Q1 2023 Camping World Holdings Inc Earnings Call

Okay.

Operator: Good morning, and welcome to Camping World Holdings Conference call to discuss financial results for the first quarter of fiscal year 2023.

Operator: 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.

Later, we will conduct a question and answer session and instructions will follow at that time.

Operator: Please be advised 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.

Operator: Participating in the call today are Marcus Lemonis, Chairman and Chief Executive Officer, Brent Moody, President, Karin Bell, Chief Financial Officer, Matthew Wagner, Chief Operating Officer, Lindsey Christen, Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer, and Brett Andres, Senior Vice President of Investor Relations.

Chairman and Chief Executive Officer. Moody President. Bell Chief Financial Officer. Matthew Wagner Chief operating officer. Lindsay Kristen Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer. Break Andres senior Vice President of Investor Relations.

Moody President. Bell Chief Financial Officer. Matthew Wagner Chief operating officer. Lindsay Kristen Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer. Break Andres senior Vice President of Investor Relations.

Bell Chief Financial Officer. Matthew Wagner Chief operating officer. Lindsay Kristen Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer. Break Andres senior Vice President of Investor Relations.

Matthew Wagner Chief operating officer. Lindsay Kristen Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer. Break Andres senior Vice President of Investor Relations.

Lindsay Kristen Executive Vice President and General Counsel, Tom Curran, Chief Accounting Officer. Break Andres senior Vice President of Investor Relations.

Break Andres senior Vice President of Investor Relations.

Operator: I'll turn the call over to Ms. Christen to get started. Thank you.

Lindsey Christen: Thank you and good morning, everyone. A press release covering the company's first quarter 2023 financial results was issued yesterday afternoon, and a copy of that press release can be found in the Investor Relations section on the company's website.

Lindsey Christen: Management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Lindsey Christen: These remarks may include statements regarding our business plans and goals, our strategic initiatives, acquisitions, and planned capital expenditures industry and customer trends, the expected impact of inflation, interest rate and market condition, future dividend payments, and anticipated financial performance.

Future dividend payments and anticipated financial performance.

Lindsey Christen: Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in our risk factors section in our Form 10-K, and our Form 10-Q, and other reports on file with the SEC.

Lindsey Christen: Any forward looking statements represent our views only as of today and we undertake no obligation to update them.

Lindsey Christen: Please 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.

As EBITDA adjusted EBITDA and adjusted earnings per share diluted which we believe may be important to investors to assess our operating performance.

Lindsey Christen: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial statements are included in our earnings release and on our website. All comparisons of our 2023 first quarter results are made against the 2022 first quarter results unless otherwise noted.I will now turn the call over to Marcus.

We did in our earnings release and on our website all comparisons of our 2023 first quarter results are made against the 2020 to the first quarter results unless otherwise noted I will now turn the call over to Margaret.

Marcus A. Lemonis: Good morning Lindsay and thanks for joining us for Camping World's 2023 first quarter earnings call. I'm joined today by our senior management team and on today's call I'll provide a state of the union, highlight financial results for the quarter, and provide insight into the remainder of 2023, and then we're going to turn the call back over to the operator for questions.

Highlights financial results for the quarter and provide insight into the remainder of 2023, and then we're going to turn the call back over to the operator for questions.

Marcus A. Lemonis: We had a very strong quarter in our good Tam segment, service and parts business, and used RV unit sales with used meaningfully outperforming our new vehicle sales as we posted a record Q1 across the board in this category.

Service and parts business and used RV unit sales with used meaningfully outperforming our new vehicle sales as we posted a record Q1 across the board in this category.

Marcus A. Lemonis: For the quarter, new RV unit sales were down more than anticipated, however, new RV margins were better than expected. Compared to year end 2022, we have reduced our new inventory by close to $200 million materially more than the $140 million we originally committed to.

Compared to year end 2022, we have reduced our new inventory by close to $200 million materially more than the $140 million. We originally committed to.

Marcus A. Lemonis: Additionally, we've made material progress in exiting model year 2022. Comparatively, we've gone from almost 45% beginning of the year, so less than 19% as of today. We are stocking 166 new RV units per location down significantly when you compare it to 2016 to 2019 historical average of 245 units.

We are stocking 166 new RV units per location down significantly when you compare it to 2016 to 2019 historical average of 245 units.

Marcus A. Lemonis: We expect to continue to be extremely disciplined around RV stocking levels, particularly new as we believe pressure will continue on both new RV demand and new RV margin for the next four to six months.

Marcus A. Lemonis: Today, the RV market has its challenges, but I know from the 20 plus years that I've been doing this that the outcome is a macroeconomic environment like this is the emergence of very favorable dealership acquisition opportunities.

Marcus A. Lemonis: What I find most unusual and intriguing about the last 90 days is the rapid and recent influx of acquisition candidates, the likes of which I've never seen.

Marcus A. Lemonis: As a management team, we will not miss the opportunity. In the last five months, we've acquired or have agreements to acquire 10 locations and are in various stages to potentially acquire an additional 20 locations. These locations ranged from $10 billion in revenue to close to $50 million each.

And the last five months, we've acquired or have agreements to acquire 10 locations and are in various stages to potentially acquire an additional 20 locations.

These locations ranged from $10 billion in revenue to close to $50 million each.

Marcus A. Lemonis: Historically on average we've paid multiples in the two to four time range and recently, we've seen those multiples drop, including some deals that are very simple, buy my real estate and inventory and I'll sell.

Marcus A. Lemonis: As a management team, we have a mandate to grow profitably with solid returns on our deployed capital. Based on the volume of opportunistic acquisitions, combined with how we constantly balance our capital allocation, we believe acquisitions are the highest and best use of our company's capital as we sit here today.

Based on the volume of opportunistic acquisitions combined with how we constantly balance our capital allocation. We believe acquisitions are the highest and best use of our company's capital as we sit here today.

Marcus A. Lemonis: A big part of monetizing our scale, processes, and best practices when making those acquisitions is leveraging our higher margin and more predictable segments and categories. Our good Tam segment, which is on track to approach $100 million of EBITDA for the first time, our used RV category, which had a great annualized growth, and our parts and service that deliver stable and high margins to the large installed base of $11 million RVers are ultimately our company's differentiators.

Our good Tam segment, which is on track to approach $100 million of EBITDA for the first time, our used RV category, which had a great annualized growth, and our parts and service that deliver stable and high margins to the large installed base of $11 million RVers are ultimately our company's differentiators.

Ultimately our company's Differentiators Cal.

Marcus A. Lemonis: Capitalizing on those differentiators is another reason why we are so compelled to make acquisitions in this environment. The multiples that we pay for these acquisitions are based on historical performance before we install our process around used, parts, service, F&I, and good Tam, which on a pro forma basis makes these acquisitions even more attractive.

The multiples that we pay for these acquisitions are based on historical performance before we install our process around used parts service F&I and good Sam which on a pro forma basis makes these acquisitions even more attractive.

Marcus A. Lemonis: Look, I'm very proud of how this team is performing in this current landscape and how we as a company executed against critical priorities for this quarter, reducing our inventory by almost 200 million, streamlining core operations, and cost structure, exiting three distribution centers year to date and restructuring our house ecommerce business were all keys to controlling SG&A.

Restructuring our house ecommerce business were all keys to controlling SG&A.

Marcus A. Lemonis: Moving to a summary of our first quarter financial results, we recorded $1.5 billion of revenue, down 11% from last year, driven primarily by soft new RV unit sales.

Marcus A. Lemonis: Our RV sales team sold 12,432 used units in the quarter compared to 10,976 last year, an increase of over 13%.

Marcus A. Lemonis: And good Sam, our most stable and predictable business asset, had $46.4 million of revenue for the quarter and $30.2 million of gross profit. Our adjusted EBITDA for the first quarter was $61 million.

Our adjusted EBITDA for the first quarter was $61 million.

Marcus A. Lemonis: We ended the quarter with roughly $297 million of cash broken up by the $224 million of cash in our floor plan offset account and an additional $73 million of cash on our balance sheet. We also have about $400 million of used RV inventory net of flooring and $249 million of parts inventory.

Flooring and $249 million of parts inventory.

Marcus A. Lemonis: Lastly, we also have about $134 million of real estate without an associated markets.

Marcus A. Lemonis: As we plan for the remainder of 2023, we know that an intense discipline around new inventory management will pay off in the coming 12 months. Our capital allocation towards growing our used business and capitalizing our acquisition pipeline setsthe stage for significant growth in the coming years. We believe that we can increase our store count by 50% in the next five years.

It's the stage for significant growth in the coming years. We believe that we can increase our store count by 50% in the next five years.

We believe that we can increase our store count by 50% in the next five years.

Marcus A. Lemonis: I'll now turn the call over for questions.

Yes.

Operator: Thank you very much. We will now be conducting a question and answer session. If you'd like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Please limit your questions to one question and one follow up question. You may press star and then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key.

A confirmation tone will indicate your line is in the question queue.

Please limit your questions to one question and one follow up question.

You may push it stopped and then two if you would like to remove your question from the queue.

All participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key.

Operator: One moment, please while we poll for questions. The first question comes from Joe Altobello from Raymond James. Please proceed with your question Joe.

The first question comes from Joe <unk> from Raymond James. Please proceed with your question Joe.

Joseph Nicholas Altobello: Guys, good morning. I guess the first question Marcus, given your comments on the new RV market, I'd love to get your big picture, you actually know the RVIA shipment forecast for this year is around 334000 units and the conventional wisdom I think is that retail will outpace that by somewhere in the neighborhood of 30,000 units or possibly more. Is that roughly how you expect the issue to play out as well? I think so. As everybody remembers, last summer we were the first to call out a big discrepancy between the RVIA shipment data north of 400,000 and recalled 360. And I think a lot of macroeconomic factors since that point has driven that number down to 330, and we believe there's risk that it can either go down closer to 310. But we do agree with your thesis and everybody else's that retail will outpace that, whether it's by 30,000 or 40,000 we don't know. But what we do know for certain is that the industry, the dealers, and the manufacturers are working together to destock the current inventory positions at a very healthy pace so that we're really braced and prepared for a solid 2024.

Joseph Nicholas Altobello: Guys, good morning. I guess the first question Marcus, given your comments on the new RV market, I'd love to get your big picture, you actually know the RVIA shipment forecast for this year is around 334000 units and the conventional wisdom I think is that retail will outpace that by somewhere in the neighborhood of 30,000 units or possibly more. Is that roughly how you expect the issue to play out as well?

Given your comments on the new RV market.

Love to get your Big picture, you actually know the RV I E. A shipment forecast for this year is around 334000 units in the conventional wisdom I think.

Marcus A. Lemonis: I think so. As everybody remembers, last summer we were the first to call out a big discrepancy between the RVIA shipment data north of 400,000 and recalled 360. And I think a lot of macroeconomic factors since that point has driven that number down to 330, and we believe there's risk that it can either go down closer to 310. But we do agree with your thesis and everybody else's that retail will outpace that, whether it's by 30,000 or 40,000 we don't know. But what we do know for certain is that the industry, the dealers, and the manufacturers are working together to destock the current inventory positions at a very healthy pace so that we're really braced and prepared for a solid 2024.

They're very helpful and maybe just to kind of follow up in terms of acquisitions.

When we met in Tampa.

Joseph Nicholas Altobello: Very helpful. And maybe just to kind of follow up in terms of acquisitions, when we met in Tampa, I guess it was mid January, you were very sorta cautious on the industry at least for the first half of 2023, and I think clearly over the last few weeks here you've become a lot more aggressive from an M&A stay on point in terms of capital allocation. So other than maybe valuations coming in a little bit, what else has changed to kind of move you from more of a more conservative stance on M&A to being much more aggressive.

kind of move you from more of a more conservative stance on M&A to being much more aggressive.

Marcus A. Lemonis: Well, we're still very conservative about how we're managing our capital inside the company and the tone that I had of concern in January doesn't really change the. The new RV market is a lot softer than any of us anticipated and we're trying to really balance proper margins along with destocking that inventory. What also changes, and I feel better about where our company is and how we've reduced the new inventory by 200 million and in January that was fresh and top of mind. After executing on that strategy and additionally lowering our retail inventory and additionally restructuring a number of our cost structures, getting out of distribution centers, restructuring we did all the things that we knew we had to do right out of the gate, but as we look at the influx of M&A opportunities, and I have to say it again, in the 20 years that I've been doing this including the 2008 period, 2009 period I have never seen the quality of acquisitions and the quantity of acquisitions at the low prices ever in the history of being in this business and we're not going to miss out on that opportunity, which means that as we look at all of our working capital, every single business unit, every single venture that we're in, we're making tough decisions and whether we are going to shed them or reduce them or sell them. We're looking to take every last dollar that's not in our business and redeploy that into these acquisitions.

And I feel better about where our company is and how we've reduced the new inventory by 200 million in in January that was fresh and top of mind after executing on that strategy and additionally, lowering our retail inventory and additionally, restructuring a number of our cost structures getting out of distribution centers restructuring.

we did all the things that we knew we had to do right out of the gate, but as we look at the influx of M&A opportunities, and I have to say it again, in the 20 years that I've been doing this including the 2008 period, 2009 period I have never seen the quality of acquisitions

and the quantity of acquisitions at the low prices ever in the history of being in this business and we're not going to miss out on that opportunity, which means that as we look at all of our working capital, every single business unit, every single venture that we're in, we're making tough decisions and whether we are going to shed them or reduce them or sell them. We're looking to take every last dollar that's not in our business and redeploy that into these acquisitions.

Marcus A. Lemonis: We've already announced I think approximately 10 so far and we have another 20 on the discussion, but I want to remind everybody it's May and normally when you see this level of activity from us it's usually in the fall when somebody didn't have a good summer. Dealers historically have a lot of confidence going into the spring, going into the summer and we're not sensing that same level of confidence. In some cases, there are 30, 40 year dealers that have just decided that it's time for their family to exit and were able to buy their property or able to buy their inventory and the multiples look different than we ever have.

When you see this level of activity from us it's usually in the fall when somebody didn't have a good summer day. Dealers historically have a lot of confidence going into the spring going into the summer and we're not sensing that same level of confidence in some cases. There is 30 40 year dealers that have just decided that it's time for their family to exit and were able to buy their property are able to buy their inventory and the multiples look different and. We ever have.

Dealers historically have a lot of confidence going into the spring going into the summer and we're not sensing that same level of confidence in some cases. There is 30 40 year dealers that have just decided that it's time for their family to exit and were able to buy their property are able to buy their inventory and the multiples look different and. We ever have.

We ever have.

Marcus A. Lemonis: I think one other difference for us and the reason you're sensing such a rapid increase in volume is that we've dedicated specifically a team around making these acquisitions, around integrating these acquisitions, and around really populating them amongst the rest of our community. We historically didn't allocate that type of human capital to this venture. We don't know how many we could do on an annual basis, but I wouldn't be surprised if we set records over the next 12 to 24 months.

Really populating them amongst the rest of our community. We historically didn't allocate that type of human capital to this venture we don't know how many we could do on an annual basis, but I wouldn't be surprised if we set records over the next 12 to 24 months.

Joseph Nicholas Altobello: Got it, thank you.

Operator: Thank you. The next question comes from Daniel Imbro from Stephens, Inc. Please proceed with your question Daniel.

Daniel Robert Imbro: Good morning, guys. Congrats on the quarter. can def. Marcus, I want to talk about to used business, obviously would stand out here after hearing 1Q. I think back in January you guys introduce, you talked about the RV evaluation tool, RV evaluator, and some investments there to build inventory. Can you talk about the success you've had using that tool to procure inventory? And I guess related, as you use that more and get more sophisticated with buying inventory is controlling used GPU almost more in your control as you dictate how much you are paying to buy that inventory and ultimately what the G.P. you might get on the other side of it is?

Mortgage don't Wanna talk about to use business, obviously would stand out here at hearing one Q I think back in January you guys introduce you talked about the RV evaluation to reevaluate or and some investments there to build inventory can you talk about the success you've had using that tool to procure inventory and I guess related.

as you use that more and get more sophisticated with buying inventory is controlling used GPU almost more in your control as you dictate how much you are paying to buy that inventory and ultimately what the G.P. you might get on the other side of it is?

Marcus A. Lemonis: Yes, as a reminder to everybody, when Matthew Wagner created this RV evaluator 2 years ago, he was very candid with all of us to say, it's going to take a couple of years, we need the data to populate, we need to really understand how things work, we need to measure it against what's happening on the new side and we're really starting to see that hum. In the month of April we acquired lower used inventory in one single month than we ever had and I think that's a testament, not to the fact that people are leaving the industry cause they're not, it's our ability to procure with science and more importantly, our ability to process that lead.

see that hum. In the month of April we acquired lower used inventory in one single month than we ever had and I think that's a testament, not to the fact that people are leaving the industry cause they're not, it's our ability to procure with science and more importantly, our ability to process that lead.

Marcus A. Lemonis: Historically, we hadn't done a great job of taking the tool and integrating it with a customer retention model. So as a customer raises their hand and says I want to do this, I think we historically are not as refined as we are today and our team has really well executed that process, even after dropping values inside the tool.

Marcus A. Lemonis: As we head to the back half of the year, it is our expectation that used has to continue to be what our company is known for. 24 months ago, it was almost like a sidebar. Today, we want to bring it to the front. There are two things that we want investors to really know that we're spending a lot of time on. One is looking at the turns and the aging around that used inventory because we know that asset moves with value, so we have a very disciplined approach to how we manage how much inventory we have, how many times, it's turning, the ageing et. cetera.

There are two things that we want investors to really know that we're spending a lotta time on one is looking at the turns and the aging around that used inventory because we know that asset moves with value. So we have a very disciplined approach to how we manage how much inventory we have how many times, it's turning the ageing et.

Cetera.

Marcus A. Lemonis: I think the second thing that we want people to know is that we pay very close attention to the pricing in the marketplace. And the more we do to properly recondition our used and the more we do to separate it out from all the other used assets that are in the marketplace, you are essentially building pricing protection around that asset because it's unique, it has a proprietary process in terms of refining it, and it's an asset that you can't really shop as easily. When you see inflation driving up the price of new RVs every single day, not that the manufacturers are trying to do that, they are dealing with supply chain issues at the same time, we know that there is a significant discount between the price of a new RV and a used RV we have historically been agnostic on what that customer buys. We should expect that our company will continue to lean both in the amount of capital we have allocated to use and the human capital dedicated to growing that business, but we do have a lot of control around it. Then you saw it in the margins in the first quarter.

And the more we do to properly reconditioned are used in the more we do to separate it out from all the other used assets that are in the marketplace. You are essentially building pricing protection around that asset because it's unique it has a proprietary process in terms of refining it.

And it's an asset that you can't really shop as easily when you see inflation driving up the price of new Rvs every single day not that the manufacturers are.

trying to do that, they are dealing with supply chain issues at the same time, we know that there is a significant discount between the price of a new RV and a used RV

Significant discount between the price of a new R V and he used R V.

we have historically been agnostic on what that customer buys. We should expect that our company will continue to lean both in the amount of capital we have allocated to use and the human capital dedicated to growing that business, but we do have a lot of control around it. Then you saw it in the margins in the first quarter.

We should expect that our company will continue to lean both in the amount of capital we have allocated to use in the human capital dedicated to growing that business, but we do have a lot of control around it then you saw it in the margins in the first quarter.

Daniel Robert Imbro: Yeah, that's really helpful. And one thing you touched on there is reconditioning, I wanted to follow up on parts and service markets. Obviously M&A is taking a much more it sounds like a a priority with use of capital. I think back maybe a year and a half ago at the Analyst Day in Utah talking more about the ability to add service bays and that being a high highly accretive use of capital, I guess where does that initiative fall today in terms of your capital priorities, adding service pays to locations and what kind of return have you seen on those relative to your initial expectations you provided a few years ago.

Highly accretive use of capital I guess weren't as bad initiative fall today in terms of your capital priorities, adding service pays two locations and and what kind of return to have you seen on those relative to your initial expectations you provide I want it years ago, Yeah, I want to clarify capital allocation because it is sometimes an overused term our core.

Marcus A. Lemonis: Yeah, I want to clarify capital allocation because it's sometimes an overused term. Our core business is the absolute priority of our first dollar of free cash flow. Our core business is the number one priority and that means investing in good Sam and the technology, which is why you are seeing the growth there, investing in our used inventory, which is why you see the growth there, and investing in our service and parts, not only the facilities, but more importantly, our team.

Our core business is the number one priority and that means investing in good Sam and then the technology, which is why you are seeing the growth they're investing in our used inventory, which is why you see the growth there and investing in our service and parts not only the facilities, but more importantly, our team and the back half of 2020.

Marcus A. Lemonis: In the back half of 2022, we instituted over $40 million of wage increases across our entire service platform. The stability and strength of our service parts and collision business is what differentiates us from everybody else and so please don't ever if anybody ever think that dollars are going to be taken away from you, taken away from good Sam, taken away from service to do anything, that's where the first dollar goes, the second dollars are going to go towards things like stock buyback, reducing debt, and making acquisitions.

Sam taken away from service should do anything that was the first dollar scope a $2nd are going to go towards things like stock buyback, reducing debt and making acquisitions.

Daniel Robert Imbro: Alright, I appreciate all the color, best of luck.

Operator: Thank you. The next question comes from Mike Swartz from [inaudible]. Please proceed with your question Mike.

Michael Arlington Swartz: Morning, everyone. Marcus, just wanted to ask on M&A and follow up on some of Joe's question, maybe coming into the year and based on conversations with yourself earlier this year, the view is really where in cash containment battening down the hatches for what's to come and now we're talking about a more aggressive M&A strategy. I think some investors are a little confused about that, so maybe give us a sense on what's the typical maybe cash investment that you are making when you acquire a dealership. I know they can all be different but maybe how should we think about that?

With yourself earlier this year, the view is really where in <unk> <unk> <unk>. Cash containment battening down the hatches for what's to come and now we're talking about a more aggressive M&A strategy antiques. Some investors are a little confused about that so maybe give us a sense on what's the typical maybe cash investment that you are making you know when you acquire a dealership I know they can all be different but but maybe how should we think about that.

Cash containment battening down the hatches for what's to come and now we're talking about a more aggressive M&A strategy antiques. Some investors are a little confused about that so maybe give us a sense on what's the typical maybe cash investment that you are making you know when you acquire a dealership I know they can all be different but but maybe how should we think about that.

Marcus A. Lemonis: Well, let me address the first point. We are in cash preservation mode; that hasn't changed. And cash preservation and cash collection are looking at all of our assets, all of our inventory segments, all the business units and making sure that if we have anything that's not giving us a great return or that's bleeding cash it's going to go away. And we believe we executed that in Q1 and that is not ever going to change inside of our company. But as we're building cash out and as we're looking at what you do with that cash, we want to make sure that we're giving our shareholders the highest return. And what we didn't anticipate that we're experiencing now, what we didn't anticipate 90 days ago is the volume of acquisition opportunities, the quality of those opportunities, and the discount to multiples on those opportunities. And it would be difficult to tell you that there's a specific dollar amount for an acquisition because they range in volume size of a single location, from a 10 million dollar store to a 50 million dollar store. So as you would imagine, the prices of those two different bookends have different values, but the way we look at it is historically, we would pay two to four times for an acquisition and that was based on historical financial performance with us not adding a bunch of nonsense back and us not pro forming other things in.

And we believe we executed that in Q1 and that is not ever going to change inside of our company, but as we're building cash out and as we're looking at what you do with that cash we want to make sure that we're giving our shareholders the highest return and what we didn't anticipate.

we're experiencing now, what we didn't anticipate 90 days ago is the volume of acquisition opportunities, the quality of those opportunities, and the discount to multiples on those opportunities. And it would be difficult to tell you that there's a specific dollar amount for an acquisition because they range in volume size of a single location,

from a 10 million dollar store to a 50 million dollar store. So as you would imagine, the prices of those two different bookends have different values, but the way we look at it is historically, we would pay two to four times for an acquisition and that was based on historical financial performance with us not adding a bunch of

Marcus A. Lemonis: When we look at what we are able to buy stores for today, in many cases, it's buy my land, buy my inventory. And in some cases it's buy my land, buy my inventory, give me a little bit of goodwill. In some cases, it's buy my inventory, don't buy my land and give me a little bit of goodwill. And we've seen kind of the flavor of the month and they range all over the board. But on average, back of the napkin, we see that the amount of money that we're spending excluding real estate in these transactions is about $5 million per acquisition on average per rooftop. On the real estate side, we'll either put a mortgage on it, we'll do a sale leaseback on it, or we may choose to hold it. We're less likely to hold that property in this environment because there is a better use of our capital than just holding onto a bunch of real estate, but $5 million is a good number. And so if I say to you we're gonna do 30 acquisitions, 30 rooftops in a single year, it's not a bad number to use back of the napkin. Hey, that could be around $150 million of capital that we would use. Is that helpful?

By my land by my inventory and in some cases is by my land by my inventory give me a little bit of goodwill in some cases, it's five my inventory don't buy my land and give me a little bit of goodwill and we've seen Canada flavor of the month and they range all over the board.

On average back of a napkin, we see that the amount of money that we're spending excluding real estate and these transactions is about $5 million per acquisition on average per rooftop on. The real estate side will either put a mortgage on it will do a sale leaseback on it or we may choose to hold it were less likely to hold that property in this environment. Because there is a better use of our capital than just holding onto a bunch of real estate, but $5 million is a good number and so if I say to you were gonna do $30 million 30. Acquisitions at 30 rooftops in a single year, it's not a bad number to use back of the napkin, hey that could be around $150 million of capital that we would use.

The real estate side will either put a mortgage on it will do a sale leaseback on it or we may choose to hold it were less likely to hold that property in this environment. Because there is a better use of our capital than just holding onto a bunch of real estate, but $5 million is a good number and so if I say to you were gonna do $30 million 30. Acquisitions at 30 rooftops in a single year, it's not a bad number to use back of the napkin, hey that could be around $150 million of capital that we would use.

Acquisitions at 30 rooftops in a single year, it's not a bad number to use back of the napkin, hey that could be around $150 million of capital that we would use.

That helpful.

Michael Arlington Swartz: Yeah, that's very helpful. I appreciate that. And maybe just switching over to another topic, I think on the on the new vehicle margin side, you had given us a pretty dour outlook. I think the last time, we talked and it sounds like maybe the first quarter things were a little bit better than you expected, you worked through a lot of that model year '22 overhang, I know there are a lot of dealers out there they are probably still struggling with that. But is there a way to think about maybe the cadence of new vehicle margin as we progress through the year? Should we just think of it as flattish or could we have some opportunity for that to improve through year end. 

Given us.

Dour outlook I think the last time, we talked and it sounds like maybe the first quarter things were a little a little bit better than you expected you worked through a lot of that model year 22, overhang I know, there's a lot of dealers out there. They are probably still struggling with that but is there a way to think about maybe the cadence of new vehicle margin as we progress through you or should we just think of it. It's flattish or to be asked some opportunity for that to improve. Through here.

It's flattish or to be asked some opportunity for that to improve. Through here.

Through here.

Marcus A. Lemonis: The new vehicle margin that we reported in the first quarter was really a product of Matt Wagner and his whole team managing the balance between how do we get $200 million out of our system, how do we maximize the gross profit on every transaction, and how do we exit stage left on model year '22. And I feel like the sales organization did a hell of a job going from more than 44% of our total inventory being 22s to as we sit here today being 19. The margin that we experienced in Q1 while down from the previous couple of years was still better than some periods pre-pandemic and I still believe and it's a little bit of an internal debate that as we rid ourselves of 2022 is that we think we're probably another four to six months to do that that you're going to see margin stabilization and maybe in the back half with the pick up a quarter of a point to a half a point because you are now dealing with fresh 23s and more importantly, fresh 24.

I feel like the sales organization did a hell of a job going from more than 44% of our total inventory being 20 twos two as we sit here today being 19, the margin that we experienced in Q1 wild down from the previous Coupla years was still better than some periods pre pandemic and I.

Still believe and it's a little bit of an internal debate that as we rid ourselves of more 2022 is that we think we're probably another four to six months to do that that you're going to see margin stabilization and maybe in the back happy with pick up a quarter of a point to a half a point because you are now dealing with fresh 20, threes and more importantly, fresh 20.

Marcus A. Lemonis: I think the most important thing for our company to stay focused on is exiting the remaining 5000ish 2022s that are left. And as we head into the selling season, April, May, June, July, we're going to do everything we can to do that because the cleaner our inventory is going into the fall, the more opportunistic we can be in restocking our '24 model years then giving us better margin performance in the last couple of months of 2023 and hopefully in 2024. We're really setting ourselves up for the cleanest inventory we could possibly have in '24, knowing that it's going to still be a little softer for the next four to six months.

Opportunistic, we can be and restocking or 24 model years than giving us better margin performance in the last couple of months of 2003 and hopefully in 2000 2004, we're really setting ourselves up for the cleanness inventory, we could possibly have in 2004, knowing that it's going to still be a little softer for then.

Four to six months.

Michael Arlington Swartz: Okay. Thanks, a lot Marcus.

Operator: Thank you. The next question comes from Noah Zatzkin from Keybanc Capital Market. Please proceed with your question Noah.

Noah Zatzkin: Hi, thanks for taking my question. Just on the outsized performance on the used side, how are you thinking about cannibalization when it comes to the new business? In terms of the consumer, is the strength somewhat related to kind of trading down in your view? And just how do you think about that dynamic playing out moving through the year? Thanks.

In terms of the consumer is the strength somewhat related to kind of trading down in your view and just how do you think about that dynamic playing out moving through the year.

Marcus A. Lemonis: I think the strength of our used business isn't customers trading down, it's that'd be more value oriented, looking for a better value at a better price. And when you're dealing with higher interest rates and increased prices on new they look at us more as an alternative.

Marcus A. Lemonis: The one thing about the RV lifestyle is that there's never this rush to the exit door to get out of the space. And the reason we know that it's because of how hard we have to work to find people willing to sell their used units. If people wanted to leave the industry used units would be everywhere, prices would be dropping, and we would be absorbing inventory at a very rapid pace, and unfortunately that opportunity hasn't been presented to us while we may not mind that.

At a very rapid pace and unfortunately that opportunity hasn't been presented to us while we may not mind that.

Marcus A. Lemonis: I think ultimately what we wanna do is when a customer engages with us online or on the phone, we want to make sure that we're doing everything we can to convert them to a sale. So when they go through the process and we're doing our needs analysis of what is your family like, where do you like to camp, what's your budget, we are trying to make sure that we're transacting with them, not shoving them into something that may not work for their family. So you could say to a certain degree that we're agnostic about it, but there is some data that supports that when a customer comes to our website looking for a new, more often than not, they stay on the new. And when they come looking at a used, there is a greater likelihood that while they may more than likely by a used some of our salespeople are able to convert them to a new because they see for $20 a month more, for $19 a month more, they can go into a new unit.

So when they go through the process and we're doing our needs analysis of what is your family like where do you like to camp. What's your budget. We are trying to make sure that we're transacting with them not shoving them into something that may not work for their family. So you could say to a certain degree that were agnostic about it but there is some data that supports that when a customer.

It comes to our website is looking for a new more often than not they stay on the news and when they come looking at a used there is a greater likelihood that while they may more than likely by used some of our salespeople are able to convert them to undo because they see for $20 a month more for $19 a month more they can go into a new unit.

Marcus A. Lemonis: I think the difference in our company more than anything else isn't just our ability to procure used or to sell used or recondition it properly; it's really a 360 degree approach to procurement, reconditioning, merchandising, pricing online the pictures, proper pricing against the market, the way we manage our leads, the sales experience, and the after sale experience that's giving us the edge over everybody else. And good Sam as a brand instills a lot of confidence when they are getting warranties and roadside in reconditioning standards and the insurance that encompass that whole product. The use process is amplified when they can walk into a Camping World retail store and install new appliances, new refrigerators, new toilets, new mattresses, new furniture, and they look at essentially buying a unit and being able to dial it up. It would be like buying a home that somebody else lived in and walking into home depot and just continuing to replace things. If home depot is a home builder or was in the real estate business, they would see better conversion. It's our ability to utilize all of our existing assets like good Sam, like our retail business, like our service business that's really making more of a difference than anybody ever anticipated and that's why the margins remain at where they are as well.

Manage our leads the sales experience and the after sale experience, that's giving us the edge over everybody else and good Sam S. A brand and still has a lot of confidence when they are getting warranties and roadside in reconditioning standards and the insurance that encompass that whole product. They use process is is ample.

Five when they can walk into a camping, where retail store and installed new appliances, new frigerator as new toilets, new mattresses, new furniture, and they look at essentially buying a unit and being able to dial it up it would be like buying a home that somebody else lived in and walking into home depot and just continuing to replace things. Home depot is a home builder or was in the in the real estate business. They would see better conversion, it's our ability to utilize all of our existing assets like good Sam like our retail business like our service business, that's really making more of a difference than anybody ever anticipated and that's why the margins remain. That where they are as well.

Home depot is a home builder or was in the in the real estate business. They would see better conversion, it's our ability to utilize all of our existing assets like good Sam like our retail business like our service business, that's really making more of a difference than anybody ever anticipated and that's why the margins remain. That where they are as well.

That where they are as well.

Noah Zatzkin: Very helpful. Maybe if I could squeeze one more and just kind of relate it to the M&A in the pipeline, when you think about the kind of normalized EBITDA or baseline going forward, any kind of guard rails there? How are you thinking about that? Is $400 million kind of a a good number there? Just any thoughts would be helpful.

When you think about the kind of normalized EBIT, our baseline going forward.

Any any kind of guard rails. There how are you thinking about that is it is it is $400 million kind of a a good number there just any thoughts would be helpful.

Marcus A. Lemonis: These acquisitions that we're making today, as everybody knows, have a little bit of a tail to them to close. They usually take anywhere from 90 to 150 days to close based on the states that we're in, licensing and conversion in human capital integration et cetera. So when we announced the deal today you could expect that it takes at least 90-120 days to close. In our numbers today, which we obviously don't provide a forecast, you mentioned the number 400, and I wanted to address it outside of M&A really quickly. When you go back and you look at the history of our business prior to the pandemic, there were two key numbers, the highest we had ever been which I think was around $394 million, and the lowest we had ever been which is I think 2019 when we were exiting the gander business so we had a number of cash charges run through our P&L. It is our management team's goal, not a forecast, not guidance, it is our management team's goal to set a new low. And what I mean by that is we believe if we execute on all these other things that the previous high should be our new low. Do we think we have a shot at it? We're going to work as hard as we can to get there and maybe some of those acquisitions contribute to it. But as we look forward, the way we want people to think about these acquisitions on a modeling basis is on average these acquisitions will generate about $25 million of revenue, on average. As I said to you, between 10 and $25 million. And if you look at our EBITDA margin, once stores mature you can input that into that so whether it's six or 7% into $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

Least 92 120 days to close.

In our numbers today, which we obviously don't provide a forecast you mentioned the number 400 and I wanted to address it outside of M&A really quickly. When you go back and you look at the history of our business prior to the pandemic. There were two key numbers highest we had ever been which I think was around $394 million. And the lowest we had ever been which is I think 2019, when we were exiting the gander business. So we had a number of cash charges run through our P&L. It is our management teams goal not a forecast not guidance. It is our management team's goal to set a new low. And what I mean by that is we believe if we execute on all these other things that the previous high should be our previous our new low do we think we have a shot at we're going to work as hard as we can to get there and maybe some of those acquisitions contribute to it but as we look forward the way we were. Wants people to think about these acquisitions on a modeling basis is on average these acquisitions will generate about $25 million of revenue on average as I said to you between 10 and $250 million and if you look at our EBITDA margin one stores mature you can input that into that so whether it's six or 7%. To $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

And the lowest we had ever been which is I think 2019, when we were exiting the gander business. So we had a number of cash charges run through our P&L. It is our management teams goal not a forecast not guidance. It is our management team's goal to set a new low. And what I mean by that is we believe if we execute on all these other things that the previous high should be our previous our new low do we think we have a shot at we're going to work as hard as we can to get there and maybe some of those acquisitions contribute to it but as we look forward the way we were. Wants people to think about these acquisitions on a modeling basis is on average these acquisitions will generate about $25 million of revenue on average as I said to you between 10 and $250 million and if you look at our EBITDA margin one stores mature you can input that into that so whether it's six or 7%. To $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

And what I mean by that is we believe if we execute on all these other things that the previous high should be our previous our new low do we think we have a shot at we're going to work as hard as we can to get there and maybe some of those acquisitions contribute to it but as we look forward the way we were. Wants people to think about these acquisitions on a modeling basis is on average these acquisitions will generate about $25 million of revenue on average as I said to you between 10 and $250 million and if you look at our EBITDA margin one stores mature you can input that into that so whether it's six or 7%. To $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

Wants people to think about these acquisitions on a modeling basis is on average these acquisitions will generate about $25 million of revenue on average as I said to you between 10 and $250 million and if you look at our EBITDA margin one stores mature you can input that into that so whether it's six or 7%. To $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

To $25 million, that's what we expect a mature acquisition to contribute to our business in the coming 12 to 24 months.

Noah Zatzkin: Very helpful. Thank you.

Operator: Thank you. The next question comes from Ryan Brinkman from JP. Morgan. Please proceed with your question Ryan.

Ryan Brinkman: Hi, thanks for taking my question. I wanted to ask on what trends you might be seen in the market for financing new and used RVs, for example, when it comes to credit availability or loan APRs, maybe for different credit tiers, what are consumers telling you about affordability or the trend in monthly payments. And I'm if you expect any fallout from the recent turmoil in the banking industry.

<unk>, if you expect any fallout from the recent turmoil in the banking industry.

Marcus A. Lemonis: We have the same consumer as we are as consumers and we're all rate sensitive and so there has been a little bit of sticker shock from consumers when they see the increase of new RV prices and the interest rates that are associated with financing, but their love of the outdoors and the affordability of camping compared to other leisure activities like travel in Disneyworld and cruises and traveling all over the world it still makes it the most affordable alternative for you and your family that's out there in the leisure space. I want to be very clear that while those things have maybe put a little bit of headwind, people still want to go outside and be with their family. 

The interest rates that are associated with financing, but their love of the outdoors and the affordability of camping compared to other leisure activities like travel in Disneyworld and cruises and traveling all over the world is still makes it the most affordable alternative for you and your family that's out there in the leisure spaces I want to be very clear that.

while those things have maybe put a little bit of headwind, people still want to go outside and be with their family. 

Marcus A. Lemonis: In terms of sensitivity around it, our relationship is really on the finance side circled around six to seven primary banks. And when we came out of the 2008, 2009 crisis, we started a new process with how we interacted with our lenders around retail financing. As opposed to having 20 or 30 banks in the portfolio, we narrowed it down two big ones where we could have sizeable relationships. We have not as a company experienced any real change in credit tightening.  We're still able to get people bought, the average credit score is the same, we're seeing kind of the same flow. But as rates move around you get a little bit of prickliness with the customer. In terms of our working with banks, we're making sure that we're helping them manage their delinquencies and if there's any issues out there we're working with them to solve them through our used process, but we haven't seen any real change of any kind. And the banking crisis that people describe, we haven't seen that affect our business both on the retail side and on the treasury management side.

We have not as a company experienced any real change in credit tightening we've seen.

We're still able to get people bought, the average credit score is the same, we're seeing kind of the same flow. But as rates move around you get a little bit of prickliness with the customer. In terms of our working with banks, we're making sure that we're helping them manage their delinquencies and if there's any issues out there we're working with them to solve them through our used process, but we haven't seen any real change of any kind. And the banking crisis that people describe, we haven't seen that affect our business both on the retail side and on the treasury management side.

Seen any real change of any kind in the banking crisis that people describe we haven't seen that affect our business both on the retail side and on the Treasury management side.

Ryan Brinkman: That's helpful. Thanks. And then just lastly, to follow up a little more on those comments about the rapid and recent influx of dealership acquisition opportunities, is the primary driver there do you think more just the lower level of industry new RV sales or is it more the dealers are having too much inventory in the context of that level of sales? And then given it seems like you have a great many opportunities before you, how are you going about choosing amongst those different opportunities beyond the obvious financial benefits of the transaction, are there may be other strategic objectives you could be trying to achieve such as geographic diversification or perhaps more or less exposure to a particular OEM or customer stat or anything else?

It seems like you have a great. Many opportunities before you how are you going about choosing amongst those different opportunities beyond the obvious financial benefits of the transaction or there may be other strategic objectives, you could be trying to achieve such as geographic diversification or perhaps more or less exposure to a particular. Our customer stat or anything else.

Our customer stat or anything else.

Marcus A. Lemonis: If you can think about the visual of a metal strainer and you're pouring all this water into there we have a very stringent filter process to make sure that whatever we're acquiring is going to be accretive to our company not just financially, but it's gonna add value by filling white space or add value by taking care of a segment or add value. By being complimentary in many many many cases when you look at the power of our used business the power of service and the power of good Sam we look for those locations that don't necessarily excel in those categories, because when we're paying them a multiple of X, we want to get a pro forma multiple that's materially lower.

By being complimentary in many many many cases when you look at the power of our used business the power of service and the power of good Sam we look for those locations that don't necessarily excel in those categories, because when we're paying them a multiple of X, we want to get a pro forma multiple that's materially lower.

And that there are many deals that we see on a daily basis that we say thank you very much for the opportunity, but it's not right for US we pass on many more deals than we actually do and the reason that we're able to do the volume of deals that we have is that people know that were incredible buyer. They know we're going to show up with the check.

And it's not going to be any funny business. They know we're going to take care of their employees by integrating them properly and they know that we're going to respect the legacy of the multi decade business that they bill I think a lot of reason the dealers or exiting right now isn't just because the new RV businesses soft we see this as waves over the years.

Karen and I, who have been here from the beginning has seen this you have multi generational dealers second generation third generation owners or some 40 year old dealers that are in their seventy's that have just said Wow. The last couple of years were great consolidators are starting to really capitalize on the market the dynamics of how consumers are buying <unk>.

Today interacting today communicating today I can't keep up with and I want to make sure. This business that I built with my family for 40 years I can extract value. So that my family can experience generational wealth, that's number one and I want to make sure. This legacy business that I built ends up in the hands of somebody that's going to respect it and grow it. And nurture my people that is the reason, we get a greater an influx of opportunities more than any other consolidator ever even. This moment as a management team we have a goal of growing our store base by 50% in the next five years. That would equate to close to nine or $10 billion in revenue and when you look at the scale of our business and you look at the SG&A control in our business. We have built for 20 years, a model that can absorb and leverage and absorb and leverage and that's really what we want to seize on right now.

And nurture my people that is the reason, we get a greater an influx of opportunities more than any other consolidator ever even. This moment as a management team we have a goal of growing our store base by 50% in the next five years. That would equate to close to nine or $10 billion in revenue and when you look at the scale of our business and you look at the SG&A control in our business. We have built for 20 years, a model that can absorb and leverage and absorb and leverage and that's really what we want to seize on right now.

This moment as a management team we have a goal of growing our store base by 50% in the next five years. That would equate to close to nine or $10 billion in revenue and when you look at the scale of our business and you look at the SG&A control in our business. We have built for 20 years, a model that can absorb and leverage and absorb and leverage and that's really what we want to seize on right now.

That would equate to close to nine or $10 billion in revenue and when you look at the scale of our business and you look at the SG&A control in our business. We have built for 20 years, a model that can absorb and leverage and absorb and leverage and that's really what we want to seize on right now.

Very helpful. Thank you.

Thank you. The next question comes from Tristan Thomas Martinez from BMO capital markets. Keith proceed with your question and chicken.

Good morning.

Can you talk about a retail turn it over the quarter, let me kind of what you're seeing in April .

Yeah.

Things were got progressively worse through the quarter. In fact March was a very tough month, we were down in excess of 30% 32%.

Month of March and whether it's a combination of whether all the noise and banking or whatever it may be it was a tough new months, but it was oddly a spectacular used months as we got into April we saw things marginally improved I think our same store sales in the month of <unk>.

April were down 22, a 10% improvement over from where we were in March and we have to be careful in that analysis not to get overly excited because there were five saturday's Easter was a little earlier the weather was a little better but we'll take the win as we head into May June and July the comps clearly get easier because if you go.

Back and look at 2022, the same store sales numbers started to fall off a cliff right about now and so as we start to experience slightly better results. We don't want anybody to Pat themselves on the back we are still grinding on tight inventory discipline, but I want to make one point that I hope.

Everybody, including the manufacturers here there is a balance between destocking and taking yourself out of business and when I look at the number of new units per location at 166, I'll be honest with you with our warriors in the field and visiting stores, we may be on the cusp of having too little.

And I'm, starting to get concerned and putting a lot of pressure on internally that there's a fine line between being sensible and practical imprudent and walking away from business.

And while we're excited about making acquisitions, we have 188 locations that have the ability to seize this opportunity right now and grow their business based on their previous 12 months, we're not going to let that opportunity go away. So as we go into April May June and July while we're still focused on.

Getting rid of 20 twos, we do want to start bringing in fresh product. So that our sales organization and our customers can repopulate leagues and transactions as we move through the selling season.

A very fine line and so everybody is excited about destocking and everybody's excited about drops in inventory. We told the market. We would drop by 140, we dropped by 200 I don't expect us to drop by another 150, so everybody should set their expectations right.

The number of new units per location ended the quarter at 166. It may in the next quarter and 176 or 180, because we're in the middle of our selling season will get back to normal destocking in the fall and then when we get back to winter will get back to Howard historical game plan in November to <unk>.

We start to rise again in preparation for 2004, so you're going to be on a little bit of a rollercoaster here seizing opportunity and exiting and then retrenching again in inventory.

Okay. So.

So you called out 310 shipments for the industry for the year.

In your mind, you think that's too low based on what you do.

Well I think that's where other dealers are going to drive. It. In addition to US we are the pace cetera, as a company of where this industry goes in terms of its volume, but we don't want to be the only one holding the bag and we are concerned about the number of 2022 is that other dealers have us while we're outperforming that bye.

Material amount, we have to be concerned about the health of the overall industry are manufacturing partners need to get manufacturing again, and we have to do a good job of helping them do that but other dealers who were faced with sizeable curtailments under 20 twos are at risk of either having their floor plan pool.

Or their manufacturers not being willing to ship them based on exposure. So there's this balance there that we have to help help mitigate I would expect that our order positions with our key manufacturers likes or force River and Winnebago will actually start to increase here and their backlog as it relates to our company.

<unk> should increase over the coming months.

Alright.

Thank you. The next question comes from Brandon Go Funky Seventies proceed with your question Brandon.

Good morning, Thank you for taking money.

And while you're twenty-three is right now with still some overhanging model your twenty-two inventory and just like you were talking about with curtailments on the rugs or looming for some dealers potentially more aggressive promotional activity in the market and how that may impact the monitor your twenty-three sales.

I don't think that the overhang of 20 twos are really going to affect twenty-three. These we have been very.

I think strategic about acquiring twenty-three that we believe we're going to give us the margin enhancements we need.

Other dealers in the first quarter had had no choice, but to sell certain inventory and we do have dealers that were selling units at 567, 10, 20000 dollar losses, because they were being faced with curtailments that they didn't have the working capital to support I expect that pressure to continue here for the next four to six months.

But I expect it to be less impactful on us as we exit 20, twos and we worked into 20 three's the.

The model year 2000, threes are probably going to be the shortest gap of model years in terms of volume that we've seen since probably motto year 19.

And that's just because we didn't order a lot of 2003, because we had overhang of 20 twos and 20 fours are coming here in the next four to five months. So I'm really focused on let's get out of the 20 twos, let's have a normal course of business on twenty-three, let's get prepared on 20 fours as soon as we possibly can and setup.

Sales up for a very solid 24.

Great and just to follow up on the 20 fours I guess for now you know you are planning 24 has to be in the market maybe in this fall versus maybe this summer.

Like some people were thinking earlier this year.

Well there is some already out there some manufacturers have started to linger 2000 source, particularly on the motorized side and there are manufacturers, who will start producing 2000 for us here in late July maybe even mid July and we respect the fact and are grateful to every single manufacturer that made the decision to push that out.

A little longer than they have historically been I think the one thing about this industry that I am very proud of after being in it for 20 years is the evolution of the collaboration between manufacturers and dealers. Historically there was two camps doing their own thing and I think that everybody realized that we're not just a cottage industry anymore. This industry.

Continues to grow continues to grow in popularity and the manufacturers of the dealers realized that if they could work together to eliminate pain.

We're going to be in much better shape I think the reason that the margins were not as bad as everybody anticipated in Q1 is because manufacturers started to cut off production in late summer early fall winter of 22, and they've been very disciplined at the start of 2003 much to their apparel, but they've been very disciplined I b.

Leave those manufacturers will see the dividends of that discipline in the back half of this year and in full year 2004, that's how I see it if I was an investor in the manufacturer.

Great. Thank you.

Thank you. The next question comes from <unk> from <unk> with your question.

Yeah, I think it's good morning, I, just want a double back on capital allocation, sorry, if I missed it but how you think about the dividend in the context of those priority specifically in the face of the significant consolidation opportunity that you see how're Ya prioritizing that yeah.

Every single day, we think about how we're going to spend our capital and it's a balancing act right are we deleveraging are we buying stock back are we paying a dividend are we making acquisitions and in most universes. Those things can all exist, but as we look at the influx of acquisitions that are coming coming we have to be very thoughtful.

Put it we have no plan at this time to make any modifications to our dividend, but every single day that goes by we have to be smart about sitting down with our management team and sitting down with our board and doing that analysis I think it's too early to make that determination because we don't know how many more acquisitions are going to <unk>.

Come at Us, but we know for sure that acquisitions in this moment at these prices, where we are in the cycle could be an unbelievable supercharge growth agent for this company and we will continue to analyze it in the coming months.

Okay. Thanks, Marcus and then maybe digging in a little bit more on the model set of things you're S.

I per unit still really strong, but did drop I think below 5000 for the first time in a little while here given the current market trends in the macro condition. How should we think about the potential of that matrix going forward and kind of worried that trends and I guess, maybe related to that mix of new versus used to have a significant impact on kind of the attachment that tonight.

Well it does but let me let me address the first right.

When you're in that dealership working every single day and you feed your family based on that transaction, securing the transactions selling the customer putting them in our database and making money is first and foremost with interest rates rising a little bit there is payment sensitivity and so your ability to monetize that single.

Transaction has some risk and so what you saw in Q1 is probably what you're going to see for the balance of the year I think the shift to new to US we tend to perform a little better on new and F&I than we do on US we haven't really figured out the science behind it but we're really working hard to see if there is some sort of a high technology that can tell us.

Why that is.

But we don't want to abandon our youth strategy because the front end margin is so much better on new when you. When you look at the total gross profit per transaction, taking the front and the F&I and you put them together they used clearly still outweighs the new transaction, but to summarize your question I would take a look at two one.

I would extrapolate that out within a 5% range could there be a little bit more softness to the downside, yes, but they're also could be a return to the upside just the same so I would look at the current result, and built a very tight band around it.

Alright that makes sense. Thank you that's all for me.

[noise]. Thank you. The next question comes from Jordan from case. Please. Please proceed with your question in the bank.

Hey, guys. This is Patrick bought me on it for breath, thanks for taking our questions Sir.

How is service demand trying to start the year and going in the queue to hear you're still seeing demand outpaced capacity there are things starting to balance out on the labor side.

Well, we have done a heck of a job to be honest with you at building, our technician count and building our service operations to be stronger and more stable than ever.

We are very proud of the service numbers were putting up and we're seeing strength in those numbers. There was two reasons why the service numbers were down in the first quarter and one of them is the big driver I think we were down about $7 million on a year over year basis, one of the inputs in that service parts and other category is.

Our furniture business that supplies furniture to the manufacturers and when manufacturers shut down in Q1, it had a significant impact to our furniture business, we were off almost $13 million in that business alone and showing you extract the furniture business shifting to the manufacturers out of the equation.

Our service business was actually up the.

The other piece that put pressure on us, but we were able to overcome is with shipments being down significantly and upbringing are new inventory down by $200 million there were less new units, arriving at our dealerships in the first quarter of this year than there were in the first quarter of last year. When a unit arrived to our store, we do what's called the pre delivery inspection.

Can we go through the unit, we do the warranty adjustments and we're generating revenue with every transaction that whenever unit that comes in we had less units come in and we had less revenue from that our service team made up all of that ground from two primary sources, one customer pay revenue, which is going out and finding customers.

Do maintenance and repair of their units reconditioning renovation et cetera. The second was as we continue to grow or use business and put reconditioning into them, that's making up the lion's share of it as well. So our service business has never been stronger a technician count has never been stronger and that's a part of our business that we're going to continue to allocate home.

Capital financial capital and technology too because it's got 65, 70% plus margins.

Great. That's helpful. Thank you.

And could you also talk a little bit more about what you're seeing as far as web and foot traffic to start there any notable year over year changes or shifts there or maybe any regions to call out yeah.

Foot traffic was a little softer than we would have light and we elected not to throw a bunch of money at the wall just to create activity. We're trying to manage SG&A. That's a big thing for us and if you look at where SG&A came into the quarter. It met our expectations. We think we still have some improvement in Q1, we made some seed.

Difficult changes to our SG&A cost structure and eliminated a few businesses.

From the web traffic standpoint web traffic continues to be strong. However, our conversion to sail off web traffic was off a little and we think that was driven primarily by consumers, taking a little longer on the new side to pull the trigger hey, I'm really interested in this space, but I'm concerned about the macro environment Hey.

I'm really interested boy the prices have gone up a little bit hey, I'm really interested the payments a little higher so we're having to work a lot harder to convert it's just not as easy, but I'm proud of our web traffic on proud of our performance, but there's always room for improvement.

Great that's all for us thanks, guys.

Thank you. The next question comes from China <unk> H. Please proceed with your questions on.

Thank you Mark and I just wanted to have kind of a big picture question and hopefully you find it there when when I think about this call today I mean, I think we've heard a number of positive things I'm just looking at my notes here.

You are seeing acquisitions, and you're going to be more active than ever.

Talking to maybe margins stabilising over the next couple of quarters.

Oh, and the manufacturers that maybe you need more product.

Is it safe to say that.

Your mood or you're kind of state of the union to use your phrase earlier is that we are seeing light at the end of the tunnel or maybe we're at an inflection point, where we hit the bottom and turning it I just kind of want to get your thoughts of how you would respond to that.

My seriousness around discipline around inventory around capex around capital allocation I don't think has ever been higher and the reason that it's never been higher is the opportunity for us to have one of those <unk>.

Once in a lifetime moments to really grow the company.

I have to tell you we have to seize what's your hearing from me is a company that is going to execute on its 20 year history and business plan and as we've gone through all these cycles of 2008, and nine and 18 and 19 and all the gyrations around all the things we know what we do best we are an R V dealership company.

<unk> that has a real knack for capitalizing on the installed base through our service parts and good Sam business I think the other piece that you're hearing from me that may sound like a little light at the end of the tunnel is the excitement that you're hearing my voice about our ability to acquire stores.

Never found a moment in time, where I can confidently say that we want to grow our store footprint by 50% in the next five years and done it with such confidence historically, our ability to make acquisitions was always tempered with our ability to integrate them in the human capital associated with them and we made the decision as a management team.

To allocate human capital and SG&A, specifically to the acquisition process the integration process and the growth process and we were always nervous to do that it was actually me that was nervous to do that because the acquisitions come and they go but the reality of it is is that long term investors big holders.

Of our company expect us to grow our company profitably that's what they expect from US and we're we're looking at returning capital to shareholders and you look at the opportunity to make these acquisitions, we don't see on a piece of paper and in reality.

Better chance to do it than right now.

And so we have to remember that we have an existing business to run which is why we got to take care of our same stores and a new business to grow which is why we have to be really home that you probably also sensing that we've been in this sort of free fall for almost 15 months now if you go back and look at the same store sales for our company and for the.

Industry and shipments from the manufacturers were not in the first inning, but I don't believe we are in the ninth inning.

And anytime I'm in the middle of the ball game and I have some clarity and I can see our capital structure and I can see what we're executing on and I can see us putting out to the market very specific critical metrics to hit and then hitting them I gained confidence in our team that's probably what you're hearing from me more than anything is we have 14.

People and when Karen and I started this business almost 20 years ago to today literally today is 20 year anniversary.

It's a different mindset, we've surrounded our people ourselves with people that are brighter and smarter and better than Karen and I could have ever imagined that's what you're sensing from us.

Extremely helpful. Thank you.

And can the no further questions at this time I'd like to tell you to call back to Mark his chemo Netflix <unk>. Thank you Sir.

Thank you very much for participating in this call as you study the company over the next 90 days before we meet again, we're excited to hopefully announced a number of additional acquisitions. We're excited to continue to improve on the trends that we've experienced for the last 12 months and build the company a big bright company for the future. Thank you.

So much.

Thank you very much Sir that does complete today's comments. Thank you very much for joining us. He may now disconnect your lines.

The company a big Bright company.