Q4 2023 Camping World Holdings Inc Earnings Call

Operator: Good morning, and welcome to Camping World Holdings' conference call to discuss financial results for the fourth quarter and year ended December 31, 2020. At this time, all participants are in a listen-only mode.

Good morning, and welcome to Camping World Holdings Conference call to discuss financial results for the fourth quarter and year ended December 31, 2023 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 at.

Operator: Later, we will conduct a question-and-answer session, and instructions will follow at that time. 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. Joining on the call today are Marcus Lemonis, Chairman and Chief Executive Officer, Brent Moody, President, Karen Bell, Chief Financial Officer, Matthew Wagner, Chief Operating Officer, Lindsey Christen, Chief Administrative and Legal Officer, Tom Kim, Chief Accounting Officer, and Brett Andrus, Senior Vice President, Investor Relations. I will turn the call over to Ms. Kristen to get us started. Thank you and good morning, everyone.

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.

Joining on the call today are Mark <unk>, Chief Chairman and Chief Executive Officer, Brent Moody, President, Karen Bell, Chief Financial Officer, Matthew Wagner, Chief operating Officer.

Hey, Kristen chief administrative and legal officer.

I'm, Kim Chief Accounting Officer, and Brett Andress, Senior Vice President Investor Relations I will turn the call over to Mr. Christian to get Us started.

Christian: Thank you and good morning, everyone. A press release covering the company's fourth quarter and year ended December 31st 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.

Operator: A press release covering the company's fourth quarter and year ended December 31, 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. Management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include statements regarding our business plans and goals, industry, and customer trends. Inventory Expectations, The Expected Impact of Inflation, Interest Rates, and Market Conditions. Acquisition Pipeline and Plan. Future Dividend Payments and Capital Allocation and Anticipated Financial Performance. However, actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Rick's Factor section in our Form 10-K, our Form 10-Qs, and other reports on file with the SEC.

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

Christian: These remarks may include statements regarding our business plans and goals industry and customer trends.

Christian: Inventory in expectation, you expected impact of inflation interest rates and market conditions.

Christian: Acquisition pipeline and plan.

Christian: Future dividend payments and capital allocation and anticipated financial performance.

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

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

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

Christian: 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 record.

Christian: 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.

Marcus Anthony Lemonis: All comparisons of our 2023 fourth quarter and fiscal year results are made against the 2022 fourth quarter and fiscal year results, unless otherwise noted. I'll now turn the call over to... Good morning, and welcome to the first call of 2024. I've got to be honest; I'm glad 23 is over.

Christian: Comparisons of our 'twenty to 'twenty, three fourth quarter and fiscal year results are made against the 2022 fourth quarter and fiscal year results unless otherwise noted.

Christian: I'll now turn the call over to Margaret Good morning, and welcome to the first call of 2024, I Gotta be honest I'm glad 'twenty three is over on today's call. The team will cover both the operational and financial highlights from 2023, while providing an exciting outlook for 'twenty 'twenty four and beyond.

Marcus Anthony Lemonis: On today's call, the team will cover both the operational and financial highlights for 2023 while providing an exciting outlook for 2024 and beyond. As for the State of the Union for 2023, there's really one key message that prevails. We believe our industry has seen the bottom of new RV sales and results and are seeing positive indicators that the next several years will produce growth in revenue, unit sales, overall gross profit, and sequentially an improving bottom line for our company; we expect to deliver 30% plus EBITDA compared to 2023. As we worked internally through the back half of last year in an effort to raise our profitability in fiscal 24, we identified three key factors needing to be accomplished to achieve our 2024 earnings We needed to eliminate age model year units, renegotiate model year 24 pricing, and subsequently adjust our use position and values resulting from the revised new model year pricing on 24.

Margaret: As the state of the Union for 2020 three there's really one key message that prevails. We believe our industry has seen the bottom of new RV sales and results and are seeing positive indicators that the next several years will produce growth in revenue unit sales overall.

Margaret: Most profit and sequentially and improving bottom line for our company.

Margaret: We expect to deliver 30% plus EBITDA compared to 2023.

Margaret: As we worked internally through the back half of last year in an effort to raise our profitability in 'twenty four we identified three key factors needing to be accomplished to achieve our 2024 earnings calls we needed to eliminate AIDS model year units renegotiate model year 'twenty for pricing.

Margaret: Subsequently adjust our use position in values, resulting from the revised new model year pricing on 24 is the execution of this strategy puts us well ahead of our competitors and drives market share growth going forward.

Marcus Anthony Lemonis: The execution of this strategy puts us well ahead of our competitors and drives market share growth going forward. As we discussed on our last call, we will have completed the bulk of this by the end of Q1, with our adjustments on used driving the bulk of our current period. We elected to temporarily slow down used acquisitions to allow for market pricing to resolve before reinvesting our cash.

Margaret: As we discussed on our last call. We will have completed the bulk of this by the end of Q1 with our adjustments on used driving the bulk of our current period.

Margaret: We elected to temporarily slow down used acquisitions to allow for market pricing to resolve before reinvesting our cash.

Marcus Anthony Lemonis: While we work through the inventory, while working through the inventory with our primary focus, we must recognize the GoodSAM business, which delivered record earnings of over $100 million for the first time and continues to show stability and growth in servicing the installed base of RVers. Fundamentally, I've never seen our business adjust with such precision to micro and macro economic headwinds. Being able to achieve the profitability we experienced during this difficult period has proven the resiliency of our company and put a finer point on the quality and strength of the management team that I have had the privilege of assembling over the last 20 years. I'd like to now turn the call over to Matthew Wagner to discuss our company's operations. Thank you, Marcus.

Margaret: While we work through the inventory while working through the inventory was our primary focus we must recognize the good Sam business, which delivered record earnings over $100 million for the first time and continues to show stability and growth and servicing the installed base of RV Ers Fund.

Margaret: Mentally I've never seen our business adjust with such precision to micro and macro economic headwinds.

Margaret: Being able to achieve the profitability we experienced during this difficult period has proven the resiliency of our company and puts a finer point on the quality and strength of the management team that have had the privilege of assembling over the last 20 years.

Margaret: I'd like to now turn the call over to Matthew Wagner to discuss our company's operations. Thank you Markus as we reflect upon 2023 I cannot be more proud of our 12000 plus team members in 2023, we sold nearly 57000 used units and generated nearly $2 billion of revenue.

Sean Wagner: As we reflect upon 2023, I cannot be more proud of our 12,000 plus team members. In 2023, we sold nearly 57,000 used units and generated nearly $2 billion in revenue, marking an all-time record for Camping World. Total new and used unit sales volume for the year totaled 115,000 units.

Sean Wagner: Marking an all time record for camping world.

Matthew Wagner: Total new and used unit sales volume for the year totaled 115000 units.

Sean Wagner: Good Sam had another record year, with 12% growth in gross profit and generating $100 million of adjusted EBITDA for the first time in company history. We also achieved our goal of significantly improving our new unit portfolio. We started 2023 with over 16,000 Malta Year 22s.

Sean Wagner: Good Sam had another record year with 12% growth in gross profit and generating a $100 million of adjusted EBITDA for the first time in company history.

Sean Wagner: We also achieved our goal of significantly improving our new unit portfolio.

Sean Wagner: We started 2023 with over 16000 multi year 'twenty twos in stock.

Sean Wagner: Today, we are sitting with less than 7,500 Model Year 2023s, significantly outpacing the industry with close to 80% of our inventory mix now being 2024 models. Our new inventory position was further enhanced by our successful negotiations in the fall of 2023 with our OEM partners to reduce invoice prices in key categories. We were so successful in lowering new invoice prices, our used RV values were impacted, and in Q4. We took decisive actions to reset used values and slow down the purchases of used RV inventory while market values corrected themselves.

Sean Wagner: Today, we're sitting with less than 7500 model year 2020 threes.

Sean Wagner: Difficult leap outpacing the industry with close to 80% of our inventory mix now in 2024 models.

Sean Wagner: Our new inventory position was further enhanced by our successful negotiations in the fall of 'twenty three with our OEM partners to reduce invoice prices in key categories.

Sean Wagner: We were so successful in lowering new invoice prices are used RV values were impacted in Q4, we took decisive actions to reset used values and slowed down the purchases of used RV inventory, while market values corrected themselves.

Sean Wagner: Queen September through today, we procured 50% less used inventory year over year as of today, our use same store inventories down 13%.

Sean Wagner: Between September through today, we procured 50% less used inventory year-over-year. As of today, our used same-store inventory is down 13%. These short-term maneuvers will allow our used volumes to improve over time as appropriately valued inventory is brought back into the system. We expect our used margins to improve sequentially starting over the next 60 days and to normalize to historical levels by Q4. This overall inventory strategy resulted in positive same-store new sales in December, and this trend continued throughout February, increasing in the mid-single to low double-digit range. This movement and demand support our previously stated thesis that lower-priced RVs are a highly elastic product. In the way of capital deployment and asset management, we acquired, opened, or signed LOIs on over 30 dealership rooftops.

Sean Wagner: These short term maneuvers will allow our used volumes to improve over time as appropriately valued inventory is brought back into the system.

Sean Wagner: We expect our used margins to improve sequentially starting over the next 60 days and to normalize to historical levels by Q4.

Sean Wagner: This overall inventory strategy has resulted in positive same store new sales in December and this trend continued throughout February increasing in the mid single to low double digit range.

Sean Wagner: This movement in demand supports our previously stated thesis that lower priced rvs are a highly elastic product.

Sean Wagner: And the way of capital deployment in asset management, we acquired opened or signed LOI on over 30 dealership rooftops. We ended 2023 with 202 RV dealerships are service centers.

Sean Wagner: At the same time, we optimize our SG&A cost structure, we restructured our active sports business, and we consolidated or exited distribution centers and underperforming locations.

Sean Wagner: We made a number of changes in 2023 and it made our company stronger and we believe this sets the stage for at least 30% EBITA growth in 2024.

Sean Wagner: We ended 2023 with 202 RV dealerships or service centers. At the same time, we optimized our SG&A cost structure, we restructured our active sports business, and we consolidated or exited distribution centers and underperforming locations. We made a number of changes in 2023, and it made our company stronger. And we believe this sets the stage for at least 30% EBITDA growth in 2024. As part of our growth plan for 2024, we will continue to focus on expanding upon the tremendous progress that we have made with Good Sam, Service, our used RV business, while focusing on market share growth of new RVs and adding accretive acquisitions to our dealer network. As we sit here today, we are currently planning to add 25 to 30 dealerships in 2024, and the pipeline to acquire additional locations remains robust. Many of these new locations will be opened as exclusively branded stores focused on popular RV brands like Keystone, Jayco, Airstream, Forest River, Coachmen, Alliance, and Grand Design.

Sean Wagner: As part of our growth plan for 'twenty four we will continue to focus on expanding upon the tremendous progress that we've made with good sand service, our used RV business, while focusing on market share growth of new arby's, and adding accretive acquisitions through our dealer network.

Sean Wagner: As we sit here today, we are currently planning to add 25 to 30 dealerships in 'twenty 'twenty four and the pipeline to acquire additional locations remains robust.

Sean Wagner: Many of these new locations will be opened as exclusively branded stores focused on popular Rd brands like Keystone, Jay Koh Air Stream Forest River Coachman Alliance and Grand design.

Sean Wagner: This cadence of store openings and acquisitions reaffirms our confidence in hitting our goal of growing our store count to 320 stores by the end of 'twenty 'twenty eight.

Sean Wagner: Now I'll turn the call over to Tom Curran to discuss our financial results.

Tom Curran: Thanks, Matt and 'twenty three we recorded revenue of $6 2 billion a decline of roughly 10% from last year, driven primarily by new unit volume while used vehicle revenue of 2 billion increased 5% from last year and was a record for the company. Meanwhile, our good Sam services and plans.

Tom Curran: <unk> posted record revenue and gross profit for the year with $194 million in revenue and $134 million of gross profit.

Tom Kern: This cadence of store openings and acquisitions reaffirms our confidence in hitting our goal of growing our store count to 320 stores by the end of 2028. I'll now turn the call over to Tom Kern to discuss our financial results. Thanks, Matt.

Tom Curran: In the fourth quarter, we recorded revenue of $1 1 billion down 13% from last year, driven primarily by used unit volume.

Tom Curran: Total new unit sales increased three 2% turning positive for the first time in 10 quarters.

Tom Curran: Decline in new same store unit sales improved to down two 2%.

Tom Kern: In 2023, we recorded revenue of $6.2 billion, a decline of roughly 10% from last year, driven primarily by new unit volume, while used vehicle revenue of $2 billion increased 5% from last year and was a record for the company. Meanwhile, our Good Sam's Services and Plans segment posted record revenue and gross profit for the year, with $194 million in revenue and $134 million in gross profit. In the fourth quarter, we recorded revenue of $1.1 billion, down 13% from last year, driven primarily by used unit volume. However, total new unit sales increased 3.2%, turning positive for the first time in 10 quarters. The decline in new same-store unit sales improved to down 2.2%.

Tom Curran: Our adjusted EBITDA for the fourth quarter was a loss of $8 9 million during what is historically, our industry's toughest quarter. During the back half of 2023, we also reduced costs by north of $60 million annually and we will continue to look for SG&A efficiencies throughout our business as Matt alluded we aggressive.

Tom Curran: We managed to used inventory in the fourth quarter to return cash to the business and recalibrate, our inventory position heading into spring, we see our used business experiencing volume and margin trends in the first quarter of 'twenty four that are similar to the fourth quarter as we worked to restock our loss for the upcoming season.

Tom Curran: On the balance sheet, we ended the quarter with about $185 million of cash, including $145 million of cash in the floor plan offset account.

Tom Curran: We also have roughly $271 million of used inventory net of flooring and $200 million of parts inventory.

Tom Curran: Finally, we own a $175 million of real estate without an associated mortgage.

Speaker Change: Thanks, Tom because we all have indicated we believe the trend lines are very clear.

Speaker Change: We expect 'twenty 'twenty four to be a much better year with the outlook after that only getting better I'd like to turn the call over to the operator for the Q&A section.

Speaker Change: We will now be conducting a question and answer session.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.

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

Speaker Change: You May press star two if you'd like to remove your question from.

Speaker Change: The cute.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Kids one moment, please while we poll for questions.

Tom Kern: Our adjusted EBITDA for the fourth quarter was a loss of $8.9 million during what is historically our industry's toughest quarter. During the back half of 2023, we also reduced costs by north of $60 million annually, and we'll continue to look for SG&A efficiencies throughout our business. As Matt alluded, we aggressively managed used inventory in the fourth quarter to return cash to the business and recalibrate our inventory position heading into spring. We see our used business experiencing volume and margin trends in the first quarter of 24 that are similar to the fourth quarter as we work to restock our lots for the upcoming season. On the balance sheet, we ended the quarter with about $185 million of cash, including $145 million of cash in the floor plan offset again. We also have roughly $271 million of used inventory, net of flooring, and $200 million of parts inventory. Finally, we own $175 million of real estate without an associated mortgage.

Thank you. Our first question is from Joseph <unk> with Raymond James. Please proceed with your question.

Speaker Change: Good morning. This is Martin on for Joe.

Martin: Back in Tampa, you talked about likely margin compression in <unk> and <unk> to clear out non current inventory do you anticipate the impact to be less than <unk> unexpected normalization in <unk>.

Martin: So I want to unpack that in two different categories. You know, we believe that the new margins are going to sequentially improve as we continue to move out of 2023 and really get back to a more normalized margin state for the full year. We actually think we have a pretty good shot at that on the used side as we meant.

Martin: And earlier when we had success in renegotiating the 24 pricing we had to acknowledge that the success on one side could create a short term risk for us on the other side and that's the used inventory values. We through the fourth quarter I took a lot of gas and a lot of pain and liquidating that.

Martin: Used inventory and at the same time shut off our procurement abuse at a pretty rapid pace. So that we could bring cash back and wait for the market to settle in with the appropriate new derived values based on pricing and then we work our way back up I expect the used margin compression.

Martin: To continue through the end of Q1, because we really believe that if we can just bring our cash back in and turn that inventory. It will pay dividends in Q2, three and four the compression of margin that we're experiencing in Q1, that's self inflicted doesn't change our outlook for the full year. It just moves.

Marcus Anthony Lemonis: Thanks, Tom. Look, as we all have indicated, we believe the trend lines are very clear. We expect 2024 to be a much better year, with the outlook after that only getting better. I'd like to turn the call over to the operator for the Q&A section.

Martin: A lot of the profitability as expected to the normal quarters, when we make the bulk of our money, which is two and three and we will have a much better for than we did the last two years.

Operator: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star 2 if you'd like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Speaker Change: Thank you and you mentioned in your record at your profitability for good Sam do you have any further thoughts on good Sam on innovation.

Speaker Change: It looked like in the perpetual Tommy.

Speaker Change: I missed that one word good Sam.

Speaker Change: Active monetization.

Speaker Change: As we've spoken in our release that press release, just a couple of months ago. Now there is no further updates that we have at this time, but we've been thrilled with the amount of outpouring outreach that we've had from interested parties and wanting to partner with us and work with us and learn more but as at this moment no additional update.

Operator: One moment, please, while we pull up the press. Thank you. Our first question is from Joseph Altobello with Raymond James. Please proceed with your question. Good morning, this is Martin on behalf of Joe.

Speaker Change: Yeah, I mean look that's a technical answer here is that you know the.

Speaker Change: The other answer and that is we love this business, we love the good Sam business and when we look at the last five to 10 years. It has been our crown jewel and we believe it will continue to be the management changes that we've made there in the last several years have clearly paid dividends and from our perspective, it's really about understanding.

Marcus Anthony Lemonis: Back in Tampa, you talked about likely margin compression in 4Q and 1Q to clear out non-current inventory. Do you anticipate the impact to be less than 1Q and expect normalization in 2Q? So I want to unpack that in two different categories. You know, we believe that the new margins are going to sequentially improve as we continue to move out of 2023 and really get back to a more normalized margin state for the full year. We actually think we have a pretty good shot at that.

Speaker Change: How we're going to unlock value for our shareholders. There are a lot of different scenarios and we're not.

Speaker Change: Married to any of them in fact at the end of the day, we just wanted to understand what our options are but that business continues to perform and we expect it to continue to be the stable rock in our portfolio.

Speaker Change: Great I appreciate it thank you so much.

Speaker Change: Our next question is from James Hardiman with Citi. Please proceed with your question.

James Hardiman: Hey, good morning, guys.

Speaker Change: So.

James Hardiman: Obviously, that's the most encouraging part about all of this is how much better things.

Marcus Anthony Lemonis: On the use side, as we mentioned earlier, when we had success in renegotiating the 24 pricing, we had to acknowledge that the success on one side could create a short-term risk for us on the other side. And that's the used inventory value. Through the fourth quarter, we took a lot of gas and a lot of pain in liquidating that used inventory and, at the same time, shutting off our procurement of used cars at a pretty rapid pace so that we could bring cash back in, wait for the market to settle in with the appropriate new derived values based on pricing, and then we would work our way back up. I expect the used margin compression to continue through the end of Q1 because we really believe that if we can just bring our cash back in and turn that inventory, it will pay dividends in Q2, 3, and 4.

James Hardiman: 50000 units at a minimum.

James Hardiman: But we do believe that there are things that we are doing that would have allowed us to outpace our competitors and when you look at the decision to drive down Asp's consciously drive down Asp's in the face of what is still pretty material interest rates. We think that's made a big big difference.

Marcus Anthony Lemonis: The compression of margin that we're experiencing in Q1 that's self-inflicted doesn't change our outlook for the full year; it just moves a lot of the profitability as expected to the normal quarters where we make the bulk of our money, which is 2 and 3, and we will have a much better 4 than we did the last two years. Thank you.

James Hardiman: The other piece that we are really starting to recognize.

James Hardiman: Is that the creativity that we have worked on in developing some of our private label brands like the launch of Eddie Bauer, which previewed materially at both Hershey in Tampa and the and the consistent performance of Coleman has made a big difference, but we have also seen solid performance out of our Keystone business in our Jake.

Marcus Anthony Lemonis: You mentioned your record year for possibility for Good Sam. Do you have any further thoughts on Good Sam on innovation? What might that look like in the potential timing?

Marcus Anthony Lemonis: I missed that one word, good Sam, activation monetization. Oh. As we spoke and released that press release just a couple months ago now, there's no further updates we have at this time, but we've been thrilled with the amount of outpouring and outreach that we've had from interested parties wanting to partner with us and work with us and learn more. But as of this moment, there are no additional updates. Yeah. I mean, look, that's the technical answer.

James Hardiman: Business, just the same and we've seen good explosive growth with the new acquisitions of certain dealerships that had grand design. So I think there's a combination of a lot of things cleaning the inventory was actually in our opinion the biggest driver of all of it and taking the pain that we took and will continue to take for another couple of months.

James Hardiman: Is really what is putting the wind in our sails and setting us up nicely.

James Hardiman: Great. That's helpful and maybe you know maybe when the accurate how much is your destiny in 2024 do you think you ultimately control, what we think about that 30% EBITDA growth.

Marcus Anthony Lemonis: Here's the other answer, and that is we love this business. We love the Good Sam business. And when we look at the last five to 10 years, it has been our crown jewel, and we believe it will continue to be. The management changes that we've made there in the last several years have clearly paid dividends. And from our perspective, it's really about understanding how we're going to unlock value for our shareholders. There are a lot of different scenarios, and we're not married to any of them.

James Hardiman: Argue embedding some assumptions about where interest rates are going ahead and win and.

James Hardiman: Are there any sort of industry wholesale retail benchmarks that we should be thinking about that would be necessary for you to.

James Hardiman: <unk> accomplish your goals.

James Hardiman: We still believe that the general macro environment, it's tough I mean, the interest rates are still high and we're not going to prognosticate on how many interest rate cuts there will be we're probably in our minds thinking that there may be too and there later in the year. So they are still has some head were headwind that we have to work through us having.

Marcus Anthony Lemonis: In fact, at the end of the day, we just want to understand what our options are. But that business continues to perform, and we expect it to continue to be a stable rock in our portfolio. Great. I appreciate it. Thank you so much.

James Hardiman: 30% <unk>.

James Hardiman: Improvement in EBITDA over a lower number is not any high five moment for our company.

James Hardiman: So we while we're confident that we can get there. It is not a celebratory moment, we continue to work forward and making sure that our inventories clean our SG&A is tight so that we can enjoy that type of growth hopefully in the years past 2024, I think from our perspective, we're expecting.

Operator: Our next question is from James Hardiman, from U.S. City. Please proceed with your question. Hey, good morning, guys.

Marcus Anthony Lemonis: So, you know, obviously, the most encouraging part about all this is how much better teams have gotten in January and February, obviously, particularly on the new side. Help us understand how much of that improvement is sort of industry improvement, overall demand improvement versus, you know, what you guys are doing at Camping World, trying to figure out which of those two things would be really more sustainable and more important. Obviously, the whole industry has been waiting for that positive inflection point. Do you think we've seen it, or is it just, you know, sort of stuff that you guys are doing to gain?

James Hardiman: Retail and wholesale to be in the 360 to 370 range and there are some that believe that can go higher we have to be realistic that there is still a possibility that it could even go lower but we're comfortable with that band and what we're seeing in the marketplace. Both from shows but from looking at other dealers websites.

James Hardiman: Is that there is momentum happening with more than just us. We think we're just outpacing everybody a little bit.

Speaker Change: Got it makes sense I appreciate your guys and good luck from here.

James Hardiman: Alright. Our next question is from Daniel Ember with Stevens. Please proceed with your request.

Daniel Ember: Yeah. Good morning, everybody thinks I got a question.

Daniel Ember: Good morning.

Daniel Ember: Mark is a lot of the last quarter I think you're the team talked about taking maybe $60 million of cost out of the business maybe to follow up and the EBITDA growth outlook.

Daniel Ember: We see unit growth improve how do you and the team feel about keeping those costs out of the model and then as you go through the downturn never waste an opportunity are there any other shows you've turned over that could drive further efficiencies and the model is you see the business positioning for growth again.

Marcus Anthony Lemonis: I'm going to separate that into two very specific answers. One, we are very hopeful that the industry at large is rebounding. And that's important for us because the growth of the installed base is a giant feeder for our service business, our goods business, our parts business. We need the overall industry to be healthy.

Daniel Ember: Well, there's always a really important distinction between taking fixed costs out of the business and understanding that variable costs tied to commissions and advertising are going to go up as volume goes up while we're really focused on is driving down our SG&A as a percentage of our gross profit that is really the <unk>.

Marcus Anthony Lemonis: We need the manufacturers to get back to working production cycles where they're shipping north of 350,000 units at a minimum. But we do believe that there are things that we are doing that have allowed us to outpace our competitors. And when you look at the decision to drive down ASPs, consciously drive down ASPs in the face of what is still pretty material interest rates, we think that's made a big, big difference. I think the other piece that we are really starting to recognize is that the creativity that we have worked on in developing some of our private label brands, like the launch of Eddie Bauer, which performed very well at both Hershey and Tampa, and the consistent performance of Coleman, has made a big difference.

Daniel Ember: And I want to turn it over to Tom who really was the architect of looking through the expense structure in finding those things while recognizing that is volume comes back right variable expenses are going to go with it as long as long as it was back as we need more people to pick up the phone and take the apps.

Tom Curran: There will be some increase in in some of those variable compensation structure pieces, but we are continuing to look with Matt and the team and the analytics team things like our lead prevents any model and how can we get smarter with the advertising dollars that we do spend how can we get smarter with our I T spend in certain areas, it's not to say that we're banking on it for the upcoming year.

Daniel Ember: But there's we're still turning over stones for sure, but I'll give you a small little case in point right. One of the things that we work very hard on in 23 is to renegotiate certain leases look at exiting certain properties and just driving down those fixed costs that weren't generating any revenue we exited the active.

Marcus Anthony Lemonis: But we have also seen solid performance out of our Keystone business and our Jayco business is just the same. And we have seen good explosive growth with the new acquisitions of certain dealerships that have grand designs. So I think there is a combination of a lot of things.

Daniel Ember: Port's business for the most part we still have a very small web presence, but we started to get out of distribution centers and underperforming locations, because we can't afford to wait for the market to come back while we burn through money until we made some tough decisions and we will continue to do that as we always have as we enter 2004.

Marcus Anthony Lemonis: Cleaning the inventory was actually, in our opinion, the biggest driver of all of it. And taking the pain that we took, and will continue to take for another couple of months, is really what is putting the wind in our sails and setting us up nicely. Great, that's helpful.

Daniel Ember: I will be really crystal clear about that the expense reductions aren't done.

Daniel Ember: We're always going to be looking for things that we can eliminate getting out of things that don't perform well eliminating staff members that are contributing to the bottom line are generating revenue that is always going to be the thesis I will tell you that one of the things that we are excited to see is as rates come down our floorplan expense comes down and.

Marcus Anthony Lemonis: And then, you know, maybe let me ask this: how much of your destiny in 2024 do you think you ultimately control if we think about that 30% EBITDA growth? You know, are you embedding some assumptions about where interest rates are going to head and when? And are there any sort of industry wholesale retail benchmarks that we should be thinking about that would be necessary for you to still accomplish your goal? We still believe that the general macro environment is tough. I mean, interest rates are still high, and we're not going to prognosticate on how many interest rate cuts there will be. We're probably, in our minds, thinking that there may be two, and they're later in the year.

Daniel Ember: It comes down materially.

Daniel Ember: For every half a point that comes down I mean, you're talking about big numbers on an annual basis. When you have a billion dollars of inventory. So as we look at driving advertising costs down getting out of poor performing locations, making sure. We have the right staff levels modifying pay plans, which is always tough we're going to wait for some when they come in to.

Daniel Ember: Sales that is outside of our control, but that we anticipate happening at some point.

Speaker Change: Understood appreciate that and then move for a follow up I think you mentioned, adding 25 to 30 dealerships as your can you remind me how many you've completed so far and then over those you've done or all of them open and kind of running on this lean camping World model, where you've worked through old inventory or is there still a digestion period through the middle of this year.

Marcus Anthony Lemonis: So there are still some headwinds that we have to work through; us having a 30% improvement in EBITDA over a lower number is not a high five moment for our company. So, while we're confident that we can get there, it is not a celebratory moment. We continue to work forward in making sure that our inventory is clean, and our SDNA is tight, so that we can enjoy that type of growth, hopefully, in the years past 2020. I think, from our perspective, we're expecting retail and wholesale to be in the 360 to 370 range. And while there are some that believe it could go higher, we have to be realistic that there's still a possibility that it could even go lower. But we're comfortable with that band.

Speaker Change: That maybe we were worried until 2025 before we're giving them a full contribution from those recently acquired and the soon to be acquired source.

Speaker Change: So if I take a step back and try to answer your questions in sequential order as of this moment. We have opened four of those locations. So far so we should immediately start to generate revenue out of those specific locations.

Speaker Change: The other 25 to 30, we will have staggering open dates over the ensuing two quarters at least some of them might even bleed over to the third quarter, depending upon so when we think about what we're assuming and 70 scenarios. Some of them are just greenfield bills, whereby we built them completed them in Q4 of last year in which case, we'll be able to pick.

Speaker Change: Just clean revenue, we won't have to be picking up any sort of older model. Your units like 2022 units or 20, threes, which to answer your question ultimately in some of these other scenarios, we could be inheriting a number of multi year 2022 or 23 is the good news, though and these scenarios. We're negotiating all of these deals whereby any sort of write down.

Marcus Anthony Lemonis: And what we're seeing in the marketplace, both from shows, both from looking at other dealers' websites, is that there is momentum happening with more than just us. We think we're just outpacing everybody a little bit. Thank you.

Marcus Anthony Lemonis: Our next question is from Daniel Embro with Stevens. Please proceed with your question. Marcus, last quarter I think you and the team talked about taking maybe $60 million of cost out of the business, maybe to follow up on the EBITDA growth outlook. As we see unit growth improve, how do you and the team feel about keeping those costs out of the model? And then, as you go through the downturn, you know, never waste an opportunity.

Speaker Change: It's really just a trudel to goodwill and is factored into any sort of purchase price. So we are buying these malia 20 twos amount of your 20 threes at appropriate market values as such I don't think that I should negatively impact our margin profile in the back half of next year and we do believe that will start to pick up some incremental gains year over year by Q3.

Speaker Change: Q for which is why when Marcia, suggesting the sequential improvement we see a lot of upside here in Q3 Q4 in particular because of these acquisitions plus all the different expense reductions, we've been making and we see a lot of upside there just to put a finer point on it we're gonna make acquisitions are closed on those acquisitions here in a pretty steady pace.

Marcus Anthony Lemonis: Are there any other stones you've turned over that could drive further efficiencies in the model as you see the business positioning for growth again? Well, there's always a really important distinction between taking fixed costs out of the business and understanding that variable costs tied to commissions and advertising are going to go up as volume goes up. What we're really focused on is driving down our SG&A as a percentage of our gross profit. That is really the focus. And I want to turn it over to Tom, who really was the architect of looking through the expense structure and finding those things while recognizing that as volume comes back, variable expenses are going to go with it. Yeah.

Speaker Change: Over the next 12 weeks and there are going to be 22, and 23 model year, new units coming into our system. So if you analyze our website or run any metrics against our website you will see a jumping that we wanna be crystal clear that the value of the.

Speaker Change: Those units coming into our system that are 22 and 23.

Speaker Change: Materially materially lower than the original invoice cost they are on the money as we would say so there should be no negative gross profit experience coming from those acquisitions. So please when you see those units come into our system do not arrive that there is some sort of problem.

Tom Kern: As volume comes back, as we need more people to pick up the phone and take the calls, there will be some increase in some of those variable compensation structure pieces. But we are continuing to look with Matt and the team and the analytics team at things like our lead propensity model and how can we get smarter with the advertising dollars that we do spend. How can we get smarter with our IT spend in certain areas? That's not to say that we're banking on it for the upcoming year, but we're still turning over stones for sure. But I'll give you a small, little case in point, right?

Speaker Change: Just understand they are on the money and that was in large part. The reason we were able to make the acquisition of what was a very successful business that just got into inventory trouble.

Speaker Change: Really hope all the best of luck at all.

Speaker Change: Thank you.

Speaker Change: Alright next question is from like sport with current security. Please proceed with your question.

Like Sport: Hey, good morning, everyone.

Like Sport: Maybe just following up on on the the gross margin on new in the quarter. It was it was almost ninth teen percent and that's fourth quarters seasonally I think is one of the seasonally lightest quarters for gross margin and I think you you had mentioned markets that you're kind of expecting.

Like Sport: Flattish gross margin if I heard that correctly in new for the full year on a year over year basis, I guess walk us through why that would be the case and maybe how to think about where that 19 goes over the next couple of quarters.

Marcus Anthony Lemonis: One of the things that we worked very hard on in 23 was to renegotiate certain leases, look at exiting certain properties, and just driving down those fixed costs that weren't generating any revenue. We exited the active sports business for the most part. We still have a very small web presence, but we started to get rid of distribution centers and underperforming locations because we can't afford to wait for the market to come back while we burn through money. And so we made some tough decisions, and we will continue to do that as we always have as we enter 24. I will be really crystal clear about that. The expense reductions aren't done yet.

Like Sport: Well the 19 was largely driven by assistance from the manufacturers, who understood the necessity and that had been prenegotiated months and months and months and months in advance that they needed to help us to participate in that cleansing on a go forward basis. The normal margins are in that 13 to 14 range and we really believed.

Like Sport: That that is the sustainable long term strategy that gives us the velocity, we need to do volume in transactions.

Like Sport: As we have said for a very very long time, the lowest contribution of margin and our entire portfolio is the new margin even when it gets up to 15 16 17 during COVID-19 periods, we rely on the F&I transaction, the service and parts of transaction and all the good Sam attachment to all those.

Marcus Anthony Lemonis: We're always going to be looking for things that we can eliminate, getting out of things that don't perform well, eliminating staff members that aren't contributing to the bottom line or generating revenue. That is always going to be the theme. I will tell you, though, one of the things that we are excited about. And it comes down materially.

Like Sport: Things, making that entire transaction more valuable one thing that we have to do a better job of in 2425, as we need volume and market share back our company feeds off of a larger installed base that has always and will continue to be our business model. So in volume contract.

Sean Wagner: You know, for every half a point it comes down, I mean, you're talking about big numbers on an annual basis when you have a billion dollars of inventory. Understandable. Appreciate that. And then maybe for our follow-up, I think, Matt, you mentioned adding 25 to 30 dealerships this year. Can you remind us how many you've completed so far?

Like Sport: It has a long lasting effect on more than just the new sales of our business. It affects our F&I it affects our compensation metrics SG&A as a percentage of gross so what we're most excited about in 2004 is driving those asp's down going out and grabbing market share in categories that.

Like Sport: We believe our competition is late to the party on an understanding that volume in transactions and getting volumes back to pre COVID-19 levels is job number one.

Sean Wagner: And then, of those you've done, are all of them open and kind of running on this Lean Camping World model where you've worked through old inventory? Or is there still a digestion period through the middle of this year before we wait until 2025 before we're getting the full contribution from those recently acquired and soon-to-be acquired stores? Thanks.

Like Sport: Our new volume by location has hit a level along with everybody else in the industry that is unacceptable to us and not sustainable so as we want to kick start that volume again and get these same stores not new stores, but get these same stores to contribute at a level that they historically contributed to that.

Marcus Anthony Lemonis: Thank you. Flat-ish gross margin, if I heard that correctly, in new for the full year on a year-over-year basis. I guess I can walk us through why that would be the case and maybe how to think about where that 19 goes over the next couple quarters. Yeah, well, the 19 was largely driven by assistance from the manufacturers who understood the necessity and that had been pre-negotiated months and months and months and months in advance that they needed to help us participate in that cleansing. On a going forward basis, the normal margins are in that 13 to 14 range.

Like Sport: We need volume, which is why we're pushing down the Isps, which is why we're going to accelerate into new volume that really is the thesis, but I don't want anybody to look at the queue for new margin and think that some some trackable event for the next 12 to 24 36 months, it's an abnormality, but it was a plan.

Like Sport: Abnormality that we knew would help us push that through.

Speaker Change: Okay. That's that's that's helpful. Thank you Marcus and then maybe on the on the used vehicle side and you know maybe two questions.

Speaker Change: Trying to understand if gross margins, where so compressed and you were obviously clearing inventory pretty pretty dramatically during the quarter I guess volume didn't react similarly, but that simply due to not procuring as much.

Marcus Anthony Lemonis: And we really believe that that is a sustainable long-term strategy that gives us the velocity we need to do volume and transactions. As we have said for a very, very long time, the lowest contribution of margin in our entire portfolio is the new margin, even when it gets up to 15, 16, 17 during COVID periods. We rely on the F&I transaction, the service and parts transaction, and all the good SAM attachment to all those things, making that entire transaction more valuable. One thing that we have to do a better job of in 24 and 25 is we need volume and market share back. Our company feeds off of a larger installed base that has always and will continue to be our business model. So when volume contracts, it has a long-lasting effect on more than just the new sales of our business that affects our F&I; it affects our compensation metrics. SG&A is a percentage of gross.

Like Sport: And then I guess with what's gone on in 20.

Like Sport: 24 pricing I noticed kind of anomaly historically at least I guess, how does that feed into how you think about the rd evaluate or tool going forward.

Like Sport: So when Matt and I drove away from the open house in September and he had had unbelievable success in renegotiating that 20 foreign pricing, we both looked at each other in the car and said we better get ahead of these use values one key component of that good Sam RV value later.

Like Sport: Invoice pricing on new models is an input into that equation, along with a number of other factors and we knew that as that was a factor that valuator was going to be impacted in terms of how it saw us values, we knew driving home on that day that we needed to be quick.

Like Sport: And fast and exiting all used inventory that had been procured under the premise that values were higher on the.

Like Sport: At the same time, we were unsure of ourselves in terms of our willingness our appetite to take on risk and continue to procure inventory at the same time, while we knew there was a falling knife unused values. So we pulled back on our procurement knowing that it was going to affect volume because if.

Marcus Anthony Lemonis: So what we're most excited about in 24 is driving those ASPs down, going out and grabbing market share in categories that we believe our competition is late to the party on, and understanding that volume and transactions and getting volumes back to pre-COVID levels is job number one. Our new volume by location has hit a level, along with everybody else in the industry, that is unacceptable to us and not sustainable. So as we want to kickstart that volume again and get these same stores, not new stores, but get these same stores to contribute at a level that they historically contributed at, we need volume, which is why we're pushing down the ASPs, which is why we're going to accelerate into new volume. That really is the thesis, but I don't want anybody to look at the Q4 new margin and think that's some trackable event for the next It's an abnormality, but it was a planned abnormality that we knew would help us push it down.

Like Sport: You have less inventory in stock you're gonna sell less but in our thesis as money came out of our used inventory and came back into a cash account. We felt that it was the right thing to do we are not done in cleansing that used inventory. There is some hangover, there's a material amount of hangover in Q1, but that's self and.

Like Sport: Collected many dealers many recreational dealers auto dealers et cetera will do what's called kick the can and they would just worry about dealing with the aging later, we have been disciplined since the beginning of this company on how we manage our used inventory and the reason for that is that.

Like Sport: We know that the number one thing that can kill a business is poor inventory management. Our best loss is our first loss and recognizing that the values are overstated, but not a lot but enough to be material, we needed to act quickly or volume on the youth side will be.

Operator: So when Matt and I drove away from the open house in September, and he had had unbelievable success in renegotiating that 24 price, we both looked at each other in the car and said, we had better get ahead of these used values. We knew driving home on that day that we needed to be quick and fast in exiting all used inventory that had been procured under the premise that values were higher on the... Great, thank you. Our next question is from Scott Stember with Roth MKM. Please proceed with your question. Yes, sir.

Like Sport: Temporarily constrained because we are not chasing procuring inventory just yet I would expect that in the month of March probably towards the middle we will turn back on their procurement. So that we have a more robust spring and summer unused and we feel more comfortable.

Like Sport: How the values have settled in.

Speaker Change: Great. Thank you.

Stops Timber: Our next question is from stops timber with raw and terror.

Stops Timber: Proceed with your question.

Tom Kern: If we look at the products and services, a pretty big decline in the quarter. But if you were to parse out some of the illuminated businesses and look at just the repair side at the garage or at the shop level, how did that perform in the quarter on an organic basis? Well, we don't report the shop level separately.

Stops Timber: Good morning, and thanks for taking my questions.

Stops Timber: Yes, Sir.

Stops Timber: The products and services are pretty big the climate of a quarter, but if you were to parse out some of the eliminated businesses and look at just the repair side at the garage or in the shop level How's It got performed and a quarter an organic basis.

Speaker Change: Well, we we don't report the shop level separately I'll start with that but we were quite pleased with how our core service Department had performed in the quarter.

Tom Kern: I'll start with that. But we were quite pleased with how our core service department performed in the quarter. We did, as we mentioned before, restructure that active sports business at the beginning of the year. Historically, the fourth quarter has been the best quarter for that business as you get through Black Friday and you get into the winter season. And we also have our RV furniture distribution business, that OEM distribution business that relies on wholesale shipments and production in Elkhart to drive volume. That obviously was down as well in the quarter.

Speaker Change: We did as we mentioned before restructure that active sports business at the beginning of the year.

Speaker Change: Historically that the fourth quarter had been the the best quarter for that business is you get through Black Friday, and you get into winter season.

Speaker Change: And we also have our RV furniture distribution business that OEM distribution business that relies on a wholesale shipments in production in Elkhart to drive volume that obviously was down as well in the quarter. So when you think about the impact of those maybe about $50 million of top line impact and.

Sean Wagner: So when you think about the impact of those, maybe about $50 million of top line impact in the quarter. Yeah, the good news is, right, that we really look at the core business, and that core service business seems to be... Yeah, this is Matt Wagner speaking now. I mean, as Tom and I have wrestled over this many times, I would love nothing more than to break out the service business in particular to give credit where it's due, ultimately, where we would love to continue to highlight the success of our service business and actually push more business through the bays. Because we've seen in times like this, where there are different calculations, valuation issues out there, inflation takes hold in a deflationary environment, the service business And just as well, we realize the benefits that come along with all the extended service plans and the good Sam business that begins to be bolstered by such a presence, and as we trade for more units.

Speaker Change: Quarter, Yeah. The good news is right that we really look at the core business and of course service business seems to be yeah. This is Matt Wagner speaking now I mean, it's Tom and I have arm wrestled over this many times I would love nothing more than a breakout the service business in particular to give credit where it's due ultimately where we would love to continue to.

Speaker Change: Highlight the success of our service business and actually pushing more business through the base because we've seen in times like this where there's different calculations valuation issues out there inflation takes hold and and deflation environment. The service business is the one constant within the dealership network, especially that consistently performs especially as consumer.

Speaker Change: Errors, when our hold onto their asset longer and just simply repaired instead of just a straight up replacement and just as well we realize the benefits that come along with all the extended service plans and the good Sam business that begins to be bolstered by such a presence we did see a nice improvement and service year over year, and we continue to see upsetting growth is.

Sean Wagner: And just one follow-up: just after a year of absorbing a lot of new companies through acquisition, maybe just talk about some of the positives that you've seen on the synergistic side, whether it's from a used angle or from, you know, F&I. And if I could even just throw in a couple other elements, every time we add a store, we achieve more and more scale in our marketing tech stack, so that, ultimately, we know that we have such a commanding presence within this entire industry. And each time we add another rooftop, we're enhancing not only marketing but also service capabilities. To go back to your first question, Scott, part of this whole opportunity is that we continue to expand and evolve within this whole lifestyle and grow this total addressable market, and for our capture of that total addressable market. Our next question is from John Healy with North Coast Research. Please proceed with your question. I got it. Thank you. No, that doesn't make sense.

Speaker Change: Specially with external work within our service base. The one thing that I cannot sort of avoid is as the new volume comes back and as we trade for more units and as more customers are out on the road, both the existing ones and new ones that service busy.

Speaker Change: And this has a natural rise that ties back to overall sales growth.

Speaker Change: So we expect to see over the next several years continued improvement continued bay utilization et cetera. It wasn't tough 24 months for us and I don't I don't want to avoid that topic, even service with stuff because when volume falls everything sort of falls with it yes or use business helps us keep reconditioning.

Speaker Change: Things going but that's internal work, we need to see more customer pay work where people are out using their rigs and we're eliminating pain points for them and that is a clear focus for us for the next 36 months.

Speaker Change: Got it and just one follow up just after a year of absorbing.

Speaker Change: The company's through acquisition, maybe just talk about some of the positives that you've seen on the the synergistic side, whether it's from a used angle or from.

Speaker Change: It's always tough to feel really good about acquisitions that we buy it's super trough multiples in a trough environment because the trough environment still is the macro environment that that business has to function with what we have been successful in doing and what we think is the bright spot is the integration of the brand the installation of our.

Operator: And then just one final question on the SG&A to growth side of things. I might have missed it, but is there a bogeyman that we should be thinking about for this year or maybe the exit from this year? That I mean, excuse me, 72 to 74 range in 2020. Our next question is from Noah Zatzkin with KeyBank Capital Markets. Please proceed with your question. Hi, thanks for taking my questions.

Speaker Change: Process and F&I the installation of our process in service.

Speaker Change: <unk> judgment of the inventory matrix to have use those things had been real bright spots, but to have those acquisitions really make us feel good we need the overall market to come back so that our same store business growth and our news Georgia.

Operator: I'm hoping you could maybe provide some additional color on any updated thoughts around the complexion of the 30% plus EBITDA growth expectation in 24, relative to maybe how you were thinking about that three or four months ago. I think there was a thought that maybe full-year same store unit growth could be driven by both new and used growth, but given some of the commentary around used, would you expect new same store units to drive that growth with used declines? And then you just kind of touched on this a bit, but given some of the moving pieces on vehicle margins in the quarters, any updated thoughts on blended vehicle margins versus SG&A rate as a percentage of gross margin as building blocks to get to that 30% plus would be helpful. Thanks. Okay, great. I'm gonna try to unpack that in a couple of different ways.

Speaker Change: And if I could even just throw in a couple of other elements Everytime, we add a store, we achieve more and more scale on our marketing Tech stack, where ultimately we know that we have such a commanding presence within this entire industry and each time, we add another rooftop we're enhancing marketing, but also service capabilities to go back to your first question Scott We're part of this whole opportunity.

Speaker Change: As we continue to expand has continued to evolve within this whole lifestyle and grow this total addressable market.

Speaker Change: And for our capture of that total addressable market.

Speaker Change: [noise] got it that's all I have thank you.

Speaker Change: Our next question is from John Healey with North Kirk Research. Please proceed with your questions.

John Healey: Thanks for taking my question just wanted to ask kind of a high level of question and do you think about the product and service business and good Sam are there any aspects of that business that kind of operate today based on what happened three or four years ago. So I kind of look at the Spike that you saw on your business from 20th of 2021 is there anything that we.

John Healey: Would expect them 24, 25 that should and that sounds kind of pop up higher.

John Healey: Because of the age and then they'll slow at the RV. It's just kind of migrating just through you know just do the consumer holding them for X O X amount of period of time.

Marcus Anthony Lemonis: The 1st is we believe we, I don't recall ever saying that we thought both new and used would be up materially in 24. I think we believe that same store total unit sales will be up, but it is largely driven by new on a double-digit basis. So that's a big contributor.

Speaker Change: That's an excellent question and good Sam has portions of its revenue that are deferred and so when we have a good year. The deferred income happens over two or three or four years based on the product that we sold.

Speaker Change: Hardly enough.

Speaker Change: With volume is down the deferred revenue doesn't isn't as robust and we've already been through that process over the last two years, we've had to make other moves inside of the business to grow that business as a volume comes back we expect first year revenue recognition and then the following year's revenue recognition.

Marcus Anthony Lemonis: The 2nd contributor is that we also believe that we're not going to experience the same gross margin pain through the 2nd and 3rd quarters that we were experiencing last year. And the 3rd piece, as Tom mentioned earlier, we have made some material SG&A reductions. The combination of those 3 is what's giving us the ability to have a fairly decent 24.

Speaker Change: Children improved materially and that's an excellent assessment because that's ultimately how the good good Sam business works you need good volume over a long period of time to help that's why we're excited for volume to come back that business needs. It just the same.

Marcus Anthony Lemonis: We don't consider a 30% growth in our EBITDA number anything to celebrate, because we're coming off of a low number. We're trying to dig out of a low trough environment, and we're trying to get back to mid cycle, which we think is probably going to be more realistic in the 25 to 26 years when that'll be far more robust. We are working our ass off to get to a number in 24 that cobbles together better margins, better top-line revenue on new, sustaining our relevance in use, continuing to grow our service business, and That's what's helping us get there. There is no grand macro wind that's going to take us to 30% by 2024. We believe that's possible in 25 and 26, and we've seen this movie before, but we do have to work through that. So that is the stacker builder model to get to that 24 number. Can you remind me of the 2nd half of your question? I apologize.

Speaker Change: Even further elaborate on that going back to the Psoe category. When you think of just the installed base growing in 2023 based upon our Vio records. Another 200000 individuals that are registering their assets. That's just suggested the fact that yes, you are going to need to have more repair cycles as well as all the different products that consumers are.

Speaker Change: Need so you're spot on John that's a good thing for US is this business grew markedly two years ago consumers do not leave this industry once they get hooked they're in this lifestyle and that starts to pay residual value for all of our different businesses like a service in particular and good Sam.

Speaker Change: Got it thank you.

Speaker Change: And then just one final question on the <unk> side of things I might've missed it but is there a a bogey that we should be thinking about for this year or maybe the exit of the ship.

Speaker Change: Yeah, I mean, you know, we're not where we want to be in terms of full maturity coming back into mid cycle. Yeah. We would not consider 2024, a mid cycle year, we're still in a we're not in the trough, but we're not at mid cycle in mid cycle has always targeted us to be around 68.

Speaker Change: 69% I would expect will be in the 70 to 72 range.

Speaker Change: Excuse me 72 to 74 range in 2024.

Speaker Change: Great. Thank you.

Speaker Change: Oh and the next question is from <unk> <unk> can you Bank capital markets. Please proceed with your.

Speaker Change: Hi, Thanks for taking my questions I'm, hoping you could maybe provide some additional color on any updated thoughts around the complexion of the 30% plus EBITDA growth expectation and twenty-four relative to maybe how you were thinking about that three or four months ago. I think there was a thought that maybe full year same storage unit growth can be driven by it.

Marcus Anthony Lemonis: Yeah, just any thoughts, you know, relative maybe three or four months ago on kind of the blended vehicle margins for the year and the complexion of that new versus used. And then you kind of touched on the SG&A rate as a percentage of gross already. Yeah, I mean, the SG&A as a percentage of growth is a hump to get there.

Speaker Change: Both new and used growth, but given some of the commentary around used would you expect a new seem storage units to drive that growth would be used to clients and then you just kind of touched on this a bit but given some of the moving pieces vehicle margins in the corridors and.

Marcus Anthony Lemonis: And I really believe that while 72 to 74 is a goal, we have a lot of work to do to get there. We're going to need those margins to come back. In our model today of 30% EBITDA growth, it's probably closer to call it 76 or 77. And we have a lot of work to do to get there. And so I'm optimistic on the SG&A side, probably more optimistic than I should be, but we feel comfortable with that number. We have made no change from three or four months ago. I don't see any strategy.

Speaker Change: In the corner, just any updated thoughts on blended vehicle margins versus SG&A rate as a percentage of gross margin as building blocks to get to that 30 per cent plus it'd be helpful. Thanks, Okay, great I'm Gonna I'm gonna try to unpack that in a couple of different ways.

Speaker Change: The first is we believe I don't recall ever saying that we thought both new and used would be up materially in 2004, I think we believe that same store total unit sales will be up but it is largely driven by new on a double digit basis. So that's a big contributor.

Tom Kern: The one thing I do want to put a very strong point on is that we are going to continue to stay disciplined around inventory. I cannot stress that enough. We are gonna continue to stay disciplined. And while we know that that doesn't make everybody happy, we promise that the investment in staying disciplined will yield much better results this year and the following years. We cannot get lazy in managing that. So the used margins are gonna continue to take pressure. No, even just to put a fire point on, perhaps more directly, your question of margins, especially in Q1 sequentially throughout the year. You heard Marcus earlier speak about new margins being in that 13.5% to 14% range. We believe they'll probably be in that range in Q1 and can maybe improve a little bit throughout the course of the year on the new side. And on the used side, as he suggested earlier, just as well, it's going to be lower than historically it has been in Q1. In Q1. Yeah. If I were a betting individual, I'd probably be in that perhaps 14% to 16% range.

Speaker Change: The second contributor is we also believe that we're not going to experience. The same gross margin pain through the second and third quarter that we were experiencing last year and the third pieces as Tom mentioned earlier, we have made some material SG&A reductions a combination of those three is what's giving us the.

Speaker Change: 80 to have a fairly decent 24, we don't consider a 30% growth in our EBITDA number anything to celebrate we're coming off of a low number we're trying to dig out of a low trough environment and we're trying to get back to mid cycle, which we think is probably going to be more realistic in the 25 to two.

Speaker Change: Thousand six years that that'll be far more robust we are working our <expletive> off to get to a number in 24 that cobbled together better margins better top line revenue on new sustain.

Speaker Change: Sustaining are relevant in us continuing to grow our service business and stabilize are used are good Sam business. While we are contracting costs at the fastest rate that we possibly can that towards helping us get there. There is no grand macro wind that's going to take us to 30% up in 2000 2000.

Tom Kern: Four we believe that's possible in 25, and 26 and we've seen this movie before but we do have to work through that so that that is the stacker build their model to get to that 24 number can you remind me on the second half of your question I apologize yeah.

Tom Kern: And we know that that's a bit of self-inflicted pain, but really good inventory hygiene and management. And that sets the stage very well then for the balance of the year, where I wouldn't be surprised if we settle into that 20% to 21% range for the balance of the quarter and the year. By the end of the year. Correct By the end of the year. It's kind of interesting, and I'm hoping you guys heard what I did.

Speaker Change: Yeah, just just any just any thoughts you know relatives, maybe three or four months ago on kind of the the blended vehicle margins for the year and the complexion of that new versus used.

Speaker Change: And then you kind of touched on SG&A rate as a percentage of gross already yeah.

Speaker Change: Yeah, I mean, the SG&A as a percentage of gross as a hump to get there and I I I really believe that while the 72 to 74 is the goal we have a lot of work to do to get that we're gonna need those margins to come back in our model today of 30% EBITDA growth, it's probably closer to call at 76 <unk>.

Marcus Anthony Lemonis: We're apologizing and disappointed with used margins that are still going to be higher than everybody's excitement around new margins. And what that tells you is the used business is the secret sauce of this company. And the reason that we are so diligent right now in the hygiene around it is because we know that that's what's going to carry us for the balance of 24, 25, 26 and beyond.

Marcus Anthony Lemonis: 77.

Marcus Anthony Lemonis: And we have a lot of work to do to get there and so I'm optimistic on the SG&A side, probably more optimistic than I should be but we feel comfortable with that number we have no change from three or four months ago I don't see any different strategy. The one thing I do want to put a very strong point on is that we are.

Operator: We go as the new market goes, and there are years where we outperform the market. And there are years where we underperform the market on new. We have to always be outperforming the market on new, and we know that cleansing is the key. Thank you. Good morning. Good morning.

Marcus Anthony Lemonis: Going to continue to stay disciplined around inventory.

Operator: I cannot stress that enough we are going to continue to stay disciplined and while we know that that doesn't make everybody happy we promise that the investment in staying discipline will yield much better results. This year and the following years, we cannot get lazy and managing that so he.

Operator: Margins are going to continue to take pressure.

Marcus Anthony Lemonis: Can you talk about just OEM promotional support in one cue? Did they just kind of stop the spigot when the year turned, or how did that play out?

Operator: No even just to put a firefight on perhaps more directly your question of margins, especially in Q1 sequentially throughout the year you heard Marcus earlier speak about new margins being in that like 13.5% to 14% range. We believe it'll probably be in that range in Q1, and can maybe improve a little bit throughout the course of the year and the new side and then they use side as you see.

Marcus Anthony Lemonis: No, I mean, look, the manufacturers are always supportive. It's not about stopping the spigot. It's that there's not a lot of water left in the tank. There's not a lot of necessity for it. And we made a commitment with them to be proactive together. And the assistance that we're getting is similar to the assistance that other people are getting. They may be showing it in marketing co-op or floor plan assistance or a variety of other areas, but the manufacturers have been, in my opinion, stellar in understanding that the overall growth of the market is dependent on the cleanliness of the inventory. And if you look back at 2023, each manufacturer took a lot of pain and a lot of gas both on the top line side and on their overall contribution to dealers to cleanse the inventory. We're hopeful that the bulk of that's done. However, there are still a subset of dealers out there that have issues with their inventory. You can see it in the general market. We don't think it's as prevalent as it was seven months ago, but there are still some.

Marcus Anthony Lemonis: Jess earlier, just as well, it's going to be lower than historically it has been into one and Q1, yeah. If I was a betting individual probably in that like perhaps 14% to 16% range and we know that that's a bit of self inflicted pain, but really good inventory hygiene in management and that set the stage very well then for the balance of the year, where I would it be.

Marcus Anthony Lemonis: Surprised that we settled into that like 20th 21 per cent range for the balance of the quarters out of the year by the end of the year correct by the end of the year you know, it's kind of interesting and I I I'm, hoping you guys heard what I did were apologizing and disappointed with use margins that are still going to be higher than everybody's excitement around new marches.

Marcus Anthony Lemonis: And what that tells you is to use business is the secret sources. This company and the reason that we are so diligent right now in the hygiene around it is because we know that that's what's going to carry us for the balance of 2425 26 and beyond we go as the new market goes in there are years, where we outperformed the market.

Marcus Anthony Lemonis: That's usually how acquisitions come to our front door, because there are inventory struggles. The manufacturers, for the first time to this degree, really do understand the importance of units moving through the channel, and I compliment them on three specific things.

Marcus Anthony Lemonis: And there are years, where we underperformed the market on new we have to be always outperforming the market on us and we know that cleansing is the key to that.

Speaker Change: Thank you.

Speaker Change: Our next question is from Christian Thomas Martin with BMO capital markets.

Speaker Change: Stay with your question.

Marcus Anthony Lemonis: [noise] good morning.

Speaker Change: Good morning can.

Marcus Anthony Lemonis: Can you talk to just OEM promotional sport <unk> do they just kinda stopped the spigot.

Marcus Anthony Lemonis: One, they don't seem to be making spec inventory like they were before, trying to be far more in line with what the retail registration registers. Two, they acknowledge the need to drive down the cost of a like-for-like unit by being more innovative, negotiating with suppliers, with suppliers being more willing to participate. And three, everybody really does understand that inventory management, for the first time and, hopefully, the final time, is key to having symbiotic communication with the dealer to not outpace it. In the past, manufacturers would overproduce, dealers would get overstocked, and we'd go through the same cycle. I think maybe, for the first time, that lesson has been learned more than ever.

Marcus Anthony Lemonis: When the your turned her house hopefully it up.

Marcus Anthony Lemonis: No and you look to manufacturers are always supportive, but it's not about stopping the spigot and said that there's not a lot of water left in the tank, there's not a lot of necessity for it and we made the commitment with them to be proactive together and the assistance that we're getting is similar to the assistance that other people are getting they may be showing it in.

Marcus Anthony Lemonis: Marketing co op or floor plan assistance or a variety of other areas, but the manufacturers had been in my opinion stellar and understanding that the overall growth of the market is dependent on the cleanliness of the inventory and if you look back in 2023, each manufacturer took a lot of pain and.

Marcus Anthony Lemonis: A lot of gas both on the top line side and on their overall contribution to dealers to cleanse inventory. We're hopeful that the bulk of that's done there are still a subset of dealers out there that have issues with their inventory you can see it in the general marketplace. We don't think it's as prevalent as it was seven months.

Sean Wagner: I got it. And then you kind of mentioned this, are you expecting more price concessions for model year 25 relative to model year 24? And then, just as a whole, how are you thinking about late model year 24 ordering ahead of the 25 rollout? I think the manufacturers have been very effective at targeting certain price points to ensure that they're spurring some demand in the marketplace. What I mean by that is, specifically within that travel trailer segment and under, I'd say, a $30K retail price point, we believe that the manufacturers were very creative in terms of either decontenting or perhaps having some sort of price concessions to actually ensure that we're able to yield more market growth. But ultimately, within other categories, I do believe that there's going to have to be a little bit more wiggle room, specifically when we talk about motorized or even fifth wheels.

Sean Wagner: Ago, but there are still some that's usually how acquisitions come through our front door, because our inventory struggles the manufacturers in the 20 something years that I've been doing this for the first time to this degree really do understand the importance of units moving through the channel and I can.

Sean Wagner: Compliment them on three specific things one they don't seem to be making spec inventory like they were before trying to be far more in line with what the retail registrations are too they acknowledged the need to drive down the cost of a like for like you in it by being more innovative negotiating with supply.

Sean Wagner: Here's suppliers being more willing to participate in three everybody really does understand that inventory management for the first time and hopefully the final time is key to having symbiotic come communication with the dealer to not outpace it in the past manufacturers would overproduce dealers will.

Sean Wagner: We're keeping a very diligent eye on that just as well because we understand that when prices are modified within the overall new marketplace, it could impact used. So we believe that we have factored that in moving ahead to understand that there's going to perhaps be some other price concessions in different categories, albeit I don't think they're going to be necessarily as material as what we just saw across the board. But I think we're set up pretty well as a company. I can't necessarily speak for our competition and the broader base at large.

Sean Wagner: Get overstock and we'd go through the same cycle I think maybe for the first time that lesson has been more learned than ever.

Speaker Change: Got it.

Sean Wagner: And then you can't you kind of mentioned this are you expecting more kind of price concessions from all your twenty-five relatives, Somalia 24, and then just as a whole how were you thinking about Palin model year 2000 for ordering ahead of the twenty-five rollout.

Sean Wagner: Thank you, and then just your kind of plan for 25 ordering slash add to 24 ordering, plan for ordering at the end of 25? Yeah. We don't order... Another month? Yeah. Let me jump into this one.

Sean Wagner: And I think the manufacturers have been very effective at targeting certain price points to ensure that their spring some demand in the marketplace. What I mean by that is specifically within that travel trailer segment and under I'd say 30 hated retail price point, we believe that the manufacturers were very creative in terms of either D contenting or.

Marcus Anthony Lemonis: We don't order... Like, we don't wake up in the morning and just order. We have a six- to nine-month planning process that we sit down with each manufacturer to ensure that we're ordering inventory the right way. And what we want to be careful of is that we're ordering and looking at demand while we're ordering. So, we're not just going to go out and place a ton of orders. 25s are going to come around at some point.

Marcus Anthony Lemonis: Perhaps having some sort of price concessions to actually ensure that we're able to yield more market growth.

Marcus Anthony Lemonis: But ultimately within other categories I do believe that there is going to have to be a little bit more wiggle room, specifically, when we talk about motor eyes, or even fifth wheels, we're keeping a very diligent I on that just as well because we understand that when prices are modified within the overall new marketplace. It could impact used so we believe that we are factor that <unk>.

Marcus Anthony Lemonis: And we don't know when that's going to happen. We believe that the manufacturers are going to stay disciplined and allow dealers to work through their 24 inventory as we hit the selling season in the spring and the summer, and then roll out 25s at the appropriate time. Yeah. Specifically, motorized conversions convert quicker.

Marcus Anthony Lemonis: Moving ahead to understand that there's going to perhaps be some other price concessions in different categories I'll be and I don't think they're going to be naturally as material as what we just saw across the board, but I think we're set up pretty well as a company I can't necessarily speak for our competition in the broader base at large.

Sean Wagner: That'll probably happen in the next couple months here. And in all likelihood, my hope, to Marcus' point, is that TOVLs don't convert that model year until the July, August timeframe, in which case, there won't be an abundance of 2025s within the overall network until probably like October, November. It generally takes a little while to ramp up that production and start to sell down 24s to introduce 25s. So, to suggest what the game plan is, I mean, that's really tough to say at this moment. But just understanding that there is a scarce supply of rolling stock inventory, and generally speaking, of the dealers that we're acquiring, they've been apprehensive to restock as of this moment. And I say restock really in Q1 and perhaps bleeding into Q2.

Sean Wagner: And then just you're kind of plan for 25 order.

Sean Wagner: And to 24 order.

Sean Wagner: Plan for ordering at the end of 25, Yeah. We don't we don't have my order.

Marcus: Let me let me let me jump into this one we don't order like we don't wake up in the morning, and just order we have a six to nine months planning that we sit down with each manufacturer to ensure that we're ordering inventory the right way and what we want to be careful of is that we're ordering and looking at demand. While we're ordering so we're not just going to go out and place a ton of orders.

Sean Wagner: Twenty-five is they're gonna come at some point and we don't know when that's gonna happen. We believe that the manufacturers are gonna stay disciplined and allowed dealers to work through their twenty-four inventory as we hit the selling season in the spring and the summer and then roll out 25 at the appropriate time, specifically motorized convert quicker than I'd probably have in them.

Sean Wagner: Next couple of months here and in all likelihood my hope to marks is pointed to that total is don't convert the amount of your until July August time frame in which case there won't be an abundance of 2020 fives within the overall network until probably like October November it generally takes a little while to ramp up the production and sorts, who still down 24 is to <unk>.

Sean Wagner: There's going to come a moment, though, where all dealers are going to have to restock because they simply are just so low on inventory, and they need to have some sort of way to entice consumers to come back into the overall network. My guess is that in Q3, Q4, there could be a fair amount of wholesale shipments within the overall industry.

Sean Wagner: Produced 20 fives, so to suggest what the game plan is I mean, that's really tough to say as of this moment, but just understanding that there is a scarce supply of rolling stock inventory and generally speaking of the dealers that we're requiring they'd been apprehensive to restock as of this moment, so when I say restocked really in Q1 and for her.

Sean Wagner: I think there could be some material increases, and that's just suggestive of the fact that we've reduced inventory to such an extreme level as an industry over the last two and a half years. So, there has to come a point where restocking occurs. Perfect. That's what I was looking for.

Sean Wagner: <unk> bleeding into Q2, there's gonna come a moment, though we're all dealers are going to have to restart because they simply or either just soloing inventory and they need to have some sort of way to entice consumers to come back into the overall network. My guess is Q3 Q for there could be a fair amount of wholesale shipments within the overall industry I think there could be.

Operator: Thanks. Thank you. Our next question is from Brandon Rowley with D.A. Davidson.

Operator: Some material increases and that's just suggested the fact that we've reduced inventory to such an extreme level as an industry over the last two and a half years. So there has to come a point where restocking occurs.

Operator: Please proceed with your question. Good morning. Thank you for taking my questions. Just first, a follow-up on your fiscal year 24 assumptions. You had said maybe two rate cuts in the back half of this year. Does your 30% EBITDA growth forecast bake in, you know, improvement in flooring costs and maybe overall retail demand, or is that just a comment you made about rate relief being minimal this year? I mean, we have very, very little enhancement to our number based on any rate cuts happening. If it's a million dollars, that would be a lot in the back half of the year.

Speaker Change: Perfect cause I was looking for.

Brian: [noise]. Thank you. Our next question is from Brian enrolling with doing Davidson. Please proceed with your question.

Speaker Change: Good morning. Thank you for taking my questions. Just first the follow up on your fiscal year 24 assumptions do it said.

Operator: Maybe two rate cuts in the back up with this year does your 30 per cent EBITDA growth forecast Bacon improvement in flooring cost and maybe overall retail demand or is that just a comment you felt like right relief would be minimal this year.

Operator: I mean, we have very very little enhancements to our number based on any rate cuts happening if it's a million dollars that would be a lot in the back half of the year.

Tom Kern: That's right. It's really just a couple of rate reductions in the back half of the year impacting that floor plan interest expense. We have not tried to, you know, really get bullish on the demand impact. Okay, okay, great.

Operator: Okay. It's really just a couple a couple of rate reductions in the back half of the year impacting that floor plan interest expense. We have not tried to you know really good bullish on the on the demand.

Tom Kern: Impact of it.

Speaker Change: Okay. Okay, Great and then also just one are new or be pricing you talked about you know continuing the drug prices lower how much lower do you think pricing needs to go on some of your higher velocity categories to really get the industry back to normal lives retail volumes.

Brandon Rowley: And then also just on RV, new RV pricing, you talked about, you know, continuing to drive prices lower. How much lower do you think pricing needs to go on some of your higher velocity categories to really get the industry back to normalize retail volume? I mean, for us, I feel pretty good, Brandon, that within our high-velocity products, especially those that are under the $20K retail price point, we've been very effective at hitting that right invoice price and, in turn, the right retail price. I think as you go up the pricing funnel, there's going to have to be some concessions here and there, especially as you get up to the motorized segment. That's why that's going to be a head-scratcher for me in so much as it's going to be very difficult to actually continue to meet the demand that we're seeing out there, knowing that Ford's still imposing price increases on their chassis.

Brandon Rowley: For us I feel pretty good Brandon that within our high velocity products, especially those that are under 20, K retail price point that we've been very effective at hitting that right invoice price and in turn right retail price I think as you go up the pricing funnel, there's going to have to be some concessions here and there, especially as you get.

Brandon Rowley: Up to the motorized segment, that's really that's going to be a head scratcher for me in so much as it's going to be very difficult to actually continue to yield the demand that we're seeing out there knowing that Ford still imposing price increases on their chassis. So motorized manufacturers truly are going to be just subjected to whatever Ford is going to suggest terms or cut.

Brandon Rowley: So motorized manufacturers are truly going to be subjected to whatever Ford is going to suggest in terms of their cutaway chassis and raising those prices. And they can only work with suppliers to such an extent to reduce the overall content that's being put into those assets. I think the one thing that we don't want to have happen, to be totally honest with you, is we want this perfect balance between prices falling and the consumer not losing confidence in the value of the asset they just bought. That's a really, really important thing.

Brandon Rowley: <unk> and raising those prices and they can only work with suppliers to such an extent to reduce the overall content that is being put into those assets.

Brandon Rowley: I think the one thing that we don't Wanna have happen to be totally honest with these we want this perfect balance between prices, reducing and the consumer not losing confidence in the value of the asset. They just spot. That's a really really important thing like we want to drive value to the consumer and we want the manufacturer to me.

Sean Wagner: We want to drive value to the consumer, and we want the manufacturer to make money, and we want to make money. But if we keep moving, having these wild swings in invoice pricing, the customer is going to lose confidence, and more importantly, the banks will lose confidence in what their end value is. This whole model for 2024 was really built on a couple of assumptions.

Sean Wagner: Money and we want to make money, but if we keep moving having these wild swings and invoice pricing the customer's going to lose confidence and more importantly, the banks will lose confidence and what their and value is this whole model for 2024 was really built on a couple of assumptions and I want to close out with just kind of clarifying a few things.

Marcus Anthony Lemonis: And I want to close out with just kind of clarifying. Number one, we expect new volume sales to, we expect use volume to stay relatively flat, and there will be nip and tuck, but for the full year, we expect it to stay relatively flat. We expect gross margins on the new side to sequentially improve, but we are not going to have some COVID-type margin return. That's not going to happen.

Marcus Anthony Lemonis: Number one we expect new volume sales to improve we expect use volume to stay relatively flat and there will be nip and tuck, but for the full year, we expect it to stay relatively fat, we expect gross margins on the new side to sequentially improve but are not gonna have some COVID-19 type <unk>.

Marcus Anthony Lemonis: Arjun return that's not gonna happen, we expect used margins to materially sequentially return as we start the year in that 15% range in Q1 and get back to a normalised number by year end on the expense side. This is maybe the most important takeaway we've always.

Marcus Anthony Lemonis: We expect utilization margins to materially sequentially return as we start the year in that 15 percent range in Q1 and get back to a normalized number by year-end. On the expense side, this is maybe the most important takeaway. We've always had a goal of having SG&A at 70 percent or below, but a number of factors are important in understanding how we get there. One of them is taking care of our people, and what we did not want to do was start going through our organization and just eliminating headcount without any logic to it, because we know this industry comes back.

Marcus Anthony Lemonis: Had a goal of having SG&A at 70% or below but a number of factors are important in understanding how we get there one of them is taking care of our people and what we did not want to do is start going through our organization and just eliminating head count without any logic to it because we.

Marcus Anthony Lemonis: This industry comes back in a matter of 60 days, we saw our numbers go from negative materially negative on the new side to reasonably positive and that happened really quickly and we know that as we get into selling season that can happen the worst customer experience and the worst overall brand b.

Marcus Anthony Lemonis: In a matter of 60 days, we saw our numbers go from negative, materially negative on the new side, to reasonably positive, and that happened really quickly. And we know that as we get into selling season, that can happen. The worst customer experience... And the worst overall brand building that a company can have is when customers come in and there's nobody to answer the phone, nobody to call them back, and nobody to take care of them.

Marcus Anthony Lemonis: Something that accompany can have is what customers come in and there's nobody to answer the phone and nobody you could call them back nobody to take care of them. So as we manage the SG&A as a percentage of gross we have to have a finer balance when I say things like 72 and 73 the rest of the team looks at me like I'm nuts, I'm, probably more optimistic about.

Marcus Anthony Lemonis: So as we manage SG&A as a percentage of gross, we have to have a finer balance. When I say things like 72 and 73, the rest of the team looks at me like I'm nuts. I'm probably more optimistic about how things could return. But the reality of it is that expenses are going to continue to be there, particularly when the floor plan is high, marketing dollars are high, and we're taking on acquisitions. Our standards are not going to change in the foreseeable future for the overall mid-cycle look, and that is an 8% EBITDA margin. SG&A is a percentage of growth at 70%. Those two numbers have been constant forever, and we've had numbers as high as 13 and 59, and we've had numbers, excuse me, as low as those two numbers, and we've had the opposite. As we work through the 2024 calendar year, we are confident that we're going to do what it takes to get to the 30% plus number in EBITDA. The inputs are still moving around a little bit.

Marcus Anthony Lemonis: How things could return, but the reality of it is is that expenses aren't going to continue to be there, particularly when floorplan is high in marketing dollars are high and we're taking on acquisitions. Our standards are not going to change in the foreseeable future for the overall mid cycle luck and that is an 8% EBITDA margin.

Marcus Anthony Lemonis: SG&A as a percentage of gross at 70% those two numbers have been constant forever and we've had numbers as high as 13, and 59 and we've had numbers excuse me as long as those two numbers and we've had the opposite as we work through the 2024 in calendar year, we're confident that we're going to do.

Marcus Anthony Lemonis: What it takes to get to the 30% plus number and EBITDA. The inputs are still moving around a little bit maybe pick up a little bit more margin. We hope are expensive is going to be better of course, they are but we have to be realistic about what we're dealing with in this environment and not set ourselves up for credibility.

Marcus Anthony Lemonis: May we pick up a little bit more margin? We hope so. Are our expenses going to be better? Of course they are.

Marcus Anthony Lemonis: But we have to be realistic about what we're dealing with in this environment and not set ourselves up for credibility issues with the customer, with our employees, or with you. So we're sticking to our number because we know we can get there. But there are a lot of moving parts and pieces.

Marcus Anthony Lemonis: Issues.

Marcus Anthony Lemonis: With the customer with our employees or with you. So we're sticking to our number because we know we can get there, but there is a lot of moving parts and pieces and we do believe that the bulk of the earnings for the company like every other year aren't gonna happen in Q2, and Q3 I think the difference for US is that we expect.

Marcus Anthony Lemonis: And we do believe that the bulk of the earnings for the company, like every other year, are going to happen in Q2 and Q3. The difference for us is that we expect Q4 to be better. We expect it to be better because there was a lot of noise in our Q4 numbers last, and we want to be super clear about that. So if there are no other formal questions, we want to move into the Q&A. Thank you. Operator, we'll go ahead and move into the Q&A. That's it.

Marcus Anthony Lemonis: Q for it to be better.

Marcus Anthony Lemonis: We expect it to be better because there was a lot of noise in our queue for number last year and we want to be super clear about that so if there are no other form of questions. We want to move into the queue in a section.

Speaker Change: Okay do you think.

Speaker Change: Operator will go ahead and move into the queue in a section please.

Speaker Change: That's it we're done.

Operator: We're done. Okay, thank you very much for joining us. Sure. We want to confirm that there are no more questions. There are no further questions at this time. Great. Thank you so much. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay. Thank you very much for joining us.

Operator: Sir.

Operator: Oh.

Operator: We want to confirm there's no more questions.

Operator: No further questions at this point.

Operator: Great. Thank you so much.

Operator: This concludes today's conference may disconnect. Your lines at this time. Thank you for your participation.