wake up buy here pay here people it's a beautiful day go grab yourself another cup of joe and say hello to jim and michelle rhodes on the buy here pay here morning show take it away you two hey good morning from uh north ogden utah happy monday hope everybody had a really nice weekend out there we uh we thought we were kind of done with cold weather in Utah. It's back. It's cooling again. And so, uh, we'll, uh, we'll, we'll see summertime eventually. I'm sure. Uh, just wanted to, uh, uh, do a couple of quick updates. We've got, uh, two VA group meetings coming up this week. Uh, we've got, um, topics lined up for, uh, for Wednesday and Friday. So you'll see that on social media or in your email. And, um, We'll get the word out about those. And then I know just a quick mention too about NIADA. It is time to make those decisions. In fact, if I'm not mistaken, today is the last day on some hotel discounts. So don't delay. Get over there and grab those hotel rooms. We want to see you there. I am moderating a panel on... let's see that panel is on exit strategy. I think it's what they didn't end up calling it, but, um, but we've got, um, uh, a dealer. We've got, uh, Colin, uh, from, uh, Lane Gorman is going to be there. And, um, gosh, I'm forgetting the third panelist, but, uh, we'll, uh, we'll get you updated on those, but look for us to be in, um, in the convention hall at NIADA, and we hope to see many of you there. So just, by the way, it's just me again. Michelle will be back with us on Friday. She returns to Utah from a girls getaway on Wednesday, but not in time for the podcast. You will see her on Friday. And so shout out to her. She's kind of been listening in from her resort location, so good for her. And we got Brent Carmichael standing by. Let me bring in Mr. Brent Carmichael, our distinguished guest. Brent, always great to have you here. Good to see you. Always great to be here, Jim. Appreciate that. Michelle, we miss you, but hope you're enjoying your time away. I'm quite sure she is. Yeah. She's having fun. We've been checking in here and there, of course, and she seems to be having a good time. So what's the latest, Brent? What's going on with your 20 groups? First, I want to usually wait to the end to ask about that, but what's the situation? You got spots in your groups? We do. We do. Currently, I've got what we would consider a smaller volume group, and two of my larger volume groups are have a couple of openings in there and them at this point. So actually getting ready to start meeting again here in about a month, uh, putting the attendance together this week as we speak. So. And what are the breaks on your, on your group sizes? We consider small volume anybody under $10 million. And so we have a couple of groups where the group averages are as small as $2 and $3 million and then closer to that $5 or $6. And then our large volumes typically start around $10 million and above. And so we've got an opening in a group that's around 13 mil and one that's around almost 20 mil as far as average portfolio. So we've got a couple of spots available. Depending on your size, feel free to reach out. Yeah, and I put your email on there. We'll remember to show it again at the end. But that's how you find Brent. And I think today's topic, Brent, you were kind enough to come talk to us about operating expenses. And I just put a poll out on social media. I said, look, the guy, the expert is going to be here. What do you guys want to hear about? And the answer that came back, it was close between that and deal structure, if I recall. And so we're going to talk about operating expenses today. And I think this is really important because you know, even, you know, we're over here doing our V8 groups, but we're not looking at operating expenses at all. Everything we do in a V8 group comes from the DMS. It's a pretty simple turnaround, but it's an abbreviated composite for sure compared to what, you know, an NCM20 group is going to do. So, and especially operating expenses, you know, we don't see that. So, I think this is an important thing for people to have as a point of reference, and Brent is kind enough to share the the summary form, you know, the kind of summarized composite for Q1. And so I pulled together some kind of comparative numbers, Brent. I would just say that, you know, in my glancing through those, it looked like a lot of the expenses year over year were down, at least in all I really focused on with the small volume averages. And I actually, I think I chose the benchmark average instead of benchmark. And so, you know, we will be able to explain kind of the difference in those, but But in looking at that, it looked like most of the categories were down year over year by the first quarter, except for payroll. Not surprisingly, payroll expenses was up a little bit. Most everybody's having to pay a little more to get some good folks, right? And so that was up somewhat. But before we dig into the actual numbers, any general observations about what you're seeing with expenses over there? Well, kind of like everything over the past couple of years since everything has gone up, obviously the cost of everything with inflation has gone up. There has been more of a focus on day-to-day expenses. And, you know, it's interesting that typically our summer meetings, our June meetings are kind of expense focused more. anything else at that point we typically don't look at them in january because the year is over and then october you know we're pretty much most of the way through the year so it is kind of a focus for us coming up in our meetings so when you when you sent me the invite for this talking about those I mean this is exactly what a majority of our composite discussion will be about uh next month at our meetings but but there has been a concerted effort to you know I'm not saying chase pennies for dollars but looking at everything uh trying to find the ways to to save money any way we can get more efficient wherever we can and as you mentioned obviously personnel expense I mean we are at fifteen dollars an hour in a minimum wage it seems like anymore I mean that just seems where we're going even though obviously the federal government will never have to change anything because everybody's getting there already when mcdonald's and And Chick-fil-A and everybody's starting you out at $14 an hour. You know, personnel expense is just going to be one of those that you can't necessarily manage to a certain extent. It's going to be a necessary evil for us. Yeah, got to have the people right to do our stuff. But I think, you know, in thinking about 20 groups in particular and just looking at, and keep in mind, those who don't know the story, I first met Brent Carmichael when I was a member of an NCM 20 group way back. I think the world was still black and white, Brent, back when I first met you. Or the internet, it seems like, right? Yeah. It was back there, Waze. So I think you and I probably met somewhere around 07 when I was involved in a 20 group. And so it's something I think, just to talk about it, for those who aren't in a 20 group and they're contemplating, let me just make sure that folks understand, of course, NIADA has 20 groups. I always suggest that people talk to both NIADA and NCM before joining a buy here, pay here 20 group. And I just think for me as, you know, thinking back on my own 20 group experience and again these numbers today are a good example it's just going to be it's going to be challenging for anybody to find the kind of comparative information that is compiled in a 20 group composite and so you guys you're getting pretty deep on the expense side and I you know and looking through the material you were kind enough to share you know you break it down in a lot of different comparative ways And you can tell me just rough numbers. We're going to focus today on your small volume group. So smaller dealers, because that tends to be most of our audience. As you know, the bigger dealers, they got it all figured out. They don't tune in the morning show. They know what to do. But that sounded like a dig. I didn't mean it that way. No, I think we do have, it's mostly newer dealers that listen to the morning show. And So this information that we brought together is really looking at expenses on a per vehicle sold basis. So I just think, you know, this is hard information to come by. And this is why, you know, we're going to look at one quarter which happens to be tax refund season so these numbers can be a little bit you know uh can be moved a little bit by that element but I just think you know when I look at 20 groups I think you know the ability to get in a group and one access comparative information from the other members and then access your wealth of knowledge across all of your groups which is you know significant how many total buy here payer groups now for you you I have seven buy here, pay here groups currently. That's what I've got. So, you know, the data that comes out of that, and then this, before we share the screen on these numbers that we're going to look at, about how many dealers you feel like would be represented in this small volume category that we're going to look at? Well, that's kind of hard to say. Our average dealer portfolio size would be considered a small volume dealer. I think our average dealer is somewhere around not quite $8 million in a portfolio. So our average dealer is a small volume dealer. But at any given time, those benchmarks reflect, I think the max has been somewhere in the 480 dealer range because we have quite a few dealers that supply data that are not part of a 20 group. They just get a kind of a monthly composite that shows their data against our overall group average and our overall benchmarks that just don't, you know, maybe don't want to travel. Maybe you've been a part of a 20 group in the past and just really want comparative data so they can see how they're doing against the world, so to speak. So I don't know what the count was for our Q1 of this year. I haven't seen that yet, but it typically runs over. I mean, it's usually a sample size of well over 400 dealers. that are in there. But again, of our current active dealers, the average dealer is below $10 million in a portfolio. So our average dealer would be considered a small volume dealer. So to your point, yeah. The bigger dealers are exceptions to the rule, not the rule anymore. I mean, the $20 million guy, I know there's some out there listening that may be $100 million, but you get up to $15, $18, $20 million. That's big, and that's a smaller subset of the total, at least as far as our client base, is a smaller of the whole, for sure. Yeah. Yeah. Gotcha. So this is going to get messy on the screen for just a second. I'm going to switch over to the the because I just don't have it teed up quite right. But I'm going to add the spreadsheet over here to the stage. And let me get this where folks can see it. And Brent, I've kind of lost the view of our cameras. Are you now seeing the spreadsheet on the screen? Yep. Okay, good. Let's go through this and let me make sure our viewers can kind of make sense of how it is I chose to represent this information. I'm going to take us off the screen for just a minute so that make this a little easier for everybody to view. Wow, it's going to get ugly. So actually, I'll just leave it there. If you're being able to see it, we'll get it where folks can. And so many of our folks end up tuning in on this thing on audio anyway. This is another reason for folks to find the YouTube channel because we will on occasion bring things to share on the screen. And so this is a way to be able to catch this. If you're listening after the fact to the recorded audio, then just know that um, YouTube is going to be the way to see these numbers, but I'll, I'll talk it through as well as I can. So, you know, again, Brent's numbers are, um, he shared the, and I focused on the small volume dealer and I've got this number up here, Brent, where it says 35. We've got that where we can change it and kind of give people a feel. So if they want to send in their comments on this, on the chat, I can, I can change it to whatever they might like to see. But as you pointed out, you know, this is a comparison. This is Q1 of 2024. So obviously numbers are going to be, you know, going to be skewed a little bit by that. That's one more reason to be in that 20 group. So you can see the numbers throughout the year and kind of know, you know, how that's looking over an entire year or what have you. But when I look, I chose the benchmark average versus benchmark. And you might take us through that formula again, if you don't mind. Benchmark is top half of top half, I guess is probably the best way to explain it. So let's say we had a pool of 100 dealers. We rank them one through 100 and basically 51 through 100 would be dropped out. and then the top half then is re-averaged from there or re-meaned from there highs and lows are taken out so that's our benchmark average is that top 50 re-averaged in there now the benchmark then is the top half of the top half so then we would take member dealers one through 25 get their average or their mean, take out the high, take out the low, get everybody else in there. And that becomes our benchmark, if that makes sense. So the benchmark average is the top 50 of those 100. The benchmark is the top 25 of those 100. So that's the easiest way to explain it. let me take you back in I want to be a nerd for just a minute so well I never really stopped being a nerd but you uh but I want to take our folks inside the the difference between the mean and the average for those of us who haven't said in a math class since like uh senior year in high school what's what's the difference between the mean and the average Well, the mean, let's say you take out the very lowest number and you take out the very highest number and then you average what's left. So what you're taking out is any kind of anomalies, maybe a reporting error where something came in at $1. And then again, maybe by the same thing, an error where something came in at a million dollars. So what you wanna do is you wanna take out the high and the low, and then that gives you what's called the true mean, or maybe a true average with that. Average is basically 1 through 100. Here's everybody added together, divided by 100, and that becomes your average. okay now let me um take folks inside what they're seeing on the screen I want to point out right away that that that um I don't know if they're seeing the row numbers on the screen but the um that row on number 13 is uh the total you'll see that it doesn't add up to those categories at the top and that's because you know those are each of these categories kind of is on its own it's measured on its own and so it may not necessarily correlate to the total, the total that we've got is, is maybe a different pool is maybe a simpler way to say that. But I just made a note down here at the bottom that the, um, the only thing that's really excluded from that, I noticed that, um, RFC expenses were a separate line item, but they were super small, like as, as kind of expected. But, um, Any non-payroll. Jim, they're actually included in that personnel. But the way our composite works is everything comes together. It's a combined financial reporting. So sales and finance are both added together as far as personnel fix, semi-fix, which you have variable on the screen. And then within our composite, we do a breakout. We call it a memo line that says, okay, of these total expenses, how much of it is the RFC eating for those that have an RFC? So that way we can kind of, to track you know where the expenses are going so the personnel expense listed here the fixed the semi-fixed the variable expense is finance company okay and uh I don't know how it is for our listeners I'm getting just a little bit of a warbling effect with your audio I heard most of it but I think it's probably just internet connection not anything we can really do anything about but um the uh so I i caught that that it's kind of you can you can you can separate and identify the rfc expenses um so that you can show you know how much is being consumed in the rfc side but most of what we're looking at here is going to be the combination of you know or kind of what I sometimes call global kind of a global look at the operation and I think these numbers are just really important for dealers to identify and so let me kind of take for those who aren't seeing the screen what we've done is taken the actual um Benchmark averages for small volume in Q1 of 2024. And personnel, Brent, I showed that at $1,831 per car sold. So then fixed expenses at $760, semi-fixed at $762,000. And variable at $659. So what I did is I said, you know, since I'm not thinking of it, maybe if I'm not in a 20 group, I'm not used to thinking of it in terms of per car sold. I just threw a volume number over here for a typical dealer. And what this tells us then, and I'm just going to quickly kind of run through my math and double check a couple things while we're sitting here because I just was in a rush this morning. It looks like everything is correct. So what it's doing is it's following... That number over there in the per car sold, and it's just extending it based on the volume. So what this says is a dealer with a volume of 35 would have about $64,000 in total payroll expense or personnel expense, I should say. And I kind of gave a quick encapsulation over there on the right side. Wages, that includes employee benefits and payroll tax, right? If you're there, I lost your audio. So try me again, Brent. Yeah, correct. Okay. So yeah, I'm hearing you. It's just cutting out a little bit. So I got that. You confirmed that that would be correct. And so I want to ask, I'm guessing a small percentage, we don't see a lot of dealers with any attributable employee benefits. I mean, I'm wondering what your best guesstimate is, what percentage of dealers out there have payroll benefits inside that number? Well, I would say most dealers that offer benefits, how many of their employees actually take advantage of it is kind of a different story when it comes to that. And so when you're talking about total payroll, probably somewhere maybe 10% of their total payroll is going to be to benefits, maybe. That's just kind of an average. Yeah, yeah, gotcha. And then when we move into fixed expenses, then that's going to be rent, insurance, licensing, maintenance, depreciation, utilities, and interest expense. Would you want to explain that interest expense? Is that my outside line of credit and floor plans? Correct, correct. All right, so that number, go ahead. No, you go ahead. So that number, again, for those not seeing the screen, fixed expenses came out to 760 per car sold, and that translates at a volume of 35 to $26,600, excuse me, at... at a volume of 35. So, you know, it's just giving us some feel for how this, uh, breaks down. And, and, you know, again, the 70 fixed and fixed were quite close. Um, semi-fixed came in at 762 in the first quarter. So that means that a dealer doing 35 would have a volume or I'm sorry, would have a total expense in that category of 26, 670. And that category is, um, is going to be outside expenses, which I'll have you explain that one, and then legal. And I call it merchant fees, like bank fees and credit card processing, training, data processing, phones, et cetera. You want to explain anything else that belongs in that semi-fixed? Yeah, I mean, that's kind of your day-to-day expenses is really what goes into semi-fixed expense. The outside services is going to be stuff like your credit reports, your... repo fees, cleaning fees, those kind of things that are gonna be more on the outside service part of it. And again, there's a lot of things that could be in outside services, maybe copiers or something that could be in data processing, but it's just kind of some of the day-to-day expenses to keep the business running kind of all fall into that semi-fix. Sure. And then the last one is going to be variable expense that came in at six hundred fifty nine dollars, which translates into twenty three thousand dollars monthly. And I've got twenty three zero sixty five and that's going to be sales compensation. So I'll have explained that when policy adjustments, delivery expense and advertising. So you can kind of take us through what belongs in that category. I mean, pretty self-explanatory, just your salesman's compensation, whatever their draw or their commissions are, are getting put into their policy adjustments. Think of your good faith is what policy adjustment is. I think it's not warranty that we're paying for because we're nice people. Delivery expense for us is WIOs. So for those of you that have WIOs in there, that's put in the delivery expense side and then advertising, obviously pretty self-explanatory there. know it can get a little convoluted on the sales comp for those of you that have maybe selling sales managers um you know so in our world their their base salary for a selling sales manager would go into personnel but their commissions for their sales would go into sales comp so um does get a little more convoluted on the smaller dealer where we've got people wearing multiple hats We do the best we can to divide up pay to make it apples to apples with everybody. Yep, and you heard Brent say that the nice people expense goes in variable expense. For nice people, that goes in variable. He's talking about post-sale goodwill expenses, right? So yeah, I think just to recap for those that aren't seeing the screen then, that total expense, so again, it doesn't add up to the numbers we just covered, but that total expense came in at $3,654, again, per car sold, in the first quarter of 2024, and that translates to $127,000 at a volume of 35. So, again, I'm going to double-check that formula just quickly before we leave the screen. And, yeah, it looks to be correct. So you've got... You're just at a volume of 35 sales, and at that benchmark average, again, at $3,654, your total expense would be $127,890. This is just a point of reference for dealers to be able to see. That's kind of why I wanted to be able to run through this and give people a feel for you know where that would be and I know that it doesn't exactly translate this way brent before we leave the screen though I'll drop this back down to 20 a volume of 20 just uh because I like to have the spreadsheets do the math for me but uh that came out to about 73 000 if I'm at a volume of 20. so you know we we see and meet a lot of dealers more like that sort of volume so that's roughly what you'd be looking at. But I think we understand that not all that stuff translates. I mean, it's not quite that simple the way I'm saying it, right? But it's generally a translation and it's best we can do kind of in a summary form to help people understand what this, you know, kind of what this looks like. But anything that I left out of that, like anything we need to explain to the viewers who are seeing those numbers? No, the one thing, and you kind of touched on it, I would caution everybody, you don't have to be at $1,800 a car sold in your personnel expense. And again, obviously, the smaller volume you get, that number will come down because, you know, 35, 45 cars, there's a different level of management. So therefore, that personnel may be skewed because there may be another level of management there. where you wouldn't have at 20, right? I'm the owner operator, so I don't need a general sales manager. I don't need a lot manager where at 35 or 40, I might need that. So then that personnel expense will be a little bit higher than that. And again, for us, It was kind of mentioned there as part of our personnel expense, if our owner compensation is actually listed in there. So if the owner is taking a payroll, a salary out of the business where taxes are being paid on it, then yes, we do include it. It wasn't that way when I first went to work for NCM, we completely excluded all owner compensation. And to me, it wasn't a true picture of what was happening with the business. And to be honest with you, we couldn't get cash flow models to make sense because it's, wait a minute, my payroll on my financial statement is this, but my point of group report is this. And so we pushed everybody to look, if you're taking a salary out of the business, we need it reported. Because we have to know. Now, we understand there may be some that are taking a higher salary than their replacement value is. But still, that's part of the business. I mean, that's, you know, whether you're overpaying yourself or underpaying yourself, doesn't matter. But for apples to apples comparison, we include if it is a salary, a taxable pay that is being taken out of the business, then we do ask it to be reported. Yeah, and you said something significant there in the replacement value because if I'm the dealer and I'm running the store, then whether I take a salary or not, I'm in fact fulfilling a management role at the business, right? So I either take it in a form of a W-2 or maybe – but your point is you're trying to get it identified because it would be an expense of the business if I weren't there. I'd have to have somebody hired. I'd have to have some payroll in there as a general manager or whatever – to do the thing. So there is a replacement value for those dealers. And so this kind of goes back to the thing. I'm guessing you encourage your dealers to take some sort of salary if they're in a management role at W2. Obviously it gets into taxation and other financial decisions, but is it generally your suggestion to take a salary if they're day-to-day? I do. Yes. Because again, to more reflect truly the business, what's really going on. I mean, if it's one of those, you only take dividends and I get that, but it's still not at some point, if you have to, like I said, if you are going to bring somebody else in, then there's going to be an expense there that you're not prepared for either possibly by what you want to do your financials or even a cashflow standpoint. So I do encourage it. A lot of the, a lot of our owner operators just taken up to satisfy tax liabilities. And again, that's a, way above my pay grade not a cpa don't play one on tv kind of thing so what the benefits are detractors and yes I've come across some that that take a let's say way more than market value out of it but again that's okay as well uh obviously just choice within the business so Yeah, I like it. And then I think the other piece of this is when I look at those expenses, I'm thinking in terms of, let me just be a dealer doing 30 a month. And I sit there and I look at, okay, I've got these resources. I've got my assets on the books. I've got my inventory on the ground, right? I've got my portfolio that's driving some cash flow. And then I've got my operating expense. And that's, you know, I'm really thinking heavily about the people. That's obviously a biggest chunk of our expenses over there. So I'm thinking about the people. And now if I sit in a 20 group room with Brent and I see that, well, gosh, this dealer's doing 30 a month with this payroll expense of X. And I'm over here doing 20. you know, 30 a month with a payroll expense of Y. It's like just a really pure, purely from an operational standpoint, it's like, how is one dealer able to produce the same amount of volume, you know, at indoor portfolio size with less payroll expense? It drives conversations and it starts to help dealers move toward being more efficient, right? it does and obviously there's some factors within that it can be geographical right I mean a dealer in california or in the upper northeast coast is not going to get people for the same price as dealers in the south they're just not or in the midwest so you know obviously that some of that's taken into account that you know what you get paid in california is going to be way more than what you get paid in arkansas it just is so there's some of that Some of that, that plays into the core number. But when you come back to the per car sold on some of that, and again, we take a look at it a couple of different ways. We look at it as a percent of adjusted gross. But also in my finance group, we take a look at per open account how much these expenses are as far as personnel. So there's kind of three or four different ways to kind of slice it and dice it. So just on page three, let's say, hey, I'm out of whack compared to Jim. Well, let me go to a page six or seven and look at the breakdown of it. Where am I off in my personnel? Is it actual wages? Is it benefits? Maybe Jim doesn't pay anything for benefits. Maybe none of, he doesn't offer benefits and that's why he's a little bit cheaper than what I am. Or his advertising expense under variable is really, really high and his sales comp is low. So it gives you some different factors to take a look at it. But But we get that all the time. I have some dealers in the middle part of the U.S. that it doesn't appear they pay their people anything based on on what their personnel expense is. But again, in their part of the world, that's the cost of doing business there. And obviously couldn't operate that way, even in a larger market, say in Atlanta, Dallas, Chicago, even in the Midwest. All those can be different because of the city. costs more to live in Dallas than it does in Lubbock. So it can just cost more there as well. But yes, it drives all of those conversations more, not what we pay our people, but how their pay plan is structured more than anything else is what it drives. Yeah, I'm surprised to hear you say it's less expensive to have living expenses in Lubbock. I think dealers would be spending more money washing their cars and trucks out there in West Texas. If there's any Lubbock dealers, I've been there. It's a beautiful city. I love it, but I can live there way cheaper than I can live in Dallas. I promise you. And I can get away with those wisecracks, because I'm originally from Western Oklahoma. So I know how that dry, dusty country can be. But so I get it. But so listen, I want to share here just quickly on the screen. This is where you find the YouTube channel for us. So for those who are listening after the fact on audio and you see the numbers that we're working with, you can find that over on the YouTube channel always. And then I'm going to get Brent's number on the screen again or Brent's email rather on the screen, because Brent's the guy you want to reach out to. I always say, talk to NIEDA about their groups. Be sure and talk to Brent before you step into a group. He's usually got a spot for dealers of varying size. I think for me, Brent, we were sensitive when we stepped out there and started offering these V8 groups. that, you know, we know that some dealers are going to look at that and think, well, I could do that instead. Well, it's no replacement for a 20 group, right? There's going to be, I think it's really important. And this is what we say to dealers when we meet them. Like we're, we're making sure they understand this. We're never going to do what a 20 group does. It's not what V8 is designed to do. And so we, we don't even look at anything from the P&L or any of the expense side of the business. We're simply looking at kind of snapshot numbers from the DMS. And so I think it's one of those things that we just, you know, So we want to make sure that people recognize this is touching on the real value of a 20-group. And what we're doing with V8 is not meant to be any kind of substitute. We highly recommend it. And by the way, Brent, I can tell you here in front of everybody that it's a real small sample so far, but roughly one in three of our dealers are also in a 20-group. So they're just kind of, you know, looking at both sides. And so we're obviously in a, in a virtual setting, we're meeting monthly on snapshot data from the DMS from the prior month. And so far about one in three are doing both. So we think that's going to kind of continue to be the trend. We're certainly saying it's not a replacement. You're not, you're not going to, you know, get the expense side. So I've got a comment here. Let me just make sure. After all expenses, what do you consider deal gross profit? per unit you'll probably know that number I don't know it's in some of that then look at it I mean we look at what's called adjusted gross profit um That kind of drive the profitability, which is you take the front end growth, which is your buy here, pay here vehicle growth. You add in your interest collection dollars, you take out your charge offs and you take out your wholesale loss and that becomes our adjusted growth. So when I see gross profit, it's are you talking about the front end growth? Just what we got in the sale price, less cost. And so right now we are. i think well you've got the benchmark I think our benchmark profit and again it's going to be a little skewed because it's q1 um all dealer benchmark was thirty four hundred dollars in profit so if you kind of back into that with that expense um you're looking at adjusted growth somewhere around seven thousand dollars sixty five hundred to seven grand total um I think our average front end gross right now Q1 was around $6,000. So our average dealer adds a little bit to that gross profit with their collectability. And again, we all kind of learned in buy here, pay here 101 years ago that you want your interest collected to be equal to or greater than your charge option. As long as you can do that, then you get to maintain your gross. And again, a caveat to this, you know q1 we're always good right we're always good at collections in the in the first quarter of the year so you know that'll level out a little bit by the end of the year but but probably I'd say the best way to answer that question I'm gonna say six thousand to sixty five hundred We don't track income tax in our composite in any form or fashion. So when he's talking about before taxes there, we do do an exercise that the group has to do on a regular basis for projections that does take into account income tax payments. But in our actual composite, we do not report income tax. in there so hopefully you don't have any taxes I would hope you've got a really good cpa yeah not paying a lot of taxes out there in the first place but the shortest answer I would say six thousand low end sixty five hundred um to mike's question is probably the range is about where we are And Mike has another question on monthly cash flow. So, Mike, I'm going to interpret that really what you're asking is, you know, what's the typical cash flow? I don't know what metrics you use. Like, what are you measuring that against? Is it per car sold or what do you look at? We don't look at a cash flow in our composite. It's an outside exercise that we do. We've been trying to get... plus or minus 5% on cashflow in our composite. It's kind of hard to do because we have some dealers with RFCs and you have to take into account stuff like repo ACVs. If you don't have an RFC, how does that calculate in there? Cause it's cashflow, but not cash. You know, the short answer for Mike's question would be, yes, I want monthly cashflow. How much that is really depends, right? I mean, if it's $1, that's great. Obviously the more, the better, but, And again, it goes back to a lot of factors. About a third to 40% of our dealers have some sort of a line of credit where about 60% of our dealers currently do not. have a line of credit, do not have any money owed to an outside source. Let me put it that way. There may be some internal money or maybe some stuff to their reinsurance company. But as far as lines of credit, don't have any. So again, the cash flow there can be a little bit skewed as far as what's true cash flow. So sorry, Mike, I can't give you a number outside of just saying, yes, with the monthly cash flow, we should have it without having to borrow any money. Well, and if we have our operating expenses, which we covered here, then if a dealer could go look at their gross cash flow, which we also measure a couple different metrics, but my favorite one lately, because it's just simple for everybody to get to, is gross cash flow, which would really just be P&I. Like if I take down payments out, I've got incoming down payments and a few cash sales. Maybe if I take that out of the equation just for a minute and I just look at P&I collected per month, active account, you know, you could just look at, so you look at that, um, active accounts on the books at the start of the month and get a feel for, you know, what that number looks like so that people can see, you know, this is roughly what I am bringing in, you know, and then that number doesn't move a lot as a portfolio has got some size and stability to it. It, it, you know, incremental shifts in that number as, as a portfolio moves, but, um, And as dealers might charge a little bit more based on the price of car or whatever, but it doesn't move a lot. And so I think that's a good number for dealers to get familiar with. And we can bring those numbers back from what we see since we're seeing DMS numbers. Our pool of data at this point is not nearly as significant as what Brent and NCM have over there. And not to mention that stuff that's between Brent's ears. My gosh, after, what are you, 16 years now with NCM? Out of my 17th, yes. seven wow so so uh congratulations to you for that congratulations to ncm for all that uh expertise but I would just that's the thing and just I know we're running a little bit long here brent but I would just say you know some of these questions that are coming up here and some of the stuff that we've we're digging into is you know just just one of mike's questions alone That might be a two-hour session for you in some of these 20-group meetings, right? I mean, kind of walk me through what a typical format looks like or a typical agenda. I know you told me you were working on all your agendas for your upcoming June meeting a couple of weeks ago. So talk to me about what an agenda looks like for those who are contemplating a 20-group. Just give them a feel for what it's going to be like. Well, there's quite a bit of time dedicated to the composite. Excuse me. So it takes, it's pretty prominent depending on day and a half meeting or two and a half day meetings, however those go. But, you know, it's going to be 50 to 75% is going to be tied somehow to the composite and to the numbers, not just not going page for page, line for line. But like I mentioned, we do a projections worksheet that every dealer has to do at the beginning of the year. We take that and we use that as a way to dig into the composite. It does have cashflow on there to Mike's question that we take a look at. And then whatever's left of time, we actually really leave up to the group. The group sets the agenda. I don't. The executive committee, it could be member presentations. It could be round tables. It could be outside studies that we do. It could be guest speakers. We take in... about six weeks ahead of the meeting we reach out to the group ask what agenda topics they want about five weeks out I have a call with the executive committee based on the feedback we've gotten from the group then we build the agenda but one thing that's a constant pretty much on all meetings and has been uh since I was been with ncm and even as as a member of 20 groups years ago as well is we drive the core of the meeting starts with that composite with that data And again, just like I said, we don't start with page one and go line one, line two, line three. It depends on what the group wants to focus on. Like I said, our June meetings will be kind of hyper focused on the expense side. So we will drill down line item and say, hey, you know, Jim, your supplies expenses up X number of dollars year over year, this percentage or so much per car, what's going on there? You know, same thing, data processing or policy expense or even personnel expense to a certain extent. So the composite is kind of the driving factor in some form as far as the framework is concerned. Obviously, can't forget best idea because everybody likes to put in money for their best idea and win a little bit of money as well. But for us, it's group driven. It's not me as the moderator saying, here's what we're going to talk about. I want to hear from the group what means the most to them and what they want to hear. And that's how we structure it. Okay. So, and we're going to wrap up, I promise you. But I think what I think people can envision that haven't ever been exposed to that. they show up for a 20 group meeting as a member and you're probably going to have a U shaped room and your composite is going to be, you know, comprised of typically groups going to have 15 to 20 dealers, you know, representing that composite. And when you open the composite book, it's a two page thing. Typically you're, you're doing a paper, you're doing a book still, right? So, so when we said in the meeting room, uh, that if we turn to page two and we're focused on that item, there's typically a ranking item. There's some indicator on there that is the ranking indicator. So if we're talking about inventory in our first session of the morning, there's going to be some inventory KPI and those dealers are going to be ranked left to right, left being the best number on that particular KPI. And now to the, yeah, the good side is the left side. And so you want to be in that spot. And so you can see the motivation in that, right? You don't want to show up to the meeting and be, you know, on the right side of the page, or if you are on page two, maybe you're looking forward to page three, where your numbers are a little better. That is true. Each page has the ranking line on it. Each one of them is different by different metrics. Yeah. Left-hand side of the page is good. Right-hand side of the page is good. not necessarily where you want to be. And yes, quite a few of our members either take pride or their pride gets hurt if they are not on the left hand or the right hand side of the page, depending on what it is. But the one thing I always caution dealers, Jim, is you can't be left hand side of the page on every page. Yeah. If you are, you're not taking enough risk in most cases. So, yeah, it's you're going to somewhere you're not always going to be the best. I don't have a current member that I would say is left hand side of the page on every single page because they all have different. different metrics on each page that are ranked by. So ahead of time in the agenda, the members know exactly what page numbers and what line numbers that we are going to be talking about. So they'll have anywhere from four weeks to five weeks ahead of time to to look over not only theirs, but we challenge them to come prepared to ask questions of their fellow members, challenge them on their numbers. Hey, you've been on the right-hand side of the page for two years now. When are you going to get your poop together and start moving to the left-hand side where we need you to be? yeah no for sure um so mike solomon also threw in a comment about lucky people the people that are in in a brent 20 group I think is what he was referring to so yeah that you know people can get in there and I think this is why and one of your jobs a moderator then it becomes to have the people who are on the left side of the page explain how they do that and help those folks who maybe are you know not doing as well in that category your your job kind of drive the conversation and draw out the the, you know, the results from and have dealers help one another. I mean, that's what a 20 group is all about. So, so yeah, I think, you know, we just haven't made time to really talk about that. I want to make sure and take people inside, you know, a little bit deeper into what a 20 group experience can be like. And so we, you know, we obviously are, are big proponents of that, big believers in the value in a 20 group. And so folks know how to reach out to Mr. Carmichael. I've still got his email on the screen there. And so just find him. And NCM has been doing 20 groups, Brent, since the 1940s, I think. 1947 was our very first 20 group. yeah and so then you know that they do beyond automotive they do you know lots of 20 groups and peer groups for other folks as well and so they they they know that drill so we're gonna wrap up there sir I appreciate you making time if you'll stand by for just a minute we'll uh we'll close up the broadcast and uh and uh we'll come back and uh say a proper so long if you'll stand by just a moment sure thank you as Oh, sorry. I cut you off a little. Thank you. I just want to thank you and everybody out there for the opportunity. Thoroughly enjoy it. And thanks for everything that you do for us in the industry. Okay. We appreciate that. And we're going to continue to do it. That's why we show up here, try to bring the smart people to the microphones. And so we're happy to have Brent with us this morning to do that as always. And so again, thank you folks for tuning in. And just again, a couple of announcements. We've got a couple of V8 meetings this week. So we've got our newcomer group and then we've got One of our groups, it's 100 to 500 accounts. And you would have to hustle. I really need to hear from you today if we're going to get you added to one of those meetings for this coming week. But please reach out if we can help with one of those. And it's kind of a simplified version of what you're talking about here and all virtual. So just know that that's a possibility. And again, we thank everybody for making time to join us today. We look forward to seeing you back here on Wednesday.
