Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's 2018 Fourth Quarter and Full Year Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the call over to Mr. Pete DeLongchamps Group 1's Senior Vice President of Manufacturer Relations, Financial Services and Public Affair. Please go ahead, Mr. DeLongchamps.

Thank you, Denise. Good morning, everyone and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results, we will refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the call, statements made by management of Group 1 Automotive, are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involves both known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ material from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume and the condition of markets, those and other risks are described in the Company's filings with the Securities and Exchange Commission over the last 12 months. Copies of these filings are available from both the SEC and the Company. In addition, certain non-GAAP financial measures as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, the Company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me today on the call; Earl Hesterberg, our President and Chief Executive Officer; John Rickel, our Senior Vice President and Chief Financial Officer; Daryl Kenningham, our President of US Operations; and Lance Parker, our Vice President and Corporate Controller. Please note that all comparisons in the prepared remarks are for the same prior year period, unless otherwise stated. I'd now like to hand the call over to our Earl.

Thank you, Pete and good morning, everyone. 2018 was a year that again, presented unique industry, political and macroeconomic challenges for us. Nevertheless, our operating teams managed through these challenges and we were able to grow the top line revenue of our Company as well as adjusted earnings per share. Our US business was subject to very difficult comparisons due to the unprecedented sales pace in our Houston and Beaumont markets subsequent to Hurricane Harvey's 2017 devastation. Houston and Beaumont new vehicle unit sales were down 16% in the fourth quarter this year, following a 23% decline in the third quarter. Despite these difficult comps, our US operations team delivered positive full year same-store gross profit growth through a continued focus on improving our used vehicle and after sales business as well as record setting year in F&I. Our UK business was once again hampered by political turmoil as the overhang of Brexit has continued to weigh on consumer confidence, driving a new vehicle retail market decline of 7%. Additionally, the WLTP legislation that was enacted across the EU in September, greatly disrupted our supply chain and had a disproportionately negative impact on our most profitable business, Audi. Despite these significant headwinds, our UK team managed to keep same-store gross profit flat on a constant currency basis. The Brazilian market had a very contentious Presidential election in 2018, and the result appears to bode well for the future of the local auto industry. 2018 new vehicle industry sales increased double-digits and current estimates imply that this pace should repeat in 2019. The auto industry is still less than two-thirds of the 3.8 million unit peak reached in 2012 and 2013, but recent trends suggest that local auto sector recovery continues to gain momentum. Despite all of these factors, we're proud…

Thank you, Earl. We were generally pleased with our performance in the US in the fourth quarter, despite very difficult comps versus a year ago. As Earl mentioned, Hurricane Harvey significantly distorted our year-over-year operating metrics. Despite a 10% decline in same-store new vehicle gross profit from the prior year, we were able to generate a slight increase in total gross profit because of very strong performance in our used and F&I business segments. On a year-over-year same-store basis, I'm particularly proud of the fact that we continue to generate strong growth in used retail unit sales, where we saw a 11% improvement. The Val-U-Line retail unit sales generated over 10% of our quarterly used volume during the quarter, which coupled with significantly improved wholesale results for the primary drivers in our same-store used vehicle gross profit growth. The wholesale improvement reflected lower reliance on the used vehicle wholesale markets, where volumes declined 18%, but our total wholesale profitability improved. In addition to the 11% same-store retail sales increase, we increased our total used vehicle gross profit per unit by $42. Moving forward, our intention is to continue to focus on keeping more units for retail. Additionally, we are piloting new pricing models that we believe will -- improve our gross profit opportunities and optimize our customer traffic. Our quarterly aftersales business grew 2.1% on a same-store basis. The results were negatively impacted by a 2% decline in warranty revenues which can be primarily explained by the lapping of the Takata airbag recall campaigns and a 5% decline in collision revenues, which were up against a tough comp due to Hurricane Harvey. Wholesale parts revenue increased 4% and customer pay service generated a strong 6% increase on a same-store basis. We are especially pleased with the customer pay growth at…

Thanks, Daryl. As mentioned earlier, our UK operations are once again significantly disrupted in the quarter due to the WLTP legislation that came into effect on September 1st. The total industry was down 4% for the quarter for the Audi brand in the UK was disproportionately affected with a 46% decline. In the areas that we can control, used vehicles, aftersales and F&I, our team once again delivered strong same-store growth. Our used retail unit sales increased 10% and total used gross profit increased 5% on a constant currency basis. F&I per unit increased 7% and aftersales gross profit increased 3%, both on a constant currency basis. Now, turning Brazil -- to Brazil which had another very strong quarter as we continue to benefit from the ongoing economic recovery, coupled with our process improvements and strong cost control. Total same-store gross profit increased to 11% on a constant currency basis, driven by a 44% increase in F&I, a 12% increase in new vehicles and a 5% increase in aftersales. Our team did a tremendous job, leveraging this additional gross profit as SG&A declined 570 basis points to 83.4% and operating margin increased 70 basis points to 1.7%. We continue to be very proud of the work our local team have done and are well positioned to take full advantage of the recovering market. I'll now turn the call over to our CFO, John Rickel to go over some of our fourth quarter financial results in more detail.

Thank you, Earl and good morning, everyone. Before I cover my prepared remarks, I want to take just a moment and address some fusion around our earnings consensus that's risen this morning. As of 10:30 PM Central Standard Time last night, the consensus in Bloomberg and in FactSet, was basically $2.29 per share. Sometime over the overnight hours, a new estimate was entered into the system from our Morgan Stanley analyst, who increased his quarterly estimate from $2.25 to $2.58 and almost 15% increase in expected earnings. I would note there was no covering note that went with this increase, so I could not able to address what's changed in his expectations. If you look now in FactSet, it still reflects $2.29, which we believe is the more appropriate estimate. Bloomberg however has picked up this inflated estimate that came out late and now reflecting a higher number. We would respectfully suggest to our covering analysts and to our investors that the appropriate thing to do is to ignore that higher estimate that came in late and continue to reflect what is in FactSet at $2.29 is our agreed consensus for the quarter. With that, for the fourth quarter of 2018, our adjusted net income decreased $0.5 million or 1.1% over our comparable 2017 results to $43.8 million. These 2018 adjusted quarterly results exclude $13.1 million of net charges, primarily consisting of $12.7 million of non-cash franchise rights impairment arising from our annual intangible asset testing. The prior year's adjusted results exclude $66.2 million of net after-tax gains primarily related to a reduction in the corporate income tax rate enacted in the US tax reform bill. This lower tax rate reduced our deferred income tax liabilities by approximately $73 million. This benefit was partially offset by net non-cash asset impairment…

Thanks, John. Related to our corporate development efforts, the company is pleased to announce the opening of four OEM granted add points. In November in the US, a new Acura dealership was opened in Sugarland, Texas, a suburb of Houston, which increases our total Houston area dealership count to 17. Also in November in Brazil, we opened a Toyota add point in the City of Sao Paulo, adjacent to our highest volume Honda dealership, which increases our Brazil dealership count to 18. In December in the UK we opened the Skoda add point in south and north of London, using a facility that our Land Rover franchise recently vacated. And finally in January in the US, we opened the Porsche dealership in El Paso, which brings our total dealership count in that market to 6. These acquisitions brought our total 2018 acquisition -- activity to 17 franchises, generating $615 million of annual revenues and our year-to-date 2019 acquisition activity to one franchise, generating $25 million in annual revenues. Since our last earnings call, we have also disposed of a Hyundai franchise in Kansas City, and a Mazda franchise in Houston. As well as terminated a Vauxhall franchise in the UK, and a Volvo franchise in Georgia. In total, these four franchises generated $65 million in trailing 12-month revenue. These dispositions are consistent with our strategy of disposing of underperforming assets and redeploying capital in ways that are beneficial to our shareholders. Finally, before I turn the call over to the operator for your questions, let me update our market outlook for 2019. For the US, we expect to see a slight pullback in the overall new vehicle industry. Total new vehicle sales in 2018 came in at 17.3 million units, a slight increase over 2017. We're anticipating a 2% decline in 2019 to around 17 million units. For the UK, the new vehicle industry declined 7% in 2018 from 2.5 million unit sales in 2017, down to less than 2.4 million units. We expect the market to continue on the same path in 2019 with another 5% to 10% decline, which would equate to industry sales of around 2.2 million units. We believe that our brand exposure, combined with the improved performance of our recent acquisitions will allow us to outperform the industry. And for Brazil, the market improved more than we had anticipated at the beginning of the year. Industry unit sales increased from 2.2 million to 2.5 million units, a gain of nearly 14%. Given the positive signals we're seeing in the economy, we expect this trend to continue with an increase of another 10% or so to around 2.75 million units. This concludes our prepared remarks. I'll now turn the call over to the operator to begin the question-and-answer session. Operator?

Thank you, Mr. Hesterberg. We will now begin the question-and-answer session. [Operator Instructions] And your first question will be from John Murphy of Bank of America Merrill Lynch. Please go ahead.

Hi. Good morning guys, and thanks for the detail. Just the -- a first question around WLTP and sort of the bounce back that you're expecting sort of here in the near-term Earl, just based on on your comments, you seem to think that you'll be able to catch up some of the lost demand, particularly your Audi dealerships. I'm just curious what gives you that confidence, do you have sort of a backlog of orders and folks that are waiting where we'll see kind of a little bit of a boost early in 2019 as VW gets through these issues?

Well, we don't really have a big backlog just because we didn't have cars to show to people, but this is a time of the year where you're starting to build an order bank for March, the plate change month. So that's just beginning. But I would say, I got my first level of confidence today I saw January UK data and Audi retail sales, just retail, private retail only dropped 14%, and they've been dropping more than 40% each of the previous three months or four months. So it looks like things are starting to normalize. I don't think we have enough time to catch up through March, but I would certainly think by the mid-year point, we should be okay. And what we do find is, demand for the Audi brand is continuously strong. It's a very powerful brand in the UK, their business is very retail driven, not fleet driven. So we're starting to gain confidence by midyear things will be back to normal.

But would it be fair to say there is a little bit of pent-up demand and that some of those consumers kind of held off, is that?

Yeah sure, sure, yeah. Yeah no doubt, no doubt.

Okay. And then just a second question with the -- even a slight pressure we're seeing on a dollar basis on new vehicle grosses, in the US, you guys have done a great job of offsetting that with continuing to press F&I PVR. I'm just curious how long do you think that sort of dynamic can go and really simplistically, do you see more pressure on new vehicle grosses and upside in F&I and PVR, or are we kind of reaching and I ask this question all the time and I apologize, but I mean, you keep beating us on the F&I and PVR side. I mean, is that something at some point you stop giving up the new vehicle gross, because you just can't get a whole lot more F&I PVR and we see it sort of correspond or sort of result in lower volumes. I'm just trying to understand that dynamic and how far you can press it and how much the automakers are pressing on these grosses as well?

So, John it's Pete DeLongchamps. Certainly, we never intentionally work on giving up gross, but the margin pressure continues. We performed in F&I in all three countries, and I think that the dealerships remain resilient in their pricing models. Daryl mentioned some of the initiatives we have in place, especially on the used front, but we think that we can continue to hold kind of where we are with the margins, but there is continued pressure on the front end.

Yeah, John, Daryl Kenningham. Nothing I would add about those -- the F&I comments that Pete made. The front end margins are a continual focus for us. It's a continual focus of the OEMs, they seem to be as interested in as well. And so, we don't trade one for the other ever trying to get as much as we can on both.

John, this is John Rickel. Let me also add to just kind of build there on Daryl's point. If you look other than kind of the fourth quarter this year, when we were up against some pretty tough comps from the -- their pretty robust demand that happened after Hurricane Harvey, our front margins have actually been pretty stable for two plus years. Daryl and the operating team have been focused on this and unlike a lot of the others in the sector, I don't think we get the credit that we should for the ability that the guys have done on holding margins. I'm looking at the numbers in front of me, and they haven't dropped by more than kind of $50 over a two-year period. So the operating team is actually doing a really good job of managing the front margin, and then what we're able to deliver on the F&I has actually been able to grow the overall margins for us.

Okay, that's helpful. And then just on Val-U-Line real quick, I mean, it sounds like that is going gangbusters for you out of the gates very quickly in the last couple of quarters. Are there any kind of lessons learned there or any more opportunities on the used side as you're seeing, your sub-billing [ph] just had such great success early on in the process.

We're pleased with Val-U-Line. We think around 10% of the mix is where the right level for us. We're always watching to make sure it's incremental. It is not substitutional, that's a continual focus for us. John, we’re doing some other things that are -- it's kind of early right now on some pricing. We started testing some things late in the fourth quarter and early in the first quarter that we may have some more news later on. But for now we're continually testing things like Val-U-Line and like additional internal auction, capabilities, and things like that. So our my short answer is yes, we continue to want to push on those kind of initiatives.

Okay. And then just lastly, real quickly on the digital efforts. It sounds like one of the big benefit is, is much more efficient and lower cost advertising my rough rule of thumb as I think about the advertising, it's about 15% of SG&A that might be a dated thought. I'm just curious, Daryl, if you would sort of underwrite that kind of rough estimate and as you get more efficient with this digital advertising, I mean, where could that number maybe go over time and is it with the U.S.?

I don't have a guess on where it would go over time, John. We are continually, though trying to make our traffic more productive, it's not always a matter of just driving more traffic, it's a matter of driving productive traffic and that's what the organic shift allowed us to do in 2018 and we're continuing to do that with a lot of the digital efforts in 2019 includes -- including digital retailer which should be the great Acura.

I'm sorry, just one follow up. Does that mean that the market reach on that dollar spend and your efforts is further than it traditionally has been, I mean, you're impacting a larger metro or a market area?

I think we are getting. Yes. Better – better reach on it. Yes.

Okay. Great. Thank you very much guys.

The next question will be from David Tamberrino of Goldman Sachs. Please go ahead.

Great. Good morning, gentlemen. There were just a lot of questions from the previous analyst, but I think you still have a few more. On the parts and service side you had about a 100 basis points of margin pressure year-over-year. I don't know if you addressed that in your prepared remarks if that's just from a mix shift, there's some instrumental labor costs related to your capacity increases like higher labor rates you need to pay, maybe just walk me through that and if that should improve?

You hit the -- you hit it on the head there. We've brought on a number of additional technicians. Our technician counts up double-digits in percentage wise year-over-year and that cost is in the cost of sales and lowers the margin effect of things. So, our focus is on driving margin and revenue process that capacity base now.

Okay. So then…

[Technical difficulty] industry as you know is technician headcount. We feel like we made a lot of [Technical difficulty] back in 2018.

Yeah, David. This is John Rickel. I'd add to that, that's -- we think is temporary, right? You bring them on, and you bring them on, they're not as productive in the initial phase, but as the volumes grow that margins should return back to those more normalized levels.

Yeah, got it. So, I mean, you have about 47 stores, so maybe about half of your footprint right now is just to progress throughout the year, you'll staff up and then we should start to see that, that growth be a little bit more profitable as you start exiting 2019?

Yeah, and just to be clear, we won't put four-day work week in all of our stores so then we're too small, but we will have it in over 80% of the revenue is represented in parts and service.

Got it. Okay. And then I do want to follow up, because there was this interesting question for the spend associated with the digital initiatives and trying to understand what type of returns you're targeting getting out of that. Is there any rule of thumb you can share with us on dollars spent on third-party leads versus what you think it's going to be per GPI-driven digital initiative leads and how that's going to accrue over time as you make that shift and bring in a different customer or to have a different lead generation for the customer?

I can't tell you we have a target per se. I can tell you that what we have found is that, when we can drive traffic organically, it's more productive and less costly to do it now. At some point, that dynamic might change, but that's what we see today and that's how it will continue for us.

Okay. And then the last question from me, definitively as you still been active in the M&A market, what are you seeing from the smaller dealers and what are they looking to do? How are they addressing some of their headwinds that are happening in the industry as you are again, you're moving toward more digital, adding more service like first service of the capacity? Is this something that they're able to do and if not, is that going to present more opportunities for you to add and make more acquisitions going forward?

Yeah, this is Earl. I think the biggest headwind for small dealers right now is probably similar to the one we have, and that to increase floorplan cost. Interest rates were artificially low for a long time. I think also when times get a little tougher and the market growth goes away, scale has a little more benefit. So I also think there's a lot of unease and smaller dealerships about emerging trends like electric vehicles and so forth. So there, I know for a fact there are many more smaller dealerships that are considering selling. Right now the math doesn't work well for companies like ours, at least for a large or a high-quality acquisitions, just because of the reduced valuations of all the companies in our sector, but there will be more and more dealerships for sale, I think continuously over time.

Great. Thank you all.

The next question will be from Rick Nelson of Stephens. Please go ahead.

would get your comments on the Texas market. How you're thinking about that in 2019 that really fully lapped now that sort of came replacement demand.

Yeah, Rick. This is John Rickel. On that front yes, you know the tough comps from – from that are behind us. So that's clean or all that Daryl kind of addressed the overall demand environment, but the comps at least are now leveled out.

Yeah. We you know we feel good about Texas. And after the spike in Q4 2017 due to Harvey we – we feel like we're back and more normal – normal sales rate, but generally feel good about the market itself.

Thanks for that. And Earl, you had mentioned you know lots of electric product coming down the pipeline and I’d like to get your thoughts on how you think that will impact parts and service and…?

Well, there is no doubt that electric vehicles will have less service potential per unit. But it seems to be quite a long way off before there are meaningful part of the units in operation. But it also seems that the amount of maintenance are required in terms of software updates and electronical diagnosis and so forth. Motor repairs and drive motor repairs and things like that are still to be determined. It seems like it will be a bigger issue in Europe and the UK long before it is here. We're looking forward to getting some experience with the Audi e-tron, which I think will be our first interesting experience and one of our primary brands. We have a reasonable number of orders for that, and they should be fulfilled starting in April or May. So, as we get experience we'll be able to tell you more, but just functionally the way that the parts rack out moving parts, they will be less per unit, but I don't see that being any material impact on our business for a long, long time.

And eventually I guess those batteries get replaced. And I would take that, you know, what incumbents a big ticket.

Yeah, yeah. And we don't understand that dynamic yet. There's a lot of discussion right now in the winter in the northern U.S. and throughout Europe about the range impact of cold weather on some of these batteries. So we're all going to learn together, I think, as these – as the take rate for these vehicles increases.

Thanks for that. Also would like to get the early learnings with this pilot online purchasing exactly what that encompass who had soup to nuts, including F&I and maybe some of the opportunities or headwinds you see there.

This is Darryl, we tested three different models. One of them included FNI, two of them did not. Before the end of this year, we expect FNI will be incorporated in all of them. We were encouraged by the F&I results both online and offline of those customers have started their process online and it was in line with what we see on just you know terrestrial purchases. So that was a learning for us. Also these customers that once they start this process online they tend to buy a car at about double the rate that another customer that place and inquiry with this. So those are both things that we were extremely encouraged by and quite honestly surprised by. So, We were – we're comfortable enough. We're going to roll it out to the rest of the country and we're excited about that.

And has this include home delivery as well?

We offer that. Yes we do.

[Operator Instructions] The next question will be from David Whiston of Morningstar. Please go ahead.

Thanks. Good morning. In the U.S. your used vehicle GPU was down over 10% but volume was up about 13%. So can you just talk about is that mostly a value line impact or you – or you overly discounting trying to get more volume right now?

Some of it is Val-U-Line impact, some of it is volume when we sell something, we also generate internal gross profit or aftersales departments and F&I profit as well. So we didn't purposely discount or give up margins that we're focused on trying to drive -- driving gross volumes. John, I think will touch on that.

Yeah. David, this is John Rickel. The other thing I would point out is what we really look at is totally used profitability and if you look at total use, we actually were up on a same-store basis in the quarter, in the U.S. And it's basically as we're redeploying units from wholesale to retail, which is a key part of the value line strategy we're basically minimizing, wholesale losses actually generating some wholesale gains and so the overall profitability of the U.S business was up $36 a unit in the quarter.

Okay. That's helpful, thanks. Also on -- going back to electrification there was a lot of talk at the end of the year with Rivian and their truck at the L.A. Auto Show and now you got Ford doing a pure electric accessories at some point and Tassel too. Do you think mid-size and full-size pickup truck customers really want a pure electric pickup or something you think will just remain more in the domain and someone who really not spent a lot of money for something just very unique.

We haven't heard any customer demand expressed to our share and we're pretty dominated in Texas and Oklahoma. But I think the OEMs are just trying to cover their bases at this point. And there could be a change in the cost of fossil fuels or tax breaks could be greater or something. So it seems to me all the OEMs are just trying to cover their bases so they can react to any changes in the market preference or taxation or whatever. But now we – we don't have anybody knocking the doors down yet. But yeah the dealer network and the OEMs we have to be ready for change. So we'll adapt as it goes.

Okay. Thanks.

The next question will be from Michael Ward of Williams Trading. Please go ahead.

Thank you. Good morning, everyone.

Good morning, Mike.

Two things, it looks like you’re in the U.S.your new vehicle truck mixes about equal with the overall market. Now trucks sell for more than cars, do you see a corresponding increase in FNI, and auto service and repair, and trucks versus cars?

Well, the carry, and the finance carry is heavier on trucks to sort of reason you mentioned. And so they provide a little more opportunity to people.

And on the FNI side, Mike, we do have higher penetration of vehicle service contracts and maintenance contracts on trucks.

A higher penetration in trucks versus cars?

Yes.

Okay. And then just – going back to the digital, I just want to make sure I understand it, so you have three different components, were you working on the digital? You have the retailing side of it, which includes some of the advertising? And then you have the service side, now is all of the service nationally going through the service center there in Houston? And then lastly, I think the third part is on the used vehicle side. Is that correct?

If I understand your – this is Darryl, if I understand your question correctly, let me break it up a little bit. On our digital retailing, which is, where we want to offer a customer an opportunity to purchase the vehicle online, we had a pilot going with a little less than 30 dealerships, and we use three different providers to enable that. So, some of that is OEM mandated, some of that is based on the direction we want to go.

And that’s for both new and used?

Yes, sir.

Okay.

On service, yes, our service development center in Houston does take all of our in-bound phone calls for service appointments and service departments, that happens. We also have enabled our website, including mobile, to take service appointments, and 25% of our service appointments today that are taken are taken online from a customer. Those calls don’t come in our services or the center in Houston. Does that answer your question?

Yeah. And I thought you said something in your prepared remarks that you said by the second quarter, all stores would be active, was that on the service side?

No, sir. That was on the new and used vehicle purchases. We’re taking this pilot that we did with 20 dealerships, and we're now going to roll that out to all 117 of our dealerships in the U.S. It’s on new news. The service side is in all the stores today.

It's already there. Okay. Beautiful. Thank you.

The next question will be from Rajat Gupta of JPMorgan. Please go ahead.

Hey, guys thanks for taking my question. I just had a question on the 2019 SG&A leverage that you see, particularly the context of used GPU pressure in the U.S., and then you're also making some investments on the bottom services side to increase capacity, I mean do you think you can grow SG&A to GP – the adjusted SG&A to GP in 2019? Or I mean, what – how should we think about the trajectory there going forward? And I had a follow-up.0

Yeah, this is this is John Rickel. In general, we’re comfortable with the view that as long as we continue to grow gross profit dollars, we should be able to leverage those, and the normal flow-through is kind of 40% to 50%. So, yeah, given that we anticipate even with our kind of a flattish to environment that the initiatives on parts and service on used and on F&I, should allow us to continue to grow our gross profit dollars. Yes, we would expect to be able to leverage our SG&A as a percent of growth as we go forward this year.

Great. Thanks for clarifying that. And then just on the capital allocation strategy going forward, I mean, should we expect 2019 to be somewhat of the similar year in terms of the way you’ve mixed your capital allocation or is there anything different we could expect that these particularly in terms of M&A. Thanks.

Yeah. This is Earl. Obviously that's a dynamic situation but as we sit here today I don't think the priorities have changed dramatically. We still believe our stock price is undervalued and if there is a nice accretion to share repurchases and we have about $15 million left, a little less than that on the board authorization. We're interested to keep growing the company in terms of brands and geographies that will -- we can leverage our existing strengths. But it's just awful hard to make the math work right now and not destroy capital on really high quality acquisitions of -- some of the top brands in some of the top markets. Possible that sellers will get a little more realistic and we can find some of that work we're certainly looking for that but it does seem that our best accretion at this point of time still looks like share repurchases.

Understood. Great. That’s all I have. Thanks.

Thank you.

And ladies and gentlemen, this will conclude our question-and-answer session. I’d like to turn the conference back over to Earl Hesterberg for his closing comments.

Okay. Thanks to everyone for joining us today. We look forward to visiting with you in about three months for our first quarter results.

Thank you, Sir. Ladies and gentlemen, that conference has concluded. Thank you for attending today’s presentation. At this time you may disconnect your lines.