Thank you. Good morning and welcome to AutoNation's first quarter 2020 conference call and webcast. Leading our call today will be Mike Jackson, our Chairman and Chief Executive Officer and Joe Lower, our Chief Financial Officer. Following their remarks, we will open up the call for questions. I will be available by phone following the call to address any additional questions that you may have.

Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call, including any statements regarding our anticipated financial results and objectives constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, including economic conditions and changes in applicable regulations that may cause our actual results or performance to differ materially from such forward-looking statements. Additional discussions of factors that could cause our actual results to differ materially are contained in our press release issued earlier today and in our SEC filings, including our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K.

And now I'd like to turn the call over to AutoNation's Chairman and Chief Executive Officer, Mike Jackson.

Mike Jackson - Chairman and Chief Executive Officer

Good morning and thank you for joining us. Today we reported adjusted EPS from continuing operations of $0.91, down only 4% year-over-year, despite significant headwinds caused by the coronavirus. I would like to thank all AutoNation associates across the country for the tremendous effort during these challenging times. Only their hard work and dedication continues to support first responders, essential workers, and communities in which we live and work. On behalf of AutoNation, I would like to say thank you to all who have put themselves on the front line of this battle of pandemic. We are forever grateful.

The health and safety of AutoNation's customers and associates is our top priority. AutoNation stores are cleaned and sanitized multiple times a day. The Company has implemented social distancing best practice within the workplace in all our associates and customer interactions and our store delivery program for customers who feel safer at home to complete their transactions. Even with the pandemic and related shelter-in-place orders across the country, AutoNation delivered strong results for the quarter compared to the prior year. Same-store first quarter 2020 revenue was $4.7 billion, a decrease of only 5%. Same store first quarter 2020 gross profit totaled $812 million, a decrease of 3%. Same-store variable gross profit was $423 million, a decrease of 5%. Same store Customer Care gross profit was $389 million, a decrease of 1% compared to the year-ago period with customer pay down 2%.

The automotive recovery is underway. As of May 8th, states from which we derive roughly 50% of our total revenue are largely still under shelter-in-place or stay-at-home orders, compared to 95% beginning of April. In the month of April, we began to see recovery in our sales. Same-store new and used retail unit sales were down approximately 20% in the final 10 days of April compared to down approximately 50% in the first 10 days of the month.

We continue to see improvement in our largest markets, Florida, Texas and California. At the end of March same-store retail unit sales for Florida, Texas and California were down approximately 50%, 40% and 70% respectively, but by the end of April retail unit sales for Florida, Texas, California were down approximately 25%, 5%, to 30%. We expect most manufacturers to resume production in May and credit is readily available and affordable for our customers.

We are also seeing customers return to our service lanes. At the beginning of April our customer repair orders were down approximately 50% and at the end of the month repair orders were down roughly 30%.

I'd now like to turn it over to our Chief Financial Officer, Joe Lower.

Joe Lower - Executive Vice President and Chief Financial Officer

Tank you, Mike and good morning ladies and gentlemen. Before discussing our first quarter financial results, I would like to provide perspective on the impact COVID-19 and related actions have had on our business and financial position. In response to dramatic sales decline during the last two weeks of March, in early April we implemented a series of cost reduction and capital preservation measures in an attempt to mitigate the economic challenges we were confronting. We placed approximately 7,000 employees on unpaid leave, implemented temporary pay reductions for our executives and associates, suspended 401(k) matches and froze corporate new hiring. We also took actions to significantly reduce our advertising expenses, discretionary spending and capital expenditures through the second quarter of 2020. Our Board of Directors also temporarily waived their retainer fees. These actions were swift, severe and necessary given the uncertainty we faced.

Fortunately, we have a business model that can quickly adapt to these types of business challenges coupled with a strong balance sheet. Currently, we have in excess of $1.4 billion of liquidity, including over $750 million of cash and approximately $650 million of availability under our revolving credit facility. We also have access to other sources of capital should it be needed. As such, we believe we have more than adequate liquidity to weather the current situation.

Turning to first quarter results, we reported adjusted EPS from continuing operations of $82 million or $0.91 per share. First quarter 2020 adjusted results exclude non-cash impairment charges of $315 million after tax or $3.49 per share associated with goodwill, franchise rights and other assets. These non-cash charges were triggered by COVID-19 related impacts to the business and our market valuation at the end of the first quarter.

During the first quarter same-store revenue decreased $238 million or 5% compared to the prior year. On a total store basis, revenue decreased $350 million or 6% and gross profit decreased $36 million or 4%. Of note, we began the year strong with combined same-store January and February revenue up 10% year-over-year before COVID-19 and related shelter-in-place order caused almost a 30% decline in March.

SG&A as a percentage of gross profit was 73.9% for the first quarter, which represents a 50 basis point increase compared to the year-ago period as disruption to our business from the coronavirus caused significant SG&A deleveraging in March following positive year-over-year trends in both January and February. Floorplan interest expense decreased $26 million as compared to $39 million in the fourth quarter of 2019 due to lower interest rates and lower average floorplan balances. Non-vehicle interest expense decreased to $24 million as compared to $28 million in the first quarter of 2019 primarily due to lower average debt balances.

At the end of March we had $2.5 billion of non-vehicle debt, an increase of $418 million compared to the end of the fourth quarter as we partially drawn our revolver and increased cash on the balance sheet as a precautionary measure, given the uncertain outlook. The provision for income tax in the quarter on an adjusted basis was an effective rate of 27%. With COVID-19 and shelter-in-place order significantly impacting our operations, we halted our share repurchases before the end of the first quarter.

Prior to that, we saw an attractive opportunity to acquire AutoNation's stock and invested $80 million for the purchase of 2.5 million shares at an average price of $31.95. Under the current Board authorization, the Company has approximately $139 million available for additional share repurchase and as of March 31st, there were approximately 87 million shares outstanding.

Our covenant leverage ratio of debt to EBITDA increased to 2.8 times at the end of the first quarter compared to 2.2 times at the end of the fourth quarter 2019. Including cash, our net leverage ratio was 2.4 times at the end of Q1. Capital expenditures were $30 million compared to $40 million in the prior year, reflecting actions we started implementing in March that will continue through Q2.

We will continue to remain disciplined over cost and capital as our markets continue to reopen and business recovers. We believe our resilient business model and strong balance sheet position us to excel going forward.

I will now turn the call back over to Mike.

Mike Jackson - Chairman and Chief Executive Officer

Thank you, Joe. While there is certainly unpredictability, especially through 2020 on the pace of the recovery, we believe the automotive recovery is on the way, customers are motivated to tell us they want personal space rather than share space when it comes to transportation. We are preparing to meet all our customers' transportation needs in a safe and responsible way. AutoNation is focused and well positioned to perform during this auto retail recovery.

We're now delighted to take any and all questions.

Question & Answers

Operator

[Operator Instructions] Your first question comes from Rick Nelson with Stephens. Your line is open.

Rick Nelson - Stephens - Analyst

Thanks. Good morning. [Indecipherable] Mike. Curious what you see happening on the used car market. Seems to be a lot of inventory out there, dealers in inventory reduction mode. How you are responding to that? Are you taking early and aggressive markdowns or are you preferring to wait on the sidelines to see how pricing develops?

Mike Jackson - Chairman and Chief Executive Officer

Rick, this is Mike Jackson. Retail pricing in the used vehicle market has been very stable. I would say it's moved by 1% or 2% thus far. And what we've also seen now with the disruption to production on new, if the customer can't find what they're looking for new, there very flexible to consider nearly new and pre-owned. Obviously, the wholesale market is a different story at it's very hard to judge, particularly with the auctions disrupted and with the rental car companies rightsizing their fleets. But I think a lot of that has already been done without disrupting the retail market. So the ability to acquire vehicles for inventory at a very attractive pricing is good. And retail pricing is, I would call, stable all things considered, and we're in a good position to manage come what may.

Rick Nelson - Stephens - Analyst

Great. Thanks for that. Also curious how you see consumer behavior changing post COVID. I know you've made lots of digital investments. Maybe you could talk about profitability of a digital sale versus in-store? And F&I, how you see social distancing affecting the F&I business?

Mike Jackson - Chairman and Chief Executive Officer

So this is Mike. I think for digital this whole disruptive period with corona is an inflection point from which there is no turning back. While there has been a strategic trend towards digital and we certainly have invested in those capabilities, this is an accelerant from which there is no turning back. And I think the bar has now been raised for any company that wants to perform in this marketplace is you need first-class digital capability, you need a safe environment for your customers and a safe environment for your associates. That is the Holy Grail going forward.

We see no difference in profitability between the digital channel and the traditional challenge whatsoever. And as far as our performance around finance and insurance on a PVR basis, I think we're at near-record levels. Joe, could you talk about that, please?

Joe Lower - Executive Vice President and Chief Financial Officer

Yeah. We -

Mike Jackson - Chairman and Chief Executive Officer

And I see no impact there.

Joe Lower - Executive Vice President and Chief Financial Officer

Yeah. Thanks, Mike. So we've continued to see strength in F&I side through Q1 and continuing to see it in April and continuing to see it in May. So all signs are very positive on that front.

Rick Nelson - Stephens - Analyst

Great. Thanks a lot and good luck.

Mike Jackson - Chairman and Chief Executive Officer

Thank you. Stay safe.

Operator

Your next question comes from Bret Jordan with Jefferies. Your line is open.

Bret Jordan - Jefferies - Analyst

Hey. Good morning guys.

Mike Jackson - Chairman and Chief Executive Officer

Good morning.

Joe Lower - Executive Vice President and Chief Financial Officer

Good morning.

Bret Jordan - Jefferies - Analyst

On the comment about digital being at an inflection point, do you see the independent used market changing dramatically? And albeit, obviously, a lot of them are not as sophisticated from an online execution standpoint do you think we're going to have a meaningful reduction in stores?

Mike Jackson - Chairman and Chief Executive Officer

I think that trend was already underway where the value of brand and experience and a warranty guarantee has all been expressed as a consumer as things that are valued and there's been a movement towards companies like AutoNation with One Price, CarMax, Vroom, Carvana. You see it. I think that is a trend that is there and that will continue now. I think there is an acceleration towards companies that has, as I said, first class digital capability and the scale and the ability around the brand and the ability to deliver a uniform experience. So this pre-owned market, which is dramatically at retail larger than the new market somewhere approaching over - somewhere between $35 million, $40 million on a - in a normal year. I don't know what it will be this year with the disruption of corona. I think there is a consolidation into first class digital, branded, warrantied known entities from consumers and I think that means those that are competing with that will lose share. And happy to share [Speech Overlap]

Bret Jordan - Jefferies - Analyst

Right. And then a macro question.

Mike Jackson - Chairman and Chief Executive Officer

What happened now will only accelerate.

Bret Jordan - Jefferies - Analyst

Thank you. And I guess a macro question. I guess, given your perspective a lot of years with cars, do you think this pandemic is followed by a recession? And I guess, do you have any outlook as far as sort of a guesstimate for SAAR for 2020?

Mike Jackson - Chairman and Chief Executive Officer

There is no question the United States is in a recession, that there is no - absolutely no doubt about. The employment level in the United States is now lower than the bottom of the '08, '09 recession. We've given it back in a month 10 years of job growth.

Now having said that to - as far as 2020, to give it a number on 2020, well, I'd say the automotive recovery is underway. I think 2020 is a very unpredictable year. I think there will still be twists and turns and bumps and surprises through 2020. So I'm not going to give a number for ‘2020, other than saying if I go back a month - a little over a month ago, we were looking at - we were down 50% and well we're going to be down 90% or was it going to be something else. And today were only down 20%. So obviously the drumbeat of demand for personal transportation is strong. And exactly how that plays out for 2020, I can't tell you. But this is a multiyear recovery in automotive retail - retail that is underway and I'm highly confident that 2021 will be better than 2020, that I guarantee, but I'm not willing to give you numbers on either considering the level of uncertainty and unpredictability but directionally I'm quite confident and - that an automotive retail recovery is underway.

Bret Jordan - Jefferies - Analyst

Great. Thank you.

Operator

Your next question comes from John Murphy with Bank of America. Your line is open.

John Murphy - Bank of America Merrill Lynch - Analyst

Good morning. It's great to hear from you and thoughts - and we're hoping Charles is doing okay. Just a first question here, Mike, I mean inventory on the new site appears to be a little bit high given the run rate of sales that we're looking at right now. But with a lack of production, it could quickly get whipsawed into being very tight or deficient in your ability to actually deliver the new vehicle demand. I'm just curious how you're navigating that and thinking about that and maybe also sort of in conjunction, how the automakers acting in this kind of environment relative to history? It seems like they are being a little bit more collaborative and supportive, but just curious your view on that as well.

Mike Jackson - Chairman and Chief Executive Officer

John, we're very satisfied with our inventory position. We think we're in good shape. As you know, day supply is a trailing number where - so it's one of those numbers you can't look in the rearview mirror, but rather you have to look forward. And I like our position and I don't see anything that we can't manage.

When it comes to the manufacturers reopening the plants, I am fully supportive. And you know I'm a hawk about watching for over production and oversupply. But we have shortages already and I am well aware that this resumption of production will be difficult, complicated. They will introduce social distancing in all of the plants and all the supply chains. It is a massive undertaking. So I'm looking down the road 60 days from now looking at a difficult resumption of production. I think it's very good that they're starting now and I support the reopening of the plants in the United States and elsewhere in the world as appropriate. I would even go so far as to say I think Elon Musk has a point that he's got a plan to keep his employees safe. He wants to reopen with 30% of the employees. So even though I don't sell new Teslas, I think the plant should be reopened. So I like our position on inventory, the day supply. As a rearview mirror it doesn't worry me too much if there is a bump in the road. I don't see anything we can't manage.

John Murphy - Bank of America Merrill Lynch - Analyst

Okay. And maybe just a follow-up on that. GPUs were reasonably strong relative to fears. Given the backdrop you just described, I mean do you sort of envision an environment both on the new and used side that you can manage reasonably strong GPUs and there is not going to be any degradation or if anything, there might be some upside over time and the near term anyway?

Mike Jackson - Chairman and Chief Executive Officer

I like your assessment, John. I think we have a very manageable situation. So if I look at the pre-owned side, retail prices are stable, wholesale prices, the way I think about it are attractive. My cost of acquisition is going down, but the retail prices is holding. That's a very manageable situation. Now exactly how it shakes out, I can't say. I am not going to promise higher gross profit per unit. But it's a very manageable situation and we see opportunity on the new side where there are shortages in terms of vehicles where we will adjust pricing upwards. It's nothing as severe as we had when you had the earthquake in Japan and production was stopped then where there was a significant pricing opportunity. I don't see it as big as that. But my whole point is it's very manageable.

And on finance and insurance, we are in excellent position. And, Joe, I think we're at record levels.

Joe Lower - Executive Vice President and Chief Financial Officer

Yeah, you are right. [Phonetic]

Mike Jackson - Chairman and Chief Executive Officer

Do you have the [Phonetic] exact number?

Joe Lower - Executive Vice President and Chief Financial Officer

I won't give an exact number, but it's north of 2,400 [Phonetic].

Mike Jackson - Chairman and Chief Executive Officer

North of 2,400 [Phonetic], yeah. So I think - listen, I'm not calling out an improvement, but I think we've got the downside risk in a very manageable situation.

John Murphy - Bank of America Merrill Lynch - Analyst

Sure. Seems like it. Maybe just one last one, you shifted gear and moved away from PPP loans and have gone to sort of furloughing workers. I'm just curious what sort of dynamics drove that decision. I mean maybe the PPP loans were a little bit too restrictive and you got handcuffed on what you may be able to do with the business. And if we think about those furlough workers coming back, are they coming back one for one or may you be just structurally more efficient going forward and you might not be hiring all those workers back?

Mike Jackson - Chairman and Chief Executive Officer

Excellent question, John. So payroll - paycheck protection was launched to try to mitigate the damage from a avalanche, unprecedented history of America, avalanche of unemployment, people being put out of work. And I thought it was a enlightened and inspired, almost a European-type plan where you're looking into companies to - despite the circumstances to sustain same payroll as the prior year. So PPP was launched with that in mind, protecting jobs. And for us to qualify for forgiveness, basically the vast majority of the money had to go to employees.

And we either had to bring the 7,000 back. So the Company either had to bring everybody back and give pay increases where you had made cuts, whatever, you had to go back to the same payroll you had before. Now that's not something we would have done for the business because it's not affordable. But in the spirit of looking at our furloughed associates standing in unemployment lines that are as far as the eye can see and not being able to get on unemployment, we did it for our associates and it was basically a pass-through from the government to try to stabilize the employment situation in America. We are clearly eligible. They had suspended the small business association rules around aggregation and we clearly had not excluded the publicly traded companies. So it was in that sense that we went forward.

Now government can changes its mind as happened. I've observed that with administrations and we woke up with new guidelines a couple of weeks later that said, basically you can do everything we've asked, you can give all this money to the associates, but we're not so sure we're going to forgive you when it's all done. Well, that made - that is a non-starter that once there was no clear path to forgiveness, we are not in a position to go down that road. And so we suspended our applications and returned whatever PPP money we received thus far, which was, I believe, $79 million, something like that and said, okay, we have to run the business for ourselves rationally where we've protected and ensured the Company would be on the other side. And participating in PPP put that at risk with no clear path to forgiveness because I think that's very understandable.

Now as far as how I view the number of associates we have and who comes back when, here is the way I think about it. So if I go back to March, early April, our sales were down 50% during that period and we had reduced the staffing of the Company by 26%, 27% something like 7,000 employees and we were prepared that it could go either way. We really didn't know. We are prepared to do more. And of course we are always happy and delighted to manage better news. That's far easier than managing more bad news.

So at this point business, as I said, is now running around down 20%. We bought back 1,000 associates thus far, meaning that our staffing reduction is around the same as the business reduction.

Now exactly - there is no predetermined cadence or plan as to when we bring back additional employees. There is going to be absolutely almost a daily discussion. And if I look back to '08 and '09, I would observe it was - the restaffing trailed the improvement in business. That's the way you have to think about it. And what other efficiencies and effectiveness around digital is figured out or we come to grips with, whether that leads back that we hire everyone when we ultimately have a full recovery on our back, well, I can't answer that today other than I can say rehiring will trail the growth of the business.

John Murphy - Bank of America Merrill Lynch - Analyst

I just - the simple characterization here is the PPP created undue risk on the grant turning into a loan where the furlough just gives you a lot more flexibility to operate more on a market basis. Is that a fair characterization? It just seems like there's a lot of risk out there with the PPP loans that you don't realize?

Mike Jackson - Chairman and Chief Executive Officer

So very good point, John. So we actually had a very strong debate within the Company about PPP that we were bringing back 7,000 associates that we clearly could not afford and did not need and we really did it because of the overwhelming unemployment situation, the crisis and the drama that these associates on furlough face and we did it for them. And I said to the Board right from the beginning, every dollar around PPP will go to associates. We don't need it to pay rent or any other expenses. This is something we're doing for our associates.

However, your point is well-taken. And for the way we run a business, this is actually more straightforward and normal than the PPP route. So, look, it was a decision we did for our associates when we said, yes, let's do it and it was a very clear decision when the path to forgiveness was muddled that it was unacceptable risk. And as far as running a business, it's more straightforward without PPP than with PPP.

John Murphy - Bank of America Merrill Lynch - Analyst

Great. Thank you very much. Appreciate it.

Operator

Your next question comes from Rajat Gupta with J.P. Morgan. Your line is open.

Rajat Gupta - J.P. Morgan - Analyst

Oh, hi. Good morning. Thanks for taking my questions. Just wanted to follow up on a couple of the previous questions, starting with the online initiatives. Could you give us a sense of where you are in your partnership with Vroom, how that's progressed, how that's changed during this crisis period, like how could it look like when we are out of this? Any material changes or any changes in strategy or anything you've learned through this process that can help the Company coming out of the other side? And I have a follow-up. Thanks.

Mike Jackson - Chairman and Chief Executive Officer

Yeah. We admire Vroom as a company. We're very satisfied with our investment. We discuss things between the companies whether, I would say, there is any strategic learnings there for either company. I can't really say other than we're satisfied with our investment. That's all I have to say today.

Rajat Gupta - J.P. Morgan - Analyst

Got it. Got it. That's helpful. And then on the SG&A side, just a follow-up to John's question, any sense of the run rate of savings you're seeing right now on a monthly basis that you can provide? Just to quantify the impact just so we can model the rest of the year. Thanks.

Mike Jackson - Chairman and Chief Executive Officer

I'm very sorry the line broke up. I did not understand the question. Did you Joe - were you able to get that?

Joe Lower - Executive Vice President and Chief Financial Officer

Monthly savings, he is basically asking about the monthly savings.

Mike Jackson - Chairman and Chief Executive Officer

Then take it. Ball is in your court.

Joe Lower - Executive Vice President and Chief Financial Officer

So obviously it's a fluid situation and that we took a series of actions in early April reflecting a business environment that, as Mike indicated, we're already seen recovery. But the magnitude of savings that we potentially had was in excess of $40 million a month if you look across both the store and the corporate operations. And obviously we'll manage that in a very disciplined fashion as we go forward based upon the business recovery.

Rajat Gupta - J.P. Morgan - Analyst

Got it. That's helpful. Thanks for taking my questions and good luck.

Mike Jackson - Chairman and Chief Executive Officer

Thank you.

Joe Lower - Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from Armintas Sinkevicius with Morgan Stanley. Your line is open.

Armintas Sinkevicius - Morgan Stanley - Analyst

Great. You talked about the improvement you've been seeing here into the end of April and beginning of May. Maybe you could - you have some numbers around May, that would be helpful. And then also where are you seeing the improvement coming, both on the sales side as well as the services side? What are people looking to - what services are people looking to do and is it the incentives driving the sales or is there something else?

Mike Jackson - Chairman and Chief Executive Officer

So the sales side is improving more rapidly than the Customer Care side. I don't have an exact figure for May, but I think 20% - minus 20% is an acceptable working number about what we sold at the end of April. The product line is holding up the strongest. It is pickup trucks only down 10%, 11%, 12%. We have a severe shortage on the General Motors Silverado, because they got the double whammy of the strike and corona. The brand is in short supply. F-150 is in reasonably good supply.

You will notice that the sales in premium luxury are down more than the overall market, but I'm not too concerned about that. We have - as you know, that's primarily a leasing business, 75%, 80% leasing, something like that. A significant percentage of our clientele extended their leases, a month or two, just to see where the uncertainty is going. They've all told us they're going to be back in the market.

Now on Customer Care, it's in essential services that we've been performing to really keep those who need to be out and about, keep their vehicle running. There is no question that miles driven is starting to recover as shelter and replace [Phonetic] is lifted, the consumption of gasoline is going up and as people begin to move about once again, we expect the recovery to get underway in Customer Care. But as of this moment, sales were only down 20%. And, Joe, what we dido say Customer Care is down so far in May?

Joe Lower - Executive Vice President and Chief Financial Officer

In May, I would say - I'd say it's high 20%s.

Mike Jackson - Chairman and Chief Executive Officer

High 20%s. High 20% is not there. [Phonetic]

Armintas Sinkevicius - Morgan Stanley - Analyst

Okay. And then you mentioned this being an accelerant for digital. What are some concrete actions that you're taking on the digital side? I know you've made the investment in Vroom, but are you deploying capital or making decisions to push the digital side because ultimately it seems like financing is still the challenge when it comes to fully online transaction.

Mike Jackson - Chairman and Chief Executive Officer

So our investment in Vroom which was $50 million is relatively minor relative to AutoNation's investment in digital over the last three to five years. We have made a significant investment in digital capability, which we're very thankful for today. And I would say the surge of activity to digital is remarkable in a very short period of time and I don't think it's going to go backwards at all. So we continued investment in our digital capabilities.

Now we have really found a marvelous blend between what the customer does digitally and what we do on the telephone, what we do interactionally personally or email with the customers that you see our performance around F&I. So we've really found the optimal line there that the customers are delighted, they love the products that they receive.

I don't see sideline to the finish line as of today that we could have the same performance in a pure digital transaction. There is a lot of added value and scale that is in our associates, processes that we've developed and built over the decade that are a win-win for the Company and for the customer. And I don't see where there is - I don't know anywhere in the industry where digital - pure digital solution can match what we do. But we don't need to end up there. We have found the optimal line of - and I have said this from the beginning, where you move back and forth between digital and interpersonal interaction. So I like where we are, we will continue to invest in digital and I think we found the optimal line.

Armintas Sinkevicius - Morgan Stanley - Analyst

Okay. And then my last question around AutoNation USA. I'm guessing that's probably not at the forefront of your priority list at the moment, but any updated thoughts would be great.

Mike Jackson - Chairman and Chief Executive Officer

So obviously it was as disruptive for the USA stores as anything else. So you have to say that when we pushed out capital decisions, USA decision also got pushed out. And I would say that's for the entire auto industry that if I look at the manufacturers, I think capital decisions have to be delayed

Until the sight lines are very clear.

And so I think that pushed out the decision point as to when we build more USA stores and as of this moment I wouldn't want to give you a date. The performance of the stores has been fine. I have no issues there, but it's a big decision to build more and we're not prepared to make that at the moment and this situation has pushed out that decision.

Armintas Sinkevicius - Morgan Stanley - Analyst

Great. Thank you. Appreciate the time.

Operator

Your next question comes from David Whiston with Morningstar. Your line is open.

David Whiston - Morningstar - Analyst

Thanks. Good morning. Staying with digital, I was going to ask, do you think post COVID people will still want to come in the store and do a test drive or are we going to move to a kind of what you already can see on Tesla's website where you can buy online in five minutes? It sounds like you don't feel that's how the whole industry would move. But any more thoughts there, please let me know. But also does this post COVID world accelerate a move to no haggle?

Mike Jackson - Chairman and Chief Executive Officer

Yeah, I think I've said that. I think this is an inflection [Indecipherable] permanent change that you're going to need first class digital - the anti to be in the game for any business in any industry post COVID-19 or in the midst of COVID-19 and I don't care whether you are in the hotel business, ariline business, or the auto retail business, the issue is that you need first-class digital capability that delight customers.

And when they choose to actually interact with your business either because you've come to their home or because they have come into a store, you absolutely must have provided them a safe environment, and you must be providing your associate a safe environment wherever they are interacting with customers, either face to face, digitally or online. You're going to have to provide social spacing, different than what you did before and it's a new ballgame. And I don't see that changing. We've embraced it going forward and I think we're well prepared.

So with that, I'd like to thank everyone for joining us today. Thank you for all your questions. I with each and every one of you and your family please stay safe, stay healthy. I would say that I look forward to the reopening of America being done in a safe responsible way and thank you for your time today.

Operator

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Q1 2020

Earnings Transcript

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