LAD
#Good morning, and thank you for joining us today.
On the call with me are Chris <UNK>, our Executive Vice President; and <UNK> <UNK>, Senior Vice President, and CFO.
Earlier today, we reported first quarter earnings of $2.07 per share, which marks our 30th consecutive quarter of record performance.
We increased quarterly revenue 19%, and earnings 16% over our adjusted 2017 results, primarily driven by our proven greenfield growth strategy of acquiring strong franchises that are underperforming to their potential and then improving them.
Vehicle sales improved sequentially each month of the quarter.
January and February were softer than expected, and we experienced more severe weather than typical in the <UNK>east throughout the quarter.
Despite the slower start, we finished strong with a record March, which generated over 70% of our earnings in the quarter.
We expect this momentum to continue throughout 2018 and beyond.
From an operational perspective on a same-store basis, total sales were flat.
New vehicle sales decreased 2%, offset by solid results in all other business lines, with retail used vehicles up 5%, F&I increasing 5% and service and parts growing 3%.
Fixed operations remained strong as we continue to focus on customer retention through the creation of personalized service experiences with each customer.
Sales shortfalls in January and February created an urgent call to action for our leaders to more aggressively pursue the over $200 million in unrealized earnings potential available to us.
Aside from cost savings opportunities and personnel, advertising and interest expense, much of this earnings improvement will come from expanding sales and margin, which Chris will be elaborating on further in a moment.
Our stores continue a variety of online buying and home delivery models tailored to their markets, the hallmark of our entrepreneurial spirit.
Our service and delivery network reaches 81% of the U.<UNK> population, as measured by vehicle sales registrations.
Online initiatives are pacing 24% ahead of last year, resulting in 80% of our total first quarter vehicle sales, originating online, or approximately 64,000 new and used vehicles sold.
Our goal of selling 85 vehicles per location each month continues its progression, as we sold 67 used vehicles in the first quarter, up from 66 units in the comparable period last year.
We also posted an all-time record result in F&I at $1,380 per vehicle.
We are operating in an exciting time, where change and disruption can create considerable opportunities.
The teams at our 186 locations are passionate about understanding our local customers and innovating to find creative and efficient solutions for them.
The speed of adaptation of automation, electrification, car sharing and other changing ownership solutions are primarily being driven by consumer affordability and convenience.
Understanding our customers' individual needs are key to future market share and retention dominance.
Combining world-class performance management systems, a deep talent pool, a strong balance sheet and a proven growth strategy, we are poised to capture these opportunities, while balancing profitability along the way.
During the first quarter, we added Honda and Acura in Buffalo, New York, expanding our national reach to another 1.2 million people.
We also added the Day Group, complementing our barrel locations in Pittsburgh, and the marquis assets from the Prestige Family of Fine Cars in Bergen County, New Jersey, adding to our existing base of stores as well there.
Earlier this month, we added Broadway Ford in Idaho Falls, Idaho and Buhler Ford in Eatontown, New Jersey, our first domestic franchise in the area.
Lastly, we divested 3 smaller franchises in Fresno, California.
We estimate these moves will add $1.4 billion in net annualized revenues, propelling us beyond $12 billion in 2018.
With 2/3 of the year remaining, we have nearly eclipsed the amount of revenues added in 2017.
We see significant opportunities in the markets that are more attractively priced than in the recent past.
We intend to continue to expand and optimize our network of local customer service and delivery centers, consistent with our strategies to effectively respond to changes in personal mobility.
Our industry is still highly fragmented, and we believe we can emerge as the dominant provider of full-service mobility and personal transportation solution.
Expanding our service and delivery sites builds the scale and national footprint that can accelerate our success in the evolving ecosystem of personal transportation.
Future expansion into the Southeast and pockets in the Midwest remain an objective in the coming years.
A larger organization with coast-to-coast coverage provides scale in inventory, cost management, financing and technology.
The web rewards size, while owning and controlling the inventory is paramount.
We have one of the largest new and used vehicle inventories online, with over 75,000 units available for sale.
We partner with industry leaders and startups on software development that is shared among our stores.
Additionally, our network of inventory and people can provide traditional sales and service experiences plus the crucial infrastructure for the operation of car sharing fractional ownership and electric fleets.
As the top-of-food-chain provider with not only used vehicles, but also new vehicles, certified vehicles, financing service and parts revenue streams, we create a more controllable, stable and diversified model than most, if not all, new market entrants.
In summary, we remain focused on delivering the annual double-digit growth that we have accomplished for the last 9 years, accounting for the momentum we expect for the remainder of the year, the significant earnings power and the current operational base and the current acquisition environment, we remain optimistic on our 2018 outlook.
These factors, coupled with the most liquidity in our history and sector-leading low leverage, gives us confidence that we can continue to drive significant top and bottom line improvement.
With that, I'll turn the call over to Chris.
Thank you, <UNK>.
Our mission of growth powered by people means cultivating a high-performing culture where all of our team member deliver top line performance, while leveraging our cost structure.
Attracting, attaining and growing the best team possible is the key to capturing the dry powder we have identified at each location.
To build an organization that continues to anticipate and respond to the needs of our customers, we inspire and empower our over 15,000 team members to innovate, grow and advance their careers.
We are enhancing our internal personal development efforts, as we have shown that our internally promoted leaders are twice as likely to succeed and become high performing.
Our efforts are delivering results, as last year we internally promoted 80% more managers than in 2016.
Our entrepreneurial culture rewards innovation in technology and is helping us to attract seasoned leaders from across our industry.
Millennials now make up over 50% of our workforce, boosting our familiarity with technology that enhances online buying, financing and servicing experiences for our customers.
By allowing our teams to utilize a variety of technology and tool sets as they see fit, we can evaluate and experiment with the best technology solutions.
Similar to an app environment, Lithia relies on competition between our internal developers and technology vendors to remain nimble and to avoid mandating a single solution across the entire organization.
We are a rapidly growing organization, as we have acquired nearly $7 billion in annual revenues in the last 5 years.
In addition, our same-store results currently contain 70 locations that are not fully seasoned and will continue to improve performance to generate an annuity stream of earnings in the future.
Our job is to accelerate this improvement as quickly as possible.
We see opportunity needs business line and on average new acquisitions have approximately 2.5x more earnings potential than our seasoned stores.
I'd like to provide more detail on the results in the quarter.
As <UNK> mentioned, approximately 1/3 of our locations were affected by weather in the first quarter, notably in Alaska, Montana and the <UNK>east, which impacted same-store comparison.
In the quarter, on a same-store basis, new vehicle revenue decreased 2%.
Our average selling price increased 3% and unit sales decreased 4%, below national sales increases of 2%.
Gross profit for new vehicle retail was $2,010 compared to $1,951 in the first quarter of 2017, an increase of $59.
As referenced in our investor presentation, new vehicle sales at our acquisitions averaged 30% below the market share expected by our manufacturers and 50% below the share achieved at our seasoned stores.
We continue to inspire and motivate our teams to capture this opportunity.
Same-store retail used vehicle revenues increased 5%, of which 4% was due to greater unit sales and 1% to an increase in selling prices.
Our used-to-new ratio was 0.93:1, gross profit per unit was $2,080 compared to $2,245 last year, a decrease of $165.
Core units increased 11%, certified units decreased 3% and value auto decreased 3%.
While our unseasoned stores saw an 11% increase in unit sales in the quarter, used vehicles continued to be our biggest focused area.
This is typically the lowest performing business line of acquired stores, as they typically sell half as many used vehicles as seasoned stores.
Achieving the 85 units per location per month objective will result in a 25% increase in used unit sales.
Same-store F&I per vehicle was a record $1,380 compared to $1,309 last year.
Of the vehicles we sold in the quarter, we arranged financing on 72%, sold the service contract on 47%, and sold a lifetime oil product on 26%.
In the quarter, our seasoned stores averaged over $1,500 per unit in F&I or more than $300 higher per vehicle than unseasoned stores, and almost double the PVR of newly acquired locations.
Our same-store service body and parts revenue increased 3%, customer pay work increased 4%, warranty increased 3%, wholesale parts increased 1% and our body shops increased 1%.
We will have over 4 million unique customer transactions in our maintenance centers in 2018.
Our factory-certified technicians, superior service facilities and state-of-the-art diagnostic equipment will continue to ensure that we are the preferred location to service consumer vehicles and assist in attracting top technician talent.
Opportunity remains as company-wide service retention, a measure of consumer loyalty and repeat business is still 20% below our seasoned store levels.
Same-store gross margin was 15.5%, an increase of 30 basis points from the same period last year, primarily due to mix shift.
The inclement weather and related softer vehicle sales in service business in the first 2 months of the quarter elevated our SG&A expenses as a percentage of gross profit, as we bumped up against semi-fixed personnel and advertising costs.
As vehicle sales recovered in March, we saw significant improvement in SG&A leverage as productivity increased and we better leveraged our advertising expense.
In March, our SG&A as a percentage of gross profit was in the mid-60% range.
Our SG&A is variable, but not on an instantaneous basis.
If we were to experience a sustained lower sales environment, our leaders would reduce SG&A spending levels to achieve appropriate cost leverage.
Given our robust area and best-in-class operational reporting, we anticipate this could be achieved over a 1 to 2 quarter period.
Unseasoned stores performed 1,500 basis points worse in SG&A than seasoned stores.
As we drive revenue growth in all lines of business, the typical new store SG&A of 90% or higher will move to company average, allowing us to further drive down our consolidated results over time.
In summary, we have significant opportunities to capture the more than 200 million in dry powder available.
The key to our success is the growth and development of entrepreneurial-driven leaders across the organization.
This spirit allows us to remain humble, stay nimble and leverage technology to adapt to market needs while maximizing the scale of our platform to innovate and deliver the best-in-class experience at our sales and delivery centers coast-to-coast.
And now a few comments from <UNK>.
Thanks, Chris.
At March 31, 2018, we had approximately $134 million in cash and available credit as well as unfinanced real estate that can provide another $250 million in 60 to 90 days for an estimated total liquidity position of $394 million.
At the end of the first quarter, we were in compliance with all of our debt covenants.
Our leveraged EBITDA, defined as adjusted EBITDA last used for opine interest and capital expenditures was $60 million for the first quarter of 2018.
Our free cash flow, as outlined in the investor presentation, was $35 million for the first quarter of 2018.
We forecast free cash flow of $125 million for the full year.
Our net debt-to-EBITDA is 2.9x, which increased from year-end levels due to the significant acquisition activity in March, while our denominator only benefited from 1 month of EBITDA from operations.
As we continue through 2018 in the additional points contributing more EBITDA, we expect the ratio to return to our targeted range of 2x to 2.5x.
We still maintain one of the lowest leverage ratios in our industry.
Earlier this morning, we announced a 7% increase in our dividend to $0.29 per share related to our first quarter of financial results.
We are pleased that the continued growth on earnings allowed us to raise the dividend for the eighth consecutive year.
We have taken advantage of the volatility in our share price to opportunistically repurchase stock.
Year-to-date, we have repurchased 90,000 shares at a weighted average price of $98.02.
Under our existing 250 million share repurchase authorization, approximately 154 million remains available.
Our tax rate came in at just over 25% in the quarter as we benefited from the annual vesting of our incentives-based stock awards.
Any step up in basis to our employees is recognized with the discrete item in the quarter.
For the full year, we still estimate an effective tax rate around 27%.
As <UNK> mentioned earlier, we continue to target revenue of $12 billion to $12.5 billion, and $10.60 in earnings per share, and an estimate of SAAR in the range of $16.5 million to $17 million units.
We continue to generate significant free cash flow and of our leverage remains at comfortable levels.
We will deploy capital towards accretive investments and opportunistically return to shareholders as efficiently as possible.
We also continuously evaluate ways to expand our business into areas where we can capture more of the automotive value stream.
This concludes our prepared remarks.
We'd now like to open up the call and take some questions.
Operator.
Sure, <UNK>.
This is <UNK>.
I think if you look at the quarter, the <UNK>east had weather throughout.
Believe it or not, though, we're still pretty bad in March.
We actually had 3 of the storms hit in March and they held up fairly well.
If we look at Alaska and Montana, there was some weather.
We also had a little bit of weather in Oregon for 3 days that we lost, which impacted things.
But I think ultimately, I really believe, and I'm not ---+ there is no way to really define specifically as to what it was in January and February and where the weaknesses were.
We know it was weather-related, but we also noticed that the consumers may have been a little bit tentative in many of the high-state-tax areas.
And then it seemed like they may be started to do their taxes and figure out that maybe it's not so bad, and with the impact of state tax not being deductible over a certain amount, and they began to buy again in March.
So if we looked at some specific states, I mean, we can look at like New Jersey, was down 3% in the quarter, but it was a strong March.
New York was down 5% in the quarter and again a strong March.
Oregon was down 2% in the quarter and a strong March.
Vermont, same thing.
Hawaii, same thing.
Iowa, same thing, which are all ---+ that's 6 out of the top 10 highest state taxes in the country.
So we're kind of pleased that the consumers have maybe grounded a little bit there, and we think that they're trending back to their typical buying patterns.
Specifically, about DCH, I think this is something that we find a lot of times when stores have improvements that it's very easy to be comfortable with the accomplishments that you've achieved and forget that they're still more opportunity, but it's neat to see that our leadership teams at DCH are reinspired.
I think January and February helped create a realization for all of us that our DCH quarterly results at 2% operating margin in, albeit, a seasonally ---+ a little bit tougher quarter, is it where they want to be and they came back through in March, and we're seeing some pretty good similar trends to what we saw in March leading into April.
We were up about 3% service parts and body.
We're not seeing shortages in labor like we used to.
It is nice to see that oil prices in Texas are strong again, which is where we did see some labor shortages 5 to 7 years ago, when oil was close to $90, $100.
But so far it's pretty stable, we're able to grow our teams internally and we're able to maintain pretty good staffs in our service departments.
Yes.
This is Chris.
So you've got to start with January and February, which are already some of the lowest production months that we have in the years ---+ in the year, and then when you compound that with the severe weather that was really impacting a lot of our northern states, you have some pretty significant impacts on the overall leverage we can get.
And a lot of that is due to our comp structure, where we carry the same teams that we had in December, which is one of our strongest months of the year into January and February, getting ready for March.
And these individuals are on really a minimum wage or guarantee that means when they don't hit production levels, we are not getting the leverage and costs on our personnel expense that we typically see in our better months.
So yes, the combined weather with low production months of January and February definitely had an impact on our SG&A.
And as we said, the leverage returned again in March when we saw our SG&A as a percentage of gross profit down in the low to mid-60s.
I think the ---+ this is Chris again, I think the easiest way to answer that is just looking at the buckets that we refer to, where you have your unseasoned stores and your seasoned stores.
And on the recent acquisitions, we are seeing SG&A as a percentage of growth or almost 15 percentage points or 1,500 basis points higher than our seasoned stores.
So as they integrate over time, and we can look at it in a succession of a 5-year period, it continues to fall as they continue to focus on increasing top line growth and maintaining a cost structure that brings more leverage and more profit to the bottom line.
Steve, this is Chris.
I guess it really is the predominately on the same-store basis when you look at what the weather impact was.
I mean, we can talk about new acquisitions and the impact they have, but for the quarter, what we saw was a $5 million increase in gross profit year-over-year on that same-store base.
But our SG&A was actually up $8 million.
So we actually had decreasing incremental leverage on a same-store basis in the quarter on a same-store basis.
In predominantly all of our stores in January and February, we saw that trend.
And it's really a function of ---+ again the way that our comp structure works and even our advertising plans, they don't leverage down significantly in those months.
And so then when you had 3, 4 days of weather issues in our northern states, really across from Alaska, Oregon, Washington, <UNK> Dakota, Montana, all the way out east to New York and New Jersey, we just didn't get the scale.
And as <UNK> said, 70% of our profit came from March because of that.
So trends are looking good in April, and we anticipate that that's behind it.
Steve, this is a <UNK>.
You're correct.
We ended Q1 at 57 days' supply, which was 5 to 7 days higher than it was at the end of Q1 last year.
We started the quarter, however, almost 17 days higher than where we were in the previous year.
And I think in January and February, a lot of that margin degradation occurred.
I mean, we did end up pulling out March, it was a $175 a unit better growth per unit than it was in January and February and we're seeing those similar trends in April.
Jamie, this is <UNK>.
I love the ---+ when it's sunny out, but that's a good catch.
Anyway, I think if we're comparing and contrasting our exclusive market strategy versus our metro market strategy, specifically looking at what we're learning in metro markets, the upside is huge.
I mean, I think from a technology standpoint, you have to be much more savvy in metropolitan areas, which is helping bring a lot of value into our exclusive markets as well.
I think if you look at the competition or even the consumers, they are less tolerant, which means you have to be even better at what you do, which leads to the third item, which is are you able to keep the people.
When we first combined with DCH, we weren't sure that people were going to be as stable and would be more transient.
We're really pleased to find out that there are similarities between stability of people and metros versus exclusive markets.
Our turnover rates are very similar to our exclusive markets.
And if you run a good business and provide opportunity and ownership for those people to be able to make their own decisions, we're finding that the stability of people is very similar, which means you're able to continue to grow and season the stores.
If we look at where we're at in terms of margin today, over margins in the metropolitan areas are slightly worse than our exclusive areas.
However, we have multiple stores that are showing us that the margins in metropolitan areas have the potential to be even higher than what exclusive markets are.
And I think some early examples of that are maybe a Paramus Honda in Bergen County or the new Toyota store in Downtown L.
A.
that are starting to reach volume levels, where you're levering your fixed costs at such a high amount that everything is dropping to the bottom line.
And I think we're very pleased with our entry into metropolitan areas because of that.
Jamie, I think that's a ---+ it's a really good insight, because I think the realization that growth is powered by people, as Chris mentioned, is how we grow.
And I think we're always a balancing that idea of are we going faster than our people can handle.
And I think at today's rate, I don't believe that's why there was a little bit of difficulty in January and February.
I do believe that some of the new acquisitions, like the new ones in Bergen County, the stores lost money last year.
I mean, we just bought them in March, and it's going to take some time to turn those stores.
So the idea of accretion, like a typical acquisition can be difficult.
But we also know that those is a 5 key assets from that group, 3 years ago made considerable profit, upward of 3% of operating margins.
So we believe that it's a quick turnaround.
I do think that the idea of slowing growth to be able to catch up may be relevant at some time.
I don't believe that, that's where we are at today.
And ultimately, if acquisitions are accretive on day 1, you would continue to deploy capital, because we believe it's a better use than share buyback or even dividends or other uses of capital.
So I think it's a great insight, and it may take us a little further discussion on the phone if you'd like.
I think when we look at who we are today, much of our business has transitioned away from traditional, what we would call, old retail automotive business, where a customer drives by the dealership and they see a car and they decide to stop and come in.
Or we advertise in the newspaper or on TV, and they decide to come in, and their car breaks and they decide to bring it in to their closest service facility.
Today, most of our interactions with our consumers begin on a web-based interaction.
So my comments, we mentioned the fact that over 81% of our business is done and initiated online, which means the interaction was found online on the vehicle, unlike driving by that vehicle.
It typically starts with chat or it starts with e-mail discussions or possibly a phone call, where we're looking at how do we meet our customers' needs, and then how do we fulfill that engagement with that customer, whether it's delivering at his home or whether it's them coming to one of the dealerships to be able to take delivery of that car.
The same happenings are happening in service and parts, whereas many of our stores today, it's a different experience.
People aren't hanging around the dealership as much as they used to.
They may come in and drop their cars off, or we may go pick it up in their living rooms and bring it back to our store, then redeliver it back to their homes.
If they're bringing their cars in, many times the customers will just get an Uber and go home or we'll shuttle them, or we have loaner vehicle that are there.
But the interactions are mostly more in passing rather than long interactions, which is making technology a lot easier to interact with our customers.
And I think I could get into a lot of different examples of how technology helps those interactions by online appointment making, by online payments and so on and so on to be able to talk about those.
But the business that we're in today is about fulfillment and fulfilling those needs of the consumers the way they choose within the comfort of their own homes, rather than trying to draw them into the dealerships, where they are sitting around and hopefully they'll have a reciprocal effect and buy a car or do something else to be able to spend their time and money.
We don\
Yes.
Rick, this is <UNK>.
I think we always try to be optimistic with our share repurchases.
We apply a similar hurdle rate and, as you know, we typically target paying 3 to 5x on EBITDA basis for acquisitions once they reach maturity.
So I would say, when you start to see our stock fall at the upper end of that range, we want to be more constructive.
And if the market is not going to reward us with the multiple and valuation that makes sense, we're happy to buy back stock.
We still believe the best use of capital is through acquisitions to develop the national footprint that <UNK> spoke to, which allows us to reach more of the U.<UNK> population, which we think is the best longer-term strategy.
But we won't drive by the opportunity to be constructive on repurchases that if the markets is there for it.
<UNK>, this is <UNK>.
I think, again, similar to most of the organization, January and February was weak, and DCH was just as strong as the rest of the group when it came to March.
I think if we look at their new acquisition opportunities, it's taking them a little bit longer to be able to improve stores, but I also know that they are a little more strategic in terms of how they approach problem solving.
We're working with them on their measurement base, whereas they're utilizing a lot of the details at that first level rather than more macro-level reporting and allow the people to be able to grow and prosper on their own, which we're helping with that type of strategy to be able to help grow the business.
But I mean, like we said, their SG&A for the quarter was at 82% which is not much better than it was when we combined 3 years ago.
So I think there's a lot of opportunity to continue to expand at both DCH and many of our other new acquisitions.
On a positive note, the Baierl organization has taken off really well.
If you recall, there were upwards of mid-80s as well in SG&A as a percentage of growth, when they joined us, and they finished the quarter at a little bit below 70%, which is a big move pretty quickly.
So we'll have to be reinspiring them that when they plateau, they have to find new solutions to be able to hit that next level.
Good question, <UNK>.
I think ---+ let me go back to the fundamentals of Lithia's greenfield growth strategy.
It's to buy strong assets, which we ---+ I think we all know that the Bergen County is one of the highest-income markets within our country, let alone in New Jersey it's #1.
So those franchises, those 5 franchise are probably the strongest high-line franchises in the <UNK>east, okay.
If we go back to how we look at developing those strong assets, we have an 86% track record of hitting our ROE targets.
Now those assets had deteriorated over the last 3 years.
Not so much in volume, but more so in operational profits.
So we believe that it's fundamentally our ability to regain margins ---+ top line margins, to grow our used vehicles, to expand our service and parts gross profit, to bring our customers back into those stores and then control the cost as we do that.
So on that acquisition, we had targeted that it's probably going to take us 3 years to be able to get them back to the 2.5% to 3% range.
Fundamentally, the leadership in the store, there's fairly good leadership.
We did replace general management in one of the stores, and we're starting to see early signs of success in that store.
We hope the other stores make the moves that they need to be make to be able to trend towards that 2.5%, 3% margin within that 3-year time horizon that we initially forecast.
Great, <UNK>.
Thanks for the question.
This is <UNK> again.
We're definitely not letting off on our acquisition cadence.
Our current strategy remains intact.
We will do acquisitions as they meet our 3 to 5x EBITDA or between 10% and 20% of revenue on our purchased price.
We look for a 15% to 20% after-tax return on a stabilized basis, which is the same strategies, and if we see those opportunities we'll strike.
The focus on parts of the Midwest or the Southeast are not that crucial at the time being, we still cover 81% of the country fairly easily.
So we weren't going to stretch to be able to get there.
We are looking for a management team in the Southeast, because we believe that in that market it would be nice to have a base of people to be able to leverage and grow from.
But I think, in closing, more importantly, we're still growing.
We don't believe that there is any hiccup in terms of our operating model, in terms of this greenfielding, value-based acquisition strategy or we don't believe that there is a shortage of people.
In fact, on the larger acquisitions like Baierl and Day and DCH, as well as Carbone, there is great people that were there that we typically don't get when we buy our traditional 1- and 2-dealership acquisitions and we're getting them in those and we believe if anything, we may have a glut of people in some of those areas.
So for us, it's same strategy, same focus and we believe that we'll be able to expand into the Southeast through our normal acquisition targeting over the coming 3 to 5 years.
<UNK>, this is Chris, just to add onto that real quick is ---+ the reason that we mentioned that there's 70 stores that are unseasoned, that are in our same-store results is because we know that they're not going to come in, in one year, get to the level of performance that our seasoned stores are.
And so the cadence over time and the pressure that we're seeing on our SG&A is anticipated.
And I think the key on that is continue to see steady progression in each of the cohorts of acquisitions that we have and continue to focus one store at a time on the individual opportunities and so our plan is if we just stop buying stores, you would see our numbers improve as far as percentages, but we're not going to continue to see the top line growth and get the national footprint that <UNK> is talking to.
<UNK>, this is <UNK>.
We closed our books on March 31, like we do every year in the first quarter.
So the OEMs have those extra days from time to time, depending on how the weekends fall, but that doesn't apply to us.
<UNK>, this is <UNK>.
We do plan on an amendment in 2018.
I think we're in the process of doing that.
I would expect you're going to see us upsize the revolver, primarily to generate more new vehicle floor plan capacity.
So what's happened is we've shifted more of the balance because we can reallocate it among those lines to give us more availability for new and used cars.
And we're going to go out to our lender group, and I expect that they'll likely be supportive of upsizing.
<UNK>, this is <UNK>.
I think you have to look at each individual market and the behaviors within that market, because I think if you look at many of our rural agriculture- and energy-based markets, even during the higher gas prices that we saw in the late 2000s, we didn't see major changes in the buying behaviors because trucks and SUVs are how they live.
Now, when we talk about crossovers there will be some transitioning into that type of model, but I think it's an individual region-by-region decision as to how people are impacted by fuel prices.
Thank you, everyone, for joining us today and we look forward to updating you again on our results in July.
Bye-Bye.
