Ladies and gentlemen, good day and welcome to the Asbury Automotive Group First Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Karen Reid. Please go ahead.

Thanks, David, and good morning everyone. As David mentioned, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive First Quarter 2021 Earnings Call. I'm Karen Reid, Asbury's new Treasurer, and Head of Investor Relations. I look forward to engaging with our analysts and our investor community. The press release detailing Asbury's first quarter results was issued earlier this morning and is posted on our website at asburyauto.com. Participating with me today are David Hult, our President and Chief Executive Officer; PJ Guido, our Chief Financial Officer; and Dan Clara, our Senior Vice President of Operations. At the conclusion of our remarks, we will open up the call for questions, and I will be available later for any follow-up questions that you may have. 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, including those statements relating to the duration and contemplated impact of the COVID-19 pandemic on our business and financial performance, the impact of the chip shortage, as well as the financial projections and expectations about our products, markets and growth. All forward-looking statements are subject to significant uncertainties and actual results may differ materially from those suggested by these statements, including potential impacts from the COVID 19 pandemic and the semiconductor chip shortage on us, our industry and our customers, suppliers, vendors and business partners. 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 2020, 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. We have also posted an updated investor presentation on our website asbury.com highlighting our first quarter results. It is now my pleasure to hand the call over to our CEO, David Hult. David?

Thank you, Karen. We are excited to have you on our team. Welcome to our first quarter earnings call. We have just reported record adjusted EPS of $4.68, up 160% over the prior year. SAAR continues to recover from prior year lows despite supply chain disruptions due to the chip shortage and COVID. The strong demand in the face of lower days supply helped us deliver a strong gross margin of 17.5%, an expansion of 60 basis points versus the first quarter of last year. We've also stayed disciplined in managing expenses, resulting in SG&A as a percentage of gross profit of 62.7%, an 880 basis point improvement versus prior year. Of note, this result includes an estimated $0.22 negative EPS impact from the winter storm experience in February that caused us to close stores in several markets along with some structural damage. Our total revenue for the quarter was up 36% year-over-year, and total gross profit was up 40%. Showing strong signs of recovery, new unit sales were up 24%, and used unit sales were up 16% with margin expansion in both segments. Total F&I revenue was up 25%, while revenue from parts and service was up 18% from last year. We saw signs of growth in parts and service over this past quarter as drivers are returning to the road. Our balance sheet remains strong due to our performance in cash flow. Our pro forma adjusted net leverage ended this quarter at 1.7 times. This leverage level will allow us to maintain a more active acquisition pipeline and grow our business by strategically deploying capital. A couple of additional comments regarding performance. We achieved an adjusted operating margin of 6.1%, up 180 basis points over last year, and we successfully launched Clicklane, which Dan will discuss further. Regarding acquisitions, it is a very active market and we are engaged in many conversations, but remain disciplined in our approach. We are confident we will find deals that make sense for Asbury. Looking forward, we are focused on our five year plan, while we continue our disciplined approach to operating our business and allocating capital to its highest returns. Finally, I would like to thank all the hard working men and women who showed up every day throughout the past year with a positive attitude and a commitment to serving our guests. Once again, you delivered great results for our company. I will now hand the call over to Dan to discuss our operating performance. Dan?

Thank you, David, and good morning everyone. My remarks will pertain to our same store performance compared to the first quarter of 2020. Looking at new vehicles. Based on current market conditions, we are focused on being opportunistic with our inventory and improving gross [Phonetic] to maximize profit. Our new average gross profit per vehicle was up $640 per car or 39% from the prior year period. All segment margins were up significantly from the prior year period. Factoring in the acquisition of Park Place, luxury represented 45% of our total revenue, up from 34% in the first quarter of 2020, driving our all-store new vehicle PVRs up $1,114 or 67%. At the end of March, our total new vehicle inventory was $527 million and our days supply was at an all-time low of 34 days, down 71 days from the prior year. Some of our brands were below 20 day supply during the quarter and experienced major challenges due to the lack of inventory. With no clear understanding of when production will return to normal levels, we expect that the days supply to remain low throughout the remainder of the year. Turning to used vehicles. Our gross margin was 8.1%, up 100 basis point from the prior period, representing an average gross profit per vehicle of $1,943. As a result of our performance, our gross profit was up 36%. Our used vehicle inventory ended March at $193 million, which represents a 27-day supply, down 15 days from the prior year. We remain focused on sourcing inventory that will generate a fair return. Turning to F&I. Our strong consistent and sustainable growth in F&I delivered an increase of $114 to $1,798 per vehicle retail from the prior year quarter. In the first quarter, our front-end yield per vehicle increased $637…

Thank you, Dan, and good morning everyone. I'd like to provide some financial highlights which mark yet another record quarter for our company. For additional details on our financial performance for the quarter, I would refer you to our financial supplement in our press release dated today, April 27th, 2021. Overall, compared to the first quarter of last year, total revenue was 36% higher than last year. Gross margin expanded by 60 basis points to 17.5%, driven by our focus on maximizing gross profit in a market where demand continues to outweigh supply. Moving down the P&L, we saw SG&A as a percent of gross profit decreased by 880 basis points to 62.7%. We estimate that SG&A would have been approximately 100 basis points lower, absent the impact on gross profit and expenses of the winter storm that resulted in store closures in several markets and also caused damage to a few of our Texas stores. Our actions to manage gross profit and control expenses resulted in a record first quarter adjusted operating margin of 6.1%, an increase of 180 basis points above the same period last year. Adjusted net income increased 161% to $90.7 million, and adjusted EPS increased by 160% versus the prior year period, maintaining our momentum coming out of 2020. Net income for the first quarter 2021 was adjusted for the following pre-tax items. Gain on legal settlements of $3.5 million or $0.14 per diluted share. Gain on real estate sales of $1.1 million or $0.03 per diluted share. And real estate related charges of $1.8 million or $0.07 per diluted share. Net income for the first quarter of 2020 was adjusted up -- up for pre-tax items totaling $20.4 million or $0.79 per diluted share. For specific details on 2020 adjustments, please reference this morning's…

Thank you, ladies and gentlemen. [Operator Instructions] Our first question comes from Rick Nelson with Stephens.

Thanks a lot. Good morning. So it sounds like you're expecting inventory to remain tight here. Do you think you can maintain these GPUs and the SG&A expense ratio in an environment like this? And because their potential [inaudible] here at 34 days of supply now, where you see that going to potentially become even more problematic.

You know, Eric, as we all know -- this is David. It's a fluid situation. It's a fantastic question. As we sit here today, we received far less cars in the month of April than we anticipated. But looking forward at May, we're anticipating more inventory to come in than we received in April. So, based upon what we have on the ground now and what we perceive we're going to receive in May, which could certainly get pushed, we think we're in fine shape to deliver what we need to from a unit perspective, but also keep the margins as well. It's really tough to look beyond a month at a time not knowing what's going to happen with the chip shortage and inventory and what's going to come. I mean it's really, really too hard to see how much beyond that, but we have strong confidence as we're positioned in April and what we anticipate receiving in May.

Thanks for that color, David. Are there brands that are more impacted by the semiconductor shortage than others, or how those have looked across the spectrum?

Good morning, Rick. This is Dan. Yes, listen, every every brand is definitely impacted, but I would say Domestics are more impacted than some of the other ones that we're seeing out there.

Got you. Thanks. I'm curious on the used side of the house, what proportion of vehicles are you sourcing internally and what proportion are you going to auction and what do you see going on in the auction market nowadays.

Yeah, Rick, another great question. So we source in -- over 50% of our cars come in from the trading perspective, auction prices as you can imagine are at an all time high and the availability is -- continues to be scarce at the auction.

In parts and service, it was quite a differential customer pay same-store up 3%, warranty down 13%. Curious what's driving that differential and PL outlook I just for those two drivers to service and parts

Rick, this is David. The warranty, it did have [Phonetic] some blows with the brand and what's going on with recalls and everything. So across the board, Import domestic luxury which is down everywhere in warranty, don't read much into that. I mean that kind of pops up and down and will continue to do that throughout the year. We're really excited about customer pay when you think about it. We probably had close to 40% of our stores at one point or another closed down in February. So we were dramatically impacted in February, not only with sales but in parts and service. March came back so strong, it was actually ahead of '19 pace numbers. And as we sit here in April, we're experiencing the same. So, the customers are back on the road, the service business is back. We always had a laddering collision coming back, and now collision is back as well. So while we're feeling it on the variable side with some shortages with inventory, thankfully Parts and Service is picking up on that. And just to go back and touch on what Dan said about the used cars and acquisitions with 50% coming from trades. Our other resources is buying directly from consumers off lease vehicles from the manufacturers, certainly within our service drive and loaner car fleet. So we got a -- certainly a tight day supply but we think it's one that the inventory turns quickly and we're creating great margins with it.

Great. And I would like to sneak one more in here about April. You talked about the inventory challenges, how do sales look and GPUs. Are they continuing to be elevated?

Yeah, just what you've seen in the first quarter results, we're experiencing that as we sit here today in April as well.

Great. Thanks a lot, and good luck.

Thank you.

Thank you. Our next question comes from John Murphy with Bank of America.

Good morning, guys. I just had a first question on [indecipherable] on inventory. I mean, you, as well as rest of the industry has done a great job of turning inventory faster and it hasn't had a significant impact on sales, and short tendered it to some extent, but it's not been a major negative. What point or what inventory level you think you start running into constraints on supply being able to deliver the consumer what they want. And also on the inventory side, we all know often dogs sit around in inventory, I'm just curious if you think that you've kind of -- you and the industry have worked out a lot of these unattractive vehicles and now we're really just looking at really hot selling vehicles in inventory that are turning fast.

It's a great question. And again it's such a fluid situation and you don't have a long runway to look over the next 90 days what's coming. So my comments that I'm going to make are based on sitting here today. Our perception is we're going to receive almost double the inventory in May that we received in April. I can tell you sitting here today, if we receive the same inventory levels in May that we received in April, we would struggle to get to the new unit sales that we need to get to. So, no insight to June at this point, but we're confident where we're sitting in April and we're confident with May assuming we receive the production that we were told we're going to receive. As it relates to the hot selling products as you point to, the OEMs are really great at this. And while the chip shortage is there, they've really been shifting their production to the faster selling vehicles. So to your point about some of the dogs that sit out there, I'm sure there is a few strays every now and then. But it's really very light inventory and it's moving pretty quickly. The demand is very high, which is obviously, you can see everyone's benefiting from in the margins, and I can't see it slowing down anytime soon. Because it's also with people coming back is going to be a pent-up demand on the fleet side as well.

Yeah, it's pretty encouraging. Okay. And then just second question, Park Place obviously was a big acquisition, but you guys didn't even mention it much in the quarter. Just curious it sounds the integration is going very smoothly because there's no noise about it. So I mean that's a good sign. And given that that appears to be going so well, you've got a $5 billion target over your five year plan. Could you get more aggressive on acquisitions? I mean, some of your peers are talking about that kind of number almost on an annual basis, or doing that almost on an annual basis. I mean is there opportunity to get more aggressive and even larger than what you're targeting at the moment?

Yeah, it's a great question, John, I'll touch on Park Place real quick. The largest acquisition Asbury's history from a dollar standpoint, but from a meaning standpoint and really setting us up for who we want to be. I mean we look at Park Place as the crown jewel in the automotive industry. The professionals that we have there, the general managers, the senior team that runs the business there is everything we thought it was and more, but it takes a lot of communication and care to make sure things go smoothly, and we're looking at the long-term relationships and run. So very, very excited what we're seeing there and it kind of shows in our total numbers compared to the same-store. So that'll continue to progress and the relationship is great and acquisition transition is going great at this point. As it relates to acquisitions, in the time that I've been with the company, we've never had more conversations going on than what we have now. Everyone one month, their price is based off COVID numbers. I don't think that that's in the shareholders' best interest to buy every acquisition based on COVID numbers and there has to be some discipline and common sense of the numbers. So while we feel the need to want to acquire things right now, we're not going to go outside our structure because it's about the long game and doing the right thing with the shareholders' equity. So we'll stay disciplined. We know deals will come our way. We like a lot of the conversations that we're in now. There aren't any deals being announced that we haven't looked at, but we're really not just into acquiring revenue. We really want to make sure it's revenue that is meaningful for the company for five, ten years from now. And we're not just buying at a moment in time when the earnings and multiples are very high.

Okay. And then the last question that all kind of weave together with that, I mean quickly you gave us some metrics which were helpful. But very curious what kind of geographic reach or extension in your reach that is giving you if you can tell us sort of early days and even with that, what kind of market share gains you may be seeing in your existing markets because of the ease of transaction for the consumer.

Sure. It's a great question. And keep in mind, every store in the company has it, but some stores were rolled out in the last week of the quarter. We're seeing the luxury customers really take advantage of the tool. We're seeing the import customers really take advantage of the tool, seeing it a little bit on the domestic side, but I think we're really hurting with inventory on the domestic side which is making it difficult, you can't purchase what you don't have. With push start, we were seeing 70%, 80% used, and 20%, 30% new. It's about a 60/4o split used to new right now. And we're certainly obviously acquiring a lot of customers with sales transactions that we never did business with before. We're shipping a lot of vehicles. But I think that is somewhat normal as well right now with low day supply and people really looking for their vehicles. I think the key metrics to really focus on, it's not a lead generation to transactional tool. Most people's tools are seeing a lot of subprime and are struggling to get the financing. Our average credit score so far in Clicklane is higher than the store average. Nine out of ten people are getting financed. Double the cash being put down on a Clicklane consumer compared to in-store. These are very strong metric that says strong creditworthy people are buying these cars online, trading vehicles with pay-offs and taking delivery of them at home. And I can't emphasize enough, it's just started. So this is only going to build incrementally over time. And we believe we're the first in this space to have a full transactional tool, not a lead generation, not a piece of the sale, a full transactional tool, which puts us in the driver's seat for really growing the tool. And like I said, we launched Dallas store at the end of the quarter, we've already launched Parts and Accessories on it now as well. So we're going to continue to innovate with this tool and we're going to get better each and every month. And we'll certainly continue every quarter to share the information what we're seeing. But it's very, very promising.

And sorry, David, if I can follow-up on that. So if we think about Clicklane and your acquisition strategy, I mean you could argue that this digital overlay means that you might not need to make as any acquisitions and you have a much farther reach so you can gain market share that way, or conversely some are arguing that you need to build a greater national network to really leverage the digital overlay. Which way do you think it is [inaudible]. How do you approach the marriage of the two?

Hey, John, it's an excellent question, and look there is more than one way to climb a mountain, but from our perspective is brick and mortar is permanent and it's expensive. And if the transaction happens online, then it's really just a supply chain delivery. I've used this example before so I used it again. As we sit here today, we currently don't have any stores in Phoenix. If we chose to put a ring around the city of Phoenix with 5.5 million population and start marketing Clicklane, no differently than Carvana we could start doing transactions within that marketplace, which would create much higher SG&A numbers than what we're currently doing without that brick and mortar. So we will continue to build out our markets, but because of the tool that we have and our ability to move vehicles around, we absolutely do not believe we have to be in every market to do business in each segment of the country.

Okay. That's incredibly helpful, thank you very much.

Thank you.

Thank you. Our next question comes from Ryan Sigdahl with the Craig Hallum Capital Group.

Good morning, guys, thanks for taking my questions.

Good morning.

Just one quick follow-up on Clicklane. So looking at the Clicklane website, also looking at Asbury website, seems very similar between the two. Curious if you plan to run kind of side by side websites there or if you plan to consolidate those at any point in the future.

Sure, Ryan. As a reminder, with the franchise stores, all the OEMs require us to use certain vendors for our websites. So we certainly have to stick to those policies. Clicklane will continue to grow, and depending upon whether we have franchise stores in that market or not, it will grow in different ways. When I talked about the [inaudible launch in the parts and accessory piece, because we didn't want it to be a distraction during the purchase of the vehicle and people accessorizing the car, we actually put it in the back end of Clicklane. So after the consumer purchases the vehicle and we PDF them their DocuSign documents, they have access to the back end of the tool for service and parts and collision. That's where they have the ability to accessorize it as well. So we have a roadmap. We're not done innovating this tool. And we have a long ways to go from where we see it. But being the first with the lending marketplace and a full transactional tool and the only one out there in the market right now being able to do pay-offs, we think we are at a competitive advantage and now we just need to scale our product and get the word out there to consumers the ease it is of doing business with us.

Great. And then you mentioned the used versus new mix, it is higher on the used side on Clicklane. Do you think that's purely a function of inventory availability right now or do you think over time used will stay stronger online as far as the mix goes?

Yeah. It's an excellent question. It's hard to say. I mean, we were close to 80% with Push Start and 60-40 to us is very promising. We're selling $100,000 Land Rovers on the tool new, and we're selling pre-owned that way as well. It's kind of hard to judge when your inventories are still low whether someone would transact that way or not. We believe no differently than technology in any other space, as the consumers become more comfortable and the tool to actually get out there more often, we believe that these numbers are going to double every year as far as used, because the convenience factor and transparency is second to none, and it's what the space has been craving for for years. And seeing their F&I results, to be 17% higher per vehicle on Clicklane compared to the actual stores is extremely promising.

Last one for me, you mentioned you quantified the EPS impact from weather in Texas and closures there, is there a way you can quantify what the impact was to same-store sales?

Yeah, sure. Ryan, this is PJ. We estimated the total impact to growth split evenly between sales and service at roughly $5 million of gross profit impact. The stores -- our stores in Texas, our Park Place in McDavid Dealer Groups were closed for nearly a full week. And our Plaza Group, our group in Indiana and our Crown Group were also closed for a full day. So again, we estimate the total impact of that on gross profit at $5 million. In addition to that, we also had roughly $1 million worth of damage to two of our stores in Texas, our Lexus [indecipherable] Plano stores. So we incurred the expense associated with that. And then lastly, we did a guarantee pay for all our associates in those markets for the time that the stores were closed. So that was it approximately an additional $800,000 of compensation expense.

Great, thanks guys, good luck.

Thank you.

Thank you. Our next question comes from Adam Jonas with Morgan Stanley.

Hey everybody. Thanks so much for your -- those KPIs around Clicklane, that's really great. I wanted to hone in on one where you said over -- I think you said over 50% preferred or chose home delivery. Is that correct? Is that you said?

Yes, correct.

Okay. Can you tell us how many units that was in the quarter?

Yeah, Adam, we're not disclosing that at this point because again, [indecipherable] doing 90 stores that came went off the road, but I can tell you it -- as we sit here, the number is growing every week.

So, when are we going to start seeing that stuff because -- and the KPIs were great, I'm looking for the slide in your deck and of course, there is no slide with all the stuff, and it's important that the KPIs are consistent. So obviously we can do the whole dog and pony thing and check the transcripts and talk with you after, but it is nice if it's on the deck. Just some feedback, when are we going to start seeing more formal unit volume that we can track so we can start tracking digital comps sequentially and then eventually year-on-year?

Yeah. I appreciate your passion in wanting to see the numbers. As I said we were launched in stores the last quarter -- or the last week of the quarter. So I don't think it's too much to say, well, let's get a full quarter under our belt and we'll be talking about it every quarter. So certainly [indiscernible] by, we'll be happy to share that information.

Thanks, David. Last one from me. Auto companies are starting to explore going direct to consumer with insurance. And then yeah, insurance has been -- and even legacy guys are starting to do that. GM using partners with OnStar, Tesla, going themselves with partners but then eventually themselves. I'm wondering if -- what you think of that. Do you think this is -- does that make sense of that part of where you see that digital expression of auto retailing, and if OEMs start to do more kind of cutting out the third-party kind of parasitic insurance folks -- and I'm not saying that mainly because of the cars become the actuary and the agent and just makes sense to do that. How do you see that affecting your role on the eye part of F&I. Thanks.

So I think it's an excellent question and I don't want -- really want to talk too much about things we're working on in innovation, but I mean for 35, 40 years within dealership people refer insurance business to other locations. It's natural to assume that this would be logical down the road to have it be one-stop shopping and everything available at one location. But I really don't want to get into any details at this point, but it's an excellent point. It's only logical that it's altogether.

Alright. Well, that answers part of the question. Thanks, David. Appreciate it.

Thank you. Our next question comes from Rajat Gupta with JPMorgan.

Good morning, thanks for taking the question. I just had a question on the used vehicle unit growth. You talked about the overall $5 million gross profit impact overall for the company. I mean suggest something like two to three points of unit growth impact, am I close on that? And then just relatedly obviously pretty strong numbers year-over-year and on a two year basis, but still seems to be lagging, some of the peers that have reported recently. Are you satisfied with the performance there? Do you think there is more you could do in terms of sourcing or the mix of the vehicles that you're selling to grow that business even faster, and I had a follow-up. Thanks.

Yeah. It's an excellent question. No, we're not satisfied and it's more than fair to say we're not performing at the level we should with pre-owned. It's hard to quantify, PJ talked about some of the markets that were close but we literally had 40% of our stores closed. And while they were physically closed for a week, you know the hyper storms they closed down before and closed down after. So I would think it's probably fair to say looking at all the stores the markets that were closed for some periods of time and the effect on business, it had to be somewhere in the 4% to 6% range in volume, but it's really hard to quantify, it's really just a guess at that point. But to answer your question simplistically, we're not performing at the level we need to with pre-owned. We think in every other category, we're more than holding our own, and this is an area of opportunity for us, we need to get going.

Got it. That's really helpful. And just a follow-up on the M&A -- the M&A environment. We talked about like unreasonable earnings and probably not appropriate multiple right now in the market. I mean, and there is -- it looks like these gross margin tailwinds could probably last for another year or maybe, you know, like mid 2022 or later 2022. So when do you make the decision to start deploying that capital finally, because it's already been six months since you announced the plan. You know, it will be 18 months a year from now and earnings might still look elevated. So, I mean would you continue to sit on the cash on the balance sheet or -- just trying to understand like how that capital might be deployed now and then. And then when would be the right time to finally make that decision to work toward your five year plan? Thanks. Yeah.

Hey, Rajat, it's PJ. So I'll start and then maybe hand it off to David. But it's actually been three months since we announced the plan in December. And as we've said before, we're very disciplined in our approach to acquisitions. We do -- we look -- when we evaluate an opportunity, we're looking at EBITDA multiples and then factoring in the synergies we think we can achieve, and then we look at the IRR relative to our cost of capital. And we need to see a margin there to deliver an accretive deal. So we are evaluating deals, it's on a deal by deal basis. And so we'll continue to fill the pipeline but we're only going to look at or execute on those deals that make the most sense for Asbury.

And I'll just follow-up on that and talk about the two points. When you look at 2020, prior to 2020, a dealer was making $5 million annually. And then in COVID they started making $10 million and they want to work off to $10 million and they want a multiple that's higher than what the brand has ever run. That makes it difficult. While I agree with you the way margins and this space is going to be for the next year, and again it's one person's opinion, this isn't a forward-looking statement. But you have to think about '23 and '24, the amount of EVs that are going to be on the market, where the infrastructure is going to be for that in the country at that time, and where is supply and demand going to mix. So I don't think you can get caught up in the hype of just buying at the moment in time and you have to look out a few years to really see what the value and trend is going to be. And as what we talked about when we launched the five year plan, which is no doubt we'll hit it, that $5 billion doesn't all have to come in one year that -- it doesn't have to be $1 billion a year. We have to be disciplined. We've been doing this a long time, I've been in automotive for 35 years. There is always highs and lows. We're talking to more acquisitions today than we ever have since I've been employed here. So I think things will happen, but I think we should be judged in the long run by the acquisitions that we did and how accretive they were for the company, instead of just having nervous energy [Phonetic] buying revenue and then may be struggling with performance over time.

Got it, got it. That's really helpful. One last one, just following up on Clicklane. And I know you don't want to give out like the unit numbers, but had it not been for Clicklane, would you have grown slower than what you did in the first quarter. I'm just curious if it contributed to incremental volumes and not just replacing one for one. Thanks.

No, it's an excellent question. And I can't stress this enough, we only had a few pilot stores on it in December, so we essentially -- and no other public group really has this full transactional tool nor that they have it in all their stores, we rolled out 86 stores in two and a half months. So the numbers are, you know what I mean, that week over week you're adding so many stores. There is a lot of incremental sales that we would not have received, and I made that comment, because looking at the information we weren't doing business with them before. But when you're adding 40 stores in the last three weeks of the quarter, it's just not a material number. I can tell you every single week the number grows and the transactions are growing on the tool. And we haven't hit our stride with marketing, where -- we really just start marketing now. We really want to protect the tool, make sure everything was rolled out properly, and it was efficiently working. And I know it sounds crazy to roll it out, it's just plug and play software. But when you think about all the different counties and different tax codes and making sure that it's perfect and everything is working correctly, there's a little bit of discipline in time to make sure it's right. You just don't want to invite people to the tool and not have it be a great experience. And what we quoted last time with the pilot stores is still holding true. It's a 14 minute transaction if there's a pay-off and there is financing needed in [indecipherable] paying cash it's 8 minutes. It's hard to beat that kind of time. And it's very encouraging for us from our perspective. And I'm not saying it won't change over time, but it's information we're sharing as it's coming, 50% of the people are taking delivery at home. That didn't happen in the heat of COVID with push start. So we're very excited about what we're seeing. We're also seeing a higher credit score with Clicklane compared to push start. So it's very, very encouraging. And I promise we'll talk about it in great detail every quarter, but it's not just the unit sales, it's the type of person that's using the tool and transacting on it that is most encouraging to us.

Got it, got it. Makes sense. Thanks for all the color, and good luck.

Absolutely. Thank you.

Thank you. Our next question comes from Stephanie Benjamin with Truist.

Hi, good morning.

Good morning.

Just we really appreciate all the additional color that you've given on Clicklane. But question -- I understand that it was a pretty, pretty large task to roll this out to all of the -- your stores this quarter. So how should we think about any kind of incremental advertising or investments as we move through the year? Is -- should there -- should we expect a step up as you kind of look to get the name out there a little bit more in some of your markets. Is that something we should just kind of expect not only in store but maybe also on a local level just so customers know what their options are.

Yes, Stephanie, it's a great question. Yes, we've allocated several million dollars between now and the end of the year and we spread the dollars by market depending upon unit sales and traffic counts and density of population. Now the numbers may change but what our plan is depending upon what happens with inventories, it's too hard to predict sitting here today what things are going to look like in July and August from an inventory standpoint. But our intent is to get that out there. We think we have some interesting marketing things coming out that will help us. And again, we're sitting here the third week in April, or the fourth week I should say, and we're talking about first quarter data. I can't stress that enough, it's incrementally growing every week. So we're very excited to talk about it in the future as it comes. We're hoping that the marketing really sticks and it's noteworthy. And I can't stress this enough, this is different than a lot of the other transaction -- or a lot of the other tools that are out there in the market right now. This was built on a chat platform. And what that means is the ability to walk people through the tool if they're getting stuck or if there is an issue at a moment in time. And there is also the ability when they leave the tool to send them a link to start right back where they were so there is no starting over. So it's not just the incremental sale or the conquest sale when they go through the whole tool, but it's also the follow up and recovering the sale and bringing them back. And we're very hyper-focused on tracking all the KPI. And as we accumulate more, we'll certainly share that as well.

Absolutely. And then just to follow up on that. When you speak to the incremental advertising, is that going to be just in your existing markets or will you also look to maybe you mentioned Phoenix as an example kind of entering a new market as well with some of these investments or advertising investments.

Sure, Stephanie, I'll say this. Our intent soon will be to test this product in markets we don't do business in. I really don't want to start talking about specifics, but it will be in short time that we experiment in markets where we don't currently do business. That is the fact.

Got it. And then lastly for me, just on acquisitions, you've mentioned that -- and it's pretty apparent that it's a pretty active market right now. So I'm just curious if you're -- if what you're targeting I think in the past, looking to expand a little bit more on luxury, so maybe in terms of brand concentration or geography. Has that changed at all just those new opportunities. May we have come up as of late. I mean, really you couldn't really consider in your past just trying to to kind of gauge as you're looking at the M&A environment what's most appealing at this stage?

No, it's a great question, Stephanie. Again, 35 years of doing this. Brand strengths come and go. Certain luxury brands are hotter than heck and years later they slow down and I think it's really about having a balanced portfolio. After doing the Park Place deal we had a lot of conversations where dealers in other parts of the country wanted same multiple that we paid Park Place. And I'll just pick a brand just for a conversation. If you have one luxury brand, the multiple is different, even though it's the same brand, whether you're talking, Massachusetts, California, Michigan or Texas or Florida, because the franchise laws are different within each individual state, seasonality of the business, density of population, business friendly state or not. So we really spend a lot of time looking at each individual acquisition and where it sits within the market and do we think that this is a proper return for us. I mean, I've just recently had this conversation with someone else asking why we wouldn't offer them the same as what we paid for Park Place and I just simplistically said it's not Texas. I mean, it's a different market with different franchise laws. If one state has a franchise law no franchise within 15 miles, in another state it's five miles, I don't know how you don't factor that in when you're looking at the pricing.

Absolutely. That's really helpful. Well, I appreciate all the additional color today.

Thank you.

Thank you. Our next question comes from Bret Jordan with Jefferies.

Good morning, this is Mark Jordan on for Bret. Well, a lot of good questions have already been asked, but I guess I have two quick questions and you may have touched on them both already, but thinking about the parts and service segment and in particular our customer pay. Can you talk about how it trended throughout the quarter and many if trends have continued to accelerate through April kind of what you're seeing there.

Sure. I would call January pretty promising and stable. It wasn't quite pre-COVID numbers, but it was continuing to come back and I would call it close to being flat. Just because the way February played out, it really varied by market because of weather, but I'll call February a step back, but I think it was more to do to weather than anything else and March was just the full acceleration forward, and all the numbers, specifically around customer pay, were ahead of pre-COVID numbers going back to '19. We're seeing that same result as we sit here in April, and we anticipate that for the rest of the year. We think there's a lot of pent-up demand. Now, if something happens in the fall, the virus comes back, I mean I can't obviously comment on that. I'm just saying, as I said in my comments earlier, people are back on the road, the collision business is back, the customer pay business is back. Warranty being down, I don't look at that is anything. It is what it is, you can't do warranty work if it's not needed. So that's just a reactionary thing.

Okay, great. And then it seems like competition for sourcing attractive used vehicles is very high right now, and thinking trade-ins might be down in terms of unit volume. Are you having to shift more to purchasing vehicles directly from customers, and if so, kind of how competitive would you say that channel is right now given May competitors might be increasing sourcing from the same channel?

It's an excellent question. We're taking in less trades because we're selling -- we're not selling the cars we should be selling based upon the demand right now. But we're still from a percentage standpoint, we're still taking in the amount of trades we always did prior, it's just different volume levels. We are having to seek other avenues and some of those avenues have dried up. There's a lot of -- it's kind of like the residential real estate market. I mean there is an awful lot of buyers out there and there's not a lot of sellers out there. So it's a little bit more difficult getting inventory. People are certainly paying up for that, you see it at the auctions and you certainly see it in the Manheim data that comes out. We don't think that that's going to change anytime soon, especially with what's going on with the new car inventory. I don't know if Dan want to comment or add to that Dan or?

No, I think you covered it well, David.

Okay, great, thank you very much for taking my questions.

Thank you.

Thank you. Our last question here is David Whiston with Morningstar.

Thanks, good morning. Do you guys -- I guess how bad did you guys want higher inventory or -- at the risk of giving up some of your pricing power you are now enjoying? Do you want a lot more, a little more, or can it stay where it is even?

Yeah, David, we're smiling over here, and listen, because it's such a fair and greedy question to ask. Yeah, that's a great question. The problem is, look at -- it's all -- everyone looks great, everyone is reporting good numbers, everyone is showing high margins. We didn't all of a sudden get that much better, it's simplistically supply and demand. There is that point where you're missing a lot of sales because you just don't have the inventory. Domestic truck for us was brutal in the quarter. We were really down in trucks. I mean, we didn't have the inventory to sell, so we wanted a lot more than what we had. I would tell you the industry performs well and stability exist when there's probably a 60 to 70 days supply in the market. And right now with all the government spending that's going on and people coming out, the demand is going to be high right now, and the fear is the inventory won't be there to match the demand.

Okay. And what happens now when the customers coming in really set [Phonetic] on buying a new -- a particular new vehicle, you have to tell them you don't have it due to inventory. Does that customer intent on buying another new vehicle, buying a used vehicle, or just [inaudible]

Hi, good morning, David. This is Dan. So in a lot of cases we have really become even more efficient on taking a pre-order for a lack of a better term. So perhaps the car that is an income in unit, that is actually being built or already on the transportation. In a lot of cases we're seeing a lot of cars that are being delivered by the trucking company and they're going in for our pre-delivery inspection, getting detailed and coming right out for delivery. So I can tell -- and in a lot of cases where we just don't have that availability of that particular model, customers are a little bit more flexible on maybe giving of a particular package or maybe taking additional package that they were not considered at the beginning.

Okay. And shifting over to the rise of Tesla in particular their model Y. I'm just curious is that hurting your Toyota Honda or your premium brand stores at all, and do you have any customers, especially at the Park Place Group wanting to pay in Bitcoin?

No, to answer all your questions, no, not yet, not at this point, no. Haven't had the consumers come to us with a Bitcoin request yet, and haven't really felt a strong competitive point from Tesla. I think a lot of their sales come from California and certainly other parts of the country, but it's not a real dominant player in the markets we currently transact in.

Okay. I appreciate the detail. That's helpful. And just for PJ or Karen, just real quick. The three special items, where were they booked for GAAP?

They're booked in other income, David.

Okay, all right, thanks guys.

Thank you very much. Appreciate it. This concludes today's discussion. We appreciate your participation and we look forward to speaking with you all in the next quarter. Have a great day.