Q2 2024 Camping World Holdings Inc Earnings Call

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Unknown Executive: Good day and welcome to the Camping World Holdings Inc. 2nd quarter of 2024 results conference call.

Operator: Good day, and welcome to the Camping World Holdings Inc. second quarter 2024 results conference call. All participants will be in listen-only mode.

Good day and welcome to the Camping World Holdings, Inc. Second quarter 2024 results conference call.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

Unknown Executive: All participants will be in listen-only mode. Should you need assistance? Please say no conference specialist by pressing the star key followed by zero.

Speaker Change: All participants will be in listen only mode should you need assistance. Please signal of Congress specialist by pressing the star key followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. Do ask a question. You may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Brent Moody. Please do so.

Unknown Executive: Please note this event is being recorded.

Speaker Change: Please note this event is being recorded.

Brent Moody: I've now would to turn the comments over to Brent Moody. Please go ahead.

Speaker Change: I would now like to turn the Congress over to Brent Moody. Please go ahead.

Lindsey Christen: Actually, it'll be Lindsey Kristen who will be reading that section. Thank you.

Operator: Actually, it'll be Lindsey Christen who will be reading that section. Thank you. Good morning, everyone.

Lindsey Christen: Good morning, everyone. A press release covering the company's second quarter 2024 financial results is issued yesterday afternoon. And a copy of that press release can be found in the Investor Relations section on the company's website.

Lindsey Christen: A press release covering the company's second quarter 2024 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 remarks may include statements regarding our business plans and goals, as well as industry and customer trends. Inventory Expectations, The Expected Impact of Inflation, Interest Rates, and Market Conditions

Lindsey Christen: Management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks 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 plans, capital allocation, and anticipated financial performance. Actual results may differ materially from those indicated by these statements. There are a result of various important factors, including those discussed in the risk factor section in our form 10-K, our form 10-Qs, and other reports on file with the SEC, and you forward-looking statements represent our views only as of today, and we undertake no obligation to update them.

Lindsey Christen: Acquisition Pipeline and Plans, 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 risk factors section in our Form 10-K, our Form 10-Qs, and other reports on file with the SEC.

Lindsey Christen: Any forward-looking statements represent our views only as of today, and we undertake no obligation to update them. 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. All comparisons of our 2024 second quarter results are made against the 2023 second quarter, unless otherwise noted. I'll now turn the call over to Marcus. Good morning, Lindsey.

Lindsey Christen: Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as EBITDA, adjusted EBITDA, and adjusted earnings per share diluted, which we believe may be important to investors to assess our operating performance. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial statements are included in our earnings release and on our website. All comparisons of our 2024 second quarter results are made against the 2023 second quarter, almost otherwise noted.

Marcus Lemonis: We'll now turn the call over to Marcus. Good morning, Lindsay. Joining me on today's call is Matthew Wagner, who's our President, Lindsay Kristen, Chief Administrative Officer, Brett Anders, Senior Vice President of Investor Relations.

Marcus Lemonis: You know, joining me on today's call is Matthew Wagner, who's our president; Lindsey Christen, Chief Administrative Officer; and Brett Anders, Senior Vice President of Investor Relations. Unfortunately, Tom Kern, our CFO, has fallen ill and was part of preparing today's remarks, but is unable to join the call.

Marcus Lemonis: Unfortunately, Tom Kern, our CFO, has fallen ill and was part of preparing today's remarks but is unable to join the call. On today's call, we're going to cover both the operational and financial highlights of the quarter while providing comments on the future ahead.

Marcus Lemonis: On today's call, we're going to cover both the operational and financial highlights of the quarter while providing comments on the future ahead. But before we get into those details, I want to take a moment to show my immense gratitude to Brent Moody and Karin Bell for their over 40 years of combined service to Camping World. It's been a real privilege for me and an honor to grow this business from the beginning with both of them.

Marcus Lemonis: Before we get into those details, I want to take a moment to show my immense gratitude to Brent Moody and Karen Bell for their over 40 years of combined service to Camping World. It's been a real privilege for me and an honor to grow this business from the beginning with both of them. As we look towards 2025 and beyond, I could not be prouder of Matthew Wagner on his promotion to President and Tom Kern to his promotion as Chief Financial Officer. These two individuals know this company very well. They've been instrumental in working side by side with me for many years to help set the strategic direction of our business.

Marcus Lemonis: As we look towards 2025 and beyond, I could not be prouder of Matthew Wagner on his promotion to president and Tom Kern on his promotion as chief financial officer. These two individuals know this company very well. They've been instrumental in working side by side with me for many years to help set the strategic direction of our business. Without exception, they, along with Lindsey Christen, our Chief Administrative and Legal Officer, are the right talent at the right time to fuel Camping World's future growth.

Marcus Lemonis: Business. Without exception, they, along with Lindsey Christen, our Chief Administrative and Legal Officer, are the right talent at the right time to fuel Camping World's future growth. Look, as we're all aware, the last 24 months have been challenging. For all of us, the industry, our company, everybody. But despite those factors, our company has taken the decades of experience to continue to outperform others in the industry. We continue to work hard to improve the overall financial results for 2024. And we're pleased with several operational highlights in milestones, like record market share for our company, double-digit new same-store sales improvement, while the industry reports double-digit decreases.

Marcus Lemonis: Record gross profit for the quarter for our good Sam business. There's a variety of other notable achievements, but it's important for us to also acknowledge some of the challenges. A get out of quick mindset, much like we had on the new side, is what we had to do. And when you look at our very, very aggressive style of eliminating new models in 2022 and 2023, and you see the fruits of that labor with our market share growth in 2024 on new, we had a pretty good idea there. We've now decided to take that same level of conservative approach as it relates to our youth.

Marcus Lemonis: Record gross profit for the quarter for our Good Sam business, opening up 16 new locations, the launch and performance of our OEM exclusive stores, the establishment of a broader used infrastructure. For the future and profitability during the highest inflation and interest rate environment in 20 years. There's a variety of other notable achievements, but it's important for us to also acknowledge some of the challenges.

Marcus Lemonis: We've had to liquidate model years like 22 and 23 as model year 2024's came out with the lower price. We've had the balance of tight expense management while building and utilizing an infrastructure around our company's thesis of growth. We've had a difficult employment environment with rapidly rising wages and benefits costs while growing the base of operations through acquisitions and new store openings. And we have the highest rate of inflation and the highest rate environment in 20 years. It not only affects the consumer, but it affects our floor plan interest, our senior debt interest expense, and we know that it's been meaningful to our P&L.

Speaker Change: Store openings, and we have the highest rate of inflation and the highest rate environment in 20 years that not only affects the consumer but it affects our floor plan interest our senior debt interest expense and we know that it's been meaningful to our P&L and we look forward to rate reductions in the future as every quarter.

Marcus Lemonis: We look forward to rate reductions in the future, as every quarter point of rate reduction, just in our floor plan alone, will return $4 million of earnings and cash flow to our business. Look, two key things that we are front and center focused on as we work through the balance of the year and prepare for what we hope will be a much more prosperous 2025 or how we're handling our use and how we're managing our S-GNA. First, our volume is you unused is not where we hoped it would be, but like other areas outside of our control, this one is squarely in our hands.

Speaker Change: Point of rate reduction just in our floor plan alone will returned $4 million of earnings and cash flow to our business slipped two key things that we are front and center focused on as we work through the balance of the year and prepare for what we hope will be a much more prosperous 2025.

Speaker Change: How we're handling our used and how we're managing our SG&A.

Speaker Change: First our volume as you unused is not where we hoped it would be but unlike other areas outside of our control. This one is squarely in our hands starting late last year. After model 2020 for pricing was revealed we recognize the need to adjust quickly we elected to temporarily pull.

Marcus Lemonis: Starting late last year, after Model 2024 pricing was revealed, we recognized the need to adjust quickly. We elected to temporarily pull back our level of aggressiveness on used acquisition so that we can see how model year 2024 pricing would affect values and the entire market. A get out of quick mindset, much like we had on the news side, is what we had to do. And when you look at our very, very aggressive style of eliminating new models in 2022 and 2023, and you see the fruits of that labor with our market share growth in 2024, our new, we had a pretty good idea.

Marcus Lemonis: We've now decided to take that same level of conservative approach as it relates to our use. As we entered the year, we had high expectations that rates would start to get cut and that sentiment would improve. After the first quarter, we felt like maybe it was going to be delayed a little bit, and we just needed to keep cleaning inventory and prepare for the upcoming selling season. May would come, and we would hope to see things dramatically improve. While it did for us in certain areas, the industry continued to struggle. While we started to see nice gains on the news side, simply because we played the lower price point game, we continue to see the dealers at large struggle, summed down to as much as 20 to 30% on a year-over-year basis.

Marcus Lemonis: That concerned us. Although we were gaining in market share, improving new sales, the data for the overall industry seemed to be getting worse. In that moment, we made the conscious decision to hunker down, selling off for closing under performing assets, tightening up our inventory pieces. The slowdown of buying more used inventory wasn't around our lack of confidence in our ability, but our concern about the aged inventory that was still looming across the inventory in businesses that we didn't control and what impact that could potentially have on us. As of this morning, we estimate that there's still in excess of 14,000 units on dealer lots that are 2022's and 2023's.

Marcus Lemonis: Although we were gaining market share and improving new sales, the data for the overall industry seemed to be getting worse. A true balance of mitigating risk and being prepared to be opportunistic is how we wanted to approach the balance of the year. We expect as we continue to sell down our own used inventory and transition into more consignments on a temporary basis that we're going to continue to see pressure against our margins from our traditional and historical 20% margins, something we think is temporary.

Marcus Lemonis: That's a real uncomfortable level of distressed dealers and inventory for us. As more dealers started coming to us to sell, manufacturers and bank chatter around distressed dealers, stat survey showing dealers down mid to upper double digits, we thought it would be best to protect our kingdom. A true balance of mitigating risk and being prepared to be opportunistic is how we wanted to approach the balance of the year. We've shifted some of that risk by getting better at doing consignments as a percentage of our total use inventory. With a lower risk appetite, we acknowledge that the consignment level of profitability isn't as good as the units that we purchase.

Marcus Lemonis: It's still better than new, but it slightly underperforms on a margin basis by two to three points at a minimum. We expect, as we continue to sell down our own use inventory and transition into more consignments on a temporary basis, that we're going to continue to see pressure against our margins from our traditional and historical 20% margin, something we think is temporary. As we gain confidence in the macro, hoping for that first rate cut potentially in September, and we get past the election, we'll become more confident to start aggressively ramping up our purchases because the risk won't seem as pronounced.

Marcus Lemonis: Second, in our opinion, we all have to continue to have a marker that lands SCNA in the 72% to 73% range. I've been consistent about that since the inception of our business.

Marcus Lemonis: For the quarter, we missed our target for four very specific reasons. Our gross profit is still under temporary pressure. And while we don't like it, we find it to be more important to continue to move inventory, continue to keep our inventory clean, and gain market share. That's a significant amount. Now, when you lower ASPs, keep in mind that even when our margins maintain historical levels, on new, for example, at 15 or used at 19 to 20, there is a significant reduction in the gross profit per unit simply because the average selling price is lower. Third, as the company grows with acquisitions, new store openings, advanced training, rapidly expanding technology, infrastructure around new tech and cybersecurity, rising wages, yeah, it's a long list.

Marcus Lemonis: It's a long list about building an infrastructure and maintaining infrastructure to be the company that we've always been and will continue to be. We are a growth company. Now, we're not naive to think that we shouldn't be making changes, and we have, as I mentioned earlier, we've closed locations, we've laid people off, we've deferred initiatives into the future. But we still have an infrastructure that we want to protect because we believe, particularly in recent times, that we're starting to see the inflection point, but we're seeing that simply on the news side. It is important to be clear that our conviction stems from our current outperformance of our competitors.

Marcus Lemonis: Our growth in market share, which is record breaking, and our belief that 2025 will be a much better year is how we're entering the balance of the year.

Matthew Wagner: I'll now turn the call over to Matt. Thank you, Marcus. As mentioned, our intentional and disciplined inventory management led to another quarter of robust new unit sales growth. We continue to significantly outpace broader new RV industry sales, resulting in material market share gains in April and May, based on the most recently reported theft survey information. And as we exit in May to June, we started to see new comp trends accelerate to mid-teens growth, with July increasing further into the low 20s. As Marcus discussed, we moved through the quarter, and we became a bit more risk averse in our use for a German strategy, as we were seeing little to no improvement in the amount of competitors out there with age inventory, and we were concerned about the overall health of the larger dealer body.

Matthew Wagner: In the back half of the quarter, we saw some stabilization and gained a bit more visibility into the model year 2025 pricing. With that knowledge, our use year then taken June increased year over year for the first time in over 10 months, with record volumes of consignments and inbound leads. We are proceeding judiciously into the second half of the year, and expect continued pressure on use, vehicle unit volumes, and margins, particularly in the third quarter. We are committed to building the infrastructure for use RV sales business, that the consumer, and ultimately, we as Camping World, will benefit from.

Speaker Change: Pricing.

Speaker Change: With that knowledge are used you then taken June increase year over year for the first time in over 10 months with record volumes of consignments and inbound leads.

Speaker Change: We are proceeding judiciously into the second half of the year and expect continued pressure on used vehicle unit volumes and margins, particularly in the third quarter.

Marcus Lemonis: We are committed to building the infrastructure for the U.S. RV sales business that the consumer and, ultimately, we as Camping World will benefit from. We are focused on prudently re-establishing our user base. Turning to the financials for the second quarter, we recorded revenue of $1.8 billion, a decline of 5% from last year, driven primarily by used unit volume, with new vehicle sales rising for the second consecutive quarter to $847 million, an increase of 6% over last year. The top line was partially impacted by the sale of our furniture business in early May. At this time, we will pause momentarily to assemble our roster.

Speaker Change: We are committed to building the infrastructure for use RV sales business that the consumer and ultimately we add camping world will benefit from specifically, our CW auction business has created both market efficiency and market transparency.

Matthew Wagner: Specifically, our CW Auction business has created both market efficiency and market transparency. In just eight months, the CW Auction business has had over three million unique views on over 1,000 sold assets with over 4,300 individual bidders. Today, we are pleased to say we have multiple third-party banks and manufacturers signed on to the platform, presenting a unique, counter-sequential opportunity for us. We've also invested in infrastructure, meant to reduce transaction friction and increase sales volume across our new and used assets, including nationwide mobile inspections, online private party listings, centralized procurement teams, and industry-leading parts portal for our service shops, and the formal launch of our CW Direct channel.

Speaker Change: And just eight months the CW auction business has had over 3 million unique views on over a thousand sold assets with over 4300 individual bidders.

Matthew Wagner: As we've proven over the last decade, the investments that we make from our purchase, the industry leader, have the effect of both influencing and throttling the behavior of the broader RV industry. As we begin to look into 2025, we know that our company gets much sharper in downturns. We are focused on prudently reestablishing our use business, establishing our dominance as the market maker in the RV industry. All while expanding upon the tremendous progress we've made in Good Sam, Service, and our new unit market share. Lastly, throughout our history, we've demonstrated our expertise in taking distressed dealerships and quickly turning these assets around.

Matthew Wagner: Most recently evidenced by a large multi-location chain that was losing nearly $10 million annually prior to our acquisition. In just six months, all seven dealerships are profitable, reporting top quartile dealership KPI metrics, and all of them are taking market share in their respective geographies. We are positioned to act upon what we believe will be a number of unique dealership acquisition opportunities in the coming months.

Marcus Lemonis: I'll now turn the call back over to Marcus to discuss our financial results and also provide concluding remarks. Thanks, Matt. As a reminder, I'm covering this section for my teammate, Tom Kern, who's out today. He'll be available post this call in the coming week to answer any specific questions that people may have. Turning to the financials for the second quarter, we recorded revenue of 1.8 billion, a decline of 5% from last year driven primarily by use unit volume, with new vehicle rising for the second consecutive quarter to 847 million, an increase of 6% over last year.

Marcus Lemonis: Good Sam services and plans posted another quarter of record gross profit at 35.4 million. With products, services and other, our cord dealer services revenue continued to show growth, while product sales declined primarily due to lower retail accessory attachment as we sold fewer use vehicles in the quarter. And top line was partially impacted by the sale of our furniture business in early May. Our adjusted EBITDA for the quarter was 105.6 million, with the primary driver of the year-over-year decline stemming from our deliberate actions to remain risk averse in our used inventory procurement, impacting used vehicle volume and consequently used vehicle gross profit.

Marcus Lemonis: We now expect use vehicle volume for the full year to be roughly 50,000 units, with margins in the back half in the range of mid to high teens. While our conservative stance on use procurement will still have the effect of weighing on use gross profit dollars and thus our SCNA to gross profit ratio by anywhere from three to six points higher than we previously expected.

Marcus Lemonis: We have been extremely pleased by the performance of our OEM exclusive stores as we ramp our consignment and CW auction channels. We are undergoing a review of our dealership portfolio with plans to reconfigure brand banners and protect mix and product mix at select stores in key markets to improve the yield on our fixed cost base. On the balance sheet, we ended the quarter with about 223 million of cash, including approximately 200 million of cash in the floor plan offset account. We also had 262 million dollars of used inventory net of flooring, and roughly 187 million dollars of parts inventory.

Marcus Lemonis: Finally, we own about a hundred and forty-five million dollars of real estate without an associated mortgage.

Unknown Executive: I'd now like to turn the call back over to the operator for Q&A. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you were using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

John Healy: At this time, we will pause momentarily to assemble our roster. Go ahead with the first question, please. Our first question comes from John Healy with North Coast Research. Please go ahead. Thanks, guys. You know, Marcus, I wanted to dive into a comment you made. You said you feel like 2025 will be a better year.

Speaker Change: With the first question please.

Speaker Change: Our first question comes from John Healy with Northcoast Research. Please go ahead.

Speaker Change: Thanks, guys.

John Healy: Marcus I wanted to dive into a comment you made you said you feel like 2025 will be a better year can you maybe give us a little bit of a a hint of what you think 2025 looks like and and maybe some framework of maybe how you might be approaching a merchandising or just you know kind of sizing and bill.

Marcus Lemonis: Can you maybe give us a little bit of a hint of what you think 2025 looks like and maybe some framework of maybe how you might be approaching merchandising or just kind of sizing and building your book of business for next year. Yeah, I'll split it into three distinct sections. First, with the rapid increase in our new state store sales, we feel very confident that we have reached an inflection point with our ability to drive new sales year-over-year improvement again in 2025. I think what we're really excited about on the new side is that we won't be liquidating out of 22s and 23s, so we see an opportunity to see margin stabilization in that 15% range, which you know I'm hopeful that maybe we can be a little higher than that, but that's sort of what we're forecasting.

Speaker Change: In your book of business for next year.

Speaker Change: Yeah, I'll I'll split it into three distinct sections first.

Matthew Wagner: On the new side, it is our anticipation with the hopeful rate kind and getting the election behind us and having 2025 model years come out that we can become aggressive again in our acquisition process. We have the infrastructure to do it, and quite frankly, we're more, you know, we're better equipped today than we were even two years ago when we were setting records with what Matt has done on the auctions and a variety of other things. And then lastly our most important asset, good Sam, as our viewers start to get comfortable again with getting out in campground activation, start again and people start using the rigs again.

Marcus Lemonis: We have the infrastructure to do it, and quite frankly, we're better equipped today than we were even two years ago when we were setting records with what Matt did at the auctions and a variety of other things. And then lastly, our most important asset, Good Sam. As our viewers start to get comfortable again with getting out, campground activation starts again, and people start using their rigs again, we expect to see continued growth on the Good Sam side.

Marcus Lemonis: We expect to see continued growth on the Good Sam side. What we do also know is that as those gross profits return to normal on new and they return to the 19 to 21% range, unused and Good Sam continues to stabilize. That will quickly bring our SGNA as a percentage of gross back in line closer to the goal of 72 to 73. I don't know that we'll get there right away, but it'll start to bring it back in line. I think the thing that I'm most excited about is that we've acquired a number of locations over the last two years, and even with the ones that Matt referenced that are profitable after being significant losers in the past.

Marcus Lemonis: What we do also know is that as those gross profits return to normal on new, and they return to the 19 to 21% range on use, and Good Sam continues to stabilize, that will quickly bring our SG&A as a percentage of growth back in line closer to the goal of 72 to 73. I don't know that we'll get there right away, but it'll start to bring it back in line. I think the thing that I'm most excited about is that we've acquired a number of locations over the last two years, and even with the ones that Matt referenced that are profitable after being significant losers in the past, we're going to enjoy the fruits of that, the labor from all of those acquisitions. Matt, do you want to add anything to that?

Speaker Change: After being significant losers in the past that we're going to enjoy the fruits of that of the labor from all of those acquisitions improvements in our original stores the growth of the acquisition stores and that's getting back into acquisition mode. Again is really going to all fuel 2025.

Marcus Lemonis: That we're going to enjoy the fruits of that of the labor from all of those acquisitions. Improvements in our original stores, the growth of the acquisition stores, and us getting back into acquisition mode again is really going to all fuel 2025.

Speaker Change: Got it.

Speaker Change: Just a mechanical question for me.

Speaker Change: You know the relationship between new unit sales and good Sam.

Speaker Change: I was just trying to.

Speaker Change: Get a little color on why good Sam's not seen maybe as much momentum as you you're seeing just on the new unit side is there some offset but I might not be aware of or might not quite understand no. You know the good Sam business is the steady Eddy horse in the race. It always has been and you know when the market starts to get to.

Matthew Wagner: That I might not be aware of or might not quite understand. No, you know, the Good Sam business is the steady atty horse in the race that always has been, and you know when the market starts to collapse like it did a couple of years ago with negative same store sales quarter after quarter, month after month. Good Sam hung in there on the opposite side. Keep in mind that the way that we record our revenue with Good Sam is deferred, and so if we sell a warranty today or sell a product today. We don't enjoy that immediately.

Matthew Wagner: Matthew, want to add anything to that? Well, I wanted to also split it up into two separate buckets here because in terms of our Good Sam products that we actually sell direct consumers, as well as are attached by means of our new and use our resale, that business has performed quite well, where that was actually a record-breaking gross profit quarter for us for the second quarter for that business. However, John, you might be looting to the Good Sam membership size, which if you are looting to that to see them further clarify, technically it is down slightly year over year.

Matthew Wagner: Well, I wanted to also split it up into two separate buckets here because, in terms of our GoodSAM products that we actually sell direct to consumers as well as are attached by means of our new and used RV sales, that business has performed quite well, where it was actually a record-breaking gross profit quarter for us for the second quarter of that business. However, John, you might be alluding to the GoodSAM membership size, which if you are alluding to that, just to even further clarify, technically, it is down slightly year over year. That was a conscious decision, though, that we made by means of a transition from a traditional membership file to an actual loyalty profile. Great That's super helpful, guys.

Matthew Wagner: That was a conscious decision, though, that we made by means of a transition from a traditional membership file to an actual loyalty program through the introduction of that loyalty program. We've also actually entered into a free tier, and there's in excess of 300,000 free tiers that consumers are already subscribing to right now. That's down, including the numbers. So technically, year over year, we're actually up on our membership size, and we made that decision going from a traditional membership, which used to cost individualist not $29 a year. We actually raised the price for the first time in goodness markets probably over 10 years, 15 years.

Matthew Wagner: And when we think about why we did that, we were able to remove what was I would regard as excess discounting at times through our retail channel. And we were able to reestablish a margin profile through our retail channel and actually enrich our cash position while at the same time providing customers the opportunity to come back and get repeat buyers and engage in a points subsidy. They're able to actually for a point every time they come back to us. So we've changed the entire narrative around that, and we see a lot of early success. Yeah, I think one thing that we learned as we really dug into the numbers is that, in some cases, there was the subset of members who were strictly getting the membership to exploit the discounted retail.

Speaker Change: Early success, Yeah, I think one thing that we learned as we really dug into the numbers is that in some cases, there was a subset of members who are strictly getting the membership to exploit the discounted retail and we werent getting the lifetime value by them, taking on other products and services and so we decided to add more benefits.

Matthew Wagner: And we weren't getting the lifetime value by them taking on other products and services. And so we decided to add more benefits, reward those members who did shop with us across multiple platforms, raise the price, but more importantly, raise the benefits at a greater rate. We saw a number of members who didn't necessarily want those other products fall off, and candidly, our cost to fulfill that membership, the discounts we were providing them, it actually wasn't a profitable member for us.

Speaker Change: Reward those members, who did shop with us across multiple platforms raise the price, but more importantly raise the benefits at a greater rate. We saw a number of members who didn't necessarily want those other products fall off and candidly our cost to fulfill that membership the discounts we were providing them it actually wasn't a profitable member.

Matthew Wagner: And so there's a way for us to break that model after more than a day.

Speaker Change: For us and so as a way for us to break that mold after more than a decade.

Matthew Wagner: Great, that's super helpful, guys.

Speaker Change: Great. That's super helpful guys. Thank you so much.

Unknown Executive: Thank you so much.

Jill DiVelo: Our next question comes from Jill DiVelo with Raymond James. Please go ahead. Thanks. Hey guys, good morning. First question, I'm pricing. Marcus, you mentioned you had greater insight into Mollier 25s. Are you still anticipating that pricing for this Mollier will be flagged up modestly? I think we're anticipating that it's going to be up modestly, but up modestly, similar to how it was all the other years in the history of the industry. And as you know, Joe, we had this record rise in pricing on like-for-like units. And then we had, for the first time in the history of the industry, this record deflation coming back down.

Marcus Lemonis: I think the stabilization of new pricing and normal and customized sort of increases year after year that are small in nature because of normal inflation is kind of what it feels like we're getting back to that.

Marcus Lemonis: It's, of course, Joe going to just vary across different segments of the business where we believe some of these motorized segments could experience a little bit higher price points, in which case we're keeping a close eye on where we can pick and choose our opportunities within the market to satisfy consumer demand because our greatest concern and our greatest focus has always been the affordability of this lifestyle, which is why we consistently work with the manufacturing partners like Thor, Winnebago, Forest River. And they've been very effective in helping us to actually create demand and satisfy demand in the marketplace.

Marcus Lemonis: In fact, within the month of July, we had pretty material growth within our new motorized segment on a same store basis within that class C segment. I mean, goodness, we were up very high, double digits year over year. So I use that as one data set just to prove that the manufacturers are willing to be very aggressive in certain segments with us. Just at the same time, they have different margin obligations that they need to hit, and we know that we need to hit while the same time continue to expand this overall segment.

Marcus Lemonis: Let me put a finer point on the increase in motorized or the increase in travel trailers in every single instance. It's at the bottom of the price stack in those categories. And so if we look at travel trailers, our exceptional growth points really back to our strategy that we disclosed to all of you of driving down that average selling price and finding the elasticity and bringing customers in. We believe that the US consumer on products like this is focused on one thing and one thing only. They're monthly payment. They know what they want. And while we've still seen strong demand across all the categories, when we don't carry price points at the bottom of those individual type codes, we don't do well.

Speaker Change: Single instance, it's at the bottom of the price stack in those categories and so if we look at travel trailers are exceptional growth points really back to our strategy that we disclose to all of you are driving down that average selling price and finding the elasticity and bringing customers in we believe that the U S.

Speaker Change: On products like this is focused on one thing and one thing only their monthly payment they know what they want and while we've seen still seeing strong demand across all the categories. When we don't carry price points at the bottom of those individual type codes, we don't do well and what I think Matt in the inventory.

Marcus Lemonis: And what I think Matt in the inventory team did exceptionally well, and I'll use that motorized case that Matt just mentioned as an example, that was the re-engineering of opening price points inside of the class C business, the class B business, and the class A business, where we are taking some chances with volume buys, some levels of decontenting, and some creative ways to present the product to the customer on term, on rate, because all we're essentially doing is giving them the product they want, maybe with a little less bells, but at the payment they can afford.

Marcus Lemonis: That's simply why you're seeing our market share and our same store number explode. We're following the customer to the affordability point that they are telling us to go to and not being ignorant to the fact that they don't want to buy expensive things. They're not going to take their monthly payments up too high. As interest rates come back down, and I want everybody to really understand this point, as interest rates come back down sequentially, hopefully over the next couple of years. We believe that those ASPs will slowly rise back up because, at the end of the day, the way that you come up with a monthly payment is the price of the unit and the rate.

Marcus Lemonis: And so, as those ASPs come back up, GPUs will come along with it. But we believe in order to see kind of a mid-cycle environment, we're going to need to see probably 200 basis points of reductions. It doesn't need to go back to free money. So, we went from zero to five plus on the Fed Funds rate. It doesn't need to go all the way back down to zero, but as you get this level right now, you're keeping certain buyers out of the market, because even with the cheapest travel trailer imputed against a nine or 10% interest rate, it's a bit of a barrier.

Matt: At this level right now you're keeping certain certain buyers out of the market because even with the cheapest travel trailer imputed against a nine or 10% interest rates, it's a bit of a barrier. So as those rates come back down the funnel opens up not only in travel trailer spend in each of those segments individually to offset that.

Jill DiVelo: So, as those rates come back down, the funnel opens up, not only in travel trailers, but in each of those segments individually. To offset that in the short term, we're just driving prices down by stocking and selling less expensive units inside of each of those typos.

Speaker Change: In the short term, we're just driving prices down.

Matt: Stocking and selling less expensive units inside of each of those type quotes.

Unknown Executive: Yeah, very helpful. Maybe still housekeeping items, dealership locations, looks like they were flat versus Q1.

Speaker Change: Got it very helpful. Maybe just a housekeeping item dealership locations it looks like they were flat.

Speaker Change: Ah versus Q1, where do you guys expect to end the year at <unk>.

Marcus Lemonis: What do you guys expect to end the year at? I expect we don't have a final number, but we will end the year lower in our dealership headcount than we're operating today. The one thing I've learned over the 20 years that I've been doing this is, if you have a situation that's not presenting a return on investment, you exit, you convert, you come up with another strategy.

Speaker Change: I expect we don't have a final number but we will end the year lower in our dealership head count than we are operating today.

Marcus Lemonis: And while we are not removing our goal of getting to 320 locations in the foreseeable future, we are not going to do it at all. So, if certain locations have to consolidate, or convert, or close, we're not going to hesitate. We take our S-GNA very, very seriously. And we know that locations that are breaking even or losing money really don't help that cause of hitting the target that we want to be at. And we're not going to hold back in making those decisions.

Unknown Executive: Got it.

Unknown Executive: Okay, thank you.

James Hardiman: Next question comes from James Hartiman with Webboach Securities. Please go ahead. Hey, good morning. So, I wanted to dig into the June, July inflection that you spoke to a little bit. And you're careful to point to market share game. I guess I'm curious what you think the broader industry is doing. Obviously, May took a pretty big step down. I think the general expectation or belief among investors is that things have only gotten worse since May. But you seem to be seeing something different, not only in the immediate term, but you seem to think that that's sustainable.

Marcus Lemonis: Thank you so much. The expectation or belief among investors is that things have only gotten worse since May, but you seem to be seeing something different, not only in the immediate term, but you seem to think that that's sustainable. And so I don't know if the sustainability of that is a function of, That's what separates us from everybody else. We expect that same performance to continue through the back half of the year on the new side, expecting double-digit same-store sales increases on new for the back half of the year with margins in that 15% range, 14 12 to 15% range.

Marcus Lemonis: And so, I don't know if the sustainability of that is a function of you think your market share is going to get even better, or you actually think maybe there's some inflection happening in the underlying industry. Well, I think first and foremost, we're not happy that we're seeing, you know, 12 to 15, 18% declines in the overall stat survey information. And based on what we have read and what we have heard, it did get progressively tougher in June and July. I think part of the difference that separates us from everybody else. And the reason we think our company is so special is we understand how to modify our business, modify our inventory, modify our marketing, modify our cost structure in the face of very strong winds.

Speaker Change: So I don't know if the sustainability of that is a function of you think your market share is going to get even better or you actually think maybe theres some inflection happening in the underlying industry.

Speaker Change: Well I think first and foremost we're not happy that we're seeing 12.

Speaker Change: 12 to 15, 18% declines in the overall Stat survey information and based on what we have read and what we have heard it did get progressively tougher in June and July.

Speaker Change: Part of that difference that separates us from everybody else and the reason we think our company is so special as we understand how to modify our business modify our inventory modify our marketing modify our cost structure in the face of very strong wins, we knew without a shadow of a doubt.

Marcus Lemonis: We knew without a shadow of a doubt that the path to prosperity on the new side was taking our average in stock selling price and stocking price down to a level where the intersection of payment would meet the customer's expectations. Early on in the process, customers were coming in the same way they always have, and they would see the interest rate in the payment and they would say, "We don't want any part of that," which is why we made that strong pivot to lower price units in each of the tiers. We actually believe that our performance will continue.

Marcus Lemonis: For example, in the month of May, we were up 4% on a new same-store sales basis. While the industry was down, I think from my best recollection, close to 20%. Okay, in June, we were up just north of 15%. And in July, we were up in the mid 20s on the same store basis. Now, in some cases, right, it just is really simply about having the right product at the right price, at the right time. By the way, that's the whole business. That's what separates us from everybody else. We expect that same performance to continue through the back half of the year on the new side, expecting double-digit same store sales increases on new for the back half of the year with margins in that 15% range, 14.5% to 15% range.

Marcus Lemonis: Usually, when we get into the fourth quarter and it's snowing outside, we just take deals because we wanna feed our people and keep things moving. But I feel very comfortable in that range. That's all really good color.

Marcus Lemonis: Usually, when we get into the fourth quarter and it's snowing outside, we just take deals because we want to feed our people and keep things moving. But I feel very comfortable in that range. I am worried about the overall dealer health. I'm not going to lie. And I want to be very thoughtful in explaining that that concern that I have is partially what's driving our conservative nature on the used acquisition side. We want to accomplish two principal things. One, we don't want to deploy our actual cash in an environment where things still seem unstable. We have an election coming up.

Marcus Lemonis: And typically, when elections come up over decades, it always gets a little squishy. It's probably more contentious than we've ever seen, and we don't know what's going to happen. But I think secondarily, we're hopeful that there's going to be rate cuts, and we would sure love it; our P and L would sure love it, but we have no certainty around that. And so, with those two factors and seeing dealers with a lot of aged inventory, that's why we continue to be more conservative. We also are more conservative because we want to leave a basket of availability on our balance sheet to take advantage of any opportunity that may present itself in the back half of the year on the procurement of distressed or liquidated inventory.

Speaker Change: Year on the procurement of distressed or liquidated inventory.

Marcus Lemonis: When I see 14,000 units out there that are still 22s and 23s, I have to be a little more direct. Those are essentially used units at this point. And so if we can keep our cash rich and our floor plan ability wide, we see an opportunity, if it presents itself, to capture a lot of those units at materially material discounts to the invoice and in line with market values. So we are playing a little bit of a hedge here at the same time, really mitigating our risk.

Speaker Change: When I see 14000 units out there that are still 20, twos and 20 threes I have to be a little more direct those are essentially used units at this point and so if we can keep our cash rich and our floorplan ability wide.

Speaker Change: We see an opportunity if it presents itself to capture a lot of those units at materially material discounts to the invoice and in line with market values.

Speaker Change: We are playing a little bit of a hedge here at the same time really mitigating our risks.

James Hardiman: That's all really good color, and you know, following up, you've mentioned sort of that affordability. and the math, a number of times now. I thought one of the most encouraging things you said today is the idea that we don't need to go back to where we were in terms of interest rate, that maybe 200 basis points is what we need to get back to more of a mid-cycle environment. I guess continuing down that path, I don't know, the over-under by the time we get to the selling season, which it sounds like is ultimately what we're playing for here, is maybe 75 to 100 basis points.

Marcus Lemonis: And, you know, following up, you've mentioned sort of that affordability. If those were to come through, if we were to see that level of cuts over the, So now that we have established kind of this control, okay, the question is how much more does this go up? Look, when you think about how, you know, fragile the customer is between the summer of 22 and the summer of 23. All of the interest rate increases happened in that 12 month period. We have never seen that in our history.

Speaker Change: That's all really good color.

Marcus Lemonis: And if those were to come through, if we were to see that level of cuts over the next, you know, call it six or seven months, what type of an impact do you think that that would have on your business outside of the obvious math that you laid out in terms of your actual market cost? Listen, I think everybody appreciates and enjoys the brotherly sparring between Matt and I on certain topics, and I have a very definitive position that every quarter of a point in rate cut will turn into a certain amount of rise in ASP, and that rise in ASP will start to return our GPUs to levels that we want to be at.

Marcus Lemonis: But where Matt and I do agree is that in order to get the kind of volume out of the industry, and we're not just thinking about ourselves, our march back to 400,000, we're going to need to see significant inflection points in that rate. It's going to be a multi-faceted component, though, where you have to think about not only obviously the interest rate and the implications of what that could mean for a consumer and monthly payments, but also the term and the invoice price and what sort of volume do we want to yield out of this, James?

Marcus Lemonis: So there is an opportunity for us to actually increase the gross profit for a unit and then turn the average selling price for a unit with each rate reduction that comes out. The question is how much did that ASP go up, and that's where we can go round and round in terms of the theory behind it. But you see that year over year, our new average selling price went backwards $4,000, our used average selling price went backwards $4,000, and this has been a relatively rate stable environment. So now that we have established kind of this control, okay, the question is how much more does this go up?

Speaker Change: There is an opportunity for us to actually increase the gross profit per unit and in turn the average selling price per unit with each rate reduction that comes out. The question is how much did that Asps go up and that's where we can go round and round in terms of the theory behind it but you see that year over year, our new average selling.

Speaker Change: This went backwards $4000, our us average selling price it went backwards $4000 and this has been a relatively rate stable environment. So now that we have established kind of his control. Okay. The question is how much more does this go up.

Marcus Lemonis: Don't know for a fact, but what I can tell you is I feel very confident in our prospects within the new space to actually satisfy further price points compared to what we have today, which shouldn't naturally drive up our ASP. It's no secret that the best selling travel trailer in America right now is the Coleman Travel Trailer, and largely we are hitting entry-level price points to actually satisfy the demand that exists out there. On the use side, we've taken a very similar approach where we have procured and consigned assets. We're actually up when you look at our use segment of what we're selling; had a cost based under $15,000.

Speaker Change: Don't know for a fact, but what I can tell you is I feel very confident in our prospects within the new space to actually satisfy further price points compared to what we have today, which should naturally drive up our asps. It's no secret that the best selling travel turn on child retailer in America right now the Coleman travel trailer.

Marcus Lemonis: So there's a corollary between consumers that are seeking that value versus those at what they can afford. So I think on the upside, I think we'll see growth in the new. I think within the use segment we can be a bit more aggressive, just given the mere fact that 2025 volume pricing has stabilized, period it. And given those two components, I feel a lot better about growth for next year. When you think about how fragile the customer is between the summer of 22 and the summer of 23, all of the interest rate increases happened in that 12-month period.

Marcus Lemonis: We have never seen that in our history, and we're happy to report that in both June and July, we crossed 13,100 units. in July. Both months, and in July, we actually sold more units than we did in June, and that has never happened. So that sort of inflection point where we're bucking the seasonal trend gives us a lot of hope. I think for me, that tells me that customers are starting to, I guess, not accept but embrace the fact that the rates are what they are. They love the lifestyle. So I have to believe that as rates come back down, they're going to love the lifestyle even more.

Marcus Lemonis: And the affordability bands are going to widen because I said earlier, it's simply a monthly payment game. Lower rates, lower monthly payments, lower monthly payments; the funnel's wider.

Unknown Executive: That's really helpful. Thanks, guys.

Craig Kennison: Our next question comes from Craig Kennison with Beard. Please go ahead. Yeah, hey, good morning. Thanks for taking my questions as well. And Marcus, I appreciate you taking this tab at 2025 so early; that's not easy.

Speaker Change: Yeah, Hey, good morning, Thanks for taking my questions as well in markets I appreciate you've taken a stab at 2025. So early that's not easy and maybe just to push back a little bit if we look at 'twenty four it clearly will be a year in which you and the industry. You know would have discounted more than you would have liked in order to stimulate.

Marcus Lemonis: And maybe just to push back a little bit, if we look at 24, it clearly will be a year in which you and the industry would have discounted more than you would have liked in order to stimulate demand. And the hope is, next year, you won't have to discount in order to stimulate demand, but just pulling the rug out from under consumers looking for promo. I mean, isn't that a tougher environment to grow volume, and I'm wondering where you see the offsets? Yeah, I'm really glad that you brought that up, Craig. I agree that other dealers have had to discount to move products because they did not do what we did.

Speaker Change: Demand. The hope is next year, you won't have to discount.

Speaker Change: In order to stimulate demand, but just pulling the rug out from under.

Speaker Change: Consumers looking for promo I mean isn't that a tougher environment to grow volume and I'm wondering where you see the offsets.

Speaker Change: Yeah, I'm really glad that you brought that up Craig.

Speaker Change: I agree that other dealers have had to discount to move product because they did not do what we did which is get out of the burning building before everybody else, but if you look at our margin profile other than the Covid years, our margin profile on new is actually pretty good at 15%.

Marcus Lemonis: Which is get out of the burning building before everybody else. But if you look at our margin profile, other than the COVID years, our margin profile on new is actually pretty good. At 15%, that's kind of exceptional if you look at history. So we haven't had to discount what we have done. And maybe to people's satisfaction or dissatisfaction, as we have become more aggressive in the way we find new customers, attract new customers, and bring back old customers. So if you look at our SNA, our marketing expense was up a little bit. Our marketing expense was up as we look to find new customers.

Marcus Lemonis: So when we talk about promotional activity, we've been successful at gaining market share, getting back to 13,000 tight units in a month of June in July without having to discount. But we did spend a little bit more money to get people in the door, to get people to send us a lead, to get people to sit down. And it has been a little tougher to convert people in the higher rate environment. Our conversion has started to improve, and we believe it's only going to improve from here. I worry again, though, Craig, that with 14,022s and 23s still out there, that's a problem because no matter how much those dealers discount, 10%, 20%, 30% off of invoice, now that pricing, 20%, 30% off of 22 and 23 models, is still higher than the price we're selling 24s and 25s for.

Marcus Lemonis: That's a problem because no matter how much those dealers discount the invoices, 10%, 20%, 30% off. And as some may recall, we acquired a business called RBI Arizona, a consignment specialist store, and we've learned a tremendous amount post-acquisition of this business. In fact, it's an asset-light model in the sense that nearly all of the assets are consignments. There's always a handful of units or used units that we will purchase, but this business solely focuses on selling used units.

Marcus Lemonis: They got really caught there. So I expect our discounting to be the same as it is, and I expect our margins to stabilize as we go into 25s. I do worry about the dealers self, the others.

Matthew Wagner: That's great, thanks, Marcus, and then Matt, I think you mentioned a reconfiguration of your dealer portfolio and some other changes. Just curious if you could shed a little more light on those changes with some of the dealers that may be underperforming. So you heard both Marcus and I, Craig, allude to the success that we've experienced with our exclusive stores, and Marcus and I had the opportunity last week, actually, to visit two more locations. And we were both in Thralls, by what we saw in terms of the general experience, where it feels very different than a very traditional camping world.

Matthew Wagner: And so much is, it's that brand focus where our own team members were decked out in this statement brand design gear, as well as Coachman gear. It gave the appearance that is a manufacturer specific store, and the level of focus on all of the sales processes and service processes gives customers a different experience altogether. We've seen that our promoter scores, but more importantly, our margin profile and our return investment have been amongst the top quartile of all of our locations in short order if you remove one-time expenses to actually get these businesses up and running.

Matthew Wagner: So as we look forward, Craig, we believe that we can take some of these dealerships that are underperforming. You're always going to have to look at a dealership portfolio of inexpensive 200 locations, and there's always going to be a bottom 10%. So in our mind, there's an opportunity to take that bottom 10% and reassess the markets in which they operate and how they actually operate in connection with nearby Camping World locations. For example, we have locations in Texas and Minnesota and Colorado that are close proximity to one another. We see an opportunity to convert some of those locations to either exclusive stores or a concept and idea that we've spoken about of consignment stores.

Matthew Wagner: And as some may recall, we acquired a business called RBR Zona, a consignment specialist store, and we've learned a tremendous amount post-acquisition of this business. In fact, it's an asset-light model in the sense that nearly all of the assets are consignments. There's always a handful of units or used units that we will purchase, but this business solely focuses on selling used units. And as we all know, looking at the history of our business, the margin profile on use always exceeds new outside of a period in 21 and 22 without landage new margins for that short time period.

Marcus Lemonis: And as we all know, looking at the history of our business, the margin profile on used always exceeds new outside of a period in 21 and 22 without landish new margins for that short time period. And the RBI Arizona business has taught us a scalable playbook that has enabled us to take that same methodology, same concept, and expand our consignment process across the entirety of our enterprise. We believe that we should be able to take not only our exclusive stores but also this consignment playbook and start to convert some additional stores to yield that much more from these underperforming assets.

Matthew Wagner: And the RBR Zona business has taught us a scalable playbook that has enabled us to take that same methodology, same concept, and expand our consignment process across the entirety of our enterprise. We would historically average as a company crying about a thousand consignment across our entire business. In the span of four short months, we've grown that to an extent of over 4,000 units just using this RBR Zona consignment playbook. We believe that we should be able to take not only our exclusive stores but also this consignment playbook and start to convert some additional stores to yield that much more, as we've done it performing assets.

Speaker Change: Units just using this RV, Arizona consignment playbook, we believe that we should be able to take not only our exclusive stores, but also this consignment playbook and start to convert some additional stores to yield that much more out of these underperforming assets because when you look at taking the floor plan expense out of things, particularly at the rates that we're at and you look at <unk>.

Matthew Wagner: Because when you look at taking the floor plan expense out of things, particularly at the rates that we're at, and you look at taking other labor savings in those locations, we can flip the script pretty quickly. We pay it, I think, approximately $3 million for that RBR Zona location. And in the last several months, it's put up 200,000, 250,000 in bottom line performance. And when we look at that and say to ourselves, okay, we don't have to invest our capital. We don't have to put it on our floor plan. We're using other people's money, and we're getting that kind of return.

Marcus Lemonis: Because when you look at taking the floor plan expense out of things, particularly at the rates that we're at, and you look at taking other labor savings in those locations, we can flip the script pretty quickly. We paid, I think, approximately $3 million for that RV Arizona location.

Speaker Change: Taking other labor savings in those locations, we can flip the script pretty quickly we paid I think approximately $3 million for that RV, Arizona location and in the last several months. It's put up 200000 250000 in bottom line performance and when we look at that and say to ourselves okay.

Marcus Lemonis: And in the last several months, it's put up $200,000, $250,000 in bottom-line performance. And when we look at that and say to ourselves, okay, we don't have to invest our capital, we don't have to put it on our floor plan, we're using other people's money, and we're getting that kind of return. We think there are a handful of locations around the country where we're either losing money because of floor plan expenses and underperformance and can convert those into something that will be positive. Those kinds of swings really matter.

Speaker Change: We don't have to invest our capital we don't have to put it on our floor plan, we're using other people's money and we're getting that kind of return we think there's a handful of locations around the country, where we either losing money because of floor plan expense and underperformance and convert those into something that will be positive those kinds of swings really matter.

Matthew Wagner: We think there's a handful of locations around the country where we're either losing money because of floor plan expense and underperformance and convert those into something that will be positive.

Marcus Lemonis: Those kinds of swings really matter. I just want to put one last point on the exclusive stores. Matt mentioned two brands; he mentioned Grand Design, he mentioned Coachman. This is a year-to-date, which is a division of Thor, is up approximately Matt? Almost double year-over-year, in terms of the segment, specifically a Travel Trailer stiff wheel from By, and the motorized business, specifically a Class C, has performed quite well. So the manufacturers are starting to really enjoy market share gains and volume gains because of these exclusive stores. And it's funny when I walk into them; I even see this as the greatest thing and an idea that you and I ever had, because it mitigates risk, it gives us a closer focus on product knowledge, and the performance has been exceptional.

Speaker Change: I just wanted to put one last point on the exclusive stores, Matt mentioned two brands you mentioned Grand design. He mentioned Coachman. We also have forest River, we have Keystone, we have genco, our Jacobs business.

Marcus Lemonis: This is the greatest idea that you and I ever had because it mitigates risk, it gives us a closer focus on product knowledge, and the performance has been exceptional. Yeah, so when we can sign a unit, we obviously sign paperwork with the consumer, that asset sits on our lot, it's still owned by the consumer, no money is changed hands. We do spend a little bit of money to clean it up to make it presentable.

Matthew Wagner: Very helpful, just one point of clarification on the consignment piece. I think earlier in the conversation or in the script, you talked about that being lower margin, but if I'm not mistaken, you don't actually purchase and then resell those units; you just capture the profits. So what's the accounting around consignment units? Yeah, so when we consign a unit, we obviously sign paperwork with a consumer. That asset sits on our lot. It's still owned by the consumer; no money has changed hands. We do spend a little bit of money to clean it up to make it presentable.

Marcus Lemonis: And when we sell that unit, it actually comes into our inventory through a purchase and increases our terms. We are starting to improve our terms. In fact, in the month of July, we're starting to see our terms get back to where we want them to be. The offset of that is that the margin profile of a consignment is a little lower.

Matthew Wagner: And when we sell that unit, it actually comes into our inventory through a purchase and increases our terms. We are starting to improve our terms. In fact, in the month of July, we're starting to see our terms get back to where we want them to be. The offset of that is that the margin profile of a consignment is a little lower. And that's what's driving some of our margin compression in the back half. When you look at our traditional used purchases, they tend to be around 20%. When we look at our consignments, they're in the 16 to 17% range.

Marcus Lemonis: And that's what's driving some of our margin compression in the back half. When you look at our traditional used purchases, Yeah, so we are heavily investing in our people. We've been talking about this for a number of quarters.

Speaker Change: Margin profile of a consignment is a little lower and that's what's driving some of our margin compression in the back half when you look at our traditional used purchases they tend to be around 20%. When we look at our consignments theyre in the 16% to 17% range and.

Matthew Wagner: And while that doesn't sound like a lot, when you grow your consignment business at a rapid pace, and you slow down your purchase business at a rapid pace, on a temporary basis, you're going to change the overall margin profile. What we want to do is continue to ramp up that consignment process, because we love free money and we love fast turns, but we want to get back into purchases as well, so that we can find that blend that gets us to the margin profile we need to be at. Got it.

Speaker Change: That doesn't sound like a lot when you grow your consignment business at a rapid pace and you slowed down your purchase business at a rapid pace on a temporary basis youre going to change. The overall margin profile. What we want to do is continue to ramp up that consignment process, because we love free money and we love fast turns but we wanted to.

Speaker Change: Back into purchase as well so that we can find that blend that gets us to the margin profile, we need to be at.

Speaker Change: Got it thanks, so much.

Michael Swartz: Thanks so much. Our next question comes from Michael Swartz. What's your list? Please go ahead.

Speaker Change: Our next question comes from Michael Swartz with Jefferies. Please go ahead.

Michael Swartz: Hey, hey, good morning, guys. Maybe sticking on the S-GNA topic, I think in the second quarter was of about three points relative to last year as a percentage of gross profit. And understanding that part of that is the denominator being a bit lower on profitability, as we've spoken about. But were there any kind of one-time or transitory costs in that number for the second quarter?

Michael Swartz: Hey, good morning, guys.

Speaker Change: Maybe sticking on the SG&A topic I think.

Speaker Change: In the second quarter was up about three points relative to last year as a percentage of.

Speaker Change: Gross profit.

Speaker Change: And understanding that part of that is the denominator being a bit lower on profitability as we've spoken about but were there any kind of one time or transitory costs in that.

Speaker Change: For the second quarter.

Marcus Lemonis: There were, but you know, as you have been with me for a long time, we don't like to always make excuses about missing our own internal targets. We launch the auction business, and I think more important than anything else, and maybe this is the fine point on this: we are a growth company. And when we started this business, and Karen and Brent and I started this business 20 years ago, it was three of us in a cubicle. But with 14,000 employees and a $7 billion-ish type business, we have to deal with a lot of different things.

Lindsey Christen: And Lindsay, who we'll talk about this in just a second, is overseeing an infrastructure that protects our company, that trains our people, and that provides them services that make them want to be here.

Lindsey Christen: Let's talk about that a little bit. Yeah, so we are heavily investing in our people. We've been talking about this now for a number of quarters. We're making significant investments in training our team across the enterprise to improve our sales process, improve our service process. So we're really, we're really proud of those investments and seeing some an increase in NTS scores and customer NTS scores and employee NTS scores. We're really excited about what that has to do with the same time. We're also continuing to enhance our IT infrastructure and security. We all have to do that in today's environment.

Marcus Lemonis: We're making significant investments in training our team across the enterprise to improve our sales process, to improve our service process. Yeah, I think, you know, Michael, the other thing that's really important is that we're a growth company. And in order to absorb 16 locations, 18 locations, 15 locations, make acquisitions, open stores, convert to exclusive stores, it required us to put in an infrastructure that allowed that to happen, so that it's a good experience for the customer and the employee. And we've had a lot of healthy debates in our organization. Do we just chop everything and cut everything all the way down to the bone?

Marcus Lemonis: So, of course, you naturally see an increase in those costs, but feel good about the contribution in that. Yeah, I think, you know, Michael, the other thing that's really important is we're a growth company. And in order to absorb 16 locations, 18 locations, 15 locations, make acquisitions, open stores, convert to exclusive stores. It required us to put in an infrastructure that allowed that to happen so that it's a good experience for the customer and the employee. And we've had a lot of healthy debates in our organization. Do we just chop everything and cut everything all the way down to the bone?

Marcus Lemonis: And the answer is we could, but what we worry about is how do we then prepare ourselves to be opportunistic again on acquisitions and open up stores and convert things? And it really is a choice. So, we really have to, you know, be really thoughtful around that.

Michael Swartz: It's just a follow-up. I think you made the comment that, you know, the target is low 70, 72, 74% something in that range in terms of SNA. Over the long run, and obviously running above that now. But is there any way to think about it? There's a lot going on, obviously, in the model and a lot of variability going into 25. But is there any way to think about what that should actually look like in the back half of the year? Yeah, so in the back half of the year, you know, we're unfortunately going to be higher than we want to be, unless the use business picks up, which we're hopeful that it does, unless the margins pick up, which we're hopeful that it does.

Marcus Lemonis: But as we start to plan for the back half and for our investors, we want to be very clear. We think we're going to end the year in the mid, in the low to mid 80s, far away from where we want to be by four or five points. And GPUs coming from lower ASPs are contributing; consignments instead of purchases are contributing. But what we would ask our investors to consider is the thoughtfulness behind risk mitigation, capital preservation, and protecting the business against cutting and still focusing on being a growth company against just making these wide swath cuts that we believe could impair the overall enterprise value arc of our company, the market performance against our competitors, and our ability to grow at the pace that we want to.

Speaker Change: The market performance against our competitors and our ability to grow at the pace that we want to we're asking our investors to trust us in this process that while we've seen probably more conservative than we should we've seen this movie many times and maybe I have a little PTSD from the past.

Marcus Lemonis: We're asking our investors to trust us in this process, that while we seem probably more conservative than we should, we've seen this movie many times. And maybe I have a little PTSD from the past. I'm not 25 anymore. And I want to be really thoughtful about protecting our capital and protecting our business and protecting our shareholders. I'm focused on the fact that we are outperforming every single other dealer in the country, and not by a little. And we know that our infrastructure and our people are really the ones that are doing that. There's no other magic sauce behind that.

Speaker Change: <unk> 25 anymore, and I want to be really thoughtful about protecting our capital and protecting our business and protecting our shareholders I'm focused on the fact that we are out performing every single other dealer in the country and not by a little and we know that our infrastructure and our people are really the one.

Speaker Change: Ones that are doing that there's no other magic sauce behind that so we expect our SG&A to be higher than we'd like as we head into 2025, we're still always focused on 72 to 73, but we need a few things to come together to get down to that number we need the asps to come back up a little bit.

Marcus Lemonis: So we expect our SDNA to be higher than we'd like. As we head into 2025, we're still always focused on 72 to 73. But we need a few things to come together to get down to that number. We need the ASPs to come back up a little bit. We need gross profits to return a little bit, and most importantly, we need the volume to come back.

Speaker Change: We need gross profits to return a little bit and most importantly, we need the volume to come back.

Unknown Executive: Great, thank you a lot, Moody.

Speaker Change: Great. Thanks, a lot mark.

Scott Stember: Our next question comes from Scott Stember, who is from MKM. Please go ahead. Good morning, and thanks for taking my questions as well. Yes, sir. Marcus, you made a comment that you would expect new same-store sales to be up in 25. I'm just trying to get a sense of what your expectation for the underlying market will be in units, and if you expect to keep benefiting from this lightning in the bottle of these lower priced units like with Coleman.

Speaker Change: Our next question comes from Sam Burwell.

Cam: Cam. Please go ahead.

Marcus Lemonis: And the answer is we could. But what we worry about is how do we then prepare ourselves to be opportunistic again on acquisitions and open up stores and convert things. And it really is a choice. So we really have to, you know, be really thoughtful around that. Good morning, and thanks for taking my questions as well.

Sam Burwell: Good morning, and thank you for taking my questions as well.

Speaker Change: Yes, Sir.

Sam Burwell: You made a comment that you would expect new same store sales to be up 25% I'm just trying to get a sense of what.

Speaker Change: Your what's your expectation for the underlying market will be in units.

Marcus Lemonis: And if you expect to keep benefiting from this lightning in the bottle of these lower-priced units like with COVA, Yeah, our customer payment work continues to be not as robust as we would like it to be. We find that consumers are still camping, but they're not camping as much. And I'm assuming that with the general pinch on their pocket, with rates being where they are and discretionary income being a little tighter, that instead of people taking seven trips a year, they're taking five.

Speaker Change: And if you expect to keep benefiting from this lightning in a bottle of these lower priced units like with Goldman.

Matthew Wagner: Well, I'm going to have Matt take that one, and then I'll add some kind of choice. We are yielding greater confidence with our opportunity for abstract segments that out of this gap, we vacated this last year because we were unable to negotiate the deal or architect the model that a significant price point reduction that would give us the actual confidence to go out to the market. What I mean by that is we scaled back our entire Coleman lineup pretty substantially over this last year, and it's still sitting at the number one position when we actually eliminated an excess of 20 floor plans that was part of the Coleman brand lineup.

Speaker Change: Well I don't have Matt take that one and then I'll add some color coded.

Speaker Change: We are yielding a greater confidence with our opportunity for upside.

Speaker Change: The segments that honestly scout we vacated this last year's because we werent able to negotiate the deals are architected. The models at a significant price point reduction that would give us the actual confidence to go out to the market what I mean by that is we.

Matthew Wagner: We did that in the name of a re-architecture of the entirety of that brand, and we've also worked with some of our other exclusive products, specifically Heartland, where we had actually vacated the entirety of what was the Pioneer Mallard, which if you look at those floor plans and those brands and theft surveys, they're amongst the top 15 best selling brands in America two years ago. We slowly started to scale that back over the last year and a half, and we've been quietly re-architecting all of that. Right now, within the Coleman segment, we've been largely focused on segments of price points under 20K.

Matthew Wagner: We believe, based on the work that our manufacturing partners have done with us, that we should be able to yield increases just in Coleman and those heartland segments alone, never mind all the other exclusive products that we have out there. So independent of what will transpire within this broader industry, which I do believe that the broader industry will actually start to increase sales again next year. To what extent, I think we're still waiting to see exactly where we settle in this year, where we've maintained very publicly that we think that retail and wholesale will end up in that, you know, 340th range plus or minus for both retail and wholesale depending upon which lens you want to look at it through.

Speaker Change: So we'll end up in that $3 40 ish range, plus or minus for both retail and wholesale depending upon which Len do you want to look at it through the.

Matthew Wagner: The question is next year, how much does that go up on both sides, because we do believe that there's relatively scarce supply of certain new units in general, rolling stock across the broad part of our industry. Yeah, I mean, I think as we look at the data and we're very hopeful for not only ourselves, but for the industry at large, that we would expect 2025 to have a decent increase over 2024, both in shipments and in retail. Now, that contemplates things coming together and the world not falling apart, which we don't expect to happen or we're hopeful it's not going to happen.

Speaker Change: The question is next year, how much does that go up on both sides. Because we do believe that there's relatively scarce supply of certain new units and general rolling stock stock across the broad broad part of our industry.

Speaker Change: As we look at the data and we're very hopeful for not only ourselves but for the industry at large that we would expect 2025 to have a decent increase over 2024, both in shipments and in retail now that contemplates things coming together in the world not falling apart.

Speaker Change: <unk>, which we don't expect to happen and we're hopeful that it's not going to happen, but we don't see it returning back to the 400000 unit level in the next 12 months, we would be very pleased if that happened because we get our pro rata share, but I think we have to be very conservative and realistic about how we step back up on our way back to four one.

Matthew Wagner: But we don't see it returning back to the 400,000 unit level in the next 12 months. We would be very pleased if that happened because we get our pro-rata share, but I think we have to be very conservative and realistic about how we step back up on our way back to 400,000 plus. Does it go up to 355 or 360 and then move itself to 385 over the next several years? We help. That's sort of our anticipation, and we want our lion share of that, but we're not building any business model or ordering any inventory as if it's going to all of a sudden magically go from 340 to 400,000.

Speaker Change: <unk> thousand plus does it go up to $3, 55% or $3 60, and then move itself to 385 over the next several years, we hope that's sort of our anticipation and we want our lion's share of that but we're not building any business model are ordering any inventory as if it's going to all of a sudden magically go from $3 40 to 400.

Matthew Wagner: That would be reckless and irresponsible, and we're not.

Speaker Change: Yeah that would be reckless and irresponsible and we're not going to do that.

Unknown Executive: Can I do that? Got it.

Speaker Change: Got it and then last question on customer pay work within products and services I think the last couple of quarters, we were running up.

Michael Swartz: And then last question on customer pay work within products and services, I think the last couple of quarters, we were running up organically, mid single digits; at least that's kind of what it sounds like. Can you maybe give us a little direction, how that part of the business did? Yeah, our customer pay work continues to be not as robust as we would like it to be. We find that consumers are still camping, but they're not camping as much. And I'm assuming that with the general pinch on their pocket, with rates being where they are in discretionary income, being a little tighter, that instead of people taking net seven trips a year, they're taking five.

Speaker Change: Organically mid single digits.

Speaker Change: Kind of what it sounded like can you maybe give us a little direction, how that part of the business that.

Marcus Lemonis: And there's a direct correlation between the number of trips that people take and how often they show up in our service department. The other thing that we're starting to see is that in a tighter economic environment, people just either live with whatever is there, or they start to fix things themselves. And just so I'm clear, you kind of mentioned maybe leaning into consignment a bit more. Obviously, floor plan benefits there, but structurally, like, is there anything to consider on used margins looking kind of longer term if you were to kind of increase your mix of consignment?

Speaker Change: Our customer pay work continues to be not as robust as we would like it to be we find that consumers are still camping, but theyre not camping as much and I'm, assuming that with the general pinch on their pocket with rates being where they are in discretionary income being a little tighter that instead of people take.

Speaker Change: <unk> net seven trips a year theyre, taking five and there's a direct correlation between the number of trips that people take and how often they show up in our service Department.

Marcus Lemonis: And there's a direct correlation between the number of trips that people take and how often they show up in our service department. The other thing that we're starting to see is, in a tighter economic environment, people just either live with whatever is there, or they start to fix things themselves. And so we're hopeful that as things open up again, and people get more comfortable with what's happening in the marketplace, that all of that will come back.

Speaker Change: The thing that we're starting to see is in a tighter economic environment people just either live with whatever is there or they start to fix things themselves.

Unknown Executive: Guy, that was very helpful. Thank you.

Noah Zatzkin: Yes, sir. Our next question comes from Noah Zaskin with M3 Partners. Please go ahead. Hi, thanks for taking my question. I just taken kind of all together with the comments around kind of July. Fucking the trend and remaining strong.

Matthew Wagner: How do you think about maybe this is a bit of a point of question, like your ability to grow earnings year by year in the back half. And then looking out to next year specifically around margins, is it your expectation on the use side that you'd kind of get closer back to normal levels? And what would it kind of take to get back there from the kind of mid to high teens rate you talked about in the second half on the use side? Thanks. Yeah, for the earnings on the back half, there's really just a couple of simple inputs.

Matthew Wagner: One is SGNA as a percentage of growth, and we need our growth profit to return to a level of normalcy at the same time we take out additional costs and rationalize locations and things of that nature. The second input in that is how our use is going to perform, and use has become such a staple of contributing to not only our top line, but the gross profit line.

Matthew Wagner: We expect our use business to return to a level of normalcy in margins in 2025. And we see that sequentially happening as we go through the balance of the year with the idea that we're going to potentially see a rate cut, get past the election, and we start absorbing inventory at a faster rate. You know, we're hoping that in December, as a very small example, that will back at that 18 and a half to 19%, and then we sequentially get back to 20 through the first quarter and into the selling season. That's how we're building our model, and we see the ways to do that simply by just starting to aggressively acquire again when we have the level of comfort.

Speaker Change: With the idea that we're going to potentially see a rate cut get past the election, and we start absorbing inventory at a faster rate, we're hoping that in December as a very small example that we're back at that 18, 5% to 19% and then we sequentially get back to 20% through the first quarter and into the selling season, that's how.

Speaker Change: We're building our model and we see the ways to do that simply by just starting to aggressively acquire again, when we have the the level of comfort.

Speaker Change: Okay.

Matthew Wagner: And just so I'm clear, you kind of mentioned maybe leniency consignment a bit more. Obviously, four planned benefits there, but structurally, like is there anything to consider on use margins looking kind of longer term if you were to kind of increase your mix of consignment. Well, we have to weigh out in that equation is the cost of capital against the margin profile and what is the best way to deploy our capital. And so, if you told me that we can grow our consignment business materially, which we plan on doing, and we can lower our carrying costs, our floor plan interest materially, which would be a byproduct of that, and that our margins would be 1% lower on the top side, but ultimately be something better on the bottom line.

Speaker Change: And just so I'm clear you kind of mentioned, maybe leading into consignment a bit more obviously floor plan benefits there, but structurally like is there anything to consider on used margins looking kind of longer term. If you were to kind of increase your mix of consignment.

Speaker Change: Well, we have to weigh out in that equation is the cost of capital against the margin profile and what is the best way to deploy our capital and so if you told me that we can grow our consignment business materially, which we plan on doing and we can lower our carrying costs our floor plan interest materially which would be a byproduct of that.

Speaker Change: And that our margins would be 1% lower on the top side, but ultimately be something better on the bottom line, we're going to find that perfect science I think that is really really important but as rates come back down we're going to be aggressive in going out and procuring used again as we gain more confidence we're going to be aggressive in <unk>.

Matthew Wagner: We're going to find that perfect. I think that is really, really important, but as rates come back down, we're going to be aggressive in going out of procuring used again. As we gain more confidence, we're going to be aggressive in going out of to procure used again. What happens when we make that use acquisition is in just the sale of the unit. It's what happens in service. It's what happens in parts as we recondition those units. So keep in mind, one of the significant deltas on a consignment versus purchase is that the consignment goes through a reconditioning process after the unit is sold, and that definitely puts pressure in the overall margins because the price is established with the customer.

Speaker Change: Going out to procure used again.

Speaker Change: What happens when we make that used acquisition isn't just the sale of the unit. It's what happens in service. It's what happens in parts as we recondition those units. So keep in mind one of the significant deltas on a consignment versus a purchase is that the consignment goes through our reconditioning process. After the unit is sold and that definitely puts pressure.

Speaker Change: The overall margins because the prices established with the customer when we purchase those units. We go through a rigorous inspection process and we ended up investing in that unit and then enjoying the margins both on the service side the parts side and the sales side on the consignment process, we missed a piece of that well that's offset by not having to.

Matthew Wagner: When we purchase those units, we go through a rigorous inspection process, and we end up investing in that unit and then enjoying the margins both on the service side, the part side, and the sale side. On the consignment process, we miss a piece of that. Well, that's offset by not having to take the risk. At this point, we'd rather just not take the risk.

Speaker Change: Take the risk at this point, we'd rather just not take the risk.

Unknown Executive: Very helpful. Thanks.

Speaker Change: Very helpful. Thanks.

Tristan Thomas: Our next question comes from Tristan Thomas Martin, would be in the capital markets. Please go ahead. Morning. I may have missed this, but did you call it how much carryover inventory you have and then mark, as you mentioned, getting turns back to where you want them to be? Where do you want them to be? On the use side, we would like our turns to be north of 3.5. And while we experience better than that in July, there are seasonal adjustments to that. On the 2023 side, I think we only have just around 800 left. I mean, that so no 22s of any consequence, and 23s were down to only 800, which is far, far better than we were a year ago.

Speaker Change: Our next question comes from Tristan Thomas Martin with BMO capital markets. Please go ahead.

Speaker Change: Good morning.

Speaker Change: I may have missed this but did you call. It how much carryover inventory you have and then Marcus you mentioned getting turned back to where you want them to be where do you want them to be.

Speaker Change: On the used side, we would like or it turns to be north of three five and while we experienced better than that in July there is seasonal adjustments to that.

Unknown Executive: Thanks, and while we experience better than that in July, there are seasonal adjustments to that. On the 2023 side, I think we only have just around 800 left. Got it. Thank you. Always One Step Ahead.

Speaker Change: On the 2023 side.

Speaker Change: I think we only have just around 800 left.

Marcus: That so no 20 twos of any consequence, and 'twenty threes were down to only 800, which is far far better than we were a year ago. I think one of the reasons. We think we're going to see nice margin stabilization on the new side is that we're not liquidating through those units and were starting to bring in 2025.

Marcus Lemonis: I think one of the reasons we think we're going to see nice margin stabilization on the new side is that we're not liquidating through those units and we're starting to bring in 2025. Okay.

Speaker Change: Yes.

Marcus Lemonis: And then what about new turns, your target? Historically, our target Tristan has been 2.4 terms, which you'll recognize that we were diligently to try to just get over two turns annualized again. And of course, there's going to be certain periods, like we saw in July, where that spike, just given a seasonal adjustment, even in actually spike. But our goal is to get back to that north and that mean of 2.4 times. And there's a fine balance between putting the right inventory on the ground so that there's selection and opportunities for the stores and keep in mind that the way that our business is fueled.

Speaker Change: Okay, and then what about new turns your targets.

Speaker Change: Historically, our target interest and has been two four terms, which youll recognize that we work diligently to try to just get over two turns annualized again and of course theres going to be certain periods like we saw in July where that spiked.

Speaker Change: Just given the seasonal adjustment, even it actually spike, but where our goal is to get back to that norm and that mean of two four times.

Speaker Change: There's a fine balance between putting the right inventory on the ground so that their selection and opportunities for the stores and keep in mind that the way that our business is fueled we're not as stand at the front door waiting for people to walk in the door business. We are a digital game and I think part of what has separated our company from every.

Marcus Lemonis: We're not a stand at the front door waiting for people to walk in the door business. We are a digital game, and I think part of what has separated our company from everybody else is the nature in which we find new customers. Our digital game is where the lion share of our marketing dollars go. We're not spending money sponsoring things in a year like this. We're not spending money on branding. We're spending money on performance marketing to drive leads. And those leads go into a very rigorous lead management process. And that lead management process goes through a very rigorous sales process.

Speaker Change: But he els is the nature in which we find new customers are digital game is where the lion's share of our marketing dollars scope, we're not spending money sponsoring things in a year like this we're not spending money on branding we're spending money on performance marketing to drive leads and those leads go into a very rigorous lead management.

Speaker Change: Yes, and that lead management process goes through a very rigorous sales process.

Marcus Lemonis: That conversion off of that very regimented process is what we believe is separating us from everybody else. In order to generate those leads, you got to have a wide offering. It doesn't have to be necessarily deep in terms of having multiple duplicates of the same unit, but you do have to have a wide swath.

Speaker Change: That conversion off of that very regimented process is what we believe is separating us from everybody else in order to generate those leads you got to have a wide offering it doesn't have to be necessarily deep in terms of having multiple duplicates of the same unit, but you do have to have a wide swath.

Unknown Executive: Got it. Thank you.

Speaker Change: Got it thank you.

Unknown Executive: Again, if you have a question, please try to star then one.

Speaker Change: Again. Thank you have a question. Please press Star then one.

Ryan Brinkman: Our next question comes from Ryan Brinkman with JP Morgan. Please go ahead. Hi, thanks for taking my question, which is on the competitive environment. Even that sometimes in the past, even when you have been differentiated versus peers, making it to managing the volume of your inventory still. Margin could be pressured by discounting at other dealers who had gotten out of their skis. It sounds like now, because you had been anticipated, you know, the customer affordability challenges. Been early and tilting toward those lower priced entry models that maybe there's an extra layer of insulation there from part of their discounting, which is probably concerted on the higher end as consumers are focused on monthly payment.

Speaker Change: Our next question comes from Ryan Brinkman with Jpmorgan. Please go ahead.

Ryan Brinkman: Thanks for taking my question.

Ryan Brinkman: On the competitive environment, given that sometimes in the past even when you have been differentiated versus peers, making to managing the volume of your inventory still margin could be pressured by discounting or other dealers, who had gotten out over their skis and it sounds like now because you had anticipated the customer affordability challenges.

Speaker Change: Early and tilting towards those lower priced entry models that maybe there is an extra layer of insulation there from competitor discounting, which is probably on the higher end as consumers are focused on monthly payment. How differentiated do you think your mix of vehicles by price strata is our competitors also.

Marcus Lemonis: How differentiated do you think your mix of vehicles by price strata is, and our competitors are also shifting toward entry-level models, and how long might it take them to catch up? That is really great insights and couldn't agree with you more in terms of overall strategy and how we feel like we anticipated everyone else's move. And now everyone is going to be moving in a rear to us where I expect a migration down into a price point in segment where they'll try to compete with our lower priced units, which if you look through stat service, we have commanding market share for every asset being sold under 15K right now.

Speaker Change: Shifting toward entry level models.

Speaker Change: Long might it take them to catch up.

Speaker Change: That is a really great insight and I couldn't agree with you more in terms of our overall strategy and how we feel like we anticipated everyone else's move and now everyone is going to be and moving in our rears to us where I expect a migration down into a price point and segment, where they'll try to compete with our lower price units, which are you.

Speaker Change: Look the stat surveys, we are commanding market share for every asset being sold under 15, K right now and that's largely a byproduct of how we constructed Coleman over years. In addition to a number of other exclusive brands that we source, we've actually worked even more diligently with our manufacturing partners over the last year.

Marcus Lemonis: And that's largely a byproduct of how we constructed Coleman over years, in addition to a number of other exclusive brands that we sourced. We've actually worked even more diligently with our manufacturing partners over the last year to come up with an even greater value enhancement to that lower price point for less money. And furthermore, we built up an entire brand lineup with Eddie Bauer, which we've not referenced, which we have slowly started to dribble out into the marketplace, as well as, I said earlier, Ryan, reconstructing the entirety of our Coleman lineup and our Harlem Pioneer lineup.

Speaker Change: <unk> to come up with an even greater value enhancement to that lower price point for less money and Furthermore, we built up an entire brand lineup with Eddie Bauer, which we've not reference, which we have slowly started to dribble out into the marketplace as well as I said earlier, Ryan reconstructing the entirety of our <unk> lineup and a Harlem pioneer lie.

Marcus Lemonis: And as Mark has suggested earlier, every other entry level price point in segment with every other category leader. So the D.B. At Thor Motor Coach, Winnebago, Forest River, when we think of their classy lineup, their entire motorized lineup and their fifth wheel lineup, we feel like we've covered every single major price point heading into this fall season to position us very well. To actually grow our market share again next year, regardless of what happens in the broader macro environment. That level of commitment to manufacturers like Thor has given us a strong competitive advantage as we work to help them predict their own supply chain, giving them very intelligent 4, 5, 6, 8, 10-month forecasts so they can procure the raw materials that are needed to drive those prices down.

Mark: And as Mark has suggested earlier every other entry level price point and segment with every other category leader, so it'd be a thorough motor coach Winnebago Forest River. When we think of their class C lineup their entire motorized lineup in their fifth wheel out of we feel like we've covered every single major price point heading into this fall season.

Speaker Change: Position us very well, it's actually grow our market share again next year, regardless of what happens in the broader macro environment that level of commitment to manufacturers likes or has given us a strong competitive advantage as we work to help them predict their own supply chain, giving them.

Speaker Change: Very intelligent 4568, 10 months forecast so they can procure the raw materials that are needed to drive those prices down and while other dealers will attempt to move into those lower price points potentially at the wrong time of year and hold those units over the winter will start moving into preparing.

Unknown Executive: And while other dealers will attempt to move into those lower price points, potentially at the wrong time of year and hold those units over the winter, we'll start moving into preparing for 2025 and already anticipate the moves that other people are going to make and be one step ahead. Head. Always. I'm step ahead. Thank you.

Speaker Change: For 2025 and already anticipate the moves that other people are going to make and be one step ahead.

Speaker Change: Always very helpful step ahead.

Speaker Change: Thank you.

Unknown Executive: I think that concludes our questions. We are thankful for everybody's participation and for their confidence in our company. We'll see you next quarter. Thank you.

Speaker Change: I think that concludes our questions.

Speaker Change: We are thankful for everybody's participation and for their confidence in our company. We will see you next quarter. Thank you.

Unknown Executive: The Congress is now concluded. Thank you for attending today's presentation.

Speaker Change: Yeah.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Unknown Executive: You may now disconnect. We'll see you next quarter.

Speaker Change: Okay.