Q4 2020 Camping World Holdings Inc Earnings Call
Good afternoon, and welcome to camping World Holdings Conference call to discuss financial results for the fourth quarter and fiscal year of 'twenty and 'twenty. At this time all participants are at in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, please be advised.
And that this call is being recorded and the reproduction of the call in whole or in part is not permitted without written authorization from the company part of.
Dissipating and the call today, our markets of minus Chairman and Chief Executive Officer, Brent Moody, President, Karen and Bell, Chief Financial Officer, and Matthew Wagner Executive Vice President and I will now turn the call over to Mr. Moody to get Us started.
Thank you and good afternoon, everyone.
Press release, covering the company's fourth quarter and year ended December 31 of 2000 and 'twenty financial results was issued this morning, and a copy of that press release can be found at the Investor Relations section on the company's website.
Managements of what's on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 of these.
These marks remarks may include statements regarding the impact of COVID-19, all of our business.
Financial results financial condition.
Our business goals plans and abilities and opportunities.
The industry and customer trends of 2000 and liked to strategic shifts and increases in our borrowings and our liquidity and future compliance with our 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 described and the <unk>.
Factor's section and our form 10-K, our form 10-Q, and other reports on file with the SEC and forward looking statements, including statements regarding our long term plans and cost related to the strategic shift represent our views only as of today and we undertake no obligation to update.
Please also note that we will be referring to certain non-GAAP financial measures all of today's call such as EBITDA adjusted EBITDA.
And adjusted earnings per share diluted which we believe may be important to investors to assess our operating performance.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release and on our website all comparisons of our 2024th quarter results are made against the $2 and Nike, Inc. Fourth quarter results unless otherwise noted.
I'll now turn the call over to Marcus.
Thanks, Brian and good afternoon, everybody and thanks for joining US today, we also have Tamara Ward, our chief operating officer store.
Joining us on the call as well today.
We had a very good 'twenty and 'twenty and I'm pleased to share those results at today.
Today's call is gonna be broken into two primary sections first of a high level of financial summary, with addition of supporting information available both in todays earning release and <unk>.
Our soon to be posted 10-K from 'twenty and 'twenty.
Second section and we will go into some of our initiatives and our updates all of those initiatives, including expanding the leverage of our national infrastructure.
Moving to our 48 state goal of March our advantage around food sales and services facilities, including the regulatory and licensing process around the sales and distribution of recreational products, both online and at the store.
Business has remained strong for the <unk> 'twenty 'twenty, one first quarter at least so far with positive trends continuing into February.
Adjusted EBITDA for Q4 was $91 billion of meaningful improvement over Q4 of 2019.
Adjusted EBITDA for the year ended December 31 2020.
And was $565 million.
And given your strong demand resulted in revenues of $1 1 billion for the quarter and.
<unk> 4 billion for the year.
Our balance sheet remains strong and we continue to be pleased with our liquidity position.
And we ended the quarter with $300 million of cash broken up between $156 million of cash and equivalents and.
And additional 134 million of cash and our floor plan offset account.
Our working capital is very healthy at 459 millions of dollars at the end.
End of the year, which is up from $395 million at the end.
2019.
Our net debt leverage was 1.0 to one at the end.
2020.
And when you think about online initiative and updates.
Continued to grow and enhance our online and our digital initiatives with investments and new and proprietary tools and technologies.
And we make our company more profitable and more efficient.
What size of activity across all brands continues to experience.
Terrific and growth for the year ended December 31, 2020 user sessions grew to 187 million.
And improvement of over 47 million sessions.
And the development of an online technology platform.
At allow for the consumer online transactions at the RV to be completed along with people at financing of that process is finished and at.
And we'll continue with home delivery and similar to what you see with other exclusive online auto retailers.
All of the difference would be within about 48 states, but we would have the ability to sell both new and used RV anywhere in America totally online with no in person visits required.
And I hope to announce it today, we have successfully datasets at the ability for a consumer to buy and RV totally online of camping world of Dot com by simply adding of the units of their car well along with other soft goods and checkout entirely with debt.
Simple click.
We are and the final stages of at watching our beta testing of our peer to peer network that will go live in late April early may and will reside and beta testing for up to 60 days, while we test measure and we focus group before worldwide launch in late summer early fall.
Paul.
It will be branded camping world RV rentals, so not only top end of June the strong natural charged and be the speed of the brand, but also of the recognition of value and security of their RV.
Lessors and the Redskins and looked for what they did and the transaction will tap into our 5 million plus of active customers, including our 2 million good plus good set of numbers to procure inventory of lessors.
To bolster the thought to bolster the launch.
And we will be launching of our beta phase of our mobile services App in may of 2021.
Framework and testing is underway and we're pleased with the progress.
We continue the acquisitions and investments and to OEM and aftermarket providers to improve both margin and supply chain flow.
And that's really fits into the dealership acquisitions that we're making consistent with how we have for years.
We're also prepared to launch a new concept called the electric world in late summer of 'twenty, 'twenty, one which would provide both the roadmap to the sale and service of the electrification of all food recommendation with new.
Using our existing footprint across the country as well as our online platform and of our call center to support those transactions.
As we leverage our national footprint, and we always believed that for years the database our customer database with the most important asset of our company outside of our associates.
Over the last 24 months, we have realized with the change in E. Commerce, the growing level of installed RV is in need of service and collision and the growing trends of both buy online and pick up and stores as well as buy online and ship from stores that we want to continue the bulge of growing our footprint.
It is important to us that we launched a day.
Location and.
All of 48 states by the end of the items of the acquisition of the dealership.
The development of already online all of the contract purchase all lives and those states at this point today, we're only two states short of that qualification.
In closing I'd like to say that I'm very excited about our prospects for this year. The RV business has been robust for decades at 12.
And in 'twenty.
The proof of that during the third quarter earnings call. We indicated that we expected adjusted EBITDA for the full year of 'twenty 'twenty, one could be roughly 5% greater than 2020.
We're actually going to raise those estimates.
And I expect our adjusted EBITDA to be between 640 million on the low side two of high five of $690 million for 'twenty and 'twenty one.
I'd like to turn the call over to the operator for Q&A.
Yeah.
All right. If you would like to ask a question you may signal by pressing star one on your telephone keypad. If you reason to speak of guns with next year.
Function is turned off and not too.
And our equipment.
And that is star one to ask a question.
And the first question is from Rick Nelson with Stephens.
Congrats Inc.
Thanks for the color.
'twenty 'twenty, one mark who of you could discuss that.
And since you saw during the quarter and.
And what's your screening and early.
2021 and.
Maybe at some guidance.
Guideposts around.
What you see as the big drivers in 'twenty and 'twenty, one two and three ring.
EBITDA.
At levels.
Yeah, we we felt very sustained.
Sustainable and pretty stable growth throughout the Q4 period and you know.
Obviously as we headed into November and December there are seasonal adjustments that normally happen in the bell curve of our annual year, but what we didn't see as the extreme drop off what we normally see at the back half of this November after Thanksgiving and the bulk of <unk> of December.
And the silver as we headed into 'twenty, one and I think the biggest paradigm shift for US is that we used to get our year started with a flurry of consumer shows and we made a decision at the company cannot expose our associates do any consumer shows is aimed at.
Beginning of 'twenty, one and while we leave at there with financial risks because other people here at responsible and holding those shows and we decided to stay home and focus on driving of.
Digital plans that will drive customer appointments using technologies and we have to do virtual tours and to be able to transact with people online and we saw and record January Ah.
But we have not ever seen before even though we did not go to any of those shows that trend continued in the first part of February and we saw a slight slowdown for about 90 days.
And you literally and solely driven by the extreme weather well, that's having to shut down the number of stores to keep our employees at home and safe and markets that we hadn't experienced before at West, Texas, and we literally lost days of business, but we expect to still see a very very strong February and to see that continue.
And into.
At March oddly enough, we don't see any spike in any one segment of our business our call centers continued to receive.
Our record breaking call our service centers continue to see record breaking appointments and so.
At this idea of it is slowly being driven around both sides of buyers that are coming into the market for the first time, while it may at first to a degree we believe our tail wins are the ever popular and ever growing and ever stable RV and outdoor industry that has been strong for years.
We saw a slowdown and a little bit of 18, and 19, but 2020 started out pretty good and obviously the continued very well opposite March and April and.
And we head into the year, we know that we're copying and easy number of April and easy number of in March and that it starts to become a little bit more difficult, but easily achievable. When you take a look at our margin improvement.
The moves we've made on the SG&A side and we continue to walk you Dziedzic acquisition that we have made and will continue to make to add to our very strong base. When you study the company over a series of years, even if you go back a decade, we have always had an average of growth and double digits.
And we don't see any reason why over the next five to 10 years, we wouldn't continue to experience the same level of growth.
There are some years that are softer than others, but we expect 'twenty one to be one of our strongest which is why we're putting guidance between 646 guidance.
And we get to the end of the first quarter, if we feel the need to update that number of based on results of the first quarter, we'll do that but it's a little too early and the first quarter throughout to provide that but we're seeing strength across the board.
Uh huh.
So one of them.
And you about.
And I'm a Tory.
<unk> talent.
We would see at with your inventory and her.
Per store.
You know if you could comment there and.
When do you see inventory normalizing.
Demand and kind of outstripping.
Supplier at Tribune.
And instead.
You know if we go back to a high school of economics class circles around supply and demand, we know that the demand far exceeds the supply and the manufacturers of doing an excellent job of managing all of the products that they're making and enhancing the quality of them without compromising quality.
But we don't we don't see and all of escalation and see a supply exceeding demand on and then.
Annualized faithfuls anytime soon to be totally honest and what that does for us is that bolsters margins for both the manufacturers who make the decisions of consciously not overproduce.
And for the retailers, who make the decisions and not consciously overbuy.
And all we can speak to of what we're doing at the company as we plan out of all these and it's already for the balance of the year as we sit here today, we have north of 70000 units on order could be a little bit more of that and we'll continue to add to that number for a couple of reasons not only our existing of same store sales and.
The growth we expect from those not only the stores that we have under contract to buy but we need to add inventory of <unk>, but we're also and the process of acquiring land and Dolby and several stores today as we sit here today. When you look at the stores that we ended the year with and the stores that we have announced in terms of.
Acquisitions I think we're around 176 I think there is an outside shot after we complete the acquisitions that we have LOI signed on and we complete the renovations at facilities that we have under our control and we complete the closings of land that we purchased and the building of those that we could scare of 200 locations.
And by the end of the year I want to remind everybody and it isn't our goal just to add revenue and add locations for that reason, we want and make sure of that we're adding at when it's smart on the market share side, and we're doing it profitably and thoughtfully in markets, where we see wide open opportunities or opportunistic acquisitions.
But lastly, and most importantly, it is our internal goal of two finished the year at 48 States, where we are able to both online and in store sell and service rvs to the fast growing demand of consumers that exist.
What we know for sure is that the technology platforms that we're building make no mistake about at camping world wont be fully selling RV, 100% online by the summer of this year, which means that while we may have locations and every state and we don't have locations and everything but.
Our online process and are fully vetted transportation processes, and our D. N V licensing that is a moat and our business gives us the ability to touch every single square mile of every state well we have of license.
We will always comply with what the manufacturers require in terms of out of territory.
But because of 40% or more of our business is private label. We have no borders we believe that the future of this company wide and that's having a presence and 48 states fully selling online, including the finance profit cost of being paperless and fully selling online and being able to ship and pick up from store.
And our buy and ship from store so that of consumer doesn't have to wait more than one day to receive their package for us.
That is our mission right now and we're supporting that with the mobile services will be launching shortly so that a customer who buys and motor lane and they have bought and they live in southern Maine will still be able to receive the kind of services at the RV or needs that Amazon and Walmart and all of the other.
Big box retailers cannot at this point execute.
And it's a big guidance as big a.
Differentiator from Us and when you compare all of our company to either roll up RV dealers and what they don't bring to the table is at 360 degree solution that we provide from RV ers that starts with service and it ends at the retail experience is complemented by mobile services and the call Center and all the price.
And services that good Sam and bring to the table that nobody has the full suite of.
And we thank you Sir.
With World, We think we can do that with world class gross margin.
Evidenced by 2020, and more importantly world class EBITDA margins.
Hi, good net.
Sure.
Thank you very much and good luck.
Thank you.
Yeah.
Once again, if you would like to ask a question you may signal by pressing star. One if you find your question has been answered you may remove yourself from the queue by pressing star to the net.
Next question is from Ryan Brinkman with J P. Morgan.
Okay.
Hi, Congrats on another strong quarter. Thanks for taking my questions, maybe just starting with the trend and used versus new RV sales. I think you used sales are typically less cyclical within 2019 your used sales not kind of stronger while the new market was softer obviously, a big reversal of that in 'twenty and 'twenty, but also sort of increasingly as the year.
Our progress and would love to get your thoughts on what is driving that trend of presumably.
And the lower supply of used vehicles and what your strategy is to source of those vehicles and see the asps and the margins on the new side, where it's really incredible and the fourth quarter or is that primarily a function of the overall tighter industry supply or maybe the supply of used RV uses even tighter at.
<unk> of their stores I'm not sure and.
Which slipped and your thoughts on that.
Used business how long these conditions might continue what happens next does volume go up and supply normalized and then Asps and gross margin has come down and if so what do you think would happen to used RV gross profit dollars and that scenario.
Wow that was a lot that is awesome by the way.
We you know I've said for years since we've been public debt I'm agnostic.
And what the consumer purchases I want to make sure that our thousands of associates of selling the customer what's best for them in that moment, and we're not shutting people and the things, but we also made a conscious decision led by.
Led by Matt Wagner's philosophy, and that will be serviced and the checking.
Do not get ourselves in a situation of where we're deploying capital and maximizing our margins and what I mean by that if we're not going to chase used inventory and we're gonna be very strategic about it and we did launch our algorithm.
The summer early fall of 2020 on used values, and we like where our margin and we like where our turns are and what we don't want to do is hurt our margins are hurt our AR.
Turns by going out and just chasing the used values at the auctions on the curb or and then the other place because we have a new alternative and that gives us a great return on capital.
And when it cuts and that comes into our store and we get at least we have seen an uptick in our closings and our conversions, but we havent, we may have gone out and see.
But I'm gonna have Matt speak a little bit more of these trends yeah. So I think it's important to point out that while we reported a net supplementary information that we were down at the same store basis on new unit sales of our used inventory was actually down a commensurate amount regardless of what we were up on a same store dollar base.
So in other words, we're reinvesting and more inexpensive units at different points in the fourth quarter and what we have at real place market dynamics at play where we have enough of proprietary tools that we lean and applied for pricing as well as for our trade and value that we assign to each year. This market just alluded to.
We're always at this upcoming year as Martin has also said, we're agnostic to where we're selling of new versus used but we also acknowledge and were not quite worried and wants to be just yet on new unit inventory and a same store basis. So we've been much more aggressive and our pursuit of used units on a same store basis I continue to have an appetite to pay up a little bit more to it.
Sure that we're procuring at as much new units from the consumer and provide them a good Sam members that loyalty and that reward that they should have as being a part of our ecosystem and that's where we ultimately see our of Nate advantage over all of our competitors to be able to dive into our dataset using our proprietary technology to actually make there and that we're not overpaying, but rather paying what we would regard as fair and <unk>.
Market prices.
Okay. Thanks, and then just lastly for me you know how are you thinking about the potential for organic versus inorganic store comp growth and given how strong the industry is I have to imagine that the acquisition multiples being discussed must be trending higher and maybe you can just remind us about how you think about organic versus inorganic generally and then.
I know theyre not at the same type of obstacles for you to organically grow store count like in the case of the new vehicle at retailers. Maybe you can just talk about at the decision matrix that goes on there and then are there certain geographies and I heard you talking about 48 states are there certain states or areas that you're more seriously evaluating for our organic store count growth and the current environment.
And.
So every decision we make either to acquire and RV dealership or to acquire a piece of land or building and open a store is based on very deep data analysis on what the market looks like what the trends are what our overall offering looks like what good Sam members of exists there where do we see widespread.
And all of the RV of things.
And the multiples that we're seeing are quite frankly, our symbol of our Q and in some cases, even less and what we've seen historically.
And I think part of that is at our dominance in this space has led us to lead.
The procurement of inventory on the supply chain side, and our investment income things like furniture or at the air conditioning or a number of other things that have not been and announced yet give us the ability to also put ourselves at the front of the line with the Oems and so.
And I'll start with that a number of dealers have really struggled as of December and January to procure inventory and have reached out to us as an opportunity to sell their business. Obviously those multiples are being suppressed.
Additionally, we're finding that a.
Commercial real estate on the land side has been suppressed as well and we have I think nine or 10 locations on the docket today, where we have either signed an LOI or close on the land or building to open up of de Novo stores.
We're already doing that and cases, where we feel like we can be profitable and those markets within the 12 to 18 months is that all of a standard.
And it will be true that in 'twenty and 'twenty. One we will have an abnormal abnormal amount of new locations added to our footprint than we traditionally have traditionally eight to 10, and we will exceed that number.
You had pretty significant amount and because of our cash flow is as good as it is today and because of our infrastructure has been really normalized over the last 24 months, we've made significant investments and the human capital side. We are prepared to take on those acquisitions and we will continue to scoop up more as we can.
Find new things in terms of looking at markets. The first answer is I have to check the boxes on the 48 states. So the Rhode Island, and submitting the Vermont and West Virginia is the Montana, you could expect us to have a stake and the ground and every state by the end of the year, but when we look at other markets states that we think of.
There is more opportunity for us.
We will continue to double down in markets like Michigan.
Okay, and so and you look at states like Pennsylvania, New York, where we see the top 10 of 15 RV registration States, where we believe there's white space will continue to do that before the format of the stores may vary and some cases it could be at small format like were doing and.
Delaware was 58 days and at 8000 square foot store.
In other cases, where it's in Michigan and it could be of large format store worth of 60000 square foot because theres 30 day and the market dictates us make dictates that and so we'll continue to grow we'll continue to acquire and we will continue to use of shareholders' money, particularly when our leverage is where it is to grow our market share and grow our footprint.
And so not only somewhere of ease but to accomplish all of the other things that we've talked about including peer to peer.
Including buy online ship from store I want everybody to really pay attention to the buy online ship from store because these locations that are being added at as many distribution centers that don't come with a lot of additional fixed costs. They come at lower shipping costs and they improve the customer experience to receiving net pack.
Within one day.
Great. Thank you so much.
Alright, and the next question is from Bret Jordan with Jefferies.
Good afternoon, and this is mark Jordan on for Brett.
And just think about the company is causing strategy and maybe talk about the progress that's been made there and how that might progress throughout the year.
And Matt, Matt Wagner, and we'll talk about that yeah. We've made a tremendous amount of improvements to our overall existing services infrastructure and we've been actively engaged and a number of different negotiations conversations and we anticipate by no later than the fall of this year, we will have an additional eight collision centers set up and where person.
Proceeding to further investigate other opportunities within our overall dealer network, where I wouldn't be surprised if we are able to find another four to five before at the end of the year, our moral before it's coming but we have recently hired a new leader over the entire business, which comes from the collision background from a larger company within the industry. So we're very confident about it and continue to improve our own.
<unk> position and that collision business I think will continue to be at a very accretive proposition for the business moving forward that 70% plus margin business is our justification. Additionally for adding new locations and 48 states because when we add those locations, we're adding service day and collision centers and we know that is at.
<unk> installed community continues to get bigger every single day at just builds and builds and builds and we know that our competitors and not investing and service facilities and collision facilities at a rate that we are.
Unfortunately, the industry is still made up of some smaller dealers that don't have the capital to build 10000, 12000, 20000 and scope of service facilities and we're going to go ahead and take the lead on that while we may not sell every of the RV and America well. Our goal is to at least provide a service opportunity for every RV and America and you have.
You have of footprint to do that.
Okay great.
Well I guess this is a bigger picture question, so thinking about the announcement with Moorestown and and the electric World strategy mentioned today now how do you see at a future of electrified powertrains and the RV space and that has a strategy evolve over time.
But one of the things that I realized as I mentioned in my prepared remarks is that we've been sitting on this asset really never we never really looked at it as one and that's our ability to secure at D. M D license and.
And the license is a bit of a low because you can't just get it at your local gas issue and you've got to have all of the proper instruments in place and you got to have the facilities in place and we've got to meet all of their requirements to receive that license I would expect that over the next several years as we launch electric world and.
And shop in shop experience at our existing 170, some odd locations and growing that a customer will be able to go online to electric world and look at everything recreational.
That is the electric power.
And to be clear about that everything that is electrified and that will not be limited to RV is today, we sell electric bikes and be selling electric pontoons, and we hope to be selling other electric apparatuses that of recreational in nature, we are not and electric.
Car company, but we may have the opportunity at some point and the future to sell electric trucks and that's good for us because we sell travel trailers that needs of the pool. We are working also to create a fully electric RV that incorporates the frame not just adding a battery pack we are aimed at <unk>.
And so coming up with other things, but I would expect when you come to our first launch in late July of 'twenty 'twenty, one that youre going to see a full assortment with us as the pioneers and the collectors of everything that's out there at one of the challenges at every electric and manufacturer and America.
And has today and this isn't a brand and OEM like Chevrolet or RV or Tesla is that their ability to distribute its difficult we've seen the battle between the regulators and the states and then.
The dealer body and we are the only company in America in our opinion that can provide a full license dealer platform to sell anything that requires a registration that has movement to it and whether that's the part of June or truck or a RV or a bike or a.
Low power and a TV whatever those things all of it we are putting in the special team with special training with a special services experience with a full of call center of experienced with no additional fixed overhead that will come with it because of all of those things are already inside of our overhead.
So you can expect to see that in jumped late July of 2021, we'll be announcing location or locations you will be able to visit in addition to that we are partnering with a national Supercharging and platform. Our goal is over the next 12 to 15 months to have.
And as many locations as we possibly can for cars trucks are these and any other electric vehicles that may come to bear in the market.
And all of this is really part of a more of a responsible company strategy that we have and so as part of that we have drawn a line and the sand and it is our goal to be 95% paper of less by 2024, there are certain things that require of paper like tag and titling or certain financial documents, but I.
And as to eliminate.
Paper and marketing by the end of 'twenty, one and new digital and social online and to move into a fully paperless company and.
And to have that be our part of our green contribution by 2025.
Okay, great. Thanks, and I guess last question for me I think it's something we ask or try and ask every quarter, but do you have a read on what the mix might be of first time buyers.
We're starting to finally see an uptick in our trade volume as we sit here today, we did see a low point in the.
Summer of.
And you want to give that number of certain yeah, we bottomed out at about 18% trade and rates that was around the time frame of about June July and since then we've seen a nice improvement at least year over year and sequentially month to month, we're not quite where we hope to be which actually is quite uplifting for the future prospect of consumers coming back into.
At a lifestyle or trading and of trading up which I'm confident by next year, we'll see a higher trade and rate, which means that you'll see in many respects that average sales price continued to improve and these lower insurance segment and we can then therefore yields of greater use of inventory level moving forward to the internal debate and our company and I want really want to just make.
This point is that I'm not intimidated by the high first time buyer rates.
And it means that we're executing on the things that we want to do internally and our company and we're going to double down on that and a good example of that because we announced this week of language initiative to put all of our e-commerce and our store experience and.
All of Spanish and.
And then we're also in the latter part of the year going to do the same thing on the French side as we stand at the border and staring at Canada looking at that as our next white space opportunity. It is important to us through language through.
Product development, both on our own and and partnership with manufacturers and our electrification of things to continue to drive down the average age of the buyer that enters our space and we want to lead that charge and have a lower average age than the rest of the industry and we know that used to spend money and take on certain product development initiatives.
To do that is that first time buyer number starts to go up too high and that means we're not attracting new people that we really want and the long term prospects of this industry look like they did 10 years ago, they're growing every single year, and we believe and we want to remind people that while this may be perceived as the greatest at.
Year in history.
Only a half of million rvs, and a $330 million plus populated country.
So we just want to give everybody that scope here are being is not a COVID-19 reaction people have been arguing for 40 years and yeah, maybe we fall from first time buyers and we're happy to see that and we're happy to see more of them and it is our goal to try to find more of them and mine different diversity and different areas of the country and quite frankly.
Of the North American content and the next 24 months to 36 months.
Okay, great. Thank you.
All right and we'll take the next question from the line of Gerrick Johnson with BMO capital markets. Please go ahead.
Great. Thank you.
And I wanted to ask did you do you see what he treated number is now I think you said at eight 2% and June July sort of a follow up on used.
Net.
It was 25% to end of year and heading into this year, it's been pretty consistent right around that number.
And I agree and then how do you account for your used inventories at LIFO or FIFO.
Either way of kind of previous inventory.
So it is.
I think identification side at all.
Okay, great. Thank you very much.
Alright, and your next question is from the line of at Brett Andress with Keybanc.
Okay.
Alright.
Good afternoon, so I'm.
I'm not too familiar with you know state by state regulations, but how many states can you actually.
Online only.
And today and then I think you alluded to this earlier, but what is the margin differential between online only sales and.
And that's true traditional cycle.
And if you do not possess a department of motor vehicle licenses and that respective state you are not permitted to tag title or sell a units into that customers reside and the state and so it's not like buying a pack of gum and shifting at all and lines of putting you in a box there are cash.
<unk> entitled requirements, and every single state and so that's.
That is and in our opinion of big barrier bad debt.
We're trying to make sure we put up not just put up in front of us.
And then the margin differential.
And quite frankly, it could even be higher.
Not lower them I'll just leave it at that at all.
And the historic expectations, not lower than what we would experience at the store level and by the way we've been perfecting debt.
And have delivered to your home model for about 18 months now and it's not as easy as one would think because you're crossing state lines and some cases and there is a whole delivery process and I think COVID-19 accelerated a little bit of it because we have to get better on the technology side of that making an appointment and the walk through of getting the inspection given.
The delivery of having the paperwork shift of people and what we realize is at the consumer actually prefer to buy that way they prefer to do within the confines of their own driveway.
Preferred to have a one on one experience at may be digital and cloud services for them and so we're doubling down on that experience and realizing that people that want to buy everything online and they want to learn everything online and RV and shouldn't be any different.
Alright, thank you.
All right and we'll take the next question from the line of Craig Kennison with Baird.
Please go ahead.
Yeah. Good morning, Thanks for taking good afternoon, and thanks for taking my question.
One of the metrics that really stood out in the quarter was the really amazing gross profit per unit and the used side and the used side, how sustainable is that and what really drove those figures.
Well ultimately I think.
A good chunk of it has to do with the supply and demand and that some of the manufacturers can stay disciplined not in 'twenty, one not in 'twenty, two but beyond that point, where theyre, making what the market is asking for I think that everybody is starting to realize that these margin.
Our sustainable, particularly on the used side when the popularity of RV ing has grown exponentially and the supply and the ability to manufacture on the new side and the amount of units available on the used side continues to be constrained and we think we'll see the types of margin within the range for the foreseeable future.
We don't know what investments the manufacturers factors are making to ramp up factories and buildings and things of that nature, which could lead to and over production and then lead to margin deterioration both of the manufacturer and us and the future, but we don't anticipate any of that in the foreseeable future.
The future from our perspective, nor are we forecasting that in our numbers.
Thank you and then.
With respect to your 2025 outlook Super helpful that you provided 2021 and day.
EBITDA guidance you provided for 2021 already achieved what I think we thought you could do in 2025, how should we reset our expectations for 2025 is at scale and expectation for mid single digit EBITDA growth and should we just reset the base at.
650 to 60, and 92021 and growth of them there.
I think we're living it up of what we always know and you know of its Craig we're living and a very cyclical industry and we don't ever we're not able to ever predict where we think the soft spot at and so we think of internally look at it and five and 10 year chunks and we look at like how do we do on average over the last five years of how do we do on average over the last two.
10 years, knowing that there's there's peaks and valleys and on average we've been able to grow pretty nicely on the bottom line every single year and I think what we're left with right now is a tremendous amount of free cash flow and of leverage.
Calculation and that we're very very comfortable with and we'll be using that free cash flow.
To continue to grow and acquire and invest in growing the base of our business and if you go back and you look at how the company grew out of 2010, and then out of 2016, we make these big swaps when theres, a softness and the market and we grow the base of the company pretty significantly.
At the new market slows down a little bit of margin come down a little bit and there's a good full year, but as we continue to build the size of the installed base of our customers and expand the product offering for our customers and continue to get better at and digital efficiency and distribution efficiency and and private label efficiency and now we start.
And to enter into the supply chain side of things, but the manufacturers are buying from us and we're selling aftermarket. We think we can continue to grow and EBITDA based on average over the long haul and that's actually how we look at it at the company and while the street all of these looks at the guidance for guidance from Us and we.
And then we.
We believe that the growth of our EBITDA over the long term will be north of what we're telling you today.
Great. Okay. Thank you.
So most of them anymore. There are no further.
Right.
Okay. Thank you very much and we look forward to reporting our Q1 results in may and take care.
This concludes today's call. Thank you for your participation you may now disconnect.