses enabled us to decrease SG&A as a percent of gross profit by 90 basis points from last year, to a ratio of 68.5%. SG&A flow-through for the total company was 40%, and was adversely impacted by our standalone used vehicle initiative, branded as Q auto.

We expect SG&A as a percent of gross profit to be between 68% and 69% over the remainder of the year. Q auto continues to progress in line with our expectations, and resulted in an EPS loss of $0.03 in the first quarter, slightly below our previous estimated loss of $0.04 to $0.06.

Looking to near term expectations, we estimate this initiative may reduce EPS by $0.01 to $0.03 in the second quarter of 2015. We continue to focus on our objective of achieving run rate profitability for Q auto by the end of the year. In terms of capital deployment, we invested $8 million in our facilities during the first quarter.

Our 2015 CapEx budget is approximately $65 million, and includes $45 million associated with our core annual CapEx plan, with the remaining balance allocated to CapEx related to recent acquisition renovations and construction, which will enable us to move out of facilities, that are currently under lease.

In addition, we will continue to seek opportunities to purchase property, in anticipation of future lease terminations. As Craig mentioned earlier, during the quarter, we returned $102 million to our shareholders through the repurchase of 1.35 million shares of our common stock.

Turning to the balance sheet, from a liquidity perspective, we ended the quarter with $1 million of cash, $60 million available in floor plan offset accounts. $90 million available on our used vehicle line, and $165 million available on our revolving credit line.

During the quarter, we closed on a $100 million real estate facility, which has a draw-down period through February of 2016, and bears interest at LIBOR plus 2.5%.

At the end of the quarter, there was $17.1 million outstanding under this facility, as the proceeds were used to pay-off a mortgage due in 2015, which was previously reported in current debt. After accounting for this transaction, we ended the quarter with a leverage ratio of 2.4 times.

In summary, we made substantial progress during the first quarter, in deploying our available liquidity, and our balance sheet is in position for us to achieve our targeted leverage ratio of 2.5 to 3 times. Now I will turn the call over to David, to discuss our operational performance.

David?.

Thanks Steve. We are extremely proud of our company's performance in the quarter. Our gross profit increased 11%, which was driven in growth in all of our business lines. This growth helped reduce an operating margin of 4.7%.

For the balance of my remarks, I would like to remind you, that everything I will be covering, with respect to operational highlights, will pertain to same store retail performance during the first quarter. New vehicle revenue increased 9% and gross profit increased 4% compared to the prior year.

Our new vehicle unit sales were up 6%, and new vehicle margins for the quarter were 5.9%. Our new margins were down, as a result of increased market competition. Looking forward, we believe we can maintain these margin levels in 2015. We ended the first quarter with $630 million of new vehicle inventory, or a 62 day supply on a trailing 30-day basis.

We are comfortable with our existing overall new vehicle inventory levels in light of our current case of business, and we will continue to monitor and adjust our inventory levels to reflect changes in the business environment.

Turning to used vehicles; unit volume increased 3%, while used vehicle gross profit remained flat over last year as a result of pressure on margins, which ended at 8.5%. However, our used vehicle gross margins are up over the last two quarters.

Going forward, in 2015, we believe our unit growth in used vehicles will continue in the low single digits, and we believe we can maintain these margin levels. We were able to maintain used vehicle day supply at 34 days, which is in our targeted range of 30 to 35 days.

Our F&I strategy remains unchanged, disciplined execution of F&I sales processes and training creates a solid sustainable growth and results. First quarter F&I revenue grew 7% compared to the prior year period. F&I per vehicle retail for the quarter was $1,365, up $35 on a year-over-year basis. The lending environment remains favorable.

In the first quarter, our parts and service revenue grew 8% and gross profit grew 10% compared to the fourth quarter of 2014. Our customer pay business, which represents approximately 54% of our parts and service gross profit, increased 4% from the prior year.

Our customer pay business was adversely impacted by the weather conditions in February and early March. In addition, reconditioning was up 19% and warranty was up 26%. For the rest of the year, we believe we can continue to grow our parts and service business in the mid-single digit range, while maintaining relatively stable margins.

However, there could be some margin pressure from increased focus on our quick service initiatives. Finally, we'd like to express our appreciation to all of our teammates in the field, as well as those in our support center.

Our company continues to improve in all aspects of our business, and our associates are producing best in class results in many areas. This is a direct result of your passion and dedication. Again, thank you. We will now turn the call over to the operator and take your questions.

Operator?.

[Operator Instructions]. We will take our first question from Rick Nelson with Stephens..

Hi. Can you comment on reach in all areas of strength and weakness, particularly Florida, as some belts have been [indiscernible]..

Rick, I am sorry, could you repeat the question please?.

If you could comment on reach in all areas of strength and weakness, particularly Florida I am interested in, and any comments on Texas would be appreciated?.

Florida continues to grow and is performing well and strong, and Texas has been stable with slight growth..

Got you.

And a mid-single digit comp guidance for the fixed operations, you have been tracking north of that for four or five quarters, if you could provide some color as to why you still think that mid-single digit is a reasonable objective, and maybe the tailwinds and warranty that we have seen -- what your expectation is there?.

Rick, this is Keith. For the quarter obviously, we are up 10%. We are very cognizant that the 10% is somewhat fueled by our internal work, which is tied largely to our used vehicle volumes and the work we do in our service base, to prepare our products for retail.

If you look at the warranty and the customer pay business, the warranty is still performing at a very high rate. Customer pay was up at 4%. If you combine the two, we are up about 8% for the quarter. That's the business that we feel like we control and we are focused on, and that's [indiscernible] our guidance level..

Good.

And finally, if I could ask you about the availability of subprime finance, if you have seen any changes there in the last quarter?.

No, it continues to be strong and favorable..

Okay. Thanks a lot..

Thanks Rick..

Thank you..

And we will take our next question from Brett Hoselton with KeyBanc..

Good morning gentlemen..

Good morning Brett..

Kind of two areas of questioning; first of Q auto, I know it's still early in the game here, but I guess, couple of questions, one, how is it performing versus your expectations? Are you seeing any thoughts or any differences in terms of the different formats, preferences, good and bad and so forth? And then, your sense of when you're ultimately going to evaluate, whether or not this is kind of a go or a no-go situation?.

Brett, I would start off and say, we are happy with the progress. We'd say we are actually moving slightly ahead of where we expected to be, as you saw in the result of this quarter, we had a $0.03 loss. We are anticipating a loss of $0.01 to $0.03 next quarter, so we think we will continue to make progress.

With respect to the formats, well essentially, we have got a small, medium and large format. I think we are learning that the smaller formats are most affected, the larger format is more challenging, but we think there is still opportunity in that store.

The other thing we are learning, is that the stores that are open the longest are the stores that are doing the best. I think that's something that you might expect.

With respect to where do we go from here, I think we continue to look at this as a tremendous opportunity for us to utilize today's technologies and some of our in-house expertise, and figure out if we can retail some portion of the 35,000 cars that we are sending to auction every year.

And I think we are making progress in that direction, our objective is to achieve run-rate profitability by the end of the year. We think we are heading in that direction, and I think at this point, we'd just ask for some patience, while we continue to work on it, and see where we can get..

And then, from a capital deployment standpoint, if I understood you correctly, you're kind of around 2.4 at the end of the first quarter, your target is 2.5 to 3 times, you're fairly close to your target.

As we think about capital deployment on a go forward basis, it seems as though you're generating free cash flow in the neighborhood of, let's say, I don't know, $150,000 or $150 million per year. You got some growth in your EBITDA, so you're going to see some increase in your availability on your net leverage ratio there.

So I kind of roll all that together, and very roughly, it seems like kind of steady state basis, you guys could deploy somewhere in the neighborhood of maybe $0.25 million per year, give or take.

I am wondering, how would you, if you were in our shoes, as investors, think about your capital deployment, just in terms of magnitude and kind of pace and so forth on a go forward basis, given that you're very close to your target at this point..

Hey Brett, this is Keith. I will start and then I will hand over to Craig. You're correct, we are at 2.4 times leveraged at the end of the quarter, recognizing that we also have about $90 million on a used-vehicle floor plan line, which we look at as low cost financing, and would include that in what we intend to deploy.

But we will setup, as you mentioned from the Wells Fargo facility we have in place, to have another $83 million or so and debt-to-eq [ph], and that would put us in our gross range.

I do track generally, the numbers you are speaking about, as far as free cash flow, I would say some of your numbers to get to $0.25 million [ph] [0:04:38] is a onetime adjustment instead of ongoing.

But we are still committed to it, to get into the 2.5 to 3 times range in a balanced way, in a balanced format, looking at internal opportunities, continuing to look at acquisitions and also obviously, we have been active on our share repurchase program as well. But it's still a balanced plan here..

I guess what I am kind of driving at, Keith is -- you obviously had a very substantial amount of share repurchase over the past couple of quarters here in the $100 million range. It kind of seems like the pace is likely to start to wind down to may be more in the range of $50 million per quarter, something also along those lines.

Is that kind of completely out of the ballpark, or is that directionally kind of the expectation over the next few quarters here?.

Hey its Craig, I will jump in. The pace in the long term is not sustainable. I mean, in the fourth quarter, we did -- let's call it $90 million on share repurchase, two major acquisitions. Another $100 million of share repurchase in the first quarter.

But I mean -- I would just come back to what Keith said, we will continue to deploy capital until we continue to get our net leverage, and by net, I mean, net of our floor plan availability, any cash on the balance sheet. We want to get that number in the 2.5 to 3 times range.

We are working to get there, and we will pursue opportunities across the board, whether that be internal investments, acquisitions when they make sense or share repurchase.

But obviously, I mean, just the math says, we can't continue at the pace that we are running certainly in the fourth quarter, and you saw that lighten up a little bit in the first quarter..

And then finally, just in the used cars, you had a difficult comparison last year. I mean, you did a fantastic job, and really overt eh past few years, you have done a very nice job on the used car side. So I think last year, if I remember correctly, same store was up around 10%, so a difficult comparison. So up 3%, not entirely surprising.

Sounds like on a go forward basis, you are kind of thinking maybe mid-single digits, was there anything unusual in the first quarter, other than maybe a difficult comparison that kind of slowed the pace down in the quarter?.

No -- this is David, I wouldn't say so. Our used to new ratio came in at 85%, which was up from the previous quarters, certainly not with the first quarter, it was at 14, but a good pace overall..

Excellent. Thank you very much gentlemen..

Thanks Brett..

We will go next to Bill Armstrong with CL King and Associates..

Good morning guys. Midline domestic comps up 12%, that's obviously a very strong number.

I was wondering if you could drill down a little bit and tell us how -- what was going on there, that drove such a strong comp?.

It's really just a market that's driving it. [Indiscernible] off to a great start this year, like several of the other midline imports, and we have just benefited from that within our markets..

No, I meant domestics, not the imports..

We have had -- Ford has performed fairly well for us. Our other domestic brands have really been most of that increase. We have seen great results with GM and Chrysler..

Got it. Okay. That's all I had. Thank you..

We will go next to Bret Jordan with BB&T Capital Markets..

Hey, good morning.

Just a little bit color on the Q auto, could you give us sort of some perspective on what you are seeing in the fixed ops there, as far as service or the F&I attachment in that channel?.

Yeah, we have very little fixed business in the Q stores at this point. It's just starting to come to life. We just don't feel we have enough units in operation yet, for that to be significant.

Our people in the service drives -- not the service, in the bays are essentially spending the vast majority of their time, preparing the cars to put back on the frontline. But otherwise, on the front end of the store, we feel like we are doing very well with our front-end grosses.

Our F&I/PVRs are not as high as the F&I/PVRs we see in our core stores, but they are good. And like I said earlier, we feel like its working, we are heading in the right direction. And remind you that, it’s a very different format. It is a fixed price format and cars are fixed price, the F&I products are fixed price.

It’s a selling process that runs off of an iPad. There is not a traditional F&I office. So it's an environment where we would expect to potentially see lower front end grosses, but we also have a lower cost structure. I would say it is -- its working, we are still learning, but we are very happy with the direction that it's at..

Okay. Thank you. And then a question, you made a comment about some margin pressure from quick service initiatives.

Is that pressure, because you're building overhead in anticipation of demand, or is that pressure because you're seeing a category what's got a lower gross margin attached in the pricing?.

It’s a category with a lower gross margin attached, and it's our initiative to go after our independents in our local markets..

Okay.

And then one last question, could you give us a number of lease penetration in the quarter, what percentage of units released?.

We don't have that available right now, we will give it to you afterwards..

All right. Great. Thank you..

Thank you..

And we will go next to John Murphy with Bank of America Merrill Lynch..

Good morning. This is Liz Suzuki on for John. Looking at your gross profit per unit for both new and used, we saw some year-over-year decline in both, and combined with the higher average selling prices, it caused some margin compression that you mentioned.

Is the competition that you talked about -- is it both on new and used, and why do you think that's getting more aggressive than it has in the past?.

I think it has been competitive for a while. I think there is always going to be a little bit of movement up and down between the quarters. There is pressure on used, there is pressure on new. The transparency, the internet, everything that's involved. I think we are fairly stable..

Okay, great. For the parts and service business, you have talked about a plan to add 200 to 400 techs over the next one to two years.

If we think about your parts and service capacity, do you think by the time you add the techs that you need, that you could theoretically see same store sales and parts and service accelerate? Like, is it a capacity constraint issue in terms of your labor, or is it more just market dynamics?.

Over the next two years, we will certainly have the techs that we need to -- while our facilities aren't at capacity, we have the availability to add the technicians, and with that, the business will come with it..

Great. Thanks very much..

We will go next to Steve Dyer with Craig-Hallum..

Thanks. Good morning. I think you responded to an earlier question about demand or trends in Texas being -- I think, you said stable. I think previous quarter, maybe Q4, a few had said that they were still positive, so I don't know if I am reading too much into it.

Have you seen -- I know, you don't have a lot of exposure to energy regions, but have you seen any sort of change in demand given energy prices?.

No. The business has been pretty stable for us there, and we really don't..

Okay. Thanks..

We will go next to James Albertine with Stifel..

Great. Thanks and good morning. I had a question for Keith, I think you had answered a previous question and I just missed it. I see your gross profit progression, as it relates to the parts and service category.

Can you talk a little bit about the reconditioning and prep growth in terms of the revenue there? What I am getting at here is, we are looking at 19% growth in profit, I think last quarter was something north of 10% as well, and yet 3% compares notwithstanding; 3% used retail unit growth.

So I guess my question is, can you make the argument that there is some spring-loaded, used retail growth here in the second quarter perhaps? How should we think about the connection between those two things?.

Jamie, I don't know that there is some spring-loaded benefit to use, naturally coming forward from this phenomenon. I would say though that, we do have the ability on the reconditioning side and on the parts and service side to put additional work into our cars, we have done that over the last couple of years.

As you have mentioned, we have shown pretty healthy increases in internal rates, and that builds into the cost of the car. And when you consider, we have been able to achieve that, and hold our margins on used, relatively stable, be it down a little bit this quarter, but relatively stable, I think overall, it’s a pretty good job..

I would agree with that, understanding the market conditions down, whatever it was to and change percent year-over-year in GPUs is quite a good result. Just wanted to make sure.

It sounds like its more processes, than it is unit volumes that's driving that GPU growth, correct?.

That's correct; and over time, we would expect those two to migrate back together, for the [indiscernible] by eased vehicle volume..

Got it. And I have noticed over the last several quarters, if I understand it correctly, the availability on your used line, has sort of hovered around $90 million.

Is that correct, am I understanding it’s the availability?.

Yeah, that's correct. The current availability is at $90 million..

Right.

So I guess my question is, is there an argument -- what's the argument for keeping $90 million outstanding, when you're in a process of sort of optimizing your used retail channel, right? I mean, isn't that argument for another 4,300 units you could be deploying arguably?.

I don't know that I am following the question. We look at that as -- we only have $10 million borrowed on our used vehicle line today. We have $90 additional to borrow, it’s a very cheap financing source for us that we intend to utilize.

But as far as investment in and from an operational standpoint, how many vehicles you have on the ground, I think is where you're getting to, we are constantly evaluating our dealerships for our day supply and having adequate inventory to sell-through to our customers..

Okay.

So is $90 million sort of the availability that you kind of identified as an optimized level, or do you se that coming down over time, as you put more investment into used inventory, Q auto and within your core model?.

I would look at that $90 million differently. I would look at that $90 million as a line that we can pull on, when we want cash to deploy.

If I look at the operations [indiscernible] inventory totally separately, if we have an opportunity to grow our used vehicle business by deploying capital to inventory, we will go ahead and do that?.

Understood, and then last question for Craig? Sorry, go ahead..

I was just going to jump in, and I'd say kind of the way I think -- if you were talking to a general manager in the store, the way they would think about it is, they want to have 30 to 35 days worth of used vehicle inventory on the front line. We then roll that up into a dollar investment in used vehicle inventory.

We kind of put that completely to one side. [Indiscernible] to stay in that 30 to 35 range, it seems to be a number that keeps us efficient, and we have internal rules that once a vehicle ages much beyond that, we start to force that car's movement within the system or we force it to auction. The line itself, we kind of look as a payable.

And right now, we are only using a portion of that, and what is the excess essentially is -- essentially liquidity that we have got available to us to redeploy..

Understood. Thank you for that clarification as well, Craig. And then if I may, just last question on the M&A environment; Craig, you have been great about kind of talking us through historically the ranges that you have seen, and it certainly marries with what we are hearing, evaluation expectations or growing up, it sounds like among sellers.

Just wanted to get maybe an update on the current state of the environment and sort of how you see consolidation playing out at this stage? Thanks so much..

I think there is -- it seems, we are always talking to someone. We are talking to people today. So there is always a transaction that's being contemplated. But I would say today, at least from our perspective, there seems to be a lot more talk about consolidation in the press, than what we see happening on The Street.

I think sellers expectations continue to increase for a number of different reasons, but there are still people who are willing to sell cars to us. We still see transactions that look like they could potentially get done at reasonable prices, but we are seeing fewer and fewer of those..

Understood. Thanks again gentlemen, and good luck in the next quarter..

Thank you..

And we will go next to Paresh Jain with Morgan Stanley..

Good morning everyone. Just a follow-up on the new GPU; you mentioned on the last call that you expect new GPU to kind of hover around the $2,100 mark, and now 1Q came in lower than that, and its obviously just one quarter and its either seasonally the strongest or the weakest.

So I guess, just a couple of questions, would you still be comfortable with that level, and despite all the pressure from midline imports, why doesn't -- on luxury, better truck makes and ideal credit conditions help convert those pricing gains into improved GPUs?.

This is Craig, maybe I will take a first shot at it. There is a number of things that are happening in the market. Luxury, you're right, luxury is higher priced vehicle, typically generate larger margins. But many of the luxury manufacturers are also starting to sell more and more lower priced units, which we move in the market much lower grosses.

I think that's playing into the market. David talked earlier about the transparency that we see in both new and used, I mean, that's the reality today. We look at this $2,100 number that you talked about, and if you just look at us over the last nine quarters, that number has been very stable. It feels to us like it will continue to be table.

I mean again, it varies quarter-to-quarter, but we have been in this $2,000 to $2,100 range for quite some time now, and we believe that will continue to exist.

Dave or Keith, you have anything to add?.

Got it. So a follow-up on the capital allocation strategy, on the last call, and you mentioned on this call as well, that you want to return excess capital to shareholders in the absence of acquisition to hit those leverage targets of 2.5 to 3 turns.

Now, just trying to understand how the current share price and multiple is being used into that decision-making, or is it just more about hitting those leverage targets, regardless of where the current price is?.

I think the overriding factor for us is that, we think -- we don't know exactly what our optimal capital structure is, but we think getting leverage into that 2.5 to 3 times range is where we should be. We are working to head in that direction.

We are not -- we don't think we are smart enough to determine what is the exact price that we should be buying or not be buying. I think we think of it as, more as an exercise with respect to share purchase, we are returning capital to our shareholders. You could argue that is essentially no different than a dividend.

What we do, do though, we look at what's the relative return on investment that we can achieve when we buy a share of stock, versus pursuing internal opportunities or pursuing acquisitions.

That becomes a trade-off for us, but we are very much interested in taking advantage of the opportunity we have to deploy some liquidity, and we will continue to move down this path..

Understood. And finally if I can squeeze in one more on Q autos, you haven't given any volume numbers obviously, but can you give us a sense of what percentage of sales are coming from wholesale being retailed, and what percentage is just Q auto taking share from peers in the market? Thank you..

I would just point out that, we have 88 core stores and three Q auto stores. So it’s a very small part of our business today. It is not a material amount of our used vehicle sales. I don't believe that we are disrupting any markets.

I think we have got something on our hands here that's very interesting, we are making progress, we are selling cars, we are learning. We are learning how to solve this puzzle of creating a marketplace where we can retail cars, that otherwise would have found their way to the auction.

We still get a lot to learn, but we like the fact that at three stores, it's very manageable, and we think the smart thing to do is continue to work on those stores. There are some technologies coming to play in those stores.

There could be -- we are working with our technology partners, we are working with our financing partners, we are experimenting with a number of different things, and we think it's just right the way we are doing it, and this is what we want to stay focused on right now..

Thank you very much guys..

We will go next to David Whiston with Morningstar..

Thanks. Good morning.

Continuing on Q auto, I was just curious, is one rationale for going to the time and expense of this and new brand and standalone stores is just that, where you can get some consumers into -- sort of buy a used vehicle, who wouldn't normally go to a new car dealer, to look for used vehicle?.

We are trying to figure out who the customers are, and we are learning that the customers in each of the markets are different. In one of the markets, for example its primary subprime. But in other markets, we can sell luxury cars.

I guess I would come back to kind of an overriding view, is that we are not consuming a lot of capital with this, it is not terribly disruptive to our core operations. We have carved out a group of people, who are dedicated to it, and we are learning, and I think that's an important thing. We are learning.

I think a brand is important, obviously a brand is important, and we do believe that as these stores continue to operate, get more time under their belt, they are becoming more relevant in our marketplace.

They are becoming more relevant online, and we think those are some of the things that are helping them continue to improve their volumes, and we just got to continue down that path.

Its going to take some time, but we feel like we are headed in the right direction and it is well worth our effort, and your investor, our investments and shareholders to give this thing a shot. In fact, we think we'd be remiss if we didn't give it a shot, because we believe there is a real opportunity here..

I completely agree, there is no reason to auction stuff you can retail. I was just trying to get more to the angle of -- why go to the time of the separate brands, so that's helpful, thank you.

And what if anything, somewhat broad market question on the industry, what if anything concerns you about consumer's ability and willingness to buy a vehicle in your markets, new or used?.

I think it’s a great time to be in the car business. We just jumped back, the product is absolutely phenomenal, we continue to see new product everyday. Interest rates are as low as they have ever been. I don't -- inventories are under control. We have learned, I think to become much better with our processes.

We continue to find ways to improve productivities, so our flow-throughs have been, I think, very healthy. It's really hard to find much to complain about today's marketplace..

Okay.

And last question, how much better can you SG&A to gross ratio get?.

This is Keith, we commented that we think we could be at 68% to 69% over the remainder of the year. We think we could operate well within that range. Obviously, a lot of the ratio is dependent upon business growth, and gross profit growth. So as our business grows, we are able to drive that even lower than those levels..

Okay. Thanks so much..

Thank you..

Well, that concludes our discussion for today. We appreciate you joining us and look forward to talking to you again next quarter..

This does conclude the conference. We thank you for your participation..