Q4 2019 Earnings Call
Good afternoon, and welcome to the camping World.
Good afternoon, and welcome to the Camping Holdings conference call to discuss financial results for the fourth quarter and full year 2019.
At this time all participants are in listen only mode. Later, we'll conduct a question answer session and instructions will follow at that time. Please be advised that this call is being recorded in the reproduction of the call.
Our in part.
Without written authorization from the company.
Dissipating.
In the call today.
Yes, well known us Chairman and Chief Executive Officer.
Britain Moody, President and Melphalan again, Chief Financial Officer.
Well now turn the call over to Mr. Moody to get started.
Thank you all good afternoon, everyone a press release covering the company's fourth quarter and full year 2019 financial results was issued this afternoon at a copy of the press release can be found any investor relations section on the company's website.
His remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act like to 95. These remarks may include statements regarding our business goals plans ability that opportunity.
This dream customer trends.
Both the diversification of our customer base and an increase in market share or begin outdoor retail location opening acquisitions closures dispositions and related expenses, our 2019 strategic shift increases in our borrowings future compliance with the financial covenants and anticipated financial performance.
Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factor section in our form 10-K, our form 10-Q and other reports on file with the I didn't see any forward looking statements represent our views only as of today.
Okay, no obligation to update them.
Please also note that we will be referring to certain non-GAAP financial measures on todays call such as EBITDA adjusted EBITDA and adjusted earnings per share the leader, which we believe maybe important to investors to a chapter operating performance.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release band on our website <unk>.
All comparisons of our 2000 and like <unk> fourth quarter results when they need to get from 2018 fourth quarter results unless otherwise noted.
I'll now turn the call overcome office.
Good afternoon, everyone. Thank you, Brian talk to say that I'm glad that Werent 20, Twond he would be on a giant understood that we have a clear vision and a plan that we believe will lead to a solid performance not only this year, but no far beyond.
As you know we announced the significant shift in our business last September we decided to strategically shift away from locations, where we could not be ability well, where it was not feasible to sell and or service departments, we elected to aggressively execute this plan.
And while it had an impact on last years 2019 results I'm proud that we accomplished should that it's behind us.
We sit here today, although locations that we identified in the strategic shift have been closed the product has been liquidated and we got sort of step process.
Sure first position ductless, it never give improvement in our overall performance both this year and beyond.
We started 2020 with $148 million of cash and equivalents on the balance sheet.
Well well stocked in our new core RV products would told is leading the charge.
We've been able to grow our card margin hard churn pre owned vehicle inventory, which is up from 20% to 166 million in areas, which we believe we have a clear competitive advantage in both sourcing van Riet failing.
Our non or me inventory made up was predominantly repair parts in retail inventory was drastically down nearly $200 million to $226 million here.
We feel operations and distribution facility were substantially consolidated.
After almost two months into the year, we are very encouraged with the results. We've seen so far demand is better margins are better and our customer and employee experience is better.
Sure I'll look for 2020.
Being in mind that it's still early year or we think it's prudent to remain cautious.
Revenue in the range of 4.7 jumped 4.9 billion now that number is after selling closely we purposes, a significant number of locations, which accounted for just north of $250 million given the revenue of 2019, what a normalized.
Uh huh.
The adjusted EBITDA.
We expect the adjusted EBITDA to be in the range up to $35 million to $245 million, new and used arby's unit volume could be up mid single digits, which by the way would be a new all time highs for our company then I'll turn the call over to mill June.
Have you been killed walk financial results and then we'll come back for human.
Thanks markets and good afternoon, everyone.
As Mark mentioned, it's a very exciting time for camping world for much of 2019, which devoted to identifying and addressing some operational challenges, culminating with the activities related to the strategic shift in the third and fourth quarters. The majority of that activity is now behind us.
We also identified an action a number of GE business initiatives and opportunities and today our team is energized by our clear direction forward.
As a result were honest we believe we're on a solid path towards renewed growth in revenue profitability and cash flow.
As we mentioned last time, our core go forward businesses are performing well and meeting our expectations.
Vehicle inventories were essentially flat year to year end goods and services and plans were up 4%.
Gross profit for these revenue categories is up almost 2% for the year.
Our overall consolidated gross margin declined 210 basis points to 26.3%.
Due primarily to the liquidation of retail inventories.
More importantly, I want to know that during the fourth quarter. We made a conscious we made conscious decisions to keep our vehicle inventories green and work toward recapturing margin.
New vehicle margins improved about 130 basis points in Q4, 2019, compared to Q4 last year and it was up 110 basis points sequentially.
We're seeing this trend continue in the first two months of 2020, now coupled with accelerating new and used vehicle demand.
Actually it's too early to drops conclusions, but we're pleased with what we're seeing so far.
Adjusted EBITDA for the year came in at $166 million.
I'm from 313 million in 2018 due in large parts of the Clos and lost profits associated with the retail store closures, coupled with increased 15, a driven by higher average store counts throughout most of the year.
Looking at the balance sheet, we ended 2019 with $148 million from cash that's about 6.5% from a year ago.
Overall inventories declined $200 million in 2019 to 1.4 billion.
Of that reduction about 190 million lives in product parts and accessories. As a result is a strategic shift.
10 million was vehicle inventories vehicle inventory was down just over $50 million for the year well use was up about 40 million.
At December 31st we had $848 million and net borrowing under the floor plan facility down 4% from a year ago.
We're in compliance with the two where relevant financial covenant covenants under our four floor plan facility and believe will remain in compliance for the foreseeable future.
So let me finish with it.
Last quarter, we said that we're working to drive greater alignment around her vision and improved communication across our blog and very capable leadership team.
We said that we're going to improve the customer experience. He said that we're pressing a pause button on acquisitions and external expansion and that our primary focus for the next several years is through improved financial performance in cash flow.
And improve our position as the largest harvey and outdoor retailer in the world.
Today, we can proudly say that we've made significant progress.
All of these actions contributor to creating a tremendous opportunity to continue growing and developing our industry, leading RV business. After world World Class team has never been more energized and unified across the organization.
And 2020, all team members are focused on taking care of each other and our customers and building a legacy business. It makes our being sought an easy.
We're very encouraged with the where team has responded and early trends you're seeing.
Our customer and employee metrics are getting better.
Many of our RV shows have seen record attendance and our margins are improving and we're just getting started.
With that I'll turn the call over to the operator hurt you in any operator. Please go ahead.
Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad using a speaker phone. Please make sure. Your mute function has turned off till that you're seeing order each or equipment.
Again, Please press star one to ask a question well pause for just a moment until now airborne and opportunities signal for questions.
Well take our first question from Rick Nelson with Stephens.
Thanks, Good afternoon.
Mark.
Guidance.
Good for you, but Uh huh.
All right 2020 is thinking about the various.
Segments.
Right.
Drivers.
Right.
Well you know I think that first and most important as we told that the team on the last call back in September that eradicating those locations that these are not able to sell the service our views of the significant chunk of the improvement in.
In addition to that since our last call. We made massive infrastructure modifications in consolidating genes and unfortunately, you didnt need to some layoffs, but we believe that we needed to rightsize our infrastructure.
For the future I think lastly, and maybe most importantly, we've seen a nice return of margins.
While it's not whether you want us to be significantly better than it was over the last 12 to 15 months with room for improvement.
And then maybe the most important thing is we believe based on what we've seen just early in January and February.
You know we can be a mid single digits on the new you unit count basis.
All of those things combined tighter us to your they the elimination of the stores improve margins and the RV market just starting to walk back to 2017, beginning of 2018 levels.
Going to be how we then we're going to walk our way out from hearing candidly wreck remember that we put out we wanted to be prudent we wanted to be cautious.
Entire management he participated in this budgeting process.
We believe that if the trend continues like we've seen in January and February we're hopeful that we'll be able to revise guidance up in the coming quarters.
Thanks for that so.
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Got it.
Single digits.
Okay.
Sorry.
Right.
Thank you.
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Down a little bit.
Uh huh.
Got it.
We believe that will be flat to positive on the new side of things.
And we believe will be more significantly on the pre on side of things. We did have good success in the back half of last year until we want to be realistic on our ability to grow up I'm, hoping that we can be closer to nine or 10% on the news side and you know up very well.
Certainly low single digit on the new side keep in mind that we looked at it from a unit transaction Carol largely because we continue to de emphasized the heavy vehicle motor home business, both on new and candidly on use as well we are coming in much better returns in the last.
90 called 60 to 90 day by continuing to bring down that hard dollar unit, even more and reinvest in the low unit. We recently launched in a new Coleman a you know Coleman is a big part of our travel trailer business, we thought that big percentage, we've watched him.
Colin what we believe we're gonna be able to sell that unit $410000, which hasn't been able to be done in gosh, maybe just post recession. So we really believe that we're finding the with the market. We've worked hard over the winter to we designed the number of our products to content them in a way that we believe.
Customer friendly that are providing value in a way, but quite frankly customers want to see that I. So what we're going to go after share on the news valley.
Definitely.
Do you think wants to continue to improve our over all the relationship with the consumer but secondly to continue to drive the girls as I used business.
Thanks for that.
Oh I'm sorry.
Yes.
Stores were.
Our views on the last 12 18 months ago there.
Probably lost.
Yes.
Right.
Your expectations there.
We we Oh, we are only luck with those locations and in fact, Rick I think youre not even talk about that when we made the decision in September we identified a certain number of location. We ended up even in December pulling the plug on a few more where we couldn't get the zoning why don't we couldn't get the layout what we are.
Yes, if we feel really good about and the new stores that we've added in the last 12 months, we had a couple of acquisitions.
These bucky acquired one in Boston and a couple of other little places like for the most park the location that we converted from strictly retail through a combination of retail, but mostly RV.
I have performed surprisingly well in the first call. It 60 days in 2020, and we expected that trend will be normalize as we go deeper into the year to wind up with to be on par with the rest of our stores were very encouraged by what we see really points.
Sounds good.
Good luck.
Thank you Sir.
Well take our next question from Craig Kennison with Baird.
Hey, good afternoon, thanks for taking my questions as well.
Well just to get a fuel for your store footprint today, how many store locations do you have that that sell rvs today, and then from a geographic standpoint is it fairly evenly distributed or did you end up.
Shuffling. The you know the managed Denise you much footprint a little bit post.
Yes, the exiting those locations.
So we have 165 locations that we operate as a company 154 of them or sell RV. The Delta services RV and so we have some historical standalone camping world stores that are very profitable.
That we're not able to sell our views that we are able to service and take care of the customer in those markets and grow the database from a footprint standpoint, as we think about our growth over the next five years, we are as I said on the call. It depends what we are on pause for the foreseeable future adding.
Occasion, because we believe there's a lot of Jews to squeeze out of the Orange, we have today, both with the combination of the stores indicted and their historical stores.
Variant softening in the back half of 18, and 19 wants us to come back to the levels that we're comfortable with and get our EBITDA margins and our cash flow back to a level, where we feel good.
When do we do decide to move forward, we're really looking at markets that continue to perform well on the RV registration side, where the outdoor lifestyle is robust markets like Texas, like Ohio, and Pennsylvania, Minnesota, and Wisconsin, Most markets Denver, Colorado, those markets, where we feel.
Have opportunity.
I love seeing about all that is why we operate a 165 locations, we see an infinite amount of white space in North America.
And I want to be clear with a statement, we see an incident amount of white space in our five to 10, you're playing in North America no principally today, primarily today, we operate in north in the United States.
Hi, good Sam pretty healthy good Sam vial sizes in Canada, and it wouldn't surprise me over the next five to 10 years, if we expanded our borders north as we continue to look for white space and continuing dominating the marketplace.
Thanks, and then regarding your mid single digit growth outlook does that imply essentially a mid single digit same store sales outlook or did the store base change materially.
Since after all of.
The changes.
Implied Craig are you asking about two bucks is that on a same store new store basis I apologize.
No. It's okay I'm sorry, so a quick question I'm just trying to understand the same store sales outlook embedded in your revenue outlook for mid single digit unit gross do do you have roughly the same number of stores on a year.
This is to get there or do you need.
A much better same store sales growth rate in order to get to mid single digit you know unit growth.
No. We haven't we have relatively the same based and we believe that our same store growth will be what we described in the mid single digits. We are hopeful and keep in mind that we have a number of locations that are not in that mid single digit formula because they're not same store qualifiers and so as we get in.
The 2021 that number will get bigger I I believe and I don't want to I don't want to be quoted on this with specificity, but I believe is around 428 over 130.
132 locations that qualifies in that same store category and so that that same store growth and spoke lucky that same 132 days plus or minus that we had a year ago, though we did close seven.
Dealership locations in the 2019 calendar year, those relocations that did not perform to our expectations. They weren't camping world locations, we either consolidated them well, we were able to exit the lease.
What's that everything in 2019 was that what do we have that we just don't want to be in a they obviously those deals are gonna be there.
Got it thank you.
Well take our next question for Mark Jordan with Jefferies. Please go ahead.
Hey, guys. Thanks for taking my questions.
I'm just thinking about the used units supply kind of have traded has been trending lately and what percentage of for use units do you source via trends.
But do you know, we've historically been call it plus 70% of a trades, but the thing that different about our company is the 11 million plus people that sit in our database that are active RV owners are now being given a much different.
Marketing platform to sell or Consigner units, and so a combination of trading buying on the curve with $148 million at cash that we have on our balance sheet going through the auctions and you know obviously using our data science not the motion to buy.
And then lastly, and most importantly, our ability to can sign up probably gosh I would say over a thousand units on consignment at any given talent and so what's the reason that we were able to grow our U.S revenue and we believe we'll be able to continue to grow our whose revenue is the way that weren't changing.
Our acquisition costs. That's the other thing that we have done and he is not something that he is available for everybody to see we've developed our own proprietary.
Tool to value trades, and we've used our almost 20 years of bean business from new transactions to new transactions to trade that to a variety of thing to put them into an algorithm that allows us to understand the right trade right price at the right time for the right location historically the interest.
For years relied on any D.A. and in the auto business, that's an appropriate metric because the volume of transactions that go into that I may be a formula or are we believe our substantial and the RV business. The remarketing of new Darby you got auctions just doesn't exist with any sort of volume so we.
Have learned overtime, we've tested this out over the last year that there are certain parts of units that the books or a relevant and weve tested that theory out in a store at a time and you could expect it that will grow overtime and we know that that is our path as a differentiator side for years to come it's an asset that we spoke.
Millions of dollars of developing we have a large team dedicated to it and because we believe that that's a big game changer for us in the coming five to 10 years.
Okay, great. Thanks, and maybe talk a little bit about maybe customer sentiment what you're seeing recently is there anything out there that's getting customers interested about either you know getting a new RV or used RV you know, what's what's driving an upgrade or you know over the last couple of months, what's really driving demand.
Shockingly you know we own a number of concern for shows up as well is awfully dealerships and those consumer shows our dealerships participate along with all the dealers when that town.
And what we have noticed.
Through our gate administration is their stuff that the people who are coming to look at our these environments.
They just continue to get younger and we're seeing more and more families and that's what led us to the redesign of a number of our private label products to think about you know families with kids at a greater rate sorry.
And the unit that we talked about redesigning and I couldn't be pulled quite frankly with the previous that was important for us to continue to drive down price fix the floor plan and really make it family friendly because we're seeing 20 year old 30 year old 40 year old commit at a more rapid pace than we've ever seen.
Before the layer on top of the already existing installed base of 10 plus million people sentiment has been strong.
We have seen more web traffic.
Inquiry and lead than we ever had.
And we're blessed that we finally have her appointment and salesforce process in a place where we're able to really work that customer and convert at a higher level. We think the conversion rates that we're seeing from leading position to booking the appointment to the appointment showing up to converting that appointment to us.
Fail the improvement in that area and the science and time spent on that.
The some of the tailwind that we are experiencing in our own business and we're anticipating continues to help us in the years ago.
Sentiment feels pretty damn good.
Alright, great. Thank you very much.
Our next question from brand in Raleigh, with Northcoast research.
Good evening could you talk about what you're seeing in the U.S market right now in terms of pricing with a new vehicle sales bouncing back are you seeing any lesser competition at auction for a used units. Given you know dealers are now seem to be taken on inventory new units.
You know, we we can't speak to what other dealers are doing but we feel like what properly thought for 2020 in fact, a quite frankly, we believe maybe the or even caught a little flat footed in January February and a little light on our new inventory, maybe lift a few opportunities on the inside.
We are seeing very very solid values.
And not the level of drop off that we historically have seen over the winter than years past and I think that really me I think what that speaks to is the drop in shipments at the back of 18 and on the and the bulk of 19 contributed to maybe a tighter supply.
That tighter supply all these leads to higher prices on are you.
We tend to our life science buyers to the options over dealing with trades and we're working on line with people. We're finding that to use values have really bolstered and whether or not fall like we saw in 2008 in 2009, but quite frankly in some some segments, they're bringing very strong numbers numbers that.
Year ago, we would have them, we would have walked away from so well keeping an eye on it as as everybody on the call knows we manage our used inventory very tight.
Aging is his job is really clean compared to how it's been historically, because we have a strong man due to a wholesale or liquidate that unit when it reaches a certain age it's painful because you lived for that rule and then you go back into the marketplace and see how strong it isn't houses.
The to replace humans, so it's a great very strong.
Good to hear thank you.
We'll take our next question from John on the follow.
Second in America.
[noise] guys. Thank you for taking my questions you don't recognize into January and February or you know typically lower volume months, maybe less meaningful for full year.
Once new volume up year over year, if you think similar to what other consumer oriented companies have reported that the first couple of months may have benefited from just warmer weather in every business [noise].
[noise] you know what are the you know we're not obviously, we're not at the end of February or March.
But I can tell you that number what signs in front of back in January and bad that as a trend that quite frankly, we have been going to see for a while now it is true that January a softer but on a relative basis. When we look at beating up you know the cost side.
In January and maybe even better in February we noticed that trend excuse me, we believe that that trend will continue and that's it in a natural color where things. It's always go alone and so for example, the Blue Bell two units in January and two and a half units in February we'll go to three and.
I have to March and will rise pretty high May June July and August So right now we're we're feeling.
Not only feeling positive, but reporting positive number on a same store basis in the first 60 days of the.
Okay, Great. That's helpful. And then I think the question that you answered before was that you procured 70% of fewer problems used vehicles it'd be a trading but I'm curious what percentage of blog.
RV.
Sales, especially to RV sales are accompanied by trade and I guess, what I'm wondering if that is used vehicle sales or new RV sales were lighter than you actually expect would that limit your ability on the a hobby. So.
So we typically see in that 30% to 32% range.
New transactions coming with the trade and that's probably more because we are a travel trailer entry level type companies. So we need a lot more first time buyers than most people they need it well, we never want to sell new RV just to get a trade. It is a great by Paul.
But I think this idea of giving away the new just to give to you is that something that we want to be subscribing to financial to reinvest a lot inventory lot of dollars in our inventory and we expect a positive margin in every transaction that we do you or use now we know that the new margins are lower than you.
Except that but it's something that's what sales manager called me on myself on it but I can make a deal on this new unit I'm going to pick a trade and who can make a lot of money on the trade, but I'm only going to make a couple of what's on the new nine times out of nine I'm expecting that transactions because I do look at the holistic relationship with the customer.
So from the minute they'd buy their new if they haven't trade and then I have a finance conservatism on two transactions I do look at that and so well I'd take 100 dollar deal on the new with the trade versus $100 deal without a tree absolutely hundred percent.
Great. Thanks, guys.
Ladies and gentlemen, as a reminder, star one for questions. Please star one we'll pause a moment to assemble the queue.
Okay.
Well take our next question from Carrick Johnson BMO capital markets.
Good afternoon, just wondering if the 154 RV dealer should how many of those or former gander stores that do kind of outdoor merchandise.
It is your outlook for that part of the business now that its keyed up that's where you wouldn't be units with existing and.
Our view dealerships, which are out what should be a much though thank you.
Approximately 30 locations is really what we're dealing with it from the legacy business and we have seen really really good signs right out of the with again, we keep a watchful eye in the free of any of those locations that are performing dealership and not dealer show.
We'll go ahead and that's because we feel really good because the way we look at these locations now we have field operations location that sell RV, primarily they service RV, primarily and then they have a retail component secondarily and the only delta between the traditional camping world store and again.
<unk> RV store is the size of the retail footprint until part of the reason that the revenue number came down from 2020 to 2019 is twofold. One we eliminated you know over 60 locations between selling selling them for closing them, but more importantly, we can see.
When you to shrink the assortment in all of our businesses and shrink certain categories and put our money put our cash our shareholders cash easy assets that are going to give us the highest return the balance pair is maximizing foot traffic.
And maximizing return so we still want to have a plentiful assortment that allows us to drive traffic that we don't want to be in categories are products that terrible turns or terrible margin at any cost just doesn't make any sense for us.
Thank you.
Well take our next question from Tim Connor with Wells Fargo.
Hey, good afternoon is actually more terms you on for Tim. Thank you for taking your question.
I guess, just what do you see in terms of the promotional environment out there. It seems as though is most of the industry inventory axis has been board through so do you expect promotions to be more normal.
This year.
No I can't speak to what the other dealers are doing but we always have a watchful eye on on how dealers or pricing the units.
Our hope is that the industry as a whole is less promotional because we've not only yard dealerships to make money, but the industry as a whole to be healthy you need the manufacturers to be healthy we need to other dealers to be healthy and the reason that that's important is that we're dealing with more than 10 million RV years in the marketplace will have a finite number.
Places to camp and a finite number of places to get service and they're they're staying in the industry as a product of a place to stay in a place to get my rigs effect and I think everybody knows that the industry as a whole has really struggled.
A few to put the rights service infrastructure in place, it's not a camping world index of industry thing. So we really believe that we'd have to stay very focused we're not seeing promotions at the level. We were last night, that's for sure but people are going to want to grow their business, we're going to want to go business and.
We're gonna be aggressive marketers.
Other dealers will be aggressive market as well, we all have to make money and so there's the violence and returns at the margin normalcy and making sure that was out is there is a definite balance.
Okay. Thank you and then for the I guess 15 to 20 million in wind down costs expected. This year of all those.
Her that in Q1 and or those added back in your adjusted EBITDA guidance.
So we have some lagging a closing cost cuts.
Distribution centers in a few stores and Alaska. The margin, we believe that most of that if not all of it will be done by the end of this quarter and do we have to obviously yet.
Her permission from our auditors, but you have to deal so as it relates to the leases we've been very successful working out of a number of them.
And we'll continue to add that back as well.
Okay. Thank you.
As a reminder, start one for questions, we'll pause a moment to assemble the queue.
We'll take our next question from Sanjay Colletti with our partners.
Hey, Mark <unk>, Thanks for taking my call.
I don't suspect this should be in issue for your supply chain, but was kind of wanted to touch on the krona virus and he tried to and how it could affect your customer base just given the context that it's affecting a lot of travel and vacation focused company.
No. This is probably the most important question that everybody's asking right now and we're obviously concerned about the health of our employees and our customers in the community around US there a couple there's really a two pronged answer to this on the longest supply chain side, we don't rely in <unk>.
They'll business on China imports to the extent that maybe other retailers do now we have a certain amount of products that we get from them certain plastics in certain textiles.
Just point out we believe we're gonna be in pretty good shape as it relates to that may there'll be a few little delays here in there that could push things out 30 to 60 day. The answer is yes, but nothing that we think is alarming to us on the manufacturer side you know we rely on our manufacturing partners to keep us a breath.
And what's happening and you know as everybody knows this is an American made product. That's the one of the things that we love about the RV business, but there are parts and pieces.
Certain components that maybe sourced overseas and I know the manufacturers have been working diligently to find replacement parts and pieces, but they don't expect any material break in the supply chain.
Well I wouldn't beyond that what's important to note is that because of our size and because of our consolidated relationships with essentially four or five key companies because there's a volume that we buy not to say that we get preferential treatment, but we playing out are ordering process seven to eight.
In advance and so that pipeline has been built it's very fluid we have the appropriate based supply on the grounds. Today, you have the appropriate day supply coming offline and we would be we believe will be properly stuff through the spring and summer selling season, what has happened.
That has surprised me is the number of includes but we have gotten some from people that maybe I've never heard of before looking at Parveen as an alternative to travel as an alternative to down the style and we don't anticipate more project will discuss.
What we think that needs, where there's been quite frankly, we would prefer that the virus completely go away, but we do understand that certain companies.
Certain disaster recovery company certain federal agencies, and certain consumers may look to the RV industry as an alternative.
<unk> international travel to vacations.
Our domestic travel and even for Offsite work spaces and so we're prepared for that reason. He goes inquiries. All the time that we have been surprised by the number of rooms out of populated in the last 10 to 14 days and we are prepared to address any of those within reason is the.
To put that into that business decision.
Thanks, Mark if that's that's very helpful.
One other question you've touched on this past already or early on this call.
I know you were focused on inventory reduction 29, she could you touched on how you want to be position going into 2020 in terms of further reductions remaining in a well positioned state as is what potentially building that inventory do you.
Well I think well, we're we're constantly looking at improving on margins and turns on the retail side.
And or whether it results in a reduction of a further reduction of inventory or a mix shift.
Or a mix shift we want to put our dollars, where we think we're gonna get the best return on investment on the RV side I would expect that are used inventory will continue at this level. If we can continue to find more growth opportunity I know that Mel and the financial team are comfortable Alex.
It is more dollars as long as it turns in the margins they've commensurate with the investment.
On the new side, we believe that we probably hurt ourselves a little over the back half of last year, particularly the fourth quarter, maybe even a little too conservative in our entry level travel trailers, a mid travel trailers and our entry level fifth wheels, and we'll probably be slightly more.
Aggressive in stocking those entry level products that have the fastest terms because we really are looking to grow our market share profitably in 2020, I think what you'll see out of our company differently. This year than call on 18, and you saw in 19 is a laser laser focus on.
Growing share, but more importantly, growing our EBITDA margin number we have a goal to get back to 7% leads the industry as a whole to be healthier for that to happen, but in the interim we are reducing costs. We are right sizing our infrastructure long lead to.
Go shooting leases and renegotiating contracts trying to find our way to six and seven assuming that the market doesn't come back.
If it does.
And we'll have an easier path to get there, but we're not waiting for that to happen to improve our return on investment a return and improve our return on capital.
Understood. Thanks much markets appreciate it.
Ladies and gentlemen at this time I'd like turn the conference back to markets, where bonus for any additional or closing remarks.
Look we're very comfortable that 2020 projection is attainable, we believe that if the trend continued we may have an opportunity to raise our expectations in the latter part of the year. We're glad to 19 is behind us and we look forward to delivering reliable stable and consider.
The results in the years to come.
Thank you.
Ladies and gentlemen, this concludes today's conference we appreciate your participation.
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