Q4 2023 Lazydays Holdings Inc Earnings Call

Okay.

[music].

Operator: Greetings and welcome to the Lazy Days Holdings fourth quarter 2023 conference call. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. Good morning everyone, and thank you for joining us.

Greetings and welcome to the Lady These holdings fourth quarter 2023 Conference call. As a reminder, this conference is being recorded its now my pleasure to introduce your host Kelly Porter Chief Financial Officer. Thank you you may begin.

Kelly Porter: On the call with me today are John North, CEO, and Amber Dillard, Vice President, Operations. Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks, uncertainties, assumptions, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as in the investor relations section of our website. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

Good morning, everyone and thank you for joining us on the call with me today are John North CEO, and Amber Dillard Vice President operations.

Before we begin I would like to remind everyone that we will be discussing forward looking information, including potential future financial performance, which are subject to risks uncertainties and assumptions that could cause actual results to differ materially from such forward looking statements and information.

Kelly Porter: And any or all of our forward-looking statements may prove to be incorrect. We can make no guarantees about our future performance. And we undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable. With that, I'd like to turn the call over to John North, our Chief Executive Officer. Thanks, Kelly. Good morning, everyone.

Such risks uncertainties assumptions and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website.

Accordingly forward looking statements should not be relied upon as a prediction of actual results.

And any or all of our forward looking statements may prove to be inaccurate.

We can make no guarantees about our future performance.

John F. North: Thanks for coming. I'll make a couple of brief opening remarks and I'll let Amber talk about operations. Kelly can take you through our financial results, and then we're happy to have a few questions at the end. It's obviously been an eventful few months since we spoke with you in early November.

And we undertake no obligation to update or revise our forward looking statements.

On this call we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website for how we define these measures and reconciliations to the closest comparable GAAP measures.

John F. North: We've had some important developments occurring both in the industry and within our organization. By now, we've heard from both large dealer groups and several OEM partners, and we validated their comments against the market data provided by vehicle registration reporting services surrounding the fourth quarter and as of yesterday into January. Similar to what they reported, we saw industry-wide economic pressures in November that resulted in retail sales below our expectations and continued headwinds into December and January as well. In the fourth quarter, as a result, we took decisive action to increase our marketing spend and adjust retail pricing.

With that I'd like to turn the call over to John North Our Chief Executive Officer.

Thanks Kelly.

Everyone. Thanks for calling in today.

I'll make a couple of brief opening remarks, and we'll talk about operations and Kelly can take you through our financial results and then we're happy to have a few questions at the end.

It's obviously been an eventful few months since we spoke with you in early November we've had some important developments occurring both in the industry and within our organization.

By now you've heard from both large dealer groups and several OEM partners and we validated their comments against the market data provided by vehicle registration reporting services surrounding the fourth quarter and as of yesterday end of January.

John F. North: And as a result, we saw significant improvement in sales volumes for the months of December, January, and February, both sequentially and year-over-year. Our current expectation is to report a pre-tax loss for the first quarter of this year, but we anticipate being profitable and operationally cash flow positive for the full year. From a liquidity perspective, Kelly and our finance team have been hard at work. They secured a $35 million mortgage facility in December and, more recently, worked with our lender partners for additional operational flexibility with our covenants over the next few quarters as we move into the summer peak selling season. Operationally, Amber and our store leaders have been working diligently to improve the health of both our new and used inventory through disciplined management around both stocking levels and pricing actions, as well as partnering with our OEMs to obtain assistance from them wherever possible.

Similar to what they reported we saw industry wide economic pressures in November that resulted in retail sales below our expectations and has seen continued headwinds into December and January as well.

In the fourth quarter as a result, we took decisive action to increase our marketing spending to adjust retail pricing and as a result, we saw significant improvement in volumes for the months of December January and February both sequentially and year over year.

Our current expectation is to report a pre tax loss for the first quarter of this year, but we anticipate being profitable in operationally cash flow positive for the full year.

From a liquidity perspective, Kelly and our finance team has been hard at work they secured a $35 million mortgage facility in December and more recently worked with our lender partners for additional operational flexibility with our covenants over the next few quarters as we move into the summer peak selling season.

John F. North: From a cost control standpoint, we have continued to focus on finding areas of unnecessary or redundant spending and have been able to reduce SG&A expense year-over-year despite increasing our storefront print right over 40% in 2023. In January, we also launched a complete rebranding effort with a new website, fonts, logos, and colors, and even a new stock symbol. We are no longer using the ticker L-A-Z-Y or Lazy.

Operationally Amber and our store leaders have been working diligently to improve the health of both our new and used inventory through disciplined management around those stocking levels and pricing actions as well as partnering with our Oems to obtain assistance from them wherever possible.

From a cost control standpoint, we have continued to focus on finding areas of unnecessary or redundant spending and then been able to reduce SG&A expense year over year, despite increasing our store brands grew by over 40% in 2023.

John F. North: Instead, we have rebranded as G-O-R-V or GoRV, which is more action-inspired and true to our culture to facilitate helping our customers find the freedom to be outdoors and do the things they love, however they use their RV. Importantly, these rebranding efforts will enhance our digital retail experience, particularly on mobile devices, which account for over 80% of our website traffic every day. In terms of corporate development, as a reminder, we started 2023 with 16 locations and ended the year with 24 operating dealerships. Earlier this week, we announced the opening of our last Greenfield location that has been under development since all the way back in 2021 in Arizona, bringing our current store count to 25.

In January we also launched a complete rebranding efforts, our new web site fonts logos and colors, and even a new stock symbol <unk>.

There are no longer using the ticker la Z y or lazy instead, we have rebranded as <unk> V or go RV, which is more action inspired.

And true to our culture to facilitate helping our customers find the freedom to be outdoors and do the things. They love however, they use their RV.

Importantly, these rebranding efforts will enhance our digital retail experience, particularly on mobile devices, which account for over 80% of our website traffic every day.

In terms of corporate development as a reminder, we started 2023 was 16 locations and ended the year with 24 operating dealerships.

Earlier this week, we announced the opening of our last Greenfield location, but it has been development since all the way back in 2021 in Arizona, bringing our current store count to 25.

John F. North: Finally, we remain focused on driving integration with our newly opened or acquired locations and anticipate less acquisition activity in 2024 compared to last year, but we will still continue to look for attractive opportunities, both on a tuck-in and strategic basis. Given the depressed macro environment and the significant number of stores we've added over the past year, we understand it can be difficult to calibrate the underlying earnings power of our business. To that end, we want to provide a picture of what we believe business looks like in a normal year. As we think about our business in a mid-cycle environment, we're confident in our ability to generate over $1.5 billion in annualized revenue while delivering a high single-digit EBITDA margin. Well, this is a challenging time for the inventory or for the industry, excuse me. We strongly believe we are well positioned for 2024 and beyond with a solid balance sheet, healthy inventory, fantastic retail locations, strong operators, and an incredible brand. With that, I'll turn the call over to Amber.

Finally, we remain focused on driving integration with our newly opened or acquired locations and anticipate less acquisition activity in 2024 compared to last year, but we will still continue to look for attractive opportunities both on a tuck in and strategic basis.

Given the depressed macro environment and a significant number of stores. We've added over the past year, we understand it can be difficult to calibrate the underlying earnings power of our business to that end, we want to provide a picture of what we believe the business looks like it normally does.

As we think about our business in a mid cycle environment, we're confident in our ability to generate over $1 5 billion in annualized revenue, while delivering high single digit EBITDA margin.

While this is a challenging time for the inventory or for the industry. Excuse me. We strongly believe we are well positioned for 2024 and beyond with a solid balance sheet healthy inventory fantastic retail locations strong operators and an incredible brands.

With that I'll turn the call over to Ammar.

Amber Dillard: Thanks, John, and good morning, everyone. Beginning in November, we put a laser focus on improving the health of our inventory, as it became clear that we needed to maximize every retail transaction we could. From the low level of sales in November, we sold more units in December, January, and February, both sequentially and year-over-year. Furthermore, growth profit improved from December to February, and current model year units are a greater percentage of our sales mix, meaning we are generating more growth profit dollars overall. As a result, I am pleased with the health of our inventory as of today and feel we are very well positioned as we move into the spring and summer selling seasons and prepare for the 2025 model year changeover. To put things in perspective, in early November, we had around 100 2022 model year units and over 2,000 2023 model year units in stock. As of yesterday, we were down to 17 2022 units and just over 750 2023 units remaining.

Thanks, John and good morning, everyone beginning of November so laser focused on improving the health of our inventory as it became clear that we needed to maximize every retail transaction we could.

From the low level of sales in November we sold more units in December January and February both sequentially and year over year. Furthermore, our gross profit improved from December to February and current model year units are a greater percentage of our sales mix, meaning we are generating more gross profit dollars overall as a result I am.

I'm pleased with the health of our inventory as of today and feel we are very well positioned as we move into the spring and summer selling season and prepare for the 2025 model year changeover to put things in perspective in early November we had around 120 22 model year units and over 2020 twenty-three model year units in stock.

As of yesterday, we were down to 17 2022 units and just over 752023 units for me.

Amber Dillard: Overall, more than 80% of our inventory is current model year, and we are well-positioned to maintain the inventory health we have spent the last four months diligently working on. We believe we have an incredibly healthy inventory position relative to the industry at the current time. We've received amazing support from many of our OEM partners, as they have contributed additional incentive dollars to help us to continue to deliver units. We are stretching to make every retail sale we can and to overcome some of the industry headwinds associated with higher interest rates, negative equity, and lower consumer demand, given the post-COVID sales environment.

Overall more than 80% of our inventories current model year, and we are well positioned to maintain the inventory health. We have spent the last four months diligently working on.

We believe we have an incredibly healthy inventory position relative to the industry at the current time.

We've received amazing support for many of our OEM partners as they have contributed additional incentive dollars to help us to continue to look to deliver unit we.

We are stretching to make every retail say all we can to overcome some of the industry headwinds associated with higher interest rate negative equity and lower consumer demand given the post COVID-19 sales environment.

Amber Dillard: We have also made the strategic decision to emphasize a faster turn and higher volume by more aggressively adjusting pricing on new units and expanding our lower price point product offerings. We know our OEM partners appreciate the focus to deliver more sales volume and increased velocity, both as it helps to achieve their volume objectives as well as incremental F&I attachment and downstream service work as we increase units and operations in the markets we serve. Thankfully, our OEM partners remain disciplined in terms of production levels and have matched their output to consumer demand. Maintaining the right balance of healthy inventory levels at the dealership level while still keeping plants in production is critical to the partnership we have with our OEMs, and we appreciate them for it. Additionally, we continue to emphasize our used vehicle procurement function to augment the units we receive via trade-in from customers.

We have also made the strategic decision to emphasize a faster turn and higher volume by more aggressively adjusting pricing on new unit and expanding our lower price point product offerings. We know our OEM partners. Appreciate the focus to deliver more sales volume and increased velocity. Both as it helps you achieve their volume objectives is.

Well as incremental F&I attachment and downstream service work as we increase the units in operation and the markets we serve.

Thankfully, our OEM partners remain disciplined in terms of production levels and have matched their output to consumer demand.

Maintaining the right balance of healthy inventory levels at the dealership level, while still keeping plants and production is critical to the partnership we have with our Oems and we appreciate that before it.

Additionally.

Emphasize our used vehicle procurement function to augment the units we received via a trade down from customers. We have an incredible team of buyers that has been able to source high demand units that allow us to provide consumers with a more affordable price point, while maintaining healthy gross margins. Upon sale, we believe there's even more opportunity to increase the volume of it.

Amber Dillard: We have an incredible team of buyers that have been able to source high-demand units that allow us to provide consumers with a more affordable price point while maintaining healthy gross margins upon sale. We believe there is even more opportunity to increase the volume of units we source in the market and have increased our marketing spend in this area to drive more leads and conversion. Over the past 180 days, we've made substantial leadership changes in our store network, both due to new locations as a result of dealership acquisitions and opening greenfield locations and to address underperforming store leadership. We remain relentless in finding the optimum general manager talent pool and are working to further develop and enhance the caliber and capabilities of our most crucial resource, our people.

In it we source in the market and have increased our marketing spend in this area to drive more leads and conversion.

Over the past 180 days, we've made substantial leadership changes in our store network, both due to new locations as a result of dealer.

And opening greenfield locations and to address underperforming store leadership.

We remain relentless on finding the optimum general manager talent pool and are working to further develop and enhance the caliber and capabilities of our most crucial resource our people.

Amber Dillard: We continue our efforts around external recruiting and internal promotion to source world-class operational talent across the country. In closing, I want to thank our team, especially our store personnel. They come to work each day with a singular mission to provide the best sales and service experience in the industry. Importantly, they have responded to the current industry environment with optimism and determination, and we are making significant progress every day, week, and month as we continue to focus on 2024. With that, I'll turn the call over to Kelly.

We continue our efforts around external recruiting and internal promotions to source world class operational talent across the country.

In closing I want to thank our team, especially our store personnel they come to work each day with a singular mission to provide the best sales and learning experience in the industry importantly, they have responded to the current industry environment with optimism and determination and we are making significant progress every day week and month.

We continue to focus on 'twenty 'twenty four with that I'll turn the call over to Kelly.

Kelly Porter: Thank you, Amber. Please note that, unless stated otherwise, the 2023 fourth quarter comparisons are versus the same period in 2022. Total revenue for the quarter was $198 million, a decrease of 18.7%.

Thank you Amber. Please note that unless stated otherwise the 2023 fourth quarter comparisons are versus the same period in 2022.

Total revenue for the quarter was $198 million a decrease of 18, 7% total revenue for the full year was $1 1 billion a decrease of 18, 4% over the prior year.

Kelly Porter: Total revenue for the full year was $1.1 billion, a decrease of 18.4% over the prior year. From this point on, all metrics will be on a same store basis unless otherwise stated. New unit sales declined 26% in the quarter, and gross profit per unit, excluding LIFO, declined 31.6%. Used retail unit sales increased approximately 1%, and gross profit per unit decreased 30.2%. Finance and insurance revenue declined 31.3% during the quarter, primarily due to a decrease in unit volume combined with higher chargebacks.

From this point on all metrics will be on a same store basis, unless otherwise stated.

New unit sales declined 26% in the quarter and gross profit per unit, excluding LIFO declined 31, 6%.

Used retail unit sales increased approximately 1% and gross profit per unit decreased 32%.

Finance and insurance revenue declined 31, 3% during the quarter, primarily due to a decrease in unit volume combined with higher charge backs.

Kelly Porter: Our service body and parts revenue decreased 20.1%, and our gross profit decreased by 26.3%. Our gross margin on service body and parts decreased 450 basis points. During the quarter, we reduced total adjusted SG&A expense by $1.6 million, despite increasing our network from 16 locations to 24 year over year. Adjusted net loss was $13.8 million for the quarter compared to net income of $936,000 last year. Adjusted fully diluted earnings per share was a loss of $1.09 for the quarter, compared to a net loss per diluted share of $0.02 in the prior year.

Our service body and parts revenue decreased 21%.

And our gross profit decreased by 26, 3%.

Our gross margin on service body and parts decreased 450 basis points.

During the quarter, we reduced total adjusted SG&A expense by $1 $6 million, despite increasing our network from 16 locations to 24 year over year.

Adjusted net loss was $13 $8 million for the quarter compared to net income of 936000 last year.

Adjusted fully diluted earnings per share was a loss of $1.90 for the quarter compared to a net loss per diluted share of two cents in the prior year.

Kelly Porter: Moving on to liquidity and capitalization, as of year end, we had $58 million in cash, and we remained operationally cash flow positive during the fourth quarter and for the full year. On December 29th, we closed on a $35 million mortgage facility secured by approximately $110 million of owned real estate. The facility has a three-year term and is structured to allow us to obtain alternative financing on a location-by-location basis with other lending partners. We estimate that we can generate an additional $47.5 million in mortgage loan proceeds by refinancing these properties at a 75% loan devaluation rate, similar to other properties we financed during 2023. In addition, we have other unencumbered real estate that we estimate can provide additional liquidity of $18 million.

Moving on to liquidity.

As of year end, we had $58 million of cash and we remain operationally cash flow positive during the fourth quarter and for the full year.

On December 29, we closed on a $35 million mortgage facilities secured by approximately $110 million of owned real estate.

The facility has a three year term and is structured to allow us to obtain alternative financing on a location by location basis with other lending partners.

We estimate that we can generate an additional $47 $5 million and mortgage loan proceeds by refinancing these properties at a 75% loan to value.

Similar to other properties, we finance during 2023.

In addition, we have other unencumbered real estate that we estimate can provide additional liquidity of $18 million.

Kelly Porter: Working with our syndicated lenders, we received a waiver of our financial covenants for the fourth quarter of 2023, as well as the first two quarters of 2024, with modified thresholds for the third quarter and a return to our standard covenant package as of the end of 2024. I want to thank our syndicated lenders, led by M&T Bank, for their partnership to allow us the room to navigate the current economic environment and focus on improving operating results throughout 2024. Now I'll turn the call back over to John for some closing. Thanks, KP.

Working with our syndicated lenders, we received a waiver of our financial covenants for the fourth quarter of 2023 as well as the first few quarters of 'twenty 'twenty four was modified thresholds for the third quarter and a return to our standard covenant package as of the end of 'twenty 'twenty four.

I want to thank our syndicate of lenders led by M and T bank for their partnership to allow us the room to navigate the current economic environment and focus on improving operating results throughout 2024.

Now I'll turn the call back over to John for some closing comments.

Thanks Casey.

So in summary, we feel well positioned for the remainder of the year based on the financial and operational actions. We have taken in response to the current environment I'd like to leave you with four main points.

John F. North: So, in summary, we feel well positioned for the remainder of the year based on the financial and operational actions we have taken in response to the current environment. I'd like to leave you with four main points. First, we have significantly improved the health of our inventory and have more than 80% of our new units in the current model year. Second, we're operationally cash flow positive year to date and expect to be profitable and operationally cash flow positive the remainder of this year. Third, as of today, we have liquidity of $45 million, which is actually $13 million higher than where we were at the end of the third quarter of last year.

First we have significantly improved the health of our inventory and have more than 80% of our new units in the current model year <unk>.

Second we're operationally cash flow positive year to date and.

And expect to be profitable and operationally cash flow positive through remainder of this year.

Third as of today, we have liquidity of $45 million, which is actually $13 million higher than where we were at the end of the third quarter of last year.

Operator: And finally, we sold more units in December, January, and February, both sequentially and year over year, and anticipate further improvement in March based on early results this month. We've also seen increasing gross margin on the current model year product. These trends increase our conviction that we are well-positioned as we move into the seasonally stronger spring and summer selling. With that, we're happy to open up the call and take some questions. Thank you, and I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

And finally, we sold more units in December January and February both sequentially and year over year and anticipate further improvement in March based on early results. This months. We've also seen an increasing gross margin on the current model year product.

These trends increase our conviction that we are well positioned as we move into the seasonally stronger spring and summer selling season.

With that we're happy to open up the call and take some questions.

Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up your handset.

Daniel Joseph Moore: You may press star 2 if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question is coming from Daniel Moore from CJS Security. Your line is now live. Good morning, John. Good morning, Kelly, and Amber.

Before pressing star one one moment. Please while we poll for questions. Our first question is coming from Daniel Moore from CJS Securities. Your line is now live.

Good morning, John Good morning, Kelly and thanks for taking the questions and all the color there.

John F. North: Thank you. Thank you. Thank you. Shipments that we saw from December through February now into March. We can maybe just delineate a little bit, kind of higher end motorized and fifth wheels versus lower-priced entry-level travel trailers, um... and whether there were uh... much of a difference between those two types of travel trailers. Nice to hear from you. Thanks for the question.

You start with just a sequential improvement.

In shipments that we saw from December through February and now into March.

Maybe just delineate a little bit between kind of higher end motorized and fifth wheels versus lower priced entry level travel trailers.

John F. North: I think in general, you know, motorized has been a little bit weaker than towable. And, you know, when we look at the market data and compare that to our results, you know, we're certainly a more concentrated motorized dealer as a historical kind of reference point than, you know, the broader industry. And I would, and I would say that our experience has been similar. We've seen a more

And whether there was much of a difference in the cadence or the rate of improvement between kind of new and used units as well.

Nice to hear from me thanks for the question.

I think in general you know motorized has been a little bit weaker than total and you know when we look at the market data and compare that to our results are you know, we're certainly probably a more concentrated motorized dealer as a historical kind of reference point, then you know for the broader industry.

John F. North: I would say a more healthy recovery on the lower end and with the total product than we have on the motorized side. And within motorized, you know, I would say the class A's in particular have been probably where we've seen additional weakness relative to what the market is. Now, we're still selling them. You know, there's definitely customers that are interested in them. You know, but overall, I would say they were, you know, the motorized piece was probably the last to roll over at the end of COVID and has been slower to recover as we come out of that. And we've seen, you know, probably more recovery at the lower end, which I think is consistent with what we've heard from other dealers. And we're not, you know, really any different, but all of them were better.

Ari.

And I would and I would say that our experience has been you know similar we've seen a more.

I would say a more healthy recovery on the lower end and with a total product than we have on the motorized side and within motorized you know I would say the class A's in particular had been probably where we've seen additional weakness relative to what the market is now we're still selling them.

Theres still definitely customers that are interested in them.

But overall I would say they were you know the motorized piece was probably the last sort of roll over at the end of Covid and has been slower to recover as we come out of that and we've seen you know probably more recovery at the lower end, which I think is consistent with what we've heard from other dealers.

John F. North: And we saw improvement in all categories sequentially each. Certainly, because, sorry, certainly, well. And then you touched on it at the end of the prepared remarks, obviously, gross profit. But maybe just talk about your expectations for gross profit, which is new and used for Q1, to what we just saw in Q4 and how we should think about the throughout the year embedded in the expectation. Net Income positive for the year. Hey.

And we're not really any different but all of them are better and we saw improvement in all categories sequentially each month.

Certainly cause sorry, certainly consistent with what we're doing as well that's helpful. And then you touched on it at the end of the prepared remarks, I'm, obviously youre seeing improvements in gross profit per unit, but maybe just talk about your expectations for gross profit per unit.

John F. North: Sure. I mean, I definitely want to comment on the used piece, but I think that's a very astute observation for you to bring up. Amber's team and the buyers, led by Red and his crew, have done a phenomenal job. And I would say over the last five, six months, we've seen a pretty marked improvement in our ability to source used vehicles as a result of our centralized buying efforts. As you can imagine, we've ramped up our marketing spend to really aggressively go after that. And you've seen, I would say, better margins on the used vehicle side. As a result of those efforts, and you know, we had some legacy buying decisions that, you know, we had to work through at the end of last year and that, you know, depressed our used vehicle margins as we moved through some of those aged pieces and decisions that had been made a number of months before we really had to look at some of those things.

On new and used for for Q1 sequentially.

Sequentially relative to what we just saw in Q4 and how should we should think about the cadence throughout the year embedded in the expectation of being I believe your expectation is to be net income positive for the year. So just how you see that playing out thanks.

Sure I mean, I first want to definitely comment on the used piece that I think that's a very astute.

John F. North: And what I would say more recently is that continues to be a really healthy avenue for us where we can find some of those key pieces that are operating profit. And, you know, we're leaning into that pretty heavily on the new vehicle side. As we get into the 24s, the margins look really good. You know, there's not anything that would indicate to me that, you know, there is a structural change in the margins that we can realize if our inventory is healthy. You know, I think what we've been dealing with is the fact that our inventory, we had some pools of it, got a little bit unbalanced, and we had to work through those.

Observation for you to bring up.

You know Andrew as seen in and the buyers are led by Red and his crew have done a phenomenal job and I would say over the last five six months, we've seen a pretty marked improvement in our ability to go source used vehicles as a result of our centralized buying efforts.

Fair remarks, we've ramped up our marketing spend.

Really aggressively go after that you know you've seen I would say better margins on the used vehicle side.

As a result of those efforts and you know we had some legacy buying decisions that you know we had to work through at the end of last year in that.

John F. North: And, you know, we did that through the pricing actions that we needed to take. And luckily, we got some really good incentives from some of our OEM partners that helped a ton. And I think our inventory looks really good. And we were looking at it yesterday and, you know, obviously preparing for this call, and we are very, very pleased with where it is and think it's probably among the healthiest that's out there, especially when we look at other, you know, larger dealer groups. And you can go in there and filter by year, as many investors do. We do the same thing.

Depressed our used vehicle margins as we move through some of those aged pieces and decisions that have been made.

You know a number of months before we really had to look at some of those things and what I would say more recently as that continues to be a really healthy Avenue for us where we can find some of those key pieces.

Our operating profit and you know we're leaning into that pretty heavily.

On the new vehicle side as we get into the 20 fours are the margins are really good you know theres not anything.

John F. North: And, you know, I would say if you go look at ours, we feel really good about where things sit and we're well positioned. And as we move into March and then into the second quarter, the mix is going to continue to improve into the more balanced 2024s. And then eventually, as we get into the summer in July, we'll see the 2025s really start to hit and be delivered.

That would indicate to me that you know there is a structural change in in the margins that we can realize if our inventory is healthy you know I think what we've been dealing with is the fact that our inventory you know we had some some pools of if they got a little bit unbalanced and we had to work through those and you know we did that through the pricing actions, though.

We needed to take and thankfully, we've got some really good incentives from some of our OEM partners that help the time and I think our inventory looks really good and we were looking at it yesterday and you know obviously preparing for this call in and are very very pleased with where it is I think it's probably among the healthiest that's out there, especially when we look at other you know larger dealer groups and you can go in there and fill.

John F. North: And, you know, we feel like that's positioned well. So, you know, I think the punchline here is that, you know, we recognize, like many people in the industry do, as the expression goes, your first loss is your best one.

John F. North: You know, we had some inventory that we needed to discount into the fourth quarter and into January and February, and we did that. And we saw a nice improvement in terms of our February gross profit, even despite the fact that our mix was definitely skewed toward more prior model years than we're going to see in March and then beyond. And we feel like we're in good shape as we go forward. You know, we're operating 25 locations now. I'm really happy with the layout of our stores. You know, we've made a bunch of decisions in terms of capital investment to really position our stores for scale. You know, you're not going to see us operate in, you know, facilities that are smaller.

Or by year as many investors do we use the same thing and you know I would say if you go look at ours, we feel really good about where things sit and we're well positioned and as we move into March and then into the second quarter.

The mix is going to continue to improve into the more balanced 2024 hours and then eventually as we get into the summer in July we will see the 2020 fives really start to hit and be delivered and you know we feel like that's positioned well. So you know.

I think the.

Probably the punchline here is that you know we recognize like many people in the industry do as the expression goes your first loss is your best one you know we had some inventory that we needed to discount into the fourth quarter and into January and February and we did that and we saw a nice improvement in terms of our February gross profit even despite the.

John F. North: We look for bigger revenue opportunities and really key markets. And, you know, we've got, I think, some operational leaders that we've really tried to think about how to find the optimum balance of those GMs that we can look for that really are going to take us to the better performance that we think is out there. Well, we're excited for 2024, and we think that we can, you know, have a profitable year and certainly operationally cash flow positive year. And as our CapEx, you know, really starts to drop off, and most of those investments are behind us, that's going to continue to build our liquidity position and allow us then to pick our heads up and look for more acquisition opportunities as we think about the rest of this year. And so that's going to be exciting, and we can't wait to show that to you guys. Great, I appreciate the color.

Fact that our mix was you know definitely skewed toward more prior model years, and we're going to see in March and then beyond and feel like we're in good shape as we go forward.

We're operating 25 locations now I'm really happy with the composition of our stores you know we've made.

A bunch of decisions in terms of capital investment to really position our stores for scale, you know you're not you're not going to see US operate you know facilities that are smaller we look for bigger revenue opportunities and really key markets and you know we've got I think some operational leaders that we've really tried to think about how to find the optimum balance.

Of those Gms that we can look forward that really are going to take us to the to the better performance that we think is out there.

Daniel Joseph Moore: That line of thought, www.LazydaysofMoney.com, The attachment rates of procuring used units or trade-ins attached to new and used unit sales. Big focus for you. Steady increasing, you know, any color in terms of what you are having on that end as well. Thanks. Thanks.

But we're excited for 2024, and we think that we can.

Have a profitable year, and certainly operationally cash flow positive year and as our Capex you know really starts to drop off in most of those investments are behind US you know that's going to continue to build our liquidity position and allow US then to pick our head up and look for more acquisition opportunities as we think about the rest of this year and so that's going to be exciting and we can't wait to show that to you.

John F. North: You know, it's interesting. I'm used to the automotive industry, and in general, you'd probably expect, you know, 75% of the vehicles you sell to have a trade-in. And that's not the case in RV. It's lower. And I would say what we saw in 23 was an even lower than normal percentage.

Guys.

Okay.

Great I appreciate the color maybe just just one more on that that that line of thought that string of thought but the attachment rates of procuring used units are trade ins are attached to the new and used unit sales, obviously, a big focus for you steady increase.

John F. North: And if normal is rough justice, 40% of the units we sell would have a trade. I mean, we were seeing low 30s, you know, in terms of the trade ratio on a new vehicle sale. You know, some of that's first-time buyers and, you know, different reasons. But we also really think negative equity was a big issue, you know. And if anybody bought a unit in 2020 or 2021, they probably paid full price and, you know, financed it at a three-handle interest rate.

Seeing any color in terms of our momentum.

That you are having on that end as well, thanks, and I'll jump back with any follow ups.

Thanks.

John F. North: And, you know, all of a sudden, now you're looking at current model year stuff that's discounted 10 or 15%. And if you're willing to go to a prior model year, you can find stuff that's 35, 40% discounted out there. And, you know, that helps in terms of affordability. But the flip side of that is, you get negative equity because what you're trading in is obviously going to be reduced commensurate because if you can buy a new one for a discount, the used ones are worth less too.

You know it's interesting.

I'm used to automotive.

And in general you'd probably expect.

You know 75% of the vehicles that you sell to have a trade in and that's not the case in our view, it's lower you know and I would say what we saw in 23 was uneven lower than normal percentage, an abnormal as a rough justice 40% of the units we sell would have a trade I mean, we were seeing low thirties.

You know in terms of the trade ratio on the new vehicle sale, you know and some of that's first time buyers and you know different reasons, but we also really think negative equity was a big issue you know and if anybody bought a unit in 2020 year 2020 one they paid you know probably full price for.

John F. North: And, you know, that was reflected in what we saw in terms of the NADA guide and, you know, the book changes that came out at year end and that sort of thing. And, you know, we were really careful. And, you know, I think in January in particular, we really slowed down our purchasing to try to anticipate the fact that this was coming. And, you know, more recently, we've been able to take some stuff to auction. We've seen some, you know, decent pricing in terms of the wholesale market. And I would say demand is coming back. And, you know, and in addition, I would say, you know, we're not the only dealer that's been dealing with these situations, and there are a lot of private guys that aren't buying stuff right now or, frankly, can't buy stuff right now.

Finance it at a three handle interest rate and all of a sudden now youre looking at you know current model yourself, it's discounted at 10 or 15% and if you were willing to go to a prior model. Your you can find stuff, it's 35% to 40% discounted out there and you know that helps in terms of affordability, but the flip side of that as you get negative equity because what youre trading in <unk>.

Lee is gonna be reduced commensurate because if he can buy a new one for a discount to use ones are worth it worth last two and you know that was reflected in what we saw in terms of the N E Guide and and you know the book changes that came out at year end and that sort of thing and we were really careful and you know I think in January in particular, we really slowed down our purchasing to try to anticipate the fact that this was.

John F. North: And so that gives us an opportunity if we can play in that wholesale market and buy stuff direct from consumers to find some pretty attractive stuff if we're judicious and careful. And so, you know, we've ramped up February. It was significantly higher than January. I think March is going to be even better.

Coming and now more recently, we've been able to take some stuff to auction. We've seen some you know some decent pricing in terms of the wholesale market and I would say demand is coming back and and in addition, I would say you know we're not the only dealer that's been dealing with these situations and there's a lot of private guys that aren't buying stuff.

John F. North: And, you know, as I mentioned earlier, Amber and Red and the team are really leaning into that to augment the trade ratios that we're seeing, which are back up in the 40% range in terms of new vehicle sales, you know, and that's all kind of found opportunity in terms of retail sales we can go get and is a big focus for us. So I think you're going to see, you know, hopefully, more consistent performance on the used vehicle side. We certainly believe there's a ton of opportunity there. And, you know, you hit that affordability price point for some consumers that, you know, are probably on the sidelines in terms of the new market. But, you know, we kind of see where interest rates end up, and we continue to see OEMs get some, you know, some pricing concessions which, you know, haven't happened in motorized vehicles. You know, the biggest cost for the motorized version is on the chassis side, as you know, Dan.

Now or frankly can't buy stuff right now you know and and so that gives us an opportunity. If we can play in that wholesale market and buy stuff direct from consumer to find some pretty attractive stomach we're judicious.

And so you know we've ramped up February was significantly higher than January and March is going to be even better and you know as I mentioned earlier, amber and red and the team are really leaning into that to augment the trade ratios that were seeing with your backup in the 40% range in terms of the new vehicle sales you know and that's all kind of found opportune opportunity in terms of retail sales. We can go get in.

It's a big focus for us so I think youre going to see you know hope.

Hopefully more consistent performance on the used vehicle side. We certainly believe there is a ton of opportunity there and you know you hit that affordability price point for some consumers that are probably on the sidelines in terms of the new market.

John F. North: And, you know, the producers of those chassis are taking price increases yet still. And so that's been, you know, one of the things that's been, I think, an affordability question, and that's where the used market lets us really come in and try to meet that consumer demand, and we're excited about that. Thank you. Our next question is coming from Mike Swartz from Truist Security. Your line is now live. Hey guys. Good morning.

You know, we kind of see where interest rates end up and we continue to see Oems get some you know some pricing concessions, which hasn't happened in motorized you know the biggest cost for motorized as on the chassis side as you know Dan and you know the the producers of those chassis are taking price increases yet still and so that's been you know one of the things that's been I think.

Michael Arlington Swartz: Maybe, John, just to start with your commentary around mid-cycle, and I think you have thrown out $1.5 billion in revenue on your current store base. Hi, single-digit EBITDA margin. But maybe help us think about how we get there, you know, in terms of, you know, new used product margins and maybe just, you know, SG&As, the percentage of cost of goods, you know, how to think about that in a steady state environment. I know the business has changed a little bit in the last couple of years, and the product mix has been shifting more towards towable, but maybe give us a sense of just Sure. Good to hear from you, Mike.

On a portable <unk> question, and that's where they use market lets us really come in and try to meet that consumer demand and we're excited about that.

Yeah.

Thank you. Our next question is coming from Mike Swartz from true Securities. Your line is now live.

Hey, guys.

Maybe John just to start with your commentary around you know mid cycle and I think you had thrown out you know $1 5 billion in revenue on your current store base and and high single digit EBITDA margins.

Help us think about how we get there you know in terms of.

New use product margins and maybe just your SG&A as a percentage of cost of goods you how to think about that in a steady state environment I know the business has changed a little bit in the last couple of years and in product mix has been shifting more towards terrible, but maybe give us a sense of the just the broad kind of you know building blocks of how you get there.

John F. North: Thanks for the note this morning. Nice to see you picking up and following us. I appreciate that very much. You know, I think we've talked about a couple of pillars, and I'm glad you brought up SG&A.

John F. North: I'll talk about that in a moment because it's really important and pretty, I think, structurally different than what the team here inherited, you know, six or 12 months ago. But in general, I want to start with the stores that we operate. You know, what you're not going to see us do is operate some dirt lot, you know, somewhere, you know, in rural Florida and, you know, try to sell a bunch of used units or something like that. That just isn't our thing.

Sure.

Good to hear for you Mike. Thanks for the note. This morning nice to see you are picking up and following us appreciate that very much.

You know I think we've talked about a couple of pillars and I'm glad you brought up SG&A I'll talk about that in a moment.

John F. North: That's not what we do. And, you know, there's nothing wrong with that. It's fine.

John F. North: You can make a business around it, and there's certainly demand for that. But, you know, what we really believe is that this is an intended purchase. This is something that customers have saved their entire lives for before buying a million-dollar Class A bus or a $50,000 fifth wheel. This is a meaningful and important investment that is their hobby, their dream, something they're doing for their lifestyle, and we want the experience to reflect that.

Because it's really important and pretty I think structurally different than what the team here inherited you know.

Six or 12 months ago, but in general I want to start with the stores that we operate what you're not going to see US do is operate some dirt lot.

Somewhere you know and in in rural Florida, and you know try.

Try to try to sell a bunch of used units or something like that I just isn't our play that's not what we do.

John F. North: And so when I look at our 25 locations, you know, I'm really proud of what we have, which is a fantastic brand, a great reputation, and a team that really is trying to go above and beyond to deliver an exceptional customer experience. But what that also does is gives us a minimum revenue size of, I'm going to say, on average, $50 million. So if you just take $50 million a route to 25, you get $1.2 billion in revenue.

No there's nothing wrong with that that's fine you can make a business around it and there's certainly a demand for that but you know what we really believe is that this is an intended purchase this is something that customers.

Have save their entire lives.

Buying a million dollar class a bus or a 50000 dollar fifth wheel. This is a meaningful and important investment that is their hobby their dream something they're doing for their lifestyle and we won't be experienced reflect that and so when I look at our 25 locations you know I'm really proud of what we have which is in a fantastic.

John F. North: You know, we obviously have Tampa, which is the big mothership, and that's probably equivalent to four or five dealerships. And so, you can pretty easily triangulate to $1.5 billion-plus in terms of revenue in a normal operating environment. And, you know, we have a couple of smaller stores. We closed a store late last year in rural Indiana, a suburb of Gary, and, you know, it was like a $20 million roof.

And a great reputation and a team that really is trying to go above and beyond to deliver an exceptional customer experience, but what that also does is it gives us a minimum revenue size of I'm going to say on average 50 million Bucks. So if you just take $50 million.

If I had to get a billion two and revenue, we obviously have Tampa, which is the big mothership and you know that's probably equivalent to four or five dealerships and so you can pretty easily triangulate to a 1 billion five plus in terms of revenue in a normal operating environment and you know we've had a couple of smaller stores, we close the store.

John F. North: And what we did was consolidate it into our Elkhart store, and I'll give a shout-out to Chip Gore, our GM at Elkhart. He's doing a phenomenal job of really improving operations in, you know, kind of the mecca for RVs. And, you know, we look at a store like that, and it's easily a $45, $50 million roof, even in Elkhart, Indiana. So the first thing for us is we want to operate meaningful stores of size and scale, which we think, you know, allows us to have a better customer experience but also attracts higher-caliber leaders and better operators because the income opportunities are greater. There are basically more swings at the back if you think of it that way.

Late last year and rural Indiana suburb of dairy and you know it was about $20 million roof and what we did is consolidated into our Elkhart store and I'll give a shout out to chip Gore G M and L. Carter has done a phenomenal job of really improving operations and kind of the Mecca of Rvs and we look at a store like that and it's usually a 45 $50 million roof even in.

Elkhart, Indiana. So the first thing for US is we want to operate meaningful stores of size and scale, which we think allows us to have a better customer experience, but also attracts higher caliber leaders and better operators because the income opportunities are greater there's there's basically more swings at the bat. If you think of it that way and you know you can run more of a volume play.

John F. North: And, you know, you can run more of a volume play and have a great service operation to move both new and used units and then put them in operation and fix them as they need maintenance and repair. So that's probably the top-line piece. You know, I don't think we have any secret sauce in terms of gross margin. You know, if you look at a gross margin of, you know, 21%, 22%, that's pretty typical, and I think that's what you're going to see from us. You know, and if anything, as Amber talked about, we're going to continue to focus on the volume side of things, both because it's good for our OEM partners and also because it allows us more touches with consumers, more F&I attachment, and importantly, you know, more service work downstream. So, you know, that's probably the rudimentary model to think about, which is, hey, we're going to run these roof Each one of them is going to be $45, $50 million minimum, and the gross margin contribution should be 20%, 25%, somewhere in there.

And have a great service operation to move both new and used units and then put them in operation and fix them as they need maintenance and repair. So that's probably the top line piece you know I don't think we have any secret sauce in terms of gross margin. If you look at our blended gross margin of 21, 22%, that's pretty typical and I think thats, what youre going to see from US you know.

And if anything is amber talked about you know we're going to continue to focus on the volume side of things both because it's good for our OEM partners and also because it allows us more touches with consumers more F&I attachment and importantly, more service work downstream. So you know that's probably the root of rudimentary model to think about you know it says hey, we're going to run these routes each one of them is gonna be.

$45 $50 million minimum in the gross margin contribution should be 2025% somewhere in there and then you know SG&A, which you pointed out you know I'm really impressed with our fourth quarter SG&A and you know I don't want to blow by that I mean, we were actually $1 $6 million lower than SG&A with 40% more.

John F. North: And then, you know, SG&A, which you pointed out. I'm really impressed with our fourth quarter SG&A, and, you know, I don't want to blow by that. I mean, we were actually $1.6 million lower in SG&A with 40% more stores. If you let that sink in for a minute, it shows you what we've been doing as a team, and it's certainly not me.

Stores.

If you let that sink in for a minute. It shows you what we've been doing as a team and it's certainly not me I mean across our organization everybody is doing more with less and working so hard and I'm. So thankful for what everyone has done because it's been a challenge and we've found tons of opportunity and regrettably, we had to make some decisions.

John F. North: I mean, across our organization, everybody is doing more with less and working so hard, and I'm so thankful for what everyone has done, because it's been a challenge, and we've found tons of opportunity, and regrettably, we've had to make some difficult decisions, and we've had to downsize in certain circumstances, but we've also been investing, and we've been growing the team in other areas to really prepare ourselves for the future, and it's no different. Look at January results. January, I think we were down 10% in SG&A for the month, year over year, and again, with nine more stores in the fold than we had in the prior January, and so what we've been able to do is really rationalize and optimize what I would say were, frankly, some investment decisions in the past that I disagree with, and I think we've seen that play out, and we're going to continue to see it play out, and so what that means from a modeling perspective is, and I appreciate what Marcus said on his call.

Decisions and we've had to downsize in certain circumstances, but we've also been investing and we've been growing the team and other areas to really prepare ourselves for the future and it's no different I mean look at January results.

January I think we were down 10% and SG&A for the month year over year and again with nine more stores in the fold than we had in the prior January and so what we've been able to do is really rationalize and optimize you know what I would say, we're frankly, some investment decisions in the past that I disagree with and I think we've seen.

Play out and we're going to continue to see it play out and so what that means.

Modeling perspective, as you know and I. Appreciate you know what Mark has said on his call certainly pay attention to him you know I think he talked about being in the low 70% range and you know I don't see any reason why structurally we wouldn't be there or better and I go back to my automotive days and remember thinking sub 70 SG&A in a dealership model you know it was never going to be.

John F. North: I'll certainly pay attention to him. I think he talked about being in the low 70% range, and I don't see any reason why, structurally, we wouldn't be there or better. I go back to my automotive days and remember thinking sub-70 SG&A in a dealership model was never going to be possible, and if you look at the public auto groups today, they all do in the low 60s, so I don't know what's possible. We can dare to dream a little bit. I don't want to get too far over my skis.

Possible and if you look at the public auto groups today, they're all doing the low sixties. So I don't know what's possible, we can dare to dream, a little bit I don't want to get too far over my skis, let's start with putting together a profitable year and some operational cash flow and continuing to scale, our business with meaningful dealerships and we'll let the chips fall, but I don't see any reason that we can't be in the low sevens.

John F. North: Let's start with putting together a profitable year and some operational cash flow and continuing to scale our business with meaningful dealerships, and we'll let the chips fall, but I don't see any reason that we can't be in the low 70s to start with, and then, hopefully, we can do better than that over time. Okay, that's helpful. And just a point of clarification on how the first quarter's played out. Is the expectation that comparable units and unit margins would be up year over year just based on what you're seeing today? Unit volume will be up for sure in absolute terms. On a same-store basis, you know, I think the jury is still out.

To start with and then hopefully we can do better than that over time.

Okay. That's helpful and just a point of clarification on I guess, how first quarter has played out I mean is the expectation that comparable units and unit margins would be up year over year, just based on what you're seeing today.

Our unit volume will be up for sure in absolute terms on a same store basis. You know I think the jury is still out you know we've seen some mixed results there to be Frank you know the market is still down you saw the Stat survey data that came out yesterday I think the market was off 19% from memory I don't have the numbers right in front of me.

John F. North: You know, we've seen some mixed results there, to be frank. The market's still down. You saw the FAT survey data that came out yesterday.

John F. North: I think the market was off 19% from memory. I don't have the numbers right in front of me, but, you know, that's real-time industry data, and we're not any different. I wish we had some special spots that would allow us to, you know, do things differently than the market is doing, but, you know, that's kind of the environment we're operating in.

But you know that's that's real time industry data and we're not any different I wish we had some special sauce that would allow us to do two.

Two things differently than what the market is but you know that's kind of the environment. We're operating in and you know I think in general what we've seen is improvement in our volume every month and the operators and you know amber's teams and looking at pricing and volume and we're getting support from Oems and so the trends have been positive you know or what nine days into March.

John F. North: And, you know, I think, in general, what we've seen is improvement in our volume every month, and the operators and, you know, Amber's team have been looking at pricing and volume, and we're getting support from OEMs, and so the trends have been positive. You know, we're, what, nine days into March, you know, so it remains to be seen in terms of where March is going to end up. And, as you know, the first quarter is hard to predict because March is such an important piece of it. You know, January is not the best month, and then February's short, and then you come into March, and you do some shows, and the weather changes, and things start to pick up.

So it remains to be seen in terms of where March is going to end up and as you know you know the first quarter, it's hard to predict because March is such an important piece of it you know January is is not the best month, and then February short and then you come into March and you know you do some shows in the weather changes and things start to pick up. So I think what we are comfortable saying is that we think unit volumes are going to be up.

Michael Arlington Swartz: So, you know, I think what we're comfortable saying is that we think unit volumes are going to be up. You know, we're continuing to work through our inventory, and as 24 has become a greater part of the mix, you're going to see margin improve. You know, I probably wouldn't get too heroic in terms of margin improvement assumptions in the first quarter, and, you know, I think, from our perspective, we're going to get through this, and we're operationally cash flow positive, which is exciting, and it's going to prepare us for the second quarter, and a lot of our stores in the north are going to then wake up and see that spring and summer selling season, and it should really accelerate Thank you so much.

We're continuing to work through our inventory and it's 24 has become a greater part of the mix youre going to see margin improve.

It probably wouldn't get heroic in terms of margin improvement assumptions in the first quarter and I think from our perspective.

We're going to get through this and we're operationally cash flow positive, which is exciting and it's going to prepare us for the second quarter and a lot of our stores in the North are Gonna, then wake up and see that spring and summer selling season, and it should really accelerate from there.

Okay, great. Thank you so much.

Michael Arlington Swartz: Thank you. The next question is coming from Griffin Brian from D.A. Davis, and your line is now. Bye.

Thank you next question is coming from Griffin, Brian from D. A Davidson your line is now live.

Griffin Brian: Yeah, thanks. Seems like you're getting some OEM promotional support here in Q1. Can you just talk about the magnitude of those promotions and maybe break that out by towables versus motorized? Well, good to hear from you. Thanks for the call, Griffin.

Okay.

Yeah. Thanks, so it seems like Youre getting some OEM promotional support here in Q1 can you just talk about the magnitude of those promotions and maybe break that out by portables versus motor eyes.

Well good to hear from you thanks for the call Griffin.

John F. North: You know, I think we want to be careful here. Obviously, there are different OEM promotions that you can see, right? And in certain circumstances, you see OEMs that are putting consumer-facing rebates on units, which isn't necessarily typical, but you'll see that advertised on our website from time to time. And, you know, those are things that we can dangle in front of the consumer if they're willing to buy a particular unit. On the motorized piece, in particular, we've seen some of those.

We want to be careful here you know obviously there are different OEM promotions that you can see right and in certain circumstances, you see Oems that are putting consumer facing rebates on units.

Which isn't necessarily typical but youll see that advertise on our website from time to time and you know those are things that we you know can dangle in front of the consumer if they're willing to buy a particular unit on the motorized piece in particular are you seeing some of those.

John F. North: You know, we've seen some promotions from other OEMs, motorized and towable, as well, that are consumer-facing. And then the flip side of that is, you know, dealer-facing rebates and, you know, what we would call in the industry a quote-unquote MARF. You know, and some of those are predicated on a reorder. So it's like, hey, we're going to sell this in 2023. You know, can you give us some incentive?

You know we've seen we've seen some promotions from from other Oems motorized in total.

As well that are consumer facing and then the flip side of that as you know the dealer facing rebates and you know.

What we would call in the in the industry as a as a quote unquote Murph you know in some of those are predicated off of a reorder. So it's like Hey, we're going to sell this 2023, you know can you give us some incentive.

John F. North: You know, and they're like, sure, we can do that if you'll order a 2024. You know, so some of that is predicated on a reorder. But we've seen support across the board. You know, it's been from across many brands. And, you know, to be frank, all of our key partners have really stepped up. And I don't want to name all of them specifically.

And in there like sure we can do that if you order 2024.

So some of that is predicated off of a reorder, but we've seen a we've seen support across the board it's been.

Hum.

Oh over many brands and you know to be Frank with all of our key partners, they've really stepped up and I don't want to name all of them, specifically and I don't want to get into the you know into.

John F. North: And I don't want to get into the details in terms of dollar values, but I would say, in general, the industry has done a phenomenal job of two things. Number one, they're not overbuilding, and they recognize where the demand is for consumers, and you've seen this from Thor, from Winnebago, from Forest River, and beyond, right? They understand that you can't just build all this stuff and put it on dealer lots. You've seen dealers stocking down, which is good, and then they've been helping financially, and you saw some erosion and gross margin from some of the publics that have reported on the OEM side because they have been incentivizing. So I'm going to probably leave it there and just say that we're very thankful for the support we get from the OEMs. It's been appreciated, and those partnerships are paramount to what we do, and we thank every one of them for them. Thank you.

Into the details in terms of dollar value, but I would say in general the industry has done a phenomenal job of two things number one.

Theyre not overbuilding and they recognize you know where the demand is for consumers and you've seen this from you know four from Winnebago from Forest River and beyond right. They understand that you can't just build all this stuff in and and put it on dealer lots you've seen dealers stocking down which is good and then they've been helping financially any SASSA.

Erosion in gross margin from some of the publics that have reported on the OEM side, because they have been incentivising, so I'm going to probably leave it there and just say that we're very thankful for the support we get from the Oems. It's been appreciated and those partnerships are paramount to what we do and we think every one of them for it.

I appreciate your thoughts. Thank you and then you also resolved this week to our performance. Since then it makes this year. So I guess my question is are you seeing anything from a geography standpoint for your dealerships and maybe any regions that might be outperforming or underperforming performing on a year over year basis.

Griffin Brian: And then, you know, total results this week saying that dual performance has been mixed this year. So, I guess my question is, are you seeing anything from a geography standpoint for your dealerships and maybe any regions that might be outperforming or underperforming on a year-over-year basis? It's a good question.

It's a good question.

John F. North: Just trying to do a quick inventory in my head. You know, I think there's obviously the seasonal component for us. You know, our mix is different than probably what you'd see industry-wide because of our concentration in Arizona and Florida, which are markets that have some counter seasonality relative to the broader demand curve that's typically going to be April to July. You know, and I'd say that's held true this year. It was definitely stronger.

Just trying to do a quick inventory in my head.

I think there is obviously the seasonal component for US you know our mix is different than probably what you'd see industry wide because of our concentration in Arizona and Florida.

You know, which are markets that have some counter seasonality relative to the broader demand curve is typically going to be April to July.

And I'd say that's held true this year.

Was definitely stronger you know, Florida like the rest of the country was weaker year over year, you know, we do our big Super show in Tampa and you know if it was not as strong as last year. It just wasn't you know attendance was down I think marginally at that at that event and.

John F. North: You know, Florida, like the rest of the country, was weaker year over year. You know, we do our big super show in Tampa. And, you know, it was not as strong as last year. It just wasn't.

John F. North: You know, attendance was down, I think, marginally at that event. And our sales were down as well, which is not inconsistent. And, you know, that's what we heard from others, both OEMs and, you know, the dealers that we talked to that are willing to share some of that information and intelligence with us. You know, so I wouldn't say there are any pockets to highlight that are tremendously different than what you've seen overall.

And our sales were down as well.

Which is not inconsistent and that's what we heard from from others for the Oems and the dealers that we talked to that are willing to share some of that information and intelligence with us.

So I wouldn't say, there's any pockets the highlights that are tremendously different than what <unk> seen overall.

John F. North: You know, the market's been down, you know, I would say low, low double digits pretty much across the board. You know, we had a trade show up in Milwaukee, and a shout out to our store up in Wisconsin that was at that trade show. Amber and I went and visited the floor last week. You know, I think we saw another decline year over year. You know, call it like low, single, low, double digits.

The market's been down you know I would say low low double digits pretty much across the board we had a trade show up in Milwaukee, and a shout out to our store up in Wisconsin that was if that trade show Ameren I went and visited the floor last week.

I think we saw.

Again, you know a decline year over year, you know call. It like low single low double digits excuse me, but you know that was kind of in line with the 10 minutes.

John F. North: Excuse me. But, you know, that was kind of in line with attendance, you know. So I think overall, we haven't seen any particular geographical divergence geographically. It's just, you know, the market that continues to face these difficult comps. And I think by the time we get into the second quarter, that's going to be mostly behind us, and then we should start to hopefully see some positive comps year over year, which, you know, it's my whatever 19th month here. And I can't wait for some positive comps to finally come.

So I think overall, we haven't seen any particular divergence geographically. It's just you know the market that continues to anniversary these difficult comps and I think by the time, we get into the second quarter, that's going to be mostly behind US and then we should start to hopefully see some positive comps year over year finally, which you know is my whatever 19 months.

And I can't wait for some positive comps to finally come I feel like you know we always got done is dealt with you know the declining market as we got through the Covid piece and you know I think we're doing everything we can to be well positioned for the summer and we're optimistic that the market is going to recover and hopefully we get some interest rate relief.

John F. North: I feel like, you know, all we've done is dealt with the declining market as we got through the Covid piece. And, you know, I think we're doing everything we can to be well positioned for the summer. And we're optimistic that, you know, the market's going to recover. And hopefully, we get some interest rate relief from the Fed on the back end of things, and things pick up, which is what our VIA and a lot of the aliens that are smarter than me are talking about. So we'll see.

From the fed on the back end of things and things pick up which is what our V. I a and a lot of the Oems that are smarter than me youre talking about so we'll see.

Griffin Brian: Got it. And then, just lastly, you mentioned that, you know, you're seeing continued inflationary pressures from suppliers and chassis. So, I guess, are you just spotting any chance of some relief there as the affordability issues still seem to be front and center for consumers and then, you know, still having higher for longer interest rates? Yeah, I think it is.

Yeah.

Got it and then just lastly, you mentioned that you're seeing continuing inflationary pressures from suppliers. The chassis is so I guess are you just spotting any chance on some relief there would be affordable affordability issues seems to be front and center for consumers.

So having higher for longer interest rates.

Yeah, I think it's.

I always think it's dangerous when you say it's different this time and if you look at it.

John F. North: I always think it's dangerous when you say it's different this time, you know, and if you look at the automotive, you know, industry in general, there was all this discussion around just-in-time dealer inventory and, you know, how lots were not going to be, you know, stocked the way they were pre-COVID, and everybody realized that, you know, delivering inventory to consumers, you know, that matched the demand that was there was amazing, but, you know, no OEM goes into their board and says, hey, we're going to cede X percent share to this electric vehicle manufacturer this year. You know, so the reality is the capital cycle is much longer than the consumer demand curve can be anticipated, and as a result, I think you're going to see inventory levels recover, which is what's been happening, you know, and if you look at dealer stock, you know, for the most part, day supply is back up, and it's continuing to be that way, and, you know, as the Fed continues to drown inflation here with, you know, higher interest rates, I think you're seeing consumer demand start to peter off a bit, and that means that stocks are improving, and so by extension, you know, what's going to happen is the OEMs are going to start to prioritize the other distribution channels, be it rental cars or be it, you know, chassis that they're giving to RV manufacturers or whatever, and I think as that happens, you're going to see price relief.

You know industry in general there was all this discussion around just in time dealer inventory and you know how lots we're not going to be you know stop the way they were pre COVID-19 and everybody realized that you know delivering inventory to consumers.

No that that match the demand that was there was amazing but.

OEM goes into their board and says Hey, we're going to see X percent share to this electric vehicle manufacturer this year.

So the reality is the capital cycle is much longer than the consumer demand curve can be anticipated and as a result, I think youre going to see inventory levels recover which is what's been happening you know and if you look at dealers.

You know for the most part days' supply is back up and it's continuing to be that way and you know as the fed continues to drown inflation here with higher interest rates I think youre seeing consumer demand start to Peter off a bit and that means that stocks are improving and so by extension you know what's going to happen is the Oems are going to start to prioritize the other <unk>.

Distribution channels be it rental cars or be it you know.

Kathy's that theyre, giving to RV manufacturers or whatever and I think as that happens youre going to see price relief I'm not sure that we're quite there yet and so I think you've seen some chassis increases that have come but my expectation is that as these retail channels that are the highest profitability places that Oems can put product you know start to slow down a bit.

John F. North: I'm not sure that we're quite there yet, and so I think you've seen some chassis increases, you know, that have come, but my expectation is that as these retail channels that are the highest profitability places that OEMs can put product, you know, start to slow down a bit, and as those inventories normalize, then you're going to see the natural regression as these OEMs look for places that they can, you know, put chassis in, and I was in Elkhart last week, and I can tell you there are plenty of e-vans parked in fields around there, so I think you're starting to see some of that, and my expectation is that will help. I don't think we've seen it yet.

As those inventories normalize then youre going to see the natural regression as these Oems look for places that they can you know put chassis fan and I was in Elkhart last week and I can tell you. There are plenty of E vans parked in deals around there. So I think you're starting to see some of that and my expectation is that will help I don't think we've seen it yet.

Griffin Brian: I appreciate it. Thank you. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to anybody for any further closing comments. I appreciate everybody's interest. Thanks to the team for a phenomenal effort, and we look forward to continuing to update using Moves for 2024. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation.

I appreciate it thank you.

Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

I appreciate everybody's interest thanks to the team for a phenomenal effort and we look forward to continuing to update you as we move through 2024. Thanks.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.