Good afternoon, ladies and gentlemen. Welcome the Penske Automotive Group Third Quarter 2018 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through November 2, 2018 on a Company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Anthony Pordon, the Company’s Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Thank you, Sean. Good afternoon, everyone and thank you for joining us today. A press release detailing Penske Automotive Group’s third quarter 2018 financial results was issued this morning, and is posted on our website along with a presentation designed to assist you in understanding our performance and strategy. As always, I’m available by email or phone for any follow-up questions you may have. Joining me for today’s call are Roger Penske, our Chairman; J.D. Carlson, our Chief Financial Officer; and Shelley Hulgrave, the Corporate Controller. On this call, we will be discussing certain non-GAAP financial measures, such as adjusted income from continuing operations, adjusted earnings per share from continuing operations, and earnings before interest, taxes, depreciation and amortization or EBITDA. As you saw in the press release this morning, Penske Automotive Group reported record results for the three months ended September 30, 2018. Our record income from continuing operations increased 38% to $130.1 million and related record earnings per share increased 39.1% to $1.53. Third quarter 2018 income from continue operations and related earnings per share included tax benefit of $11.6 million or $0.14 per share related to the final reconciliation of the income tax benefit related to enactment of the 2017 U.S. Tax Cuts and Jobs Act. Excluding this benefit, record third quarter 2018 adjusted income from continuing operations increased 25.7% to $118.5 million and related record adjusted earnings per share increased 27.3% to $1.40. We’ve prominently presented the comparable GAAP measures and have reconciled the non-GAAP measures in this morning's press release and in our investor presentation, which is available on our website, to the most directly comparable GAAP measures. Additionally, we may make forward-looking statements about our operations, earnings potential and outlook on the call today. Our actual results may vary because of risks and uncertainties outlined in today's press release, which may cause the actual results to differ materially from expectations. As always, I direct you to our SEC filings, including our Form 10-K for additional discussion and factors that could cause results to differ materially. And at this time, I would like to turn the call over to Roger Penske.

Thank you, Tony. Good afternoon, everyone, and thank you for joining us. I'm pleased to report record results for the third quarter of 2018 for PAG. In the third quarter, we retailed 130,900 new and used automotive units that generated $5.7 billion in revenue and increased our earnings before taxes 13.1% to $157.1 million. And as Tony said, adjusted income from continuing operations grew 25.7% to $118.5, related adjusted earnings per share grew 27.3% to $1.40. Exchange rates negatively impacted earnings per share by $0.01 during the quarter. The record results in the third quarter were driven by diversification, including our heavy-duty truck dealerships, Penske Truck Leasing investments and the standalone used vehicle supercenters. Additionally, the business generated increases in new vehicle, used vehicle, and finance & insurance gross profit per retail automotive unit sold, also a 70 basis-point increase in service and parts gross margin, a 33.8% increase in medium and heavy-duty truck sales and an 80 basis-point improvement in SQ&A leverage. Looking at our retail automotive business for the third quarter. Total units increased 0.5% but declined 2.2% on a same-store basis. Same-store new units declined 6.6% and were impacted by the temporary shortage in availability of units in U.S. and UK and Germany from the new and light vehicle testing procedures called WLTP. On a same-store basis, our used units increased 2.1%; total retail revenue increased 0.7% or 0.2% on a same-store basis. Just looking further into the revenue and unit shortage. Worldwide Harmonized Light Vehicle Testing Procedures impacted September's performance. UK declined 20.5% in September and declined 10.5% in the third quarter, led by many of the German brands that had also obviously impacted us in Europe. Bentley was down in September, 74%; Porsche down 68%; Audi down 53%; BMW down 11%; and Mercedes-Benz, down 4%.…

Thank you. [Operator Instructions] Our first question will come from the line of James Albertine with ConsumerEdge. Please go ahead.

Great. Thanks for taking the question. Good afternoon, gentlemen. I wanted to ask on the used vehicle side. It looks like we’re seeing some acceleration in topline, but also pretty solid expansion, 4.3% I think it was year-over-year in same-store gross profit per vehicle retailed. Can you just sort of walk us through what you're seeing in terms of demand for used vehicles? And then, maybe help articulate a little bit what's helping you drive that margin higher? Thanks.

Well, I think part of our strategy, when you look at our business, certainly in the UK, we’re looking at 1.8 to 1 on used. So, there is a focus, we’re getting some tailwind from the supercenters. But, in the U.S. because on the premium luxury side, we’ve decided to take our loaner vehicles out anywhere from 4 to 5,000 miles, which is probably 4 to 5 months of operation. So, you got about 10% reduction in your cost base, plus any anything that the OEM gives you from a standpoint when you put that vehicle into service. So, these are young, new vehicles. When you just look at BMW by itself, we’re at 1.6 to 1 used to new with that particular brand. I think that pretty much carries through most of our premium luxury. So, that focus is good. We get a new customer, we give them a premium vehicle and obviously from a finance perspective, we get all the programs that are available, either for lease or on the finance side. So, I think that's key. Also, we've gone, Jamie, to consolidated reconditioning locations, which I think are key, which gives us a lower cost base on reconditioning and allows us to gain more gross profit. So, to me, that’s also key. And also, when you look at the business and certainly with the internet being a big part of e-commerce for used automotive, we really are looking at double discounting. Double discounting means that you have a internet price. Someone comes in on internet price and the first thing your salesperson does is give him a discount. So, I think, it's managing your team. Double discounting has really helped us to maintain our used -- and both new and used gross profit, as you’ve seen that increase during the quarter. So, those would be some of the key points. To me, when you look at e-commerce, we’re up to 35% now, coming through e-commerce.

And could you just maybe remind us in terms of sourcing vehicles, some kind of a breakdown you provide as it relates to sourcing via trade-in versus auctions, just maybe help us sort of delineate where you’re grabbing a lot of the used supply from?

I don’t want -- I can’t give it to you by percentage here, but maybe Tony can get to that later. But, I would say that trade-ins would be obviously would be the first level of acquisition of used. Then, options are key. Buying cars on the curb from customers we do communicate on the internet, we buy vehicles, which I think is key. And then, tremendous amount of lease returns coming back, and we’ve talked about that wave of lease returns coming back not only in ‘17, ‘18 but beyond into ‘19. And we have the opportunity to make big purchases on those. In fact, in the UK, I know they buy sometimes between the 1,000 and 1,500 vehicles at a time which gives them very good pricing and a broad mix of vehicles. So, those would be the key areas of acquisition. And I think that with the technology that we have in the used car supercenters, both in the U.S. and in the UK, the fundamentals of what we buy at what price for what location are key. And I think with the technology they've developed, and this is in house, it’s given us the ability to buy the right vehicle to give us the turn on our inventory.

And if I can ask just a quick strategic question, if possible. As we think about acquisitions across your main lines of business, is there any update you can provide in terms of seller expectations? I guess, starting with the franchise dealers first, but also wanted to touch on if possible, the heavy duty truck dealerships and the used standalone. Where do you see the majority of the brick-and-mortar growth coming from, call it over the next year or so?

Well, I think there's -- with the complexity -- maybe out of complexity, but the implementing of the CI by the OEMs and mandating that across many of the brands, we're seeing that some of the older operators who’ve been in the business have to monetize the value they can in other businesses. So, we're seeing -- there's a number of people that are coming to us and I’m sure with the other public retailers, we seem to have the capital. But where we have the ability to buy strategically, where we have scale, I would say we’re in the market, primarily in the premium brand side and maybe the volume forward. From a standpoint of heavy-duty trucks, there's no question that we have grown that business nicely since our first acquisition. Obviously, we went out to West Texas; we went to Georgia and Tennessee; we’re up in Canada growing. So, we see that it’s a continued landscape that we will be operating in. And that to me -- will grow that business nicely because our OEM who we’re committed to, a Freightliner, we have framework agreement with them, and it allows us to grow significantly before we get any particular cap. So, also, you asked about used cars, and I think from a used car perspective, we continue to announce locations which we’ll grow on. And I think we’ll have two in the UK, one in Nottingham, one in Bristol, which will open up next year; we’ll have one in New Jersey and one in Pennsylvania, we hope to add during 2019. So, we see that as real opportunities going forward.

Thank you. We have a question from the line of Stephanie Benjamin with SunTrust. Please go ahead.

I was just hoping if you could maybe talk to the SG&A performance during the quarter. Definitely saw some good improvement year-over-year. And just kind of I know that comes despite some of the decisions to increase 401(k). So, just kind of if you could speak to what’s driving the improvement there.

Well, I think, one thing we’ve looked at our marketing and advertising particularly, really looking at a mix shift, probably more digital, which has taken some of the main core higher price advertising costs out during the quarter. I think, when you look at our yard flow through on the truck side with 56%, which certainly helped our growth from the standpoint of gross profit flow through. Also, I think it is the blocking and tackling as we've added the used car supercenters and also the truck business, our main core overheads now can be supporting both those businesses and not have duplications which certainly help a lot. The big impact we had from a headwind perspective, those, as we added the 100 basis points to our 401(k), that probably increased our costs in the quarter $2 million to $3 million. So, we have that headwind. But, I think it's better blocking and tackling. I think it’s discipline on gross profits. When you look at our new car gross profit, up 177 and used up 68, and certainly the F&I has generated more growth than on the truck side from a gross profit perspective. You can see that we had a 122%, I think I mentioned it, coverage on the truck side. So, part of this SG&A, the growth is growing the top, which I think we did nicely, and we're able to sustain our cost pretty much flat when we look at overall, based on our business.

We have a question from line of Rick Nelson from Stephens. Please go ahead.

I would like to follow up on UK market. Some of those inventory challenge that you had and with the new emissions on certification requirements, what’s timing I guess on getting some of those inventory back, and do you think -- how much do you think you can make up here in the fourth quarter?

Let me just explain. What's happened is that because of all the diesel scandals, they’ve implemented a much tighter mission control requirement and testing procedures. That's why they call it Worldwide Light Vehicle Testing Procedures. What happened in the past, they might test one vehicle in a model line, see the lower and upper grade vehicle and say S class. Well, now what they're doing is taking all models and putting them through a very stringent test. The opportunity obviously in the future is, those will come through to us and those are high priced and valuable vehicles for us. The problem is that the capability. the number of test benches that are available in the UK and in Europe are constrained. In fact, Porsche, I know has brought certain vehicles to the U.S. to be able to certify. So, I see that a temporary situation. But, I wouldn’t expect this whole ball to come through the tube here before probably end of the first quarter. I think, it's going to take probably through the first quarter. And remember, it started on September 1st. Everything was good to go up till September 1st. At September 1st, you saw the impact, I think I mentioned earlier, 30%, 40%, 50% by some of the German nameplates. And we deal with both here in the U.S. and also internationally, were highly impacted just in the month of September, which had effect on our revenue and also effect on our unit sales.

Thanks for that color. Commercial trucks, that’s been an area of strength, big growth. Any clouds on the horizon for that business, do you think kind of getting into 2019?

Look, I think 2019, 2020, really when you think about it, over the last 12 months, there's been over 500,000 net orders have been booked, which is a new record. And the backlog, as we sit here today at the end of September early October, was almost 300,000 units, 286,000, and that was a new record and the nine-month build rate was only 241,000. I think they are estimating about 310,000 to 320,000. So, again, with retail sales up 28% and I think the forecast for ‘18 would be 315, there's no question that the sales could hit 320,000 to 330,000 units next year. And what's happening is ELD are three letters people probably don’t know about on the phone is electronic logging devices. That means every driver has to electronic report his drive time to the federal government where they used to have logbooks; they filled out and typically had two of them. Well that's all gone by. So, there's been a shortage of equipment, the owner operator. So, that's put pressure on these fleets in order to buy trucks. We've even seen our rental business had PTL running in the mid-90s from a utilization perspective. So, that’s put pressure on it. Then, you look at just commerce, e-commerce. Today, 85% of all goods are delivered by trucks, either light, medium or heavy-duty, and there is pressure on those obviously with this one-day two-day delivery, which certainly is key. The good news for us is that the byproduct will be on a longer-term basis is the parts and service business it comes out of this. Units in operation with Freightliner with the highest percentage of 40% of the market, this will give us a strong parts and service follow-up and flow through for us over the next 3 to 5 years because typically these trucks run anywhere from a 100,000 to 150,000 miles, and puts us really in the sweet spot when you think about it. So, to me, I think we’re in a good shape. There's no question in my mind in 2019. And I'm also looking at 2020, because I can look at that pretty much from the standpoint of Penske Truck Leasing who spends about $2.5 billion a year on equipment. And we’re seeing more and more people having to go to new equipment. And they are driven for a couple reasons. Number one, emissions, the new emissions capability is less complicated; and also better fuel economy. And to me that's amazing. We’re up to 90% utilization in our fleet at this point.

Thank you. We have a question from the line of Armintas Sinkevicius from Morgan Stanley. Please go ahead.

When I think about the market, looking for disruption in innovation for the dealer model, there's a stock in mind that's had some traction this year. And you've made some investments, and then sort of in front of that curve, as far as pushing innovation. Just if you could talk about some of the areas of innovation that you are most excited about, that would be interesting.

Well, I think when you really look at e-commerce, online e-commerce, the question that we’re looking at and we’re taking some time and investing some money is, what is the real business case today that makes a profitable business because some of the people that are in this space today are maybe successful selling cars. At the end of the day our shareholders expect us to pay a dividend. And where do we play, and more important is how do we win. And when you think about that, there’s got to be a value proposition, not only from our perspective, but also the customer. The customer experience we’re looking -- as we look at information online from customers, what's the customer experience. It might be easy, in order to buy the car, go through the transaction, what's the logistics associated with that, and then what happens when you get the cars delivered. I think that's key. Also, we are looking at what’s the marketing and the costs that take place as we go forward from a marketing perspective. And how does that tie into logistics is not -- you can't deliver car across the country without having some costs associated with that. Is the consumer going to pay for that are not? And I think our overall, our inventory management, we know how to do that. We’re doing it every day when you think we're going to sell probably 250,000 used cars this year. Then is pricing. I think the dynamic pricing that takes place at this point, it's important that we understand the dynamic pricing, which I think we do. We talked about double discounting earlier today. And then, we have certainly the financing capability. When you look at financing, I think that there's some operators online that say…

And last quarter you talked about some of your ecommerce initiatives. Can you provide us with an update on where you are and what your plans are in sort of the next, call it six months to a year?

Well, I think, when you look today, we're continuing to have all of our sites, are e-mobile because I think that's -- and over half of our traffic comes from smartphones today. Our leads -- most of our leads are organic. I think I said that before. And less than 10% of those come from a third party. Over time, I think as we have to look at every one of our cars now is online. So, the consumer has the ability to access that. And we will continue from a service perspective, which is a point that we don't want to miss. We are now seeing over 20% of our service appointments are online by the customer -- made the appointment online. And when you look at that and taking our BDCs, now 70% would be through online and are BDC. So, overall 35% of our deals are coming from digital. So that's increasing every single quarter.

Thank you. We have a question from the line of John Healy from North Coast Research. Please go ahead.

Thank you. Roger, I wanted to ask a little bit about the PTL business. Just, given the success in the business today, maybe you could just dive in a little bit more on what's really kind of driving that as well as kind of the durability of that business as we move into ‘19 or ‘20, and maybe addressing some of the economic sensitivity and how those revenues may or may not pay back, I think is a little bit more shaky.

I think as I mentioned earlier, 75%, that's 25% in logistics and 50% in our truck leasing business, excluding rental now, typically have four to five-year contracts with economic escalator. So, people commit to us, take our vehicles, and we have contracts that are solid for those. Now, supporting that would be a rental fleet, which today is about 25% of our revenue, and half of the rental revenue comes from our existing lease customers. As an example, maybe the Coca-Cola people want extra trucks in the summertime, the battery people want extra trucks in the wintertime. So, to me, that gives us a pretty good balance from a standpoint of the business. The complexity of the new trucks, the cost of trucks is now forcing people to look for other resources. And part of our success has been conquesting not our competitors leasing business but people that are in ownership because they have a hard time in getting mechanics. When we’re buying 25,000 or 30,000 trucks a year, I would hope that we have a better buy capability which gives the ability from a profitability standpoint to sustain our self. But covering that would be the 900 service locations that we have across the U.S. We also have a very sophisticated all-digital, 24-hour, seven-day a week online SOS service in writing with probably over a 100 people. This is not coin operated emergency service; this is one which is owned and operated by our own people. And I think the fact that we have a business that's over 50% or 75% with contracts, the supporting rental revenue goes with that. And then the ability for us to service these customers over the road, capability of 900 locations gives us a real advantage in the market. And today, I'm not…

And just one final question for me. As you look at the standalone used concept here in the states and you look at the lease returns that come to your franchise locations. Is there an opportunity to potentially take those lease returns, enter them into the CPO program but then begin to retail them through the standalone concept? Is that logistically or from a framework standpoint allowed by the manufacturers just because -- just curious how you might be able to create a product that may be differentiated on the standalone base.

Number one, when we certify -- and remember, we’re talking about a car that's anywhere from two and half to say four years old in that average 15,000. So, when you start certifying a vehicle that has that many miles on it, you get to rebuild the car and you get the cost to sell at too high. I don't think today that OEMs would allow us to take certified vehicles and then, move them into our supercenters and get the benefit of warranty [ph] that follows a certified vehicle. I don't think that -- I can't tell you for sure, but my nose said that that's not something that we would do.

Thank you. And then, our final question will come from the line of Michael Ward from Williams Research. Please go ahead.

I wondered just on the standalone used, if we can talk a little bit about your strategy. So, you have four new stores coming next year, presumably they’re new locations Greenfield sites that you will build up. Will you model them after the existing stores?

I think there is two ways to go. One is to take a complete Greenfield site, which we’ve done in UK. Car People has done one in Warrington just in the last year or actually 18 months. And then, there's the opportunity, as you look at real estate, similar to an IKEA site, like we have some sites in the UK that have 800 or 900 cars in stock, so 700 a month. So, we would look at locations that have major real estate space that we could use, we probably put our CI on those which would be a less expense, might even lease them rather than building from a Greenfield. So, I think we have both of those strategies in the UK. Presently in the U.S., we have two sites I mentioned earlier, one outside of Philadelphia and Wilmington, and another site in New Jersey which we will bringing online. And again, we have also real estate that we’ve purchased that we know that we can activate as we go into ‘19 and ‘20. And I think overall, there's no question that the standalone business is returning on sales of 4%. And the return on invested capital we’ve seen to date is 15%. I think when you look at our truck business, we're looking at a return on capital of 25. So, these businesses that we've gone into along the investment at Penske Truck Leasing, really you have to look at us as I said earlier. Strategically, we’re the transportation business. And there's no question that the standalone used car is key. And we’re looking at the differentiation between pure e-retailing and focusing on also retailing from bricks and mortar. And I think there's going to be a balance, we will be able to hit here in the near future as we do our homework. I talked about earlier how do we win in this space. And I think there's a number of initiatives that are people are looking at as we’re going through that.

It seems to me that the used vehicles side, you probably have equal to greater growth opportunities in both the U.S. and the UK and you also have the opportunity to leverage off some of your expertise on -- that you’re using like docuPAD on the new vehicle side. Is that a correct assumption, is that something all the financing your bank relationships and everything else go with it?

When you think about the $1 billion that we have outstanding in leasing and retail finance, both domestically and internationally, that gives us a tremendous asset to talk about, being a finance source for any used car superstores. But remember, when the new car market goes down, we've seen that in the past, the used car market goes up. So, with our embedded capability already here with bricks-and-mortar, both in the U.S. in the UK, I think we’re positioned perfectly. But again, this is a one price, no haggle. And again, we're looking at a margin, When you look at people's margins on used cars, we are almost double when you look at that over 15%. And I think from a used to new ratio, when you look at that overall, we went from 0.5 in 2008 to 1.22, and you think about in the UK, including a superstore over 1.8. There's no question that mix of used car business is driving it. And I think we’re even going to see that, it might even be 2 to 1, when we get to 2020.

And you are carrying the same brand names, CarSense, CarShop?

Yes. CarSense is here in the U.S.; CarShop and Car People in the UK. I think that there's been a great combination, has taken our SG&A down by combining the back office and many of the marketing initiatives in the UK have driven an SG&A leverage we had in the quarter. And I think we’re going to look at having one brand name, we haven't announcement it yet. We have one brand name representing us in the UK and international markets. Remember, we can scale this anywhere because of the technology we have, the infrastructure. So, to me, the costs are a lot less. And when you think about profitability by a Greenfield site today, from an OEM, it could take two years to get into a profitability from day one. This business we think that we can generate at least Warrington and the UK 6 or 7 months before they got into a profitability. And I think Hatfield [ph] or the ones in Pittsburgh took about eight months. So, we think that within a 12-month timeframe, these businesses will be creating positive EBT.

Can you double the revenue of the standalone used vehicle in the next two years, three years?

We’re at 70,000, and that's up, what Tony, that’s up year-over-year probably, what 45%?

Yes. at least for Car People.

Yes, Car People.

We’re at $1 billion in revenue right now for nine months.

And the organic growth. So, to tell you, we’re going to double that. That would be our goal. But I think when you look at where we’re going and the ability, and obviously potentially on a international basis, the ability to make other acquisitions is not at the top of our list right now, but it’s certainly something we can do. So acquisitions plus organic growth plus the new sites will give us a chance to double that revenue.

It sounds like the way the new vehicles dealer locations were back in ‘90s.

I don’t think. Look, we’ve got to be multifaceted. We’re going to have bricks and mortar. There's no question that there's still people are buying new cars, want that experience. If we can use docuPAD and some of the technology available to us to make that experience better, there's no question…

And the bank relationships.

Exactly. I think the funding, when you when you look at the funding, ability for us to fund on electronic transactions today before the customer really thinks about contracts in transit, the amount of money that we have tied up. And I just looked at a number here, when you look at revenue, third quarter ‘17 compared to ‘18 is up 65%. And on a year-to-date basis were up 88%. So, from $500 million to a $1 billion. So, I think your number is -- could be realistic.

And I apologize. We do have one final question from the line of John Murphy from Bank of America. Please go ahead.

Roger, just kind of two follow-ups here. You and Mike just went through this in a pretty detailed way on diversification and benefit there. But, I mean, as you look at this, is there the opportunity -- it looks like cap allocation is going to go in a number of different ways which might have better returns and has had historically -- be little bit more flexible. But, is there anything that you think you might need to do in your existing portfolio and kind of release some capital that’s lower return and push it to the higher return rates, just kind of think about how you make these decisions on your portfolio and cap allocations going forward.

There's no question that we are looking not only from an international perspective, but domestic on businesses that are not giving us the returns. And I think we talked about that, I hear our peers talking about that now too. We have investments and there's no question that we have underperforming locations. And what we need to do there is determine, are we in a market that we can compete because of our facility; is it a deteriorating retail environment in that particular area, and what's the cost then to bring that CI up, based on the expectations of the OEMs. And that's driving a lot of our discussions today because they have to spend $5 million or $10 million, you start to look at the return on that. We’re much better off to maybe invest that in a truck dealership or something else. So, when I look at the business, we really have multiple levers to pull, don’t you think. It’s just not all about new cars. We’ve talked about the used cars just a little bit to go with Mike, counter cyclical. We talked about the used to new ratio in the UK over 1.8. And when you look at the commercial truck today on a going forward basis, I would assume that the sales on those would be 4% to 5% return on sales. And with a fixed absorption at a 122%, we're running probably in the mid-70s in the car business. But to think about in some good months and certainly the third quarter for premier, they roll almost a 100% of their total cost, which I think is key. Then, when we invest more in the superstores, it's a much lower investment. We don't have CI to really -- it's our own CI that we…

Roger, just one follow-up on this. When you think about what's going on here, you are a business partner that's coveted by many automakers to distribute their product, and service their customers on the automakers site. And now they are hearing someone like you say, hey, listen, I can make a lot more money someplace else. Have we reached a point where the automakers might say, hey, listen, Roger, we're going to work on economics with you, we're going to give you a better funding in some of the dealers that you buy. I mean is there any kind of discussion like that beginning to happen with some automakers because the last thing they would want to lose is the partner like you.

Well, look, there is many good partners out there. Look, I appreciate the accolades. But let me tell you that this there is no question that not only myself but many of my peers that are on the line today are having discussions with the OEMs about return on capital. And with the requirements, the CI that they are requesting, the marketplace. And then there's this vibration about subscriptions and some of the things that the OEMs are doing themselves. I'm not saying you're trying to run around the franchise agreement, but there's no question. That gives me some concern, because when you think about it overall, we need all the business we can have from the standpoint -- because when there is warranty required, when there is customer satisfaction and touching the customer who are the ones that have to do that. So, look, there's no question that I'm looking at it very carefully. And look, business is changing. And can we afford to spend $25 million a quarter in advertising to generate to an online business, the answer is no because at the end of the day, we have to have a profitable company. I said it earlier, I want a big piece of this business and I care about the customer and the shareholder return. So, I think there will be lots of discussions. But you’re seeing Lincoln brand has done a great job. We became a Lincoln dealer out in California, and there was a good partnership done on that to put that whole business together. And I think at the end of the day, you're going to see more of this because people have the right CSI, have the capital and have the knowledge in the market, I’m sure the OEMs -- or opportunities for support, what that might be. I don't know. But, I’m sure, it’s not consistent all across the country by all OEMs. But for sure, as they’ve gotten out of the business themselves, as you know that in Europe, the [indiscernible] in Germany are getting out. I'm sure they're working opportunities for people to get into those stores and make them better and more profitable. So, at the end of the business today, business is changing. And I guess that's why we’re looking at diversification.

And at this time, I have no further questions. Please go ahead.

All right. Thanks, John. Thanks to everybody for joining us today. We will see you at the end of next quarter. All the best.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for participation and for using AT&T executive teleconference. You may now disconnect.