Q1 2021 RumbleOn Inc Earnings Call
[music].
Greetings and welcome to Rumble arms, and first quarter 2021 and earnings conference call. At this time, all participants are in a listen only mode.
And that's just a short follow the full presentation for you.
And once you require operator assistance during the conference. Please press Star Zero on your telephone keypad. Please note. This conference is being recorded I would now like to turn the conference over to your host Hillary someday. Thank you you.
You may begin.
Thank you operator, good morning, ladies and gentlemen, thank you for joining US on this conference call to discuss Rumble on first quarter 2021, and financial result.
Joining me on the call today are Marshall, <unk>, Chairman, and Chief Executive Officer, and Steve Berrard, Chief Financial Officer.
Full details of our results and additional management commentary are available and our earnings release, which can be found on the Investor Relations section and other website at investors day Rumble on Dot com.
Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website.
Let's call it and the property had rumble on and any taping or other reproduction is expressly prohibited without prior written consent.
Before we start I'd like to remind you that the following discussion contains forward looking statements, including but not limited to rumble on market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here.
Additional information that could cause actual results to differ from forward looking statements can be found and rumble on periodic SEC filings.
And looking statements and risks and this conference call, including responses to your questions are based on current expectations as of today and Rumble on assumes no obligation to update or revise them, whether other and call it new developments or otherwise except as required by law.
Also the following discussion may contain non-GAAP financial measures for a reconciliation of these non-GAAP financial measures.
Please see our earnings release.
Now I'll turn it the call over to Marshall Marshall.
Thanks, Hillary and thanks to everyone for joining us this morning.
Reported solid performance and the first quarter, delivering 48% revenue growth quarter over quarter, $11 2 million total gross profit and positive adjusted EBITDA.
And we will illustrate why our Q2 guidance, we continue to experience that momentum and Q2 by continuing to accelerate growth and revenue and gross profit and all facets of our business we.
We expect on a year over year basis, Q2 revenue and gross profit growth rates of $68 78 per cent and <unk>.
<unk>, 13% to 125%, respectively and to deliver another EBITDA positive quarter.
Our overall mission has not changed but during the past year. We've continued to implement the plan meaningful enhancements to our strategy and technology stack, which we believe will enable us to participate and a tremendous share of power sport transactions over time with improved unit economics and.
And Q1, we announced the pending business combination with the nation's largest power sports dealer groups right now, which we believe will transform the power sports industry for Robert.
The other transaction has not yet closed both businesses are already benefiting from the synergistic nature of the proposed combination, which I will discuss at greater length. Shortly.
We've taken meaningful steps to improve our margin opportunity and manage our limited liquidity and available capital over the past few quarters, and we're seeing the impact and our results as you heard us and other vehicle resellers discussed there continues to be a significant imbalance and supply and demand and the market and.
And we're certainly seeing that and the power sports with extremely low new inventory availability, which is driving higher pre owned vehicle prices and all signals.
And as we emerge from COVID-19 restrictions and this country manufacturers still haven't been able to ramp production back to normal level, leaving far fewer new vehicles and showrooms and while this has created significant supply constraints of new inventory across the industry. It has created a strong tailwind and outstanding opportunity for Rumble on.
<unk> with our buy direct from consumer strategy, and our new <unk> to be redistribution capability through dealer direct clearly our business has never been better aligned to realize sustainable and significant margin improvements than today and our short history. However, we recognize that like our peers, our Q1 margin.
And to some extent is benefiting from macro trends, which we expect will normalize overtime.
The other macro backdrop is a tailwind for our business in the near term. It is important to understand that our model is a perfect solution for dealers and thus consumers and all macro environment due to our unique core capabilities, which we believe is evident and our Q2 guidance we are sharing today.
First our ability to efficiently aggregate and distribute power sports vehicles through Rumble on Dot Com, which includes our highly successful buy direct from consumer strategy.
As you know, we launched our Rumble on Dot Com three point and old platform late last summer and continue to see very exciting momentum.
As of quarter, and we had nearly 450 dealers on Rumble on dot com and continue to grow our dealer count and in fact, we added over 30 dealers and April alone.
And the first nine months since we launched Rumble on three point, all we already have roughly half the number of low season cycle trader, who has been operating in this space for over 40 years.
Recently, the industry has seen a more than 30% decline and average listings per dealer due to the supply demand imbalance I just discussed.
Based on our dealer count we estimate that under normal new vehicle stocking levels. We would have expected 80000 listings on our site. We are confident that the number of listings per dealer will grow significantly as Oems get back to normal inventory flows thus increasing dealer supply.
We further believe that our opportunities for market dominance and listings and thus quality dealer lead generation to be market, leading and the very near future.
Bill today more than 95 per cent of all inventory redistributed by Rumble losses acquired directly from consumers, which is a compelling and a strong competitive advantage of our model. Most importantly consumers now have the unique ability to work with our dealers and the locality where they live to sell or trade their vehicle.
And for instant liquidity, which has significantly improved our overall conversion rates and incremental gross margin from the fees it generates for Rumble on.
The strength of our platform revolves around providing consumers with a transparent transaction experience, including the prequalification of financing and the transparent and fair valuation of their trade it which creates quality leads provides tremendous value to dealers and marries the current online consumer demands.
And with traditional retail sales processes.
And second our enhanced dealer direct solution.
In Q4, we launched the beta be online dealer auction technology for dealer direct dealers can now use our platform to buy and sell units to and from each other enabling rumble on to participate and more transactions and earn sell through fees without taking ownership. This is an industry first to offer participating dealers real.
Time and access to more high quality inventory from the very first day, our vision for Rumble on was to completely disrupt the very inefficient pre owned supply chain and power sports through the development and deployment of unparalleled software solutions for dealers, all while improving the consumer experience by itself.
Trade and finance online.
Our tech enabled real time auction platform for dealers is our newest innovation and thats already experienced 100% sell through rates further reducing our already low average days and stock to new record levels.
Dealer direct will completely revolutionize how power sport dealers acquire and redistribute pre owned inventory.
Dealer direct online auction platform connects dealers with other dealers reduces cost and creates a more timely and efficient process for inventory acquisition and wholesale sales, making the power sports pre owned supply chain more liquid than ever which in turn makes power sports vehicles more accessible to consumers.
And we do this while eliminating expenses from our cost structure by not utilizing third party reconditioning, no associated freight cost or auction fees and multiple other benefits and.
Instead, we earned transaction fees and the acquiring and dealer pays for freight all of which provides a significant increase to our gross margin as demonstrated in our current results and future guidance.
We are driving rapid adoption, we sold 310 units through dealer direct online auction and Q4 increased that by 235 per cent to approximately 1037 units in Q1, and we are seeing substantial growth in Q2 and expect sequential growth on the platform to.
<unk> 100 per cent.
It is clear that the demand is high and we expect to dramatically grow the number of units sold through our platform, thus, enabling rumble on to scale with higher margins from both the sale of company owned inventory as well as buy and sell fees.
The combination of Rumble on three point O and our <unk> application of dealer direct is a valuable evolution of our business.
For those of you who have been following Rumble on for some time now you know that we've had to operate rumble on as a lean organization since our inception in 2020, we set a goal to achieve profitability and operational efficiency and through maintaining this commitment. We believe we are now and are positioned to achieve sustainable.
<unk> ability.
And we managed our inventory and inventory financing nimbly, but as Steve will discuss in more detail. Shortly during Q4, 2020 and Q1 2021, our unit volume capability was severely hampered by our limited access to capital and the customary operational limitations and connection with the proposed right now.
However on April 12, we raised capital and as of May 14th 2021, we haven't and significant improvement of cash on our balance sheet. We've demonstrated our resilience over the past three years and we will continue to March forward to unparalleled market domination with a significantly stronger.
Our capital structure.
We believe our current liquidity and capital structure gives us the runway necessary to accelerate volume growth and gained significant market share as evidenced by our Q2 guidance.
As we look ahead, we are incredibly excited by the opportunity to become the first omni channel customer experience and power sports in North America through our pending business combination with right now.
And our discussions with the multiple Oems involved and this transaction have been very positive and we're encouraged that we'll be able to close and the very near future.
This deal represents a meaningful evolution and the power sports industry and augments our mission to deliver an unparalleled solution for power sports enthusiasts nationwide.
We're excited to bring public investors the opportunity to be part of this meaningful advancement and the power sports industry.
The end to end platform will enable the combined company to reach more consumers and our sexual really growing yet still highly fragmented market that is benefiting from changing consumer behavior, combining rumble on and right now positions us to capitalize on the secular changes in consumer behavior.
And by COVID-19.
Together, we will have significant market share on day, one and we will build a dominant position and the 100 billion dollar marketplace for power sports.
Our complementary business models offered tremendous growth opportunities, both organically and through industry consolidation.
From online to in store sales and the ancillary services such as financing parts service and merchandise Rumble on will have an unmatched into and Omnichannel consumer experience.
We strongly believe that the integration of right now is extensive geographic footprint and strong retail brand combined with Rumble on technology platform will transform the nation's largest power sports dealer group into the first and only Omnichannel power sports platform in North America as a combined company we will.
For the fastest easiest and most transparent transaction process to consumers nationwide.
And bind with our proprietary pre owned vehicle sourcing we are reinventing the purchase and sale experience for power sports enthusiasts, both online and in store.
The transaction is expected to propel revenue growth and drive meaningful cost synergies, leading to improved monetization and margin expansion and we are already seeing evidence that the combination will be highly lucrative to our combined businesses for.
For us this transaction is about unlocking incremental sales by improving access to quality pre owned inventory improving the associated supply chain inadequacies consolidated and a fragmented industry with the intent to drive efficiency and most of all improve the consumer experience.
For our customers consumers and dealers. This is about offering and the most robust selection of inventory through a simple safe hassle free and flexible online experience.
As always we have high ambitions and are excited about the next chapter for Rumble law.
April was another strong month for our business and it's shaping up to be a great Q2 Rumble.
<unk> is making power sports ownership assessable to everyone from the first time writer to the longtime enthusiasm and we are thrilled to give consumers and dealers and what they want and need.
We love meeting, our customers and power sports rallies and events each year. We're hopeful that we will continue to see a return to normal across the country and support and in person events again. This year, we became an official sponsor of the city of Sturgis motorcycle rally for the first time in 2018 and look forward to another successful event. This.
Year. This time as the first omnichannel customer experience available and power sports in North America, and with that I'll turn it over to Steve Steve.
Thank you Marshall and good morning, everyone.
Our Q1 results are detailed in the press release, we issued this morning, and supplemental information will be available and our first quarter form 10-Q that will be filed later today.
Morning, I will provide a quick overview of our first quarter results and Q2 guidance and then we'll comment briefly on our pending transaction with right now before we open the call to questions.
And the first quarter Romblon sold 3005 hundred units and generated revenue of $104 3 million up from 2000, and 647 units and revenue of $70 4 million and Q4.
The sequential improvements were driven by strong market trends and increased demand as well as our ability to efficiently acquire high quality power sport vehicles directly for consumers and the continued growth and the volume of transactions through our dealer direct online auction platform.
We sold a thousand six power sport units in Q1, generating $10 9 million of revenue up 17% and 28% respectively as compared to Q4.
2000, and 490 for automotive units generating $84 1 million of revenue and increase of 40% and 52% respectively. Over Q4 of 2020, Q1 transportation and vehicle logistics revenue was $9 3 million up 41% from Q.
For.
The number of vehicles sold decreased on a year over year basis due to the adverse impact of COVID-19 on commercial activity, resulting in lower levels of inventory available for purchase and acceptable acquisition price levels, causing lower revenue, but higher average selling prices and gross margins.
Due to the supply and demand and balance our level of available liquidity, which required that we reduced our historical purchasing levels of inventory for sale.
Continued disciplined approach to revenue volume and margin growth and connection with day prescriptive steps implemented and 2020 to accelerate profitability and the elimination of power sport vehicles sales direct to consumers as we continued to shift our consumer activity Rumble on three point O and earmark available.
Inventory cause dealers through dealer direct.
As the impact of COVID-19, 19, and base overtime, and we anticipate that unit volumes for it turned to or exceed levels experienced before COVID-19 affected commercial activity.
Total gross profit for Q1 was $11 2 million or 10, 7% of total revenue down 20 basis points from Q4 and up from seven 2% and Q1 last year.
Gross profit and gross margins for our vehicle distribution business.
$9 2 million or nine 7% versus nine 3% and Q4 of 2020.
The strength and Q1 margins was driven by the benefits of continued supply constraints on new inventory.
The significant levels of profitability being driven through dealer direct which is a result of not having to utilize independent third party providers for transportation reconditioning or the payment of auction fees. While we have benefited from the continuing supply chain constraints on new inventory, we don't believe that the supply.
Jane effects on our increase in gross profit is sustainable over the long term, we expect vehicle margins to remain strong, but begin to stabilize as demand levels and inventory acquisition opportunities rise.
Total SG&A for the quarter was $13 4 million or 13% of revenue down from 16% of revenue in Q4 of 2020.
Our operating loss for the quarter was $2 8 million and an improvement from a loss of $4 million and Q4 of 2020.
For the first quarter Rumble on its net loss was $4 5 million and adjusted EBITDA was a positive 21, 2000 and up from a net loss of $5 5 million and a $2 8 million adjusted EBITDA loss in Q4, and a substantial improvement from the 22 million net loss and <unk>.
$6 5 million EBITDA loss of Q1 2020.
As of March 31, 2021, we had $2 1 million and cash including $2 million and restricted cash.
During Q4 and throughout the entirety of Q1 and 2021, our unit sales volume was severely hampered by the level of our available liquidity limited access to capital and the customary operational limitations in place and connection with the negotiations other proposed right now merger substance to the quarter.
And we closed a public offering of $1 48998 class B shares with.
With net proceeds of approximately $36 7 million.
With a significantly stronger capital structure, we now have the liquidity needed to accelerate unit sales and revenue growth and Q2 and beyond.
Before turning to outlook I'll provide a quick update on right now.
Right now its luminary Q1 revenue and pretax income also benefited from strong market tailwind their results will be available later this month for an early June once we file the combined Rumble on and right now pro forma financial results with the SEC.
While we expect potential upside for the full year expectations. We set in March for the combined company. We are reiterating our prior outlook for 2021, which was revenue and the range of one for 5 billion to $1 55 billion and adjusted EBITDA and the range of 110 million.
Two $115 million.
However, we are in the process of reevaluating. This outlook, we believe now more than ever that our business models are highly complementary and we expect to achieve significant levels of revenue gross profit and earnings growth. We are excited about both the business opportunities that a combination with right now will bring.
For the table and the financial profile of the combined company.
Turning to Rumble on Standalone outlook, we're seeing continued improvements and the second quarter, reflecting the progress we're making on our objective and more disciplined approach to sales volume as we take prescriptive steps to achieve our goal of increasing profitability and the rapid adoption by dealers of our enhanced.
Taylor direct solution.
We are anticipating a strong second quarter and expect a return to year over year revenue and gross profit growth coupled with strong unit economics and positive adjusted EBITDA and Q2, we are expecting a total revenue range of $140 million to $150 million gross profit of $18 million to $19 million.
And another quarter of positive adjusted EBITDA, and the range of $1.2 million to $3 million.
As the impact of COVID-19, and base over time, we and.
Wait that inventory purchasing levels and revenue will return or exceed levels experienced pre pandemic as we increase penetration in existing markets and continue to add new dealers, we expect our business combination with right now to close during the third quarter. So we are not providing full year guidance for stand alone Rumble on.
However, we are very excited by the opportunities ahead and believe we have the strategy in place to continue to deliver revenue growth and profitability with strong unit economics in 2020.
We made a commitment to achieve profitability and deliver.
And for operational efficiency, we believe our Q1 results demonstrate the progress we have made and our Q2 guidance demonstrates our continued commitment to those goals.
That I will pass the call back to Marshall for closing remarks.
Thanks, Steve.
And we began building rumble, along with the mission to disrupt the inefficient vehicle supply chain and we continue to make progress on that mission every day.
We are taking advantage of a myriad of tailwind and our industry both from the macro environment and the secular trends and dealers are increasingly looking for digital solutions.
And we have spent the last several months enhancing our business model and technology solutions to enable us to capture more market share with better unit economics, we believe that the real winner and the vehicle retail space will be the best Omnichannel concept and provider due to the optionality convenience and transparency.
It provides the consumer there.
There is no future and which a company can thrive without an online presence, but the importance of bricks and mortar should not be underestimated.
Service and parts accessories, and merchandise and the gross margin. It provides will not only be meaningful to rumble launched profitability profile, but scalable with a more prominent online presence and process.
No mistake about it we are transforming the power sports industry for all stakeholders and are very excited for the future.
Operator, we're ready for questions.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation and so in the Kate Your line is and the question queue. You may per start to people that you're moving your questions and the Q.
For participants using speaker equipment and may be necessary to pick it prevents it from for person the star Keys, one moment. Please as we poll for questions.
Our first question comes from the line of Ron Josey with JMP Securities. Please proceed with your question.
Great. Thanks for taking the question Marshall and Steve So I've got several here so maybe I'll just do them.
One by one and just on right now Marshall you mentioned Youre seeing progress and synergies already here ahead of the merger or the acquisition and you just talk about some of those synergies and maybe what youre seeing.
The benefits here and maybe the synergies or because of the dealer to dealer distribution process, you've talked about and then on right now specifically just.
Steve you talked about close maybe and three Q and you just gave us and update on closing Timeframes and financing around the acquisition that that's question number one so synergies youre seeing.
And then Timeframes and financing.
Synergies, Ron and good morning.
Good morning.
And I really looked at it from two perspectives and the in these early days.
One is providing access to pre owned inventory has been.
Extremely accelerated with them.
Since the announcement.
And I think as we get further along and.
Sure.
Numbers are available to everybody.
You'll be able to see that dramatically starting in March so as.
As we anticipated one of their biggest.
For that and one of their biggest shortcomings has been.
Access to quality pre owned inventory and.
Sure.
We have been and will fill that need and a meaningful way and it continues to grow every week.
The second piece would be really with regards to Rumble on finance.
They were they had been part of our test and what we have seen is that there.
There is a much bigger opportunity on the consumer retail finance page volume than we originally anticipated.
And it's not only in the peripheral space, but it also looks evident to us that there's a huge opportunity on the new vehicle side as well. So we're we're working diligently and ramping our capabilities on the finance side and they are aggressively participating and dealer direct.
For additional inventory flow, Steve I'll, let you take the second half for that question.
Sure Good morning, Ron on the timing right now as you remember the conditions to close we're getting.
OEM or manufacturer approval Hart Scott.
The two biggest ones.
We have now and they had all of our applications with the Oems so far they've been well received and they've been very cooperative.
I think it's just a question of how long ago.
And the right now situation.
And when he was 200 plus applications that need to be filed because every location is a separate separate franchise agreement. So therefore, we have to have 14 Suzuki and your final 14 applications.
Applications, but all of that has been pretty much done and now it's just a question and going through the process haven't had any pushed.
Pushback of resistance with anything.
The larger ones have been extremely receptive so I think that you know.
Short term would do we would we like to be done by the end of June yes, but.
And not to set expectations and not to have to disappoint.
And it's better that would just take a view that will do it sometime and.
We believe early Q and.
And hopefully in July and let's start with that on your financing question.
Just to recall, we have our letter of commitment from Oaktree, which as you know.
$2 80 for the transaction plus another 120 for future Devers, whether that'd be acquisition or working capital and then we were going to raise 170 to complete the deal. We obviously did the interim raise here just a few weeks ago. So that results that closed the deal we need to range probably.
And another.
80 $485 million.
And then and we want to have something extra on the balance sheet when I share it with balance sheets capitalize for somewhere between 75 and $100 million.
And the only question left now is are we going to do a offering are.
And a number of people step up and also to do the entire transaction. So the only question that remains is when we get closer to closing we will be filing a proxy here shortly and the next two or three weeks.
And do we do it and a.
Offering or where your spirit with one or two individuals decision we haven't made yet.
Okay.
Got it that's super helpful and glad to hear everything is going on plan and maybe another question on just guidance. We're halfway halfway through you mentioned Marshall I think April was a strong month. So just talk a little bit more about what you saw in April and and the mix between consumer and dealer to dealer just given the strength you've talked about on on dealer to deal.
Since the launch I think you said it was <unk> as we've talked about and I got one more follow up.
Okay no problem.
Okay.
And actually kind of started in March.
Very strong March.
April and.
Accelerated quite a bit for March.
And may has been thus far halfway through and it's been extremely good we have basically six weeks luck. So we have a high level of confidence of our of our guidance and.
I think the biggest improvement as we continue to March forward here would be and regards to gross margin and I really urge.
Investors to take a look at gross margin of other online providers, whether that'd be cars or.
Anything in the vehicle space and I think you'll see that the margin performance.
On the majority of our business, which is b to b.
Including the vehicles that we that the company owns.
Two dealers is.
Growing dramatically.
And they are very very strong.
Margins in comparison to the industry and I think the important part there is you heard me say before losses.
The retail consumer is easy to understand but I think we understand the short tonnage and the consumer experience and different things in that regard, but if you look at the gross margins that this produces on the ESP that we are selling net.
And then you consider the.
The lesser amount of SG&A associated to a dealer transaction compared to retail transaction that is the difference between.
Losing significant money as you lap and small.
Model compared to being in a position to make money.
Yes, Brian if I could add.
I was just going to give you some anecdotal.
Thoughts on consumer side of it obviously right now would be the representation of that and looking at their first quarter through April actually through today.
Their results have far exceeded our expectations of what we originally thought so that continued growth that they've seen.
Has just carried right over into Q1 and into Q2, So I think from a.
Consumer perspective, the whole fear of COVID-19 bubble I think I think there are lifestyle changes really starting to take hold.
And there are just more people coming into the marketplace and I want to enjoy power sports.
There's definitely some tailwind for your Marshall and Steve maybe one last one and I'll go back and the Q.
Autos, we didn't really hear much talk about orders and maybe just some insights on where you see that business going and how that's contributing and and that's a great great quarter guys. Thank you for the time.
But thank you Ron.
The automobile has been very very good obviously with the pending right now transaction and.
All of our efforts with regards to <unk>.
Technology improvements and launching our b to B and launching the three for us.
For.
Power sports and our focus right now has been on power sports.
But our automotive business as you'll see and the and the reports has been extremely strong.
Gross margins are as high as I've, probably seen in my career.
And again as we explained in the and the call a lot of that has to do with the lack of new vehicle inventory at the dealers are seeing so we're seeing.
A lot of activity and the auction lanes gross margins are extremely high at all times high levels.
Our logistics company, which.
Halls, well over 100000 cars or dispatches over 100000 cars.
Last year you see.
And the same type of.
<unk> and the business as well so the whole automotive business is doing extremely well.
Our retail group, we moved into a new location and.
And Palm Beach, Florida.
With big success and so yeah.
We like that business a lot we think its interesting from the standpoint that a lot of people still come through Rumble on dot com on our cash offer tool to acquire liquidity.
However, there is a significant amount of players and that liquidity chain, whether that be carmax, carvana bromine and and regular dealers on the power sports side, we really are the dominant player. So summation is yes. We're we're in the automobile business, it's been extremely profitable.
We think that those tail wins remain for quite some time, but the major focus and our.
And basically most of our assets are deployed towards our power sports dominance.
Great. Thank you Marshall Thank you Steve.
Thank you.
And our next question comes from Rommel Dionisio with Aegis capital. Please proceed with your question.
Thanks, and good morning, guys.
So two questions for you.
I think a quarter ago, when you talked about right now.
Just because how they had other approximately three to one ratio of new to used vehicles in 2020 I just wonder given your comments Marshall about the supply demand imbalance and the supply constraints on other manufacturers could you just maybe put that in some perspective.
And what that number might approximately be today and or just even if you can talk about it qualitatively. If you don't have the exact sort of ratio I just wanted to get some perspective, how that's changed and the last few months and second.
And just sort of a more general question.
Given the transaction.
And about to close here I Wonder if you could just talk about how.
How if at all the relationships with right now with some of the OEM producers like Ken and Harley Suzuki Polaris and others have changed at all and and the last few months.
And if they if they've changed for the better for the for the worse. Thanks.
Okay.
I think that.
With regards to.
The mix of new to pre owned.
I think two things will drive a significant improvement women when their numbers are released.
Part of it is they do have.
They reduced new vehicle availability on the other showrooms across the country as do all dealers.
But just mathematically obviously, they're going to do a better job on the other pre owned side.
So you will see an improvement from three to one to some number north of that but we haven't.
Bounced and nor have we quantified publicly.
I think that we are more confident today that over the over the long term.
Not only can it be but from a profitability perspective, it would be extremely exciting to have a one to one ratio and we think.
But I think across the company to be a one to one ratio is very very achievable and I think over time, you'll see some actual locations.
Pro forma net debt, even better levels than that.
As far as the OEM response, it's as Steve mentioned in his and his narrative that.
We've been very.
Very encouraged and I would say and some cases pleasantly surprised.
We didn't see any pushback, we think it's very very important to the long term.
Power sports industry.
No that the reception from the dealer community has been extremely strong.
It is the last vehicle that we're aware of last vehicle segments, you have public capital involved and RBS with the likes of lazy days and camping World you have public capital and the boat and the marine business with one marine and Marine Max and of course, Steve was.
Co founder of Autonation, which started all the public capital groups that now dominate the automotive space. So that we you know we think we're the first to the space we think that.
Theres always some hurdles to cross when your first and the game but.
And as Steve mentioned for my perspective, some of the.
Some of the Oems I think responses bordered on excitement for what it could bring to the franchise system and power sports so well.
We're very encouraged and we do not have responses, but as Steve said all the applications are in and obviously in most states, there's time constraints and when they have to to respond and so we expect our responses and the very near future and we have not seen anything that would lead us to believe that there's any negative.
Our response coming.
Great. Thanks, very much Marshall thanks for the perspective.
Thank you.
And with that ladies and gentlemen, there are no further questions left and the Q and this also concludes today's teleconference. You may now disconnect. Your lines at this time, we thank you for your participation and have a wonderful day.
Okay.
And then.
[music].