Q2 2021 Camping World Holdings Inc Earnings Call
Good afternoon, and welcome to camping World Holdings Conference call to discuss financial results for the second quarter office, and Eric 2020.1.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
And if I used at this call is being recorded and that the reduction of the call in whole or in part is not permitted without written.
Authorization from the company.
Participating and the call today are Marcus and the walnuts share.
Chairman and Chief Executive Officer.
Brent Moody President.
And Bell Chief Financial Officer.
And our award Chief operating Officer and me.
And our executive Vice President.
I will turn the call over to Mr. Moody to get US started please go ahead Sir.
Thank you and good morning, everyone.
A press release covering the company second quarter 2021, and financial results was issued this morning, and a copy of that press release can be found and the Investor Relations section on the company's website.
Management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These remarks may include statements regarding the impact of COVID-19 on our business financial results and financial condition.
Our business goals plans and abilities and opportunities and.
Industry and customer trends, our 2019 strategic shift increases and our borrowings 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 discussed and the risk factors section and our form 10-K, our form 10, Qs and other reports on file with the SEC any forward looking statements, including statements regarding our long term plan and costs related to the.
Strategic shift represent our views only as of today and we undertake no obligation to update them.
And he's also note that we will be referring to certain non-GAAP financial measures on 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 2021 second quarter results are made against the 2000, Twenty's and second quarter results unless otherwise noted I will now turn the call over to Marcus Good morning, everybody and thanks for joining us for what is a very exciting day.
As we celebrate camping world and good Sam 55th year and business, we continued to be astounded by the insatiable desire that Americans have for experiential travel exploration of this country and most importantly, a community of connection with others.
That desire resulted in our company's best quarter in its history.
And our incredible growth and our enduring success over the decades is proof of that demand and a testament to the 360 degree business that we have built.
As we enter our 56 year as the clear leader and disruptor and this industry, we will invest heavily and our people and technological evolutions 2 of our greatest single Differentiators and continue to separate ourselves as the clear industry leader.
We believe our high margin good Sam product and service offerings, such as roadside assistance. The good Sam membership and extended service protection to name a few strengthen our long term relationship with our customers.
To further strength as the retention of our customers we have begun a transformational process to meet the ever changing customer how we transact how we service how we communicate along with all the other necessary resources to create a customer for life.
New platforms, such as the good Sam RV evaluate or good Sam RV rentals also known as peer to peer and good Sam campground reservation systems and the good Sam services marketplace are the types of dynamic offerings that allow us to meet the needs of new and existing customers.
Today's call will be broken into 2 primary sections first a high level financial summary, with a different additional information available and our 10-Q and seconds and overview of the highlights of our operational progress and.
And regards to financial performance demand was strong in Q2, and we have continued to see very strong demand to day, yielding record breaking results adjusted.
EBITDA for Q2 was $333.3 million, a 112.6 million or 51% improvement compared to Q2, a year ago day.
Demand remained elevated with revenue of $2.1 billion for the quarter and increase of $455 million or 8.3%.
Our balance sheet is the strongest it's ever been.
At the end of June our net debt leverage was 1.14 times adjusted EBITDA and.
And Q2, our team successfully refinanced our senior secured term loan and so.
A new term facility maturing in June of 2028 and.
In October of 'twenty, and 'twenty, our board of directors authorized a stock repurchase program for the repurchase of up to $100 million of our class a common stock.
And the second quarter, we repurchased $45.5 million.
About 33 point, we have about 33 million left and that availability.
We ended the quarter with $322 million of cash consisting of $192 million of cash and cash equivalents and $130 million of cash and our floor plan offset account.
Additionally, we had $468 million of working capital with more than half made up of used RV inventory without a related floor plan financing and lastly, we have 191 million of real estate without.
Related mortgage financing.
With respect to our operational results. We ended June with over 2.2 million. Good Sam members. This represents nearly a 150000 additional members compared to June of last year.
Heading into this year, we knew there was a huge opportunity with our good Sam credit cards, we made a big shift and brought in a specialized team to focus on this area of our business.
We set a goal of 10% annual growth.
Year to date, our file size has grown to north of a quarter of a million active account holders and increase of nearly 19% compared to June of 2020.
Our good Sam RV, valuate or tool fueled our growth and the used RV inventory and provides what we believe is a huge competitive advantage. We ended June with nearly 260 million of used RV inventory.
More than double Q2 of last year.
And the second quarter, we added 9 new location store footprint today.
Today, we operate and 187 locations.
And I couldnt be more excited about our future we anticipate demand will remain strong in the foreseeable future.
<unk> has become way more mainstream.
Our team will execute the operational plan to attract the next generation of reverse expand good sales and drive innovation in the industry to reach our internal goal of generating $1 billion of annual adjusted EBITDA.
And so we continue to work towards that goal, our trailing 12 month and annual adjusted EBITDA as of June 32021 was $831 million.
We are now increasing our full year adjusted EBITDA estimates to between $840 million and $860 million I'd like to turn the call back over to the operator for Q&A.
Thank you.
If you wish to ask a question these vehicles quite pressing star 1 on the telephone keypad.
If you and use our speaker phone. Please ensure your mute function is turned off and again that has started 1 for a question and I'll pass.
Just 1 moment.
Okay.
Okay.
Okay.
Okay.
Operator.
Yeah just.
Just 1 moment, sorry excuse me.
Okay.
Okay.
Okay. So we will now take our first question.
From fresh and drugs from Keybanc.
Good morning, Brett.
The focus here is maximizing profitability, but just a question.
On pricing are you selling above MSRP now I'm just trying to put this play.
No no we are not and we've been asked that question and thank you for asking it we are not pricing at above MSRP and we'd never would ever do something like that we understand that some competitors may be doing that but our job is to maximize our profitability on every single transaction.
Action and while the inventory per location was down 21%, we became very very focused on making sure whether it was newer used that we we're maximizing each individual opportunity, which is why our GPU is almost double.
Got it and so maybe just to follow up on that day.
22% increase in used vehicle price.
I guess, how much of that as Oems and passing price to you how much of that is mix I'm just trying to get some context around that.
I don't I don't really think that we look at it that way to be honest with you we haven't seen significant increases and pricing from the manufacturer and in fact, both Thor Forest River and Winnebago has been very conscious to try to absorb as much as they can to not obviously and fleet the customer it really is.
A function of us holding more margin on each particular transaction, both new and used.
Okay, and then and then SG&A I think larger than most of us had and our models.
Is there any way to help us with what's in that $432 million number. It seems from your prepared remarks that there's some heavy investments going on but.
And any dollar amounts that you can put around that.
Actually our SG&A, we felt performed very well if it's up on a raw dollar basis, it's because our base business is significantly bigger and commissions were also bigger because of the increases and growth, but it met and actually beat our internal expectations and I think it's probably better on.
The SG&A side as a percentage of growth than we've had in my recent memory.
Got it.
And then 1 quick 1.
And just I think this is a moving target and the past, but on the updated guidance are you willing to frame up how much a day.
Contribution is coming from some of your recent acquisitions that you've made.
We don't reported that way, but I will say that a lot of our acquisitions for this particular year had closed inside of the quarter and so Unfortunately, we were not able to enjoy as much as we wanted to we saw a significant delays state by state and securing licensing based on and the Covid.
Slowdown of processing applications and so unfortunately the guidance. We had provided previously we werent able to close all of those acquisitions at the time that we wanted to say there was pretty significant delay.
Alright, Thank you Marcus.
Thank you.
Okay.
Question comes from Ryan Brinkman from Jpmorgan. Please go ahead hi.
Thanks for taking my question is there and update you can provide on the recently launched RV rental business and what can you tell us in terms of the interest the early interest from consumers in terms of place and reservations through the network or for making their own are these available on that network and has there been any thought to place and any of your own.
Used inventory onto the network or peering with other companies I think might've. Originally been suggested that May have RV is available. In addition to the peer to peer channel or maybe just a very low inventory environment at present and make that less attractive currently and then longer term. How are you thinking about your potential market share in that segment given leverage.
The good Sam brand and your roster of customers et cetera.
I'll answer and 1 of those questions first is to get it out of the way and unfortunately as we've grown our used inventory double from a year ago. We look at the margins on that used and the turns on that use and we will continue to grow our used inventory until we see a material break in either.
Unfortunately that hasnt happened and as we've grown inventories sales have grown so we don't have any available inventory to put onto that platform because when it's coming in its leading pretty quickly.
As we mentioned in the previous call. Our plan was to launch fully launched the peer to peer model good Sam RV rental business.
In early fall and while we have taken the site live we haven't put day necessary marketing funds behind it because we want to really control that user experience. The early indications are very good we're actually very pleased but at this time for competitive reasons, we will not be breaking that biz.
And south and disclosing how we're doing and comparison I'll remind everybody of this we have $2.2 million. Good Sam members, who stay with us for a very long time and our job is to educate them on the pluses of owning and RV and it's not only about enjoying the lifestyle, but it's monetizing there.
Investment and this particular space and our job as a company is to maximize particularly for our members every single investment that they make with us and whether they're buying roadside or a warranty or putting their unit on the platform, we're seeing that they're seeing the value in doing that.
We know that our ability to add units to the site has a lower cost than any competitor in the marketplace. We also know that iron necessity to charge high fees like our competitors arent necessary for our business because our monetization of that platform is a.
Singularly fee base business model. It is also based on selling the ancillary products and services that go along with that rental like warranties on a daily basis roadside assistance and all of the soft goods and if somebody could buy in anticipation of their trip. So we.
Think about it as a holistic return for our company and we expect to win in this space and the very short term and really disrupt what we believe is a very egregious fee structure by some of the competitors.
Okay, great. Thanks, and then.
And I see that you both purchased 9 dealership locations during the quarter and also the 46 billion of buyback you referenced could you talk a little bit about the M&A environment at present and given that now appears to be 1 of the best times ever to be and the RV business. What trends are you seeing in terms of the multiples that you might be being asked to pay.
And given those multiples how are you currently wayne that opportunity against the potential to buy back shares or pay down debt, which I think is less of a priority given given the increase and the EBITDA or any of the other various different organic initiatives that you have available before you.
And we look at our free cash flow like we have for since the inception of the company and whether it was public and private and when we hear things like are you being asked to pay higher premiums and we don't really enter into that dialogue. We don't deal with brokers. We don't operate our acquisition model the same way and iron.
Ability to buy dealerships across the country is quite frankly more plentiful than it's ever been and we're not seeing a dramatic modification in the pricing structure to buy those dealerships. The most important part about acquiring dealerships and I think the smaller newer competitors will learn and ofer.
Time is that the key to the art and science and making acquisitions is the integration and the implementation of our best practices.
And over the years over the 20 years, we've learned what it takes to actually make that acquisition and for US. The return on that acquisition isn't just buying the historical trailing 12 earnings that dealership had its implementing our service process implementing our F&I process installing the good Sam <unk>.
Value later, and really understanding how to monetize the entire return, including but not limited to selling membership selling roadside selling warranties and so our overall return is much higher than a typical RV dealer our auto dealer consolidator, we can buy as much as we want we have the cash to do it.
We have the know how how to do it and we know how to create that environment. When do we think it's appropriate but we are opportunistic buyers and what that means is we don't overpay ever.
Ever that is not our business model, while we acquired a ton. We also want to digest, what we have bought and as we look at the businesses that we bought and we look at the ones that could potentially be on deck, we want to make sure that our human capital and our ability to train and integrate and set up those best practices is clear.
And easy and sustainable for the long term.
So in summary, it's never been a better time to buy a dealership, but the pricing is the same as it's always been.
That's helpful. Thanks, and then just lastly is there any update to the opportunity that was discussed last December with Lordstown motors, whether in terms of the timing and our likelihood of servicing any electric pickup trucks that they might bring to market or separately any thoughts that you might have on the electrified or the space generally.
So we.
We have noted previously we will have our Investor conference in Salt Lake City on the evening of September 14th.
On the morning of September 15th we will unveil a product offering that the outdoor and recreational space have never seen before all in 1 place now we know that it's a long road and a lot of these electric company have popped up with ideas and with concepts, but we wanted to show the market is that these ideas are very.
And Theres a variety of products, we are not linked and the electrification our leadership and disruption and the electrification of the recreation space is not linked to any 1 company. It is linked to our company and our ability to distribute through our 40, some odd states and our 187 locations.
<unk> and our e-commerce platforms and products and services on the electrification side that make our company money and add value to the consumer.
Know that we're the only ones with a national platform and while we've noticed since the launch of the idea of electric World that we've had more inbound requests for us to be their distributor for us to be the deal of record, but our affinity is to not 1 single company, it's to the customer and to our shareholders.
And forward to it thank you.
Our next question comes from Joe <unk> from Raymond James. Please go ahead.
Thanks, Hey, guys good morning.
First question on New unit sales, despite strong demand and it looked like units were down year over year, obviously very likely a reflection of the lack of inventory, but what are your lead times generally look like right now and have you seen any improvement in July with Oems and restarting and after the summer break.
Well there was actually a shutdown in July which created more of a GAAP and as we continue to see record breaking website activity and record breaking lead volume and demand like we've never seen it before unrelated to COVID-19 related to the fact that people are now, saying Hey, This RV thing is a real.
Thing being mainstream we can't continue to have the suppliers the way behind and I don't see that as a criticism I say that is and encouraging piece. We don't think the supply chain from a filling ourselves again will be repaired anytime soon to be quite honest, because we don't see the.
And slowing down anytime soon and that bodes well for both the manufacturers and for us because it allows margins to stay where we believe that quite frankly, they should be and if the dealers and the manufacturers could really ever make sure that they know what the market will have healthy margins and a healthy customer experience for years to come.
As we mentioned previously our same store inventories on a unit like a location basis was down 21% and what we realize that at the end of last year and why we talked about the RV evaluated we needed to relieve our dependence exclusively on new manufacturers.
Meeting, our customers' demand and so we deployed an additional $112 million for the quarter and we will continue to invest cash from our balance sheet because when you look at the overall return.
If you look at the margins that we achieve on and used unit and the number of times, we turn that unit and a given year it could be quite frankly, 1 of our best investments and so when we look at how we think about our cash. Please know that we are going to continue to grow our used and the RV evaluated to the proprietary.
<unk> technology that we developed using 20 years of data has given us a clear competitive advantage and as you do dealer checks around the country, you'll probably hear that people can't find and get used inventory and a lot of that is because of us. We will continue to be aggressive to ensure that the customer and the trading there.
And the marketplace gets a fair and appropriate value and we're going to make sure that we are the leader and providing that value to the customer. So they see us not only as a short term relationship, but a long term relationship remember our good Sam members expected from us and so we'll continue to do that but we don't see the new.
Vehicles inventory supply.
I'm not even sure it fixes itself in 2022 to be totally honest with you.
That's very helpful. I guess, if I could kind of springboard off of that obviously, you're not giving guidance on 'twenty 2 today, but at a high level. How are you thinking about next year Directionally.
Given the lean inventories given the E. S. P improvement you've seen this year I mean, what would keep you from growing EBITDA and next year I guess is the best way to ask it.
Unfortunately, there are things outside of our control, but let me be very clear about something we understand the headwinds that the industry as a whole is experiencing on the supply side and whether that's receiving a window or finding labor. We're very very proud of how the manufacturers have had.
Handle those challenges, but we cannot be subject to those kinds of issues and so we will continue to invest and are used we're adding more service days by the day across the country. We're looking for ways to cut costs, we're looking for ways to develop better margins on our retail business.
And most importantly, and loudly and clearly we are doubling down on our good Sam business. We believe that we can start to see double digit growth and what we love is the high margin recurring revenue that differentiates us even more if the supply fixes itself well of course.
The direction is up by a lot.
But if it doesn't we still believe we're doing all the right things to continue moving forward up we don't anticipate moving back but we're not prepared at this time, because we're going through our budget process to give any real substance and guidance other than we're excited and we don't see demand slowing down and were enjoying.
The way, we're running our business today, and we will continue to deliver the results.
Great. Thank you guys.
The next question comes from Rick Nelson from Stephens. Please go ahead.
Okay.
Good morning.
Our third quarter.
To.
Follow up on inventory.
Mark I was hoping you could.
Those cuts how inventories are tracked during the quarter and.
And where do you see them here.
Our third quarter.
And it's getting more challenging or.
And tracked or are you getting more supply to meet demand.
Tomorrow.
You know unfortunately vs Victoria for the quarter and the inventory even as we start the new quarter is a challenge.
And we continue to see it drop we.
We do believe that it will start to stop falling some point in the late fall early winter like it normally does but as demand continues to be explosive and we continue to take orders out into <unk>.
Later in the fall and early winter and even early next year.
<unk>.
We believe that it's going to continue to be a challenge for the industry.
We also believe that we get our fair share and then some.
The allocation from the manufacturers, but please know that whatever challenges exist on the new side as they exist for the industry not exclusive and they camping world. What's in our control is we will continue to deploy significant capital on the used side as long as the margins are acceptable to us.
Our management team showing that we're getting a good return on capital and returns continue to be materially in the same range quite frankly, they are a little high now we'd like to actually bring them down we will continue to invest and does that means investing an additional 100 million and to us as long as margins don't compressed and turns don't.
We will.
Thats, our hedge against any challenges that the manufacturers have and.
And our ability to dip into our database our ability to use our value added tool.
And is what we believe that competitive advantage, we talked about last year is what has resulted in a $333 million a record quarter and were hopeful that we can deliver similar type results from a percentage basis or an improvement basis in Q3, and Q4 and beyond.
Thanks for that.
Color also like to share.
And if you could determine.
And so outsized for March.
And we went to the fall and.
The winter selling season.
It's a very natural.
Graph to be honest and it said the old adage of supply and demand and as long as supply continues to be constrained much like it is and the auto manufacturers.
We will continue to maximize every single transaction, we could've had way more volume for the quarter.
But our focus is maximizing profitability and margin to improve our leverage to improve our cash and give us the excess cash to either pay down our debt more make more acquisitions by more used inventory or buy stock back. That's how we think about maximizing margin and thats the golden ticket.
We've been given and it's our obligation to seize that.
And we continue to expect to do.
Great.
Okay.
Good luck.
Okay.
Okay.
The next question comes from Gerrick Johnson from BMO capital markets. Please go ahead.
Thank you good morning, Hey on your used inventory is more of that coming from outright buys or are you seeing an uptick and trade ins and related to that are you seeing your first timers from the last call. It 15 months coming into trade up to their next RV yet.
We're seeing pretty stable and consistent trade and rates, it's our ability to go out into the marketplace.
And if not only our proprietary tool, but a dedicated team who scours the country and not only by.
Through our phone room through technology through the web through auctions through knocking on doors, who are walking through campgrounds and we have a dedicated very large team that wakes up and the morning with 1 goal and 1 go only to make money for themselves by being paid to acquire inventory using the <unk>.
Technology, they've been provided I think the thing that we love most about the RV evaluated tool is it takes the human element of guesswork out of the equation and our ability to automate that process our ability to use the technology to drive leads with and to put pressure on our competitors to give the customer the fair value.
Is the competitive advantage. We also know that the most important thing that allows the RV evaluated tool to work is the strength of our balance sheet and while other dealers may have the appetite to buy we're not sure that they have the size of the bank account to be able to be competitive and.
We're at an auction or hand stands tall and proud and we make sure that if it's a unit that we want that we believe we can buy legal help with it.
Oh, Okay, and I wanted to ask 1 more question, you're probably not going to like this question, but I want to ask you about the industry itself and your position and it's.
And I know Youll look at things Holistically.
But.
In terms of same store unit sales did you gain or lose share and new and did you gain or lose share and used.
Well, we don't really look at our business that way and I don't mind that question at all.
And that question quite frankly is very obvious if you look at the Q1.
We were down in same store sales on the new side, but.
But we were down less than our inventory was down and our margins were up. So there was a daily art and science about how we managed our national pricing model and we can go in and move pricing by the minute to drive up demand or to drive up profitability reelected.
On the new side to drive up profitability, because there is risk that the replacement unit may cost us more and we don't know when we're going to get it on.
On the used side I can't speak to market share and that particular, I don't know what stats that I would necessarily rely on and be comfortable with but here's what I do know we know.
Know that if you do dealer checks around the country people are struggling to find us and we are not our used business was actually up 14%.
And so we believe that as we've always said, we're agnostic of whether the transaction is new and used but we are concerned.
That we want to grow our new inventory because we know demand is there and we want to grow our new inventory.
But when that happens, we're not going to slowdown growing are used.
And that question doesn't bother us bother us channel.
Okay perfect. Thank you Marcus.
Excuse me this is the operator, I'm very sorry for and because it means.
Both my Internet is currently down just 1 moment I'm very sorry, you once again.
Okay.
Take our next question is from Ethan Huntley from Jefferies.
Okay.
I'm very sorry, just just 1 moment sorry.
Yeah.
Okay.
Yeah.
Okay.
While the operator is.
Trying to get the connection back it's really important to look at this business and a very different way and you have historically.
We know that the addressable market has expanded dramatically and as you look at technology, that's been created or investments that we've made are innovations that are happening. The market just continues to get wider and we made and investments during the quarter into an entity called happier camper, which has adapted.
Technology and as we look to grow the marketplace. We have to continue to find new ways to generate revenue new ways to attract new customers to the marketplace.
Good old fashion historical installed base is alive, and well and healthier than ever and hopefully over the next you know.
Year or 2 we'll start to see the trade cycle with that historical installed base pick up again.
A lot of the demand that we've seen is from new entrants into the marketplace, particularly in the first and second quarter and what gives us such optimism about where we're going and that we haven't seen the historical buyer trade at the same rate because the amount of inventory thats out there isn't there. So we believe.
There will be pent up demand, even once that first time buyer belly starts to get a little more satisfied that installed consumer we will also be now ready for a trade in trade up.
Situation, which will also allow us to grow our used inventory as well.
Yeah.
Operator, if you don't have connection Unfortunately, we're going to need to wrap the call up.
I'm very sorry, but at the moment I don't have connections there may be another operator underway.
And Keith for myself, our donuts connection and I'm extremely sorry.
For anybody that was unable to answer the question and the only 1 that's in Q now as Ethan Huntley will obviously take that call during our 1 on ones that are coming and the next half hour.
Sorry, excuse me interruption I may be back.
Okay, and 1 moment Huntley.
Yeah.
And hopefully from Jefferies. Please go ahead.
Hey, Good morning, This is heath and Holly on for Bret Jordan, Thanks for taking my questions.
Just 1 year and the good Sam membership.
Can you sort of provide us with a conversion rate of acquired store customers too.
Sam platform.
Net share I understand the question I apologize.
So just I guess sort of what percentage of customers from acquired stores are you converting into good Sam members.
And your platform.
So the number for the quarter and the year over year comparison doesn't really have that much impact from the acquisitions, but when we do acquire a store and we install the camping world retail location and we installed a Pos and implement the training for our crew members to sell the variety of products and good Sam.
As we experienced pretty consistent conversion and our new stores and sometimes even better conversion, because we're offering something new to the marketplace and so when we go in and look to either acquire a store or open a store from scratch in the back of the napkin as we're doing our pro forma analysis.
We definitely calculate and consider in our overall thesis what sort of return we're going to see from increased membership increased credit card increased warranty increased roadside assistance increased insurance and all of the other products that has always been our secret sauce, which is why our EBITDA margins outperform.
<unk> any public auto manufacturer and any R&D.
And our retailer with public information not by a little buy online and so when you look at our Standalone location performance and you look at how our 2 segments report.
Our retail segment and our products and services segment. Please know that for the most part our retail segment doesn't have much if any good Sam revenue our earnings and it at all so those EBITDA margins are pretty much pure to the performance of that business, our good Sam business and and.
Growth both on the file size and the profitability are not only a function of its ability to penetrate the market outside of our stores through online and through the call Center and campgrounds, but it also gets the added benefit of every time. It's company makes an acquisition to get a nice little Joel So are <unk>.
Joel and growing locations 8 to 10 units a year on average is supercharging. The good Sam business as much as its supercharging, our dealership and our retail business.
Okay. That's helpful. Thank you.
And then on the service side of the business is there any kind of color. You can provide are you seeing sort of a pickup and that business and people sort of opt to refurbish and used unit given sort of the new supply constraints and you're experiencing.
Our service business.
Continues and will continue for as long as I'm alive to be very robust and here's why.
Unfortunately, the number of rvs and circulation dwarfs, the number of technicians and the number of service bays that exists on a ratio basis.
We have made a decision internally to continue to invest significantly over the next several years and building out more service base.
Developing more enhanced training and increasing the attractiveness than it is for technicians to work for US 1 little added nugget that we have not discussed and wheel and later calls is what we're developing to become the home depot of the RV business.
Over the next several years as we look at our retail footprint. We will continue to extract those low margin low term products from our Florida no matter, what they are and reinvest in high turn high margin high demand products that are going to give our shareholders the kind of return.
They want their money being spent on if were investing and assure for example, and it has a 32% margin or a 42% margin and it's picking up floor space and we can extract apparel from that floor and implement furniture cabinetry lighting appliances.
All of the things that go on with that we will continue to do that we have launched approximately 7 thus far and we have seen unbelievable growth in those specific locations and the profitability of those specific locations when do we extract low margin.
Low turning products with these kind of things.
And Youre talking about couches chairs mattresses cabinets counters lighting flooring toilets sinks and all of the related things that go on with it we know that consumers expect to us to be everything for their RV and we're finding that niche may.
The investments in companies that allow us to be vertically integrated to improve our margin even more and over the next 4 or 5 years I think youll see a giant transformation of how we think about our retail business and how the comp and the customers see us as their single source solution.
What's prompted a lot of that is the younger buyer.
Younger buyer loves DIY, they love to do it themselves and they love to renovate old vintage things. We have now started to make a business of buying raw used pre owned vans.
While the market is hot on the new side. The supply is limited on the chassis side, how do we counterbalance that we make significant investments and scouring the marketplace for every used shell and we can find and whether that's nissan's or Forbes and dodges are sprinters and we are.
<unk> heavily and scouring the marketplace, we then make and investment and adaptive technology that over time, we believe will create kidding that can be delivered directly to the consumer or to 1 of our locations to renovate their entire unit either through the adaptive technology of blocks or through our <unk>.
<unk> inventory and furniture cabinetry flooring et cetera.
While we already make 70% plus margins on our collision and repair business. We think those same margins will exist and our renovation centers as we move forward.
You'll see us invest more in influencers licensing and making sure that we're looking at renovating the home like Americans look at renovating their own home.
And just our home and wheels no different.
Yeah.
Okay, great. Thank you very much for taking my questions.
Yeah.
Thank you so much to everybody for joining our second quarter call.
We expect to continue to execute at the same rate at the same pace with even better precision as we move forward.
Look forward to talking to you on September 14th and the evening for our Investor Conference and showing you just a sampling of where their recreational spaces going on the electrification side take care.
This concludes today's call. Thank you for your participation you may now disconnect.