Q2 2024 Lazydays Holdings Inc Earnings Call

August 16, 2024

Greetings and welcome to the Lazy Days Holdings second quarter 2024 conference call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you, you may begin.

Operator: conference call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. You may begin. Good morning everyone, and thank you for joining us.

Operator: Conference call. As a reminder, this conference is being recorded.

Kelly Porter: It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. You may begin.

Kelly Porter: Good morning, everyone. And thank you for joining us on the call. With me today are John North, CEO, and Amber Dillard, Vice President of Operations.

Kelly Porter: On the call with me today are John North, CEO, and Amber Dillard, Vice President of Operations. Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks, uncertainties, assumptions, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the investor relations section of our website.

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

Kelly Porter: Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks and certain needs and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and certain needs, assumptions, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the Investor Relations section of our website. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate.

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

Speaker Change: Such risks, uncertainties, assumptions, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the investor relations section of our website.

Kelly Porter: Accordingly, forward-looking statements should not be relied upon as a prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate. We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward-looking standards.

Speaker Change: Accordingly, forward-looking statements should not be relied upon as a prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate. We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward-looking statements.

Kelly Porter: We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward-looking statements.

Kelly Porter: On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable gap. With that, I'd like to turn the call over to John North, our Chief Executive Officer. Thanks, Kelly. Good morning, everyone.

Speaker Change: On this call we will discuss certain non-GAAP financial measures.

Speaker Change: Please refer to our earnings press release which is available on our website for how we define these measures and reconciliations to the closest comparable gap measures.

John North: With that, I'd like to turn the call over to John North, our Chief Executive Officer. Thanks, Kelly. Good morning, everyone. Thanks for being with us today. As in usual form, I'll make some opening comments; Amber will talk about operations. Kelly will discuss our financial results, and then we'll take a couple of questions. Obviously, the second quarter didn't develop as we had hoped. Consumer demand for discretionary items, including recreational vehicles, has been under pressure, and the recovery anticipated in 2024 remains elusive. According to Statistical Surveys, Inc., US retail year-over-year RV registrations declined 6 percent in April, 10 percent in May, and 21 percent in June.

Speaker Change: With that, I'd like to turn the call over to John North, our Chief Executive Officer.

John North: Thanks, Kelly. Good morning, everyone. Thanks for being with us today. As in usual form, I'll make some opening comments. Amber will talk about operations. Kelly will discuss our financial results, and then we'll take a couple of questions.

John North: Thanks for being with us today. As in usual form, I'll make some opening comments. Amber will talk about operations. Kelly will discuss our financial results and then we'll take a couple of questions. Obviously, the second quarter didn't develop as we had hoped. Consumer demand for discretionary items including recreational vehicles has been under pressure and the recovery anticipated in 2024 remains elusive. According to Statistical Surveys, Inc., U.S. retail year-over-year RV registrations declined 6% in April, 10% in May, and 21% in June.

Speaker Change: Obviously the second quarter didn't develop as we had hoped.

Speaker Change: Consumer demand for discretionary items, including recreational vehicles, has been under pressure, and the recovery anticipated in 2024 remains elusive.

Speaker Change: According to Statistical Surveys, Inc., U.S. retail year-over-year RV registrations declined 6% in April, 10% in May, and 21% in June.

John North: While this might suggest that trends are deteriorating sequentially, we believe it is more indicative that the seasonal sales increases typically experienced in the summer months did not occur this year. Our best view is that the second quarter sales trajectory continued in July, and most industry experts are pointing to 2025 as the likely inflection for a meaningful industry recovery. So, facing that backdrop, we have continued to focus on the things we can control, maintaining healthy vehicle inventory, improving FNI per unit, and achieving substantial total gross margin improvements sequentially from the first quarter. Given the unit sales volume and financial results from the quarter, subsequently, we implemented further cost reduction actions in August that should be substantially completed by the end of next month.

Speaker Change: While this might suggest that trends are deteriorating sequentially, we believe it is more indicative that the seasonal sales increases typically experienced in the summer months did not occur this year.

Speaker Change: Our best view is that the second quarter sales trajectory continued in July, and most industry experts are pointing to 2025 as the likely inflection for a meaningful industry recovery.

John North: So facing that backdrop, we have continued to focus on the things we can control, maintaining healthy vehicle inventory, improving F&I per unit, and achieving substantial total gross margin improvement sequentially from the first quarter. Given the unit sales volume and financial results in the quarter, Subsequently, we implemented further cost reduction actions in August that should be substantially complete by the end of next month. We anticipate these decisions will save approximately $25 million annually.

Speaker Change: So facing that backdrop we have continued to focus on the things we can control. Maintaining healthy vehicle inventory, improving F&I per unit, and achieving substantial total gross margin improvement sequentially from the first quarter.

John North: We also closed one underpouring location and consolidated two locations into one that were in close proximity in our Arizona market. While portfolio optimization decisions are difficult, they are necessary. Despite these two-store actions, we remain enthusiastic about the rest of our best-in-class locations and will continue to adjust our expense structure as necessary to match the revenue opportunities available. Since the end of the second quarter, we have continued to focus on preserving liquidity, maintaining our healthy inventory levels, and deferring all non-essential spending. We are also pleased to announce that Coliseum Capital Management is committed to advancing another $5 million against their outstanding mortgage facility, which will be a further boost to provide operational flexibility for the fall.

Speaker Change: Given the unit sales volume and financial results in the quarter,

Speaker Change: Subsequently, we implemented further cost reduction actions in August that should be substantially complete by the end of next month.

John North: We anticipate these decisions will save approximately $25 million annually. We also closed one underpouring location and consolidated two locations into one that were enclosed proximity in our Arizona market. While portfolio optimization decisions are difficult, they are necessary. Despite these two store actions, we remain enthusiastic about the rest of our best-in-class locations and will continue to adjust our expense structure as necessary to match the revenue opportunity available. To the end of the second quarter, we have continued to focus on preserving the clarity, maintaining our healthy inventory levels, and deferring all non-essential spending. We are also pleased to announce that Coliseum Capital Management is committed to advancing another 5 million against their outstanding mortgage facility, which will be a further boost to provide operational flexibility to the fall.

Speaker Change: We anticipate these decisions will save approximately $25 million annually. We also closed one underpouring location and consolidated two locations into one that were in close proximity in our Arizona market.

Speaker Change: While portfolio optimization decisions are difficult, they are necessary. Despite these two-store actions, we remain enthusiastic about the rest of our best-in-class locations and will continue to adjust our expense structure as necessary to match the revenue opportunities available.

Speaker Change: Since the end of the second quarter, we have continued to focus on preserving liquidity, maintaining our healthy inventory levels, and deferring all non-essential spending.

Speaker Change: We are also pleased to announce that Coliseum Capital Management is committed to advancing another $5 million against their outstanding mortgage facility, which will be a further boost to provide operational flexibility for the fall.

John North: As always, I want to thank our entire team for delivering the improvements and operating results that are within our control and providing exceptional customer experiences as we await the market recovery. We remain confident in the earnings power of our company and look forward to unlocking its full potential as the industry recovers. With that, I'll hand it to Amber. Thanks, John. And good morning, everyone.

Speaker Change: As always, I want to thank our entire team for delivering the improvements and operating results that are within our control and providing exceptional customer experiences as we await the market recovery. We remain confident in the earnings power of our company and look forward to unlocking its full potential as the industry recovers.

John North: We remain confident in the earnings power of our company and look forward to unlocking its full potential as the industry recovers, with that all handed to Amber.

Amber Dillard: Thanks, John.

Amber Dillard: On a same-store basis, we saw a decline in both new and used unit volume relative to the first quarter, partially offset by significantly improved growth profit per unit, reflecting the benefits of the inventory actions we took earlier this year. As a result, on a same-store basis, our total growth margin improved to 19.4% in the second quarter, compared to 14% in the first. A particular bright spot was in F&I, where our same store result was over $5,300 per unit, up 6.9%, despite average selling prices being lower by approximately 17% on a blended basis.

Amber Dillard: Good morning, everyone. On a same-store basis, we saw a decline in both new and new unit volume relative to the first quarter, partially offset by significantly improved growth profit per unit, reflecting the benefits of the inventory actions we took earlier this year. As a result, on a same-store basis, our total growth margin improved to 19.4% in the second quarter compared to 14% in the first. A particular bright spot was an F&I where our same-store result was over $5,300 per unit of 6.9%, despite average selling prices being lower by approximately 17% on a blended basis. Of note, our finance penetration in the quarter was 75%, compared to 64% in the first quarter.

Speaker Change: And with that, I'll hand it to Amber.

Amber Dillard: Thanks, John, and good morning, everyone.

Amber Dillard: As a result, on a same-store basis, our total gross margin improved to 19.4% in the second quarter compared to 14% in the first.

Amber Dillard: A particular bright spot was in F&I, where our same-store result was over $5,300 per unit, up 6.9%, despite average selling prices being lower by approximately 17% on a blended basis.

Amber Dillard: Of note, our finance penetration in the quarter was 75% compared to 64% in the first quarter. We have continued to focus on maintaining our healthy inventory position while increasing our efforts to procure more used units directly from consumers, as trade-ins on vehicle sales in 2024 have been lowered by approximately 50% compared to our historical average. As of today, our new inventory is comprised of 26% model year 2025 units and 69% model year 2024 units with less than 140 2023 units remaining.

Amber Dillard: Of note, our finance penetration in the quarter was 75% compared to 64% in the first quarter.

Amber Dillard: We have continued to focus on maintaining our healthy inventory position while increasing our efforts to procure more use units directly from consumers, as trade-ins on vehicle sales in 2024 have been lowered by approximately 50% compared to our historical averages. As of today, our new inventory has comprised of 26% model year 2025 units and 69% model year 2024 units, with less than 140 2023 units remaining. Also worth highlighting, over 75% of our inventory is towable product, up from 70% at the same time last year. We continue to evaluate our product mix on a store-by-store basis, refining product classes, brands, and stocking levels based on market demand and the local competitive landscapes.

Speaker Change: We have continued to focus on maintaining our healthy inventory position while increasing our efforts to procure more used units directly from consumers as trade-ins on vehicle sales in 2024 have been lowered by approximately 50% compared to our historical averages.

Speaker Change: As of today, our new inventory is comprised of 26% model year 2025 units and 69% model year 2024 units, with less than 140 2023 units remaining.

Amber Dillard: Also worth highlighting, over 75% of our inventory is towable product, up from 70% at the same time last year. We continue to evaluate our product mix on a store-by-store basis, refining product classes, brands, and stocking levels based on market demand and the local competitive landscape. We have placed a greater emphasis on more affordable travel trailers to appeal to payment-driven and first-time buyers and are being judicious with stocking levels around motorized inventory, particularly in the Class A segment. Earlier this year, we implemented a consignment option for consumers interested in selling their RV where we are unable to agree upon a purchase price.

Speaker Change: Also worth highlighting, over 75% of our inventory is towable product, up from 70% at the same time last year.

Speaker Change: We continue to evaluate our product mix on a store-by-store basis, refining product classes, brands, and stocking levels based on market demand and the local competitive landscape.

Amber Dillard: We have placed a greater emphasis on more affordable travel trailers to appeal to payment-driven and first-time buyers and are being judicious with stocking levels around motorized inventory, particularly in the Class A segment. Earlier this year, we implemented a consignment option for consumers interested in selling their RV, where we are unable to agree upon a purchase price. We've had incredible success with the program as it continues to ramp up and resonate in the marketplace. Specifically, of the units we sourced from customers, 53% of our June units and 61% of July units acquired were consignment versus an outright purchase.

Speaker Change: We have placed a greater emphasis on more affordable travel trailers to appeal to payment-driven and first-time buyers and are being judicious with stocking levels around motorized inventory, particularly in the Class A segment.

Speaker Change: Earlier this year, we implemented a consignment option for consumers interested in selling their RV where we are unable to agree upon a purchase price. We've had incredible success with the program as it continues to ramp up and resonate in the marketplace.

Amber Dillard: We've had incredible success with the program as it continues to ramp up and resonate in the marketplace. Specifically, of the units we sourced from customers, 53% of our June units and 61% of July units acquired were consignment versus an outright purchase. These units still generate a normalized growth profit, but do not incur floor plan expense and do not expose us to inventory risk because of valuation changes or completed reconditioning work that we cannot recover when the unit is sold.

Speaker Change: Specifically, of the units we sourced from customers, 53% of our June units and 61% of July units acquired were consignment versus an outright purchase.

Amber Dillard: These units still generate a normalized growth profit, but do not incur floor clean expense and do not expose us to inventory risk because evaluation changes or completed reconditioning work that we cannot recover when the unit is sold. Regarding cost control, relative to last year, we are up approximately 1% in SG&A expense, despite adding seven locations or nearly 30% increase in our store count year over year. The absolute change in SG&A dollars increased by just under $500,000, which is a testament to the team's effort to find all opportunities to control costs and find expense reductions. As John mentioned, we have taken further action since the end of the quarter that should drive over $2 million a month in incremental savings in the future.

Speaker Change: These units still generate a normalized growth profit, but do not incur floor plan expense and do not expose us to inventory risk because of valuation changes or completed reconditioning work that we cannot recover when the unit is sold.

Amber Dillard: Regarding cost control, relative to last year, we are up approximately 1% in SG&A expense, despite adding 7 locations, or a nearly 30% increase in our store count year-over-year. The absolute change in SG&A dollars increased by just under $500,000, which is a testament to the team's effort to find all opportunities to control costs and find expense reductions.

Speaker Change: Regarding cost control, relative to last year, we are up approximately 1% in SG&A expense, despite adding 7 locations or a nearly 30% increase in our store count year-over-year.

Speaker Change: The absolute change in SG&A dollars increased by just under $500,000, which is a testament to the team's effort to find all opportunities to control costs and find expense reductions.

Amber Dillard: As John mentioned, we have taken further action since the end of the quarter that should drive over $2 million a month in incremental savings in the future. With that said, there is not a store in our network that does not have significant opportunities to improve performance without relying solely on a market recovery. We continue to work closely with our general managers to identify ways to increase volume, improve F&I, and drive incremental service revenue. In addition, we are laser-focused on continuing to grow and integrate the stores we added to the portfolio last year.

Speaker Change: As John mentioned, we have taken further action since the end of the quarter that should drive over $2 million a month in incremental savings in the future.

Amber Dillard: With that said, there is not a store in our network that does not have significant opportunities to improve performance without relying solely on a market recovery. We continue to work closely with our general managers to identify ways to increase volume, improve SNI, and drive incremental service revenue. In addition, we are laser focused on continuing to grow and integrate the stores we added to the portfolio last year. We look forward to providing incremental updates around our success in these areas in the quarters to come.

Speaker Change: With that said, there is not a store in our network that does not have significant opportunities to improve performance without relying solely on a market recovery. We continue to work closely with our general managers to identify ways to increase volume, improve S&I, and drive incremental service revenue.

Speaker Change: In addition, we are laser-focused on continuing to grow and integrate the stores we added to the portfolio last year.

Amber Dillard: We look forward to providing incremental updates around our success in these areas in the quarters to come. We'd also like to take a moment to clarify some of the rumors that have been circulating in the industry. We would note that we are not contemplating, nor are we in discussions with counterparties regarding strategic transactions involving significant store divestitures or business combinations at this time.

Speaker Change: We look forward to providing incremental updates around our success in these areas in the quarters to come.

Amber Dillard: We'd also like to take a moment to clarify some of the rumors that have been circulating in the industry. We would note that we are not contemplating, nor are we in discussions with counterparts regarding strategic transactions involving significant store divestitures or business combinations at this time. While we remain open to potential transactions that are in the best interest of our shareholders, currently we believe the most prudent course of action is to focus on strategic financing so that we maintain scale and gain additional flexibility to operate the attractive platform of dealerships in our asset portfolio.

Speaker Change: We'd also like to take a moment to clarify some of the rumors that have been circulating in the industry.

Speaker Change: We would note that we are not contemplating, nor are we in discussions with counterparties regarding strategic transactions involving significant store divestitures or business combinations at this time.

Kelly Porter: While we remain open to potential transactions that are in the best interest of our shareholders, currently we believe the most prudent course of action is to focus on strategic financing so that we maintain scale and gain additional flexibility to operate the attractive platform of dealerships in our asset portfolio. And finally, I'd like to thank our employees for their unwavering dedication and hard work and our OEM partners for their ongoing continued support as we navigate these difficult but not unprecedented times. With that, I'll turn the call over to Kelly.

Speaker Change: While we remain open to potential transactions that are in the best interest of our shareholders, currently we believe the most prudent course of action is to focus on strategic financing so that we maintain scale and gain additional flexibility to operate the attractive platform of dealerships in our asset portfolio.

Amber Dillard: And finally, I'd like to thank our employees for their unwavering dedication and hard work, and our OEM partners for their ongoing continued support as we navigate youth difficult but not unprecedented times.

Speaker Change: And finally, I'd like to thank our employees for their unwavering dedication and hard work, and our OEM partners for their ongoing continued support as we navigate these difficult but not unprecedented times. With that, I'll turn the call over to Kelly.

Kelly Porter: With that, I'll turn the hall over to Kelly. Thank you, Amber. Please note that unless stated otherwise, the 2024 second quarter comparisons are versus the same period in 2023.

Kelly Porter: Thank you, Amber. Please note that unless stated otherwise, the 2024 second quarter comparisons are versus the same period in 2023. Total revenue for the quarter was $238.7 million, a decrease of 22.6%. From this point on, all metrics will be on a same store basis unless stated otherwise. New unit sales declined 15.2% in the quarter and gross profit per unit, excluding LIFO, declined 48.6%. Compared to the first quarter of 2024, however, we saw new gross profit per unit increase more than 200% to $6,552 as a result of the aggressive inventory actions we took earlier this year.

Kelly Porter: Thank you, Amber. Please note that unless stated otherwise, the 2024 second quarter comparisons are versus the same period in 2023.

Kelly Porter: Total revenue for the quarter was $238.7 million, a decrease of 22.6%. From this point on, all metrics will be on a same-store basis unless stated otherwise. New unit sales declined 15.2% in the quarter, and gross profit per unit, excluding LIFO, declined 48.6%. Compared to the first quarter of 2024, however, we saw new gross profit per unit increase more than 200% to $6,552, as a result of the aggressive inventory actions we took earlier this year. retail unit sales decreased 30.7%, and gross profit per unit decreased 25.7%. Compared to the first quarter of 2024, gross profit per unit increased more than 150% to $10,075.

Kelly Porter: Total revenue for the quarter was $238.7 million, a decrease of 22.6%. From this point on, all metrics will be on a same store basis unless stated otherwise.

Kelly Porter: New unit sales declined 15.2% in the quarter and gross profit per unit, excluding LIFO, declined 48.6%.

Speaker Change: Compared to the first quarter of 2024, however, we saw new gross profit per unit increase more than 200% to $6,552 as a result of the aggressive inventory actions we took earlier this year.

Kelly Porter: Used retail unit sales decreased 30.7% and gross profit per unit decreased 25.7%. Compared to the first quarter of 2024, gross profit per unit increased more than 150% to $10,075. Finance and insurance revenue declined 18.8% during the quarter, primarily due to a decrease in unit volume and a higher chargeback.

Speaker Change: Use retail unit sales decreased 30.7% and gross profit per unit decreased 25.7%.

Speaker Change: Compared to the first quarter of 2024 gross profit per unit increased more than 150% to $10,075.

Kelly Porter: Finance and insurance revenue declined 18.8% during the quarter, primarily due to a decrease in unit volume and higher chargebacks. As Amber mentioned, F&I per unit increased 6.9% despite average selling prices decreasing approximately 17%. Our service body and parts revenue decreased 12.2%, and our gross profit decreased by 5.1%. Our gross margin on service body and parts increased 390 basis points.

Amber Dillard: Finance and insurance revenue declined 18.8% during the quarter, primarily due to a decrease in unit volume and higher chargebacks. As Amber mentioned, F&I per unit increased 6.9% despite average selling prices decreasing approximately 17%.

Kelly Porter: As Amber mentioned, FNI per unit increased 6.9 percent despite average selling prices decreasing approximately 17. Our service body and parts revenue decreased 12.2% and our gross profit decreased by 5.1%. Our gross margin on service body and parts increased 390 basis. Adjusted net loss was $18.4 million for the quarter, compared to net income of $3.9 million last quarter. Adjusted fully diluted earnings per share was a loss of $1.42 for the quarter compared to income of $0.14 in the prior year.

Amber Dillard: Our service body and parts revenue decreased 12.2% and our gross profit decreased by 5.1%. Our gross margin on service body and parts increased 390 basis points.

Amber Dillard: Adjusted net loss was $18.4 million for the quarter compared to net income of $3.9 million last year.

Amber Dillard: Adjusted fully diluted earnings per share was a loss of $1.42 for the quarter compared to income of 14 cents in the prior year.

Kelly Porter: Moving on to liquidity and capital allocation, as John said, we're securing an additional $5 million of capital through an increase in our outstanding mortgage facility. This will be a welcome boost of liquidity as we continue to seek additional capital sources. As a reminder, the mortgage facility currently has a balance of $50 million and includes real estate with a basis of approximately 127.

Kelly Porter: Moving on to liquidity and capital allocation. As John said, we're securing an additional $5 million of capital through an increase in our outstanding mortgage facility. This will be a welcome boost of liquidity as we continue to seek additional capital. As a reminder, the mortgage facility currently has a balance of $50 million and includes real estate with a basis of approximately $127 million.

Amber Dillard: Moving on to liquidity and capital allocation. As John said, we're securing an additional five million dollars of capital through an increase in our outstanding mortgage facility. This will be a welcome boost of liquidity as we continue to seek additional capital sources.

John North: As a reminder, the mortgage facility currently has a balance of $50 million and includes real estate with a basis of approximately $127 million.

Kelly Porter: and Millions. We estimate that we can generate an additional 45 million in mortgage proceeds by refinancing these locations at a 75% loan-to-value rate similar to other properties we financed in 2023.

Kelly Porter: We estimate that we can generate an additional $45 million in mortgage proceeds by refinancing these locations at a 75% loan-to-value rate, similar to other properties we financed in 2012. Given our performance in the second quarter, we received a waiver from our syndicated lenders as of the end of the quarter while we negotiate an amendment to our credit facility. As a result of the waiver, under generally accepted accounting principles, we are required to present our long-term debt in current portion, our balance sheet.

John North: We estimate that we can generate an additional $45 million in mortgage proceeds by refinancing these locations at a 75% loan-to-value rate, similar to other properties we financed in 2023.

Kelly Porter: Given our performance in the second quarter, we wish a waiver from our syndicated lenders as of the end of the quarter, while we negotiate an amendment to our credit facility. As a result of the waiver, under generally accepted accounting principles, we are required to present our long-term debt in current portion on our balance sheet. We view this accounting convention as not painting a complete picture of our financial condition. We would know that our lenders have not accelerated any amounts due or made any repayment demands on our outstanding debt. I want to thank our bank partners for their continued partnership to allow us the flexibility and room to navigate the current economic environment and focus on improving operating results throughout 2024.

John North: Given our performance in the second quarter, we received a waiver from our syndicated lenders as of the end of the quarter while we negotiate an amendment to our credit facility. As a result of the waiver, under generally accepted accounting principles, we are required to present our long-term debt in current portion, our balance sheet.

Kelly Porter: We view this accounting convention as not painting a complete picture of our financial condition. We would note that our lenders have not accelerated any amounts due or made any repayment demands on our outstanding debt. I want to thank our bank partners for their continued partnership to allow us the flexibility and room to navigate the current economic environment and focus on improving operating results throughout 2024. As of yesterday, we had cash and cash equivalents of $25 million, not including the incremental $5 million we should be receiving in the next few weeks.

John North: We view this accounting convention as not painting a complete picture of our financial condition.

John North: We would note that our lenders have not accelerated any amounts due or made any repayment demands on our outstanding debt.

John North: I want to thank our bank partners for their continued partnership to allow us the flexibility and room to navigate the current economic environment and focus on improving operating results throughout 2024.

Kelly Porter: As of yesterday, we had cash and cash equivalent of $25 million, not including the incremental $5 million we should be receiving in the next few weeks. We have taken significant actions to further reduce our overhead expenses by over $2 million per month and have deferred all non-essential spending. We are confident we have adequate liquidity to continue to navigate the current economic environment, and let's forward to updating you on our progress as we seek to raise additional capital in the future.

John North: As of yesterday, we had cash and cash equivalents of $25 million, not including the incremental $5 million we should be receiving in the next few weeks.

John North: We have taken significant actions to further reduce our overhead expenses by over $2 million per month and have deferred all non-essential spending. We are confident we have adequate liquidity to continue to navigate the current economic environment and look forward to updating you on our progress as we seek to raise additional capital in the future.

Kelly Porter: We have taken significant actions to further reduce our overhead expenses by over $2 million per month and have deferred all non-essential spending. We are confident we have adequate liquidity to continue to navigate the current economic environment and look forward to updating you on our progress as we seek to raise additional capital in the future. With that, we can open the call to questions. Operator?

Kelly Porter: With that, we can open the call to questions.

Operator: Operator? Thank you.

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

Speaker Change: With that, we can open the call to questions. Operator?

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

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for your questions.

Operator: One moment, please, while we pull for your questions.

Operator: One moment, please, while we poll for your question. Our first questions come from the line of Daniel Moore with CJS Securities. Please proceed with your questions. Thank you. Good morning, John, Amber, Kelly.

Daniel Moore: Our first question has come from the line of Daniel Moore with CJS Securities. Please proceed with your questions. Thank you.

Speaker Change: Our first questions come from the line of Daniel Moore with CJS Securities. Please proceed with your questions.

Daniel Moore: I appreciate the color. Maybe starting with just your kind of near-term outlook, how are you thinking about Q3 at this stage? You know, from a new and used unit sales perspective and revenue, you see Q3 being similar to Q2 sequentially and a little bit more more challenging. You know, how do you see it shaping up so far? Good to hear from you, Dan. Good morning.

Daniel Moore: Good morning, John, Amber Kelly. I appreciate color. Maybe starting with just your kind of near-term outlook, how are you thinking about Q3 at the stage from a new and used unit sales perspective and revenue? You see Q3 being similar to Q2 sequentially and a little bit more challenging. How do you see it shaping up so far?

John North: I think July was pretty consistent with the run rate we saw at the end of June in terms of unit volume, know about halfway through August and I would say August is historically when you start to see the seasonal slowing. So probably too soon to tell what the fall looks like, and I'm probably not smart enough to be a good prognosticator anyway. I think our baseline assumption is that things are gonna kind of bump along here, but obviously a lot's dependent on what happens with interest rates, and then certainly there's some political uncertainty that's probably adding, you know, to some agita for consumers.

Daniel Moore: Thank you. Good morning, John, Amber, Kelly. I appreciate the color.

Daniel Moore: Maybe starting with just your kind of near-term outlook, how are you thinking about Q3 at this stage, you know, from a new and used unit sales perspective?

Speaker Change: and Revenue, you see Q3 being similar to Q2 sequentially and a little bit more challenging. You know, how do you see it shaping up so far?

John North: Good to hear from you, Dan. Good morning. I think July was pretty consistent with the run rate we saw at the end of June in terms of unit volume. About halfway through August. I would say August is historically when you start the seasonal slowing. Probably too soon to tell what the fall looks like, and I'm probably not smart enough to be a good prognosticator anyway. Our baseline assumption is that things are going to bump along here, but obviously a lot's dependent on what happens with interest rates, and then certainly there's some political uncertainty that's probably adding to some odds of different consumers.

Speaker Change: you know, about halfway through August, and I would say August is historically when you start to see the seasonals flowing.

Speaker Change: So probably too soon to tell what the fall looks like, and I'm probably not smart enough to be a good prognosticator anyway. I think our baseline assumption is that...

Speaker Change: are going to bump along here, but obviously a lot is dependent on what happens with interest rates, and then certainly there's some political uncertainty that's probably adding to some agita for consumers. So I think we're not expecting a big improvement. I think our best view is that things are going to bump along.

John North: So, you know, I think we're not expecting a big improvement. You know, I think our best view is that things are going to kind of bump along. At a similar trajectory with maybe some of the of the normal seasonality coming in as we move through August and September, you know, we do have quite a bit of concentration in Florida and Arizona, and usually August and September are the slowest months in those markets, just given the, kind of back to school stuff. So that's, that's kind of how we really helpful.

John North: I think we're not expecting a big improvement. Our best view is that things are going to bump along at a similar trajectory, with maybe some of the normal seasonality coming in as we move through August and September. We do have quite a bit of concentration in Florida and Arizona and usually August and September are the slowest months in those markets just given the heat and kind of back to school stuff. today. Really helpful.

Operator: Conference Call. As a reminder, this conference is being recorded.

Kelly Porter: It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer.

Kelly Porter: It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. You may begin.

Speaker Change: At a similar trajectory of maybe some of the normal seasonality coming in as we move through August and September, you know, we do have quite a bit of concentration in Florida and Arizona.

Kelly Porter: Thank you.

Kelly Porter: Good morning, everyone.

Kelly Porter: You may begin.

Kelly Porter: And thank you for joining us on the call with me today are John North, CEO and Amber Dillard, Vice President of Operations. Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks and certain needs and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and certain needs, assumptions and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the investor relations section of our website.

Speaker Change: and usually August and September are the slowest months in those markets just given the heat and kind of back-to-school stuff so that's that's kind of how we see things today.

John North: You know, a big picture. You made a ton of progress, obviously, on, you know, right sizing inventories. You know, clearly most of the recovery thus far in, in RB, has been at the lower lower and price point, century level units, much more so than maybe we would have anticipated the year ago. And, you know, I guess, how are you thinking about adjusting your inventory further, you know, set another way. What's the right mix of kind of high, middle, low, cost RVs versus your historic or current mix from an inventory perspective? Yeah, I think it's, um, it's a nuanced question for us.

John North: You know, big picture, you made a ton of progress, obviously, on, you know, right sizing inventories, clearly most of the recovery thus far in RV has been at the lower, lower end price points, entry level units, much more so than maybe we would have anticipated a year ago. And, you know, I guess, how are you thinking about adjusting your inventory further, you know, set another way, what's the right mix of kind of high, middle, low cost RVs versus your historic or current mix from an inventory? Yeah, I think it's...

Speaker Change: really helpful.

Speaker Change: You know, big picture, you made a ton of progress, obviously, on, you know, right-sizing inventories. Clearly, most of the recovery thus far in RV has been at the lower, lower-end price points, entry-level units.

Speaker Change: much more so than maybe we would have anticipated a year ago and

Speaker Change: I guess, how are you thinking about adjusting your inventory further, you know, said another way, what's the right mix of kind of high, middle, low cost RVs versus your historic or current mix from an inventory perspective?

John North: It's a nuanced question for us. I think big picture. Everybody's looking for lower priced units. Whether you're talking about totals, whether you're talking about fifth wheels, and I think we've seen some pretty good reductions in 2025 relative to 2024. I think I saw a stat last night that totals were off of 24% or something, Amber. Is that right? Yeah, 25 to 24.

John North: I think big picture. Everybody's looking for lower price units, whether you're talking about totals, whether you're talking about fifth wheels. And I think we've seen some pretty good reductions in 2025 relative to 2024. I think I saw a stat last night; the totals were up, but 24% or something, Amber, is that right? 24% increase in price. Yeah, 25 to 24. So, I mean, that's a meaningful change. And that's, you know, the OEMs are working hard, obviously, to try to make affordability. And that pain and worry and reach with consumers. I think the challenge is more on the motorized side because chassis costs are still up 15%, and if you're talking about four or Mercedes or whoever, you know, or even, you know, the bigger stuff that's coming from the façade, et cetera, I mean, those, you know, those underpin kind of chassis have not come down similarly in price.

Speaker Change: Yeah, I think it's...

Speaker Change: It's a nuanced question for us. I think big picture

Speaker Change: Everybody's looking for lower-priced units.

Kelly Porter: Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliation to the closest comparable gap measures.

Speaker Change: I think we've seen some pretty good reductions in 2025 relative to 2024. I think I saw a stat last night that totals were off of 24% or something, Amber. Is that right? Amber Dillard 24% decrease.

Kelly Porter: With that, I'd like to turn the call over to John North, our Chief Executive Officer. Thanks, Kelly. Good morning, everyone. Thanks for being with us today. As in usual form, I'll make some opening comments, Amber will talk about operations. Kelly will discuss our financial results, and then we'll take a couple of questions.

John North: So I mean, you know, that's a meaningful change. And that's, you know, the OEMs are working hard, obviously, to try to make affordability, and that payment more in reach with consumers. I think the challenge is more on the motorized side because chassis costs are still at 15% and it, talking about Ford or Mercedes or whomever, you know, or even, you know, the bigger stuff that's coming from the class A, etc. I mean, those, you know, those, Those underpinned kind of chassis have not come down similarly in price, and so, you know, I think the ability to find more affordability is more elusive on the motorized side.

Kelly Porter: Good morning, everyone.

Kelly Porter: And thank you for joining us on the call with me today are John North, CEO and Amber Dillard, Vice President of Operations.

Amber Dillard: Yeah 25 to 24 so I mean that you know that's a meaningful change and that's you know the OEMs are working hard obviously to try to make affordability.

Kelly Porter: Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks and certain needs and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and certain needs, assumptions and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the investor relations section of our website.

Amber Dillard: and that payment more in reach with consumers. I think the challenge is more on the motorized side because chassis costs are still at 15% and if you're talking about Ford or Mercedes or whomever, you know, or even, you know, the bigger stuff that's coming from the Class A, etc. I mean, you know, those...

Kelly Porter: Accordingly, forward-looking statements should not be relied upon as a prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate.

Kelly Porter: We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward-looking statements.

John North: Obviously, the second quarter didn't develop as we had hoped. Consumer demand for discretionary items, including recreational vehicles, has been under pressure and the recovery anticipated in 2024 remains elusive. According to statistical surveys, Inc., US retail year-over-year RV registrations declined 6 percent in April, 10 percent in May, and 21 percent in June. While this might suggest that trends are deteriorating sequentially, we believe it is more indicative that the seasonal sales increases typically experienced in the summer months did not occur this year.

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

John North: And so, you know, I think the ability to find more affordability is more elusive on the motorized side. So, I think it's kind of a mixed bag, certainly on the total piece where the OEMs control more their destiny. We're seeing some pretty good movement there, and then just generally a shift toward the entry level stuff, whether you're talking to ovals or fifth wheels in particular. And you see that in the sales data and, you know, certainly what's moving in the marketplace. You know, I think for us more specifically, historically, as we grew through the pandemic, I think we tried to replicate a lot of the inventory and the stocking across the country that, you know, was kind of the hallmark of what we did in Tampa, you know, which tended to be higher end and more motorized based.

Amber Dillard: Those underpin kind of chassis does not come down similarly in price And so, you know, I think the the ability to find more affordability is more elusive on the motorized side so I Think it's it's kind of a mixed bag certainly on the on the total piece for the OEMs control more of their destiny We're seeing

Kelly Porter: With that, I'd like to turn the call over to John North, our Chief Executive Officer.

John North: I think it's kind of a mixed bag, certainly on the total piece, where the OEMs control more of their debts, pretty good movement there. And then just generally a shift toward the entry level stuff, whether you're talking totals or fifth wheels in particular, and you see that in the, in the sales data, and you know, certainly what's moving in the marketplace. You know, I think for us more specifically, historically, as we grew through the pandemic, I think we tried to replicate a lot of the inventory and the stocking across the country that, you know, was kind of the hallmark of what we did in Tampa, know, which tended to be higher end and more motorized based.

Amber Dillard: So I think there's some pretty good movement there and then just generally a shift toward the entry-level stuff where you're talking to estàbles or fifth wheels in particular and you see that in the in the sales data and you know certainly what's moving in the marketplace. Yeah I think for us more specifically

John North: Our best view is that the second quarter sales trajectory continued in July, and most industry experts are pointing to 2025 as the likely inflection for a meaningful industry recovery. So facing that backdrop, we have continued to focus on the things we can control, maintaining healthy vehicle inventory, improving FNI per unit, and achieving substantial total gross margin improvements sequentially from the first quarter. Given the unit sales volume and financial results from the quarter, subsequently, we implemented further cost reduction actions in August that should be substantially completed by the end of next month.

Amber Dillard: Historically, as we grew through the pandemic, I think we tried to replicate a lot of the inventory and the stocking across the country that, you know, was kind of the hallmark of what we did in Tampa.

John North: And I think, you know, as we've gotten on the other side of the pandemic, you know, we've seen that in, you know, some of these markets, we probably need to be more of a total bull and more of an entry level focus dealer, which is more of what the market, you know, bears. And so, that's been something that Amber and the operations team has been pivoting in, you know, some of our locations that are farther afield from the home base here in Florida. So, I think that's in play too. And as you mentioned on the call, my credit remarks, I mean, we're up to 75% total inventory, you know, versus 70 last year, but on almost a thousand fewer units year over year.

Amber Dillard: you know, which tended to be higher-end and more motorized-based, and I think

Amber Dillard: you know, as we've gotten on the other side of the pandemic, you know, we've seen that in, you know, some of these markets.

Amber Dillard: We probably need to be more of a tollable and more of an entry-level focused dealer, which is more what the market, you know, bears. And so that's been something that Amber and the operations team has been pivoting in, you know, some of our locations that are farther afield from the home base here in Florida.

John North: We anticipate these decisions will save approximately $25 million annually. We also closed one underpouring location and consolidated two locations into one that were enclosed proximity in our Arizona market. While portfolio optimization decisions are difficult, they are necessary. Despite these two store actions, we remain enthusiastic about the rest of our best-in-class locations and will continue to adjust our expense structure as necessary to match the revenue opportunity available. To the end of the second quarter, we have continued to focus on preserving the clarity, maintaining our healthy inventory levels and differing all non-essential spending. We are also pleased to announce that Coliseum Capital Management is committed to advancing another 5 million against their outstanding mortgage facility, which will be a further boost to provide operational flexibility to the fall.

John North: So I think that's in play too. And as you mentioned on the call prepared remarks, I mean, we're up to 75% total inventory, you know, versus 70 last year, but on almost 1000 fewer units year over year. So that's a pretty meaningful change if you think about the mix relative to those proportions and then just the absolute reduction in inventory. And some of that's a function of pivoting to the market, some of it's a function of being really cautious on the heavy motorized stuff in particular, Class A's, which are certainly probably the most challenged part of the market right now, which unfortunately skews more toward us, just given historically the mix and the markets we've played in.

Speaker Change: So I think that's in play too, and as you mentioned on the call and prepared remarks, I mean, we're up to 75% total inventory, you know, versus 70 last year, but on almost 1,000 fewer units year over year.

John North: So, that's a pretty meaningful change if you think about the mix relative to those proportions, and then just the absolute reduction in inventory. And, you know, some of that's a function of pivoting to the market; some of the function of being really cautious on the heavy motorized stuff in particular. Classes, you know, which are certainly the probably the most challenged part of the market right now, you know, which unfortunately excuse more toward us, just given historically the mix and the markets we played in.

Speaker Change: So that's a pretty meaningful change if you think about the mixed

Speaker Change: relative to those proportions and then they just the absolute reduction in inventory and you know some of that's a function of pivoting to the market some of the function of being really cautious on

Speaker Change: The heavy motorized stuff in particular, Class A's, you know, which are certainly the

Speaker Change: probably the most challenged part of the market right now, you know, which unfortunately skews more toward us, just given historically the mix and the markets we've played in.

Daniel Moore: really helpful. I'm going to ask a couple more just because if you would move in quotes, you know, obviously kind of where we sit today. Just beyond the incremental 5 million from Coliseum, is there anything you can say, you know, at this stage about what are the forms of potential financing you're contemplating? No, you know, words, you have to be careful there, but you know, I think as we as we try to elude in the prepared remarks, you know, we've got what we believe is a really good foundation of stores. You know, certainly when we look across the portfolio, the markets that we're in, and you know, thankfully the brands and the partners that we have, you know, I believe are among the best in the industry.

John North: We remain confident in the earnings power of our company and look forward to unlocking its full potential as the industry recovers, with that all handed to Amber. Thanks, John.

Speaker Change: Really helpful. I'm going to ask a couple more just because a few moving parts, you know, obviously kind of where we sit today. Just beyond the incremental $5 million from Coliseum, is there anything you can say, you know, at this stage about what other forms of potential financing you're contemplating?

John North: I'm going to ask a couple more just because a few moving parts, you know, obviously kind of where we sit today. Just beyond the incremental $5 million from Coliseum, is there anything you can say, you know, at this stage about what other forms of potential financing you're contemplating? No, in a word.

John North: Thanks, Kelly.

John North: Good morning, everyone.

John North: Obviously, we have to be careful there, but I think as we tried to allude in the prepared remarks, we've got what we believe is a really good foundation of stores, you know, certainly when we look across the portfolio, the markets that we're in, and, you know, thankfully, the brands and the partners that we have, you know, I believe are among the best in the industry. You know, I think we're dealing with the industry challenges that everybody's facing, and then probably, you know, there's a compounding effect because of where we play in the market, which, you know, some of those segments have been even weaker than the overall, you know, which is tough to parse when you're just looking at, like, SSI data or something like that.

Speaker Change: No, in a word. Obviously, we have to be careful there. But I think as we tried to allude in the prepared remarks, we've got what we believe is a really good foundation of stores.

John North: Thanks for being with us today.

Speaker Change: You know, certainly when we look across the portfolio.

Speaker Change: the markets that we're in and, you know, thankfully the brands and the partners that we have, you know, I believe are among the best in the industry.

John North: You know, I think we're doing with the industry challenges that everybody's facing, and then probably, you know, there's a compounding effect because of where we play in the market, which, you know, some of those segments have been even weaker than the overall, you know, which is tough to parse when you're just looking at like SSI data or something like that. You know, when we deconstruct it, you know, it certainly seems like we're holding our own and, you know, kind of a very difficult part of the market. And so I think we've got, you know, an ability to run processes and to evaluate certain transactions and do appeals to investors that can take a long review that know that this industry has a typical ups and downs and eventually we're going to come on their side of it.

Speaker Change: You know, I think we're dealing with the industry challenges that everybody's facing and then probably...

Amber Dillard: Of note, our finance penetration in the quarter was 75%, compared to 64% in the first quarter. We have continued to focus on maintaining our healthy inventory position while increasing our efforts to procure more use units directly from consumers, as trade-ins on vehicle sales in 2024 have been lowered by approximately 50% compared to our historical averages. As of today, our new inventory has comprised of 26% model year 2025 units and 69% model year 2024 units with less than 140 2023 units remaining.

Speaker Change: There's a compounding effect because of where we play in the market, which some of those segments have been even weaker than the overall, which is tough to parse when you're just looking at SSI data or something like that. When we deconstruct it, it certainly seems like we're holding our own.

John North: You know, when we deconstruct it, you know, it certainly seems like we're holding our own and, you know, kind of a very difficult part of the market. And so I think we've got, you know.., an ability to run processes and to evaluate certain transactions and to appeal to investors that can take a longer view, that know that this industry has typical ups and downs, and eventually we're going to come to their side of it. And so I would say we've had very constructive conversations in that regard.

Speaker Change: you know, kind of a very difficult part of the market. And so I think we've got, you know,

Speaker Change: an ability to run processes and to evaluate certain transactions and to appeal to investors that can take a longer view, that know that this industry has typical ups and downs and eventually we're going to come to their side of it.

John North: And so, you know, I would say we've had very constructive conversations in that regard. There's certainly interest out there. And, you know, obviously, as you have stuff to share, you know, we'll continue to update you. I would also highlight that, you know, our lender group has been incredibly supportive. You know, certainly they understand our inventory is in really, really good shape. We've done a phenomenal job of, you know, optimizing and making sure that we kept things healthy. And, you know, that was a very painful part of last year and the first quarter of this year.

Amber Dillard: Also worth highlighting, over 75% of our inventory is towable product, up from 70% at the same time last year. We continue to evaluate our product mix on a store-by-store basis, refining product classes, brands and stocking levels based on market demand and the local competitive landscapes. We have placed a greater emphasis on more affordable travel trailers to appeal to payment driven and first-time buyers and are being judicious with stocking levels around motorized inventory, particularly in the class A segment.

John North: There's certainly interest out there. And obviously, as we have stuff to share, we'll continue to update you. I would also highlight that our vendor group has been incredibly supportive. Certainly, they understand our inventory is in really, really good shape. We've done a phenomenal job of optimizing and making sure that we've kept things healthy. And that was a very painful part of last year and the first quarter of this year.

Speaker Change: You know, I would say we've had very constructive conversations in that regard. There's certainly interest out there and, you know, obviously as we have stuff to share, you know, we'll continue to update you. I would also highlight that, you know, our lender group has been incredibly supportive.

Speaker Change: you know, certainly they understand our inventory is in really, really good shape.

Speaker Change: We've done a phenomenal job of optimizing and making sure that we've kept things healthy. And that was a very painful part of last year and the first quarter of this year. And you can see the sequential improvement as we got through it. And what we have is generating good profitability.

John North: And you can see the sequential improvement as we got through it. And what we have is generating good profitability, and there's good dollars to be had. We just need more of it.

John North: And you can see the sequential improvement as we got through it. And, you know, what we have is generating, you know, good profitability. And there's, you know, there's good dollars to be had. We just need more of it. You know, and that's going to come eventually. And so, you know, from here to there, we've got to figure out how to just try to continue to take costs out to scale the revenue and look for those incremental opportunities to raise capital. But that's through the path forward for us.

Amber Dillard: Earlier this year, we implemented a consignment option for consumers interested in selling their RV where we are unable to agree upon a purchase price. We've had incredible success with the program as it continues to ramp up and resonate in the marketplace. Specifically, of the units we sourced from customers, 53% of our June units and 61% of July units acquired were consignment versus an outright purchase. These units still generate a normalized growth profit, but do not incur floor clean expense and do not expose us to inventory risk because evaluation changes or completed reconditioning work that we cannot recover when the unit is sold.

John North: And that's going to come eventually. And so from here to there, we've got to figure out how to just try to continue to take costs out to scale the revenue and look for those incremental opportunities to raise capital. But that's clearly the path forward for us. Very helpful, John.

Speaker Change: and there's good dollars to be had, we just need more of it. And that's going to come eventually, and so from here to there we've got to figure out how to just try to continue to take costs out to scale the revenue and look for those incremental opportunities to raise capital. But that's clearly the path forward for us.

Daniel Moore: Last one for me, and I'll jump back to any follow-ups. The restructuring, $25 million targeted cost savings. Anything you can say about kind of primary buckets, but maybe more important, what's the cash cost to achieve them, and when do you anticipate hitting that full run rate? Thanks again for the conversation. There's not a ton of cash costs. I mean, we obviously.., are looking really and probably.

Daniel Moore: Very helpful, John. Last one for me, and I'll jump back to the Nikolops. The restructuring, 25 million targeted cost savings, anything to say about kind of primary buckets, but maybe more important, what's the cash cost to achieve them and when you anticipate hitting that full run rate? Thanks again for the color. There's not a ton of cash costs. I mean, we obviously are looking really in probably three buckets. I mean, there's really only controllable costs and the dealership are people marketing and foreclan. I mean, that's really the things you can get out of the near term.

John North: Very helpful, John. Last one for me, and I'll jump back to any follow-ups.

Speaker Change: The restructuring, $25 million targeted cost savings. Anything you can say about primary buckets, but maybe more important, what's the cash cost to achieve them and when do you anticipate hitting that full run rate? Thanks again for the call.

Amber Dillard: Regarding cost control, relative to last year, we are up approximately 1% in SG&A expense, despite adding seven locations or nearly 30% increase in our store count year over year. The absolute change in SG&A dollars increased by just under $500,000, which is a testament to the team's effort to find all opportunities to control costs and find expense reductions. As John mentioned, we have taken further action since the end of the quarter that should drive over $2 million a month in incremental savings in the future.

Speaker Change: There's not a ton of cash costs. I mean, we obviously.

John North: I mean, there's really only controllable costs in a dealership are people, marketing, and floor plan. I mean, that's really the things you can get at in the near term, and within corporate, it's really just people and vendors. Those are the things you can adjust in a 60-day timeline, and I would say that over an infinite timeline, every fixed cost becomes variable, but when you're talking about something as near-term as a month or two, those are the levers to pull.

Speaker Change: are looking really and probably.

Speaker Change: three buckets. I mean there's really only controllable costs in a dealership are people, marketing, and floor plan. I mean that's that's really the things you can get out in the near term. You know and within corporate it's really just people and vendors.

John North: And within corporate, it's really just people and inventors. You know, those are those are the things you can adjust in a 60 day timeline. I would say that over an infinite timeline, every fixed cost becomes variable, but when you're talking about something in your term, it's a month or two. Those are the levers to pull. So we certainly made some very, very painful personal decisions both in corporate and in the field. And those are just totally gut-wrenching. And certainly not the first time we've had to make some of those reductions. And that was a big part of what we had to do in July and feel see some of that.

Speaker Change: Those are the things you can adjust in a 60-day timeline.

Speaker Change: I would say that over

Speaker Change: an infinite timeline, every fixed cost becomes variable, but when you're talking about something as near-term as a month or two.

John North: So we certainly made some very, very painful personnel decisions, both in corporate and in the field, and those are just totally gut-wrenching, and certainly not the first time we've had to make some of those reductions, and that was a big part of what we had to do in July, and you'll see some of that pick up in August. And then from there, it's looking at marketing and vendors, and really trying to get as aggressive as we can to what are the absolutes that we have to have versus what are the things that might be strategic priorities, things that we believe there's an ROI on.

Speaker Change: Those are the levers to pull. So we certainly made some very, very painful personnel decisions, both in corporate and in the field.

Speaker Change: Just totally gut-wrenching

Speaker Change: You know what?

Speaker Change: certainly not the first time we've had to make some of those reductions, and that was a big part of what, you know, we had to do in July, and you'll see some of that pick up in August. And then, you know, from there, it's looking at marketing and vendors and really trying to get as aggressive as we can to, you know, what are the absolutes that we have to have versus what are the things that might be strategic priorities?

Amber Dillard: We look forward to providing incremental updates around our success in these areas in the quarters to come.

John North: They got in August. And then, you know, from there, it's looking at marketing and vendors and really trying to get as aggressive as we can to, you know, what are the absolutes that we have to have versus what are the things that might be strategic priorities, you know, things that we believe there's an ROI on. You know, any of those investments or any of those transformative efforts have been effectively paused at this point outside of a very, very select list of stuff with an incredibly high ROI. So, you know, those are, those are really the buckets.

Amber Dillard: We'd also like to take a moment to clarify some of the rumors that have been circulating in the industry. We would note that we are not contemplating nor are we in discussions with counterparts regarding strategic transactions involving significant store divestitures or business combinations at this time. While we remain open to potential transactions that are in the best interest of our shareholders, currently we believe the most prudent course of action is to focus on strategic financing so that we maintain scale and gain additional flexibility to operate the attractive platform of dealerships in our asset portfolio.

John North: And any of those investments or any of those transformative efforts have been effectively paused at this point outside of a very, very select list of stuff with an incredibly high ROI. So those are really the buckets.

Speaker Change: you know, things that we believe there's an ROI on.

Speaker Change: and any of those investments or any of those.

Speaker Change: transformative efforts have been effectively paused at this point outside of a very very select list of stuff with an incredibly high ROI. So you know those are those are really the buckets. I wouldn't say there's going to be a lot of incremental

John North: I wouldn't say there's going to be a lot of incremental cost to get there, but as we talked about, it's going to take the third quarter to kind of get through it. So you really won't see the full run rate effects of those until the fourth quarter, which is not coincidentally focused on the fact that if things do see a seasonal slowdown from here in the fourth quarter like they would, that way we're better prepared for that.

John North: I wouldn't say there's going to be a lot of incremental costs to get there. But, you know, as we, as we talked about, it's going to take the third quarter to kind of get through it. So you really won't see the full run rate effects of those until the fourth quarter, you know, which is not coincidentally, you know, focused on the fact that if things do see a seasonal slowdown from here in the fourth quarter, like they would, you know, that way we're better prepared for that. Now, I certainly hope that doesn't happen, and we just sort of bump along here at the nadir of, you know, what's expected with unit volume.

Speaker Change: cost to get there, but you know as we

Speaker Change: As we talked about, it's going to take the third quarter to kind of get through it.

Amber Dillard: And finally, I'd like to thank our employees for their unwavering dedication and hard work and our OEM partners for their ongoing continued support as we navigate youth difficult but not unprecedented times.

Speaker Change: So you really won't see the full run rate effects of those until the fourth quarter.

Speaker Change: you know, which is not coincidentally, you know...

Speaker Change: focused on the fact that if things do see a seasonal slowdown from here in the fourth quarter like they would,

John North: Now, I certainly hope that doesn't happen and we just sort of bump along here at the nadir of what's expected with unit volume, but we also have to hope for the best, but prepare for things to potentially get tougher. And that's what we're doing. All right. Thank you again. I'll jump back when you're done.

John North: As in usual form, I'll make some opening comments, Amber will talk about operations.

Kelly Porter: With that, I'll turn the hall over to Kelly. Thank you, Amber. Please note that unless stated otherwise, the 2024 second quarter comparisons are versus the same period in 2023.

Speaker Change: That way, we're better prepared for that. Now, I certainly hope that doesn't happen and we just sort of bump along here at the nadir of what's expected with unit volume, but we also have to hope for the best but prepare for things to potentially get tougher, and that's what we're doing.

John North: Kelly will discuss our financial results, and then we'll take a couple of questions.

John North: But we also have to, you know, hope for the best, but prepare for things to potentially get tougher. And that's what we're doing.

Kelly Porter: Total revenue for the quarter was $238.7 million, a decrease of 22.6%. From this point on, all metrics will be on a same store basis unless stated otherwise. New unit sales declined 15.2% in the quarter and gross profit per unit, excluding LIFO, declined 48.6%. Compared to the first quarter of 2024, however, we saw new gross profit per unit increase more than 200% to $6,552, as a result of the aggressive inventory actions we took earlier this year.

Daniel Moore: All right, thank you again. I'll jump back when you follow us. Thanks, Dan. Appreciate the questions.

Operator: Thanks Dan, appreciate the question. Thank you. Our next questions come from the line of Griffin Bryan with DA Davidson.

John North: So facing that backdrop, we have continued to focus on the things we can control, maintaining healthy vehicle inventory, improving FNI per unit, and achieving substantial total gross margin improvements sequentially from the first quarter.

Speaker Change: Alright, thank you again. I'll jump back to any follow-ups. Thanks, Dan. I appreciate the questions.

Griffin Bryan: Thank you. Our next question has come from the line of Griffin Bryan with DA Davidson. Please proceed with your questions. Yeah, thanks. So I guess the start, can you guys kind of speak to how performance varied from a regional perspective over the quarter? We just kind of seen some of our other power sports companies be affected by less-than-optimal weather. So it's kind of curious if there's anything to call out there that happened within the quarter, and then maybe what you're seeing in July and August from that perspective as well. I don't recall anything in particular in the second quarter.

John North: Given the unit sales volume and financial results from the quarter, subsequently, we implemented further cost reduction actions in August that should be substantially completed by the end of next month. We anticipate these decisions will save approximately $25 million annually. We also closed one underpouring location and consolidated two locations into one that were enclosed proximity in our Arizona market.

Speaker Change: Thank you. Our next question has come from the line of Griffin Bryan with DA Davidson. Please proceed with your questions.

Griffin Bryan: Please proceed with your question. Yeah, thanks. So I guess to start, can you guys kind of speak to how performance varied from a regional perspective over the quarter? We've just kind of seen some of our other power sports companies be affected by less than optimal weather. So just kind of curious if there's anything to call out there that happened within the quarter and then maybe what you're seeing in July and August from that perspective as well. I don't recall anything in particular in the second quarter.

Griffin Bryan: Yeah, thanks. So, I guess to start, can you guys kind of speak to how performance varied from a regional perspective over the quarter?

Speaker Change: We've just kind of seen some of our other power sports companies be affected by less than optimal weather.

Kelly Porter: Use retail unit sales decreased 30.7% and gross profit per unit decreased 25.7%. Compared to the first quarter of 2024, gross profit per unit increased more than 150% to $10,075. Finance and insurance revenue declined 18.8% during the quarter, primarily due to decrease in unit volume and higher chargebacks. As Amber mentioned, F&I per unit increased 6.9% despite average selling prices decreasing approximately 17%. Our service body and parts revenue decreased 12.2% and our gross profit decreased by 5.1%. Our gross margin on service body and parts increased 390 basis points.

Speaker Change: I'm just kind of curious if there's anything to call out there that happened within the quarter and then maybe what you're seeing in July and August from that perspective as well.

Speaker Change: I don't recall anything in particular in the second quarter. You know, I would say.

John North: You know, I would say, when you're looking at a group of stores and. Pre-dates even my time at Lazydays, but you know, you have a basket of stores, you'll see one store have a good month and then the next month they'll maybe not have as good of a month. And then conversely, a store that didn't have a good month has a better month. I mean, they all kind of, you know, triangulate around some normalized distribution of performance, but I don't have anything specific to call out by region that I can think of as top of mind other than the normal seasonality.

John North: I would say when you're looking at a group of stores, and this predates even my time at Lazydays, but you know you have a basket of stores, you'll see one store have a good month, and then the next month, though maybe not have as good of a month, and then conversely, a store that didn't have a good month has a better month. I mean they'll kind of, you know, triangulate around some normalized distribution of performance, but I don't have anything specific to call out by region that I can think of as top of mind other than the normal seasonality.

Speaker Change: When you're looking at a group of stores, and this, you know, predates even my time at Lazy Days, but, you know, you have a basket of stores. You'll see one store have a good month, and then the next month they'll maybe not have as good of a month, and then conversely a store that didn't have a good month has a better month. I mean, they all kind of...

Speaker Change: you know, triangulate around some normalized distribution of performance.

Speaker Change: But I don't have anything specific to call out by region that I can think of as top of mind other than the normal seasonality. Certainly the southern stores tend to slow as you move into summer, and then the northern stores pick up as the weather changes and people start to come out of hibernation.

John North: Certainly, the southern stores tend to slow as you move into summer, and then the northern stores pick up as the weather changes and people start to come out of hibernation. I wouldn't say it was necessarily any different; we just didn't see the volume recovery that we had hoped, you know, in particular in the north. I think that's reflected, you know, more broadly in the industry, looking at the SSI data for those three months, as we talked about the period remarks. In terms of July and August, August in particular, you know the hurricane that came through here in Florida a couple weeks ago probably cost us a weekend, you know, at a few of our stores. You know, just there's always some disruption when that happens, and anytime insurance companies start or stop originating insurance policies, which is their MO when a hurricane is coming in, you can't deliver anything.

Kelly Porter: Adjusted net loss was 18.4 million for the quarter compared to net income of 3.9 million last year. Adjusted fully diluted earnings per share was the loss of $1.42 for the quarter compared to income of 14 cents in the prior year. Moving on to liquidity and capital allocation, as John said, we're securing an additional $5 million of capital through an increase in our outstanding mortgage facility. This will be a welcome boost of liquidity as we continue to seek additional capital sources.

Speaker Change: And I wouldn't say it was necessarily any different, we just didn't see the volume recovery that we had hoped.

John North: While portfolio optimization decisions are difficult, they are necessary.

Speaker Change: in particular in the North. And I think that's reflected more broadly in the industry, looking at the SSI data for those three months as we talked about the prepared remarks.

John North: In terms of July and August, August in particular, you know, the hurricane that came through here in Florida a couple of weeks ago probably cost us a weekend, you know, at a few of our stores. You know, just there's always some disruption when that happens, and anytime insurance companies start or stop originating insurance policies, which is their MO when a hurricane's coming in, you can't deliver anything. So you lose some sales and some time there, and how much of that is made up and is deferred versus lost is always a very difficult question. But that happened.

John North: Despite these two store actions, we remain enthusiastic about the rest of our best-in-class locations and will continue to adjust our expense structure as necessary to match the revenue opportunity available.

Speaker Change: In terms of July and August, August in particular, you know, the hurricane that came through here in Florida a couple weeks ago probably cost us a weekend.

Kelly Porter: As a reminder, the mortgage facility currently has a balance of $50 million and includes real estate with a basis of approximately 127, and Millions. We estimate that we can generate an additional 45 million in mortgage proceeds by refinancing these locations at a 75% loan-to-value rate similar to other properties we financed in 2023.

Speaker Change: you know at a few of our stores you know just there's always some disruption when that happens and anytime insurance companies start or stop originating insurance policies which is their MO when a hurricane coming in you can't deliver anything.

Amber Dillard: So you lose some sales and some time there, and how much of that is made up and you know is deferred versus loss is always a very difficult question. But that happened; you know, hopefully knock on wood somewhere we don't have any more storm disruptions. But I wouldn't call out anything else specifically from a geographic perspective. Understood, and then what are you guys seeing in terms of comparable pricing for modular 25 units versus modular 24s, and then maybe any level of like deconcing because there would be happening within the towable and motor home segments. Yeah hey Griffin this is the hammer. I would say that our travel trailer pricing has been the most impacted year over year, so we've seen a pretty significant decrease both because we've been working with the OEMs and they've been able to decontent to kind of attack those entry level price points. So we've seen double digit reduction in the travel trailer pricing, and as John mentioned earlier, you know in motorized we've been able to successfully, you know, decontent some of our models and offers more affordable options and class fees and fees specifically. So we've seen single digit reductions there between 24 and 25 class days, again due to chassis prices primarily. We have not seen the, I think our primary goal is open house to be to continue to refine the mix that we have and some of our newer stores and continue to look for affordable options and greenfields and acquisitions that we open.

Speaker Change: you know, so you lose some sales and some time there and how much of that is made up and you know is deferred versus loss is always a very difficult question.

Kelly Porter: Given our performance in the second quarter, we wish a waiver from our syndicated lenders as of the end of the quarter, while we negotiate an amendment to our credit facility. As a result of the waiver, under generally accepted accounting principles, we are required to present our long-term debt in current portion our balance sheet. We view this accounting convention as not painting a complete picture of our financial condition. We would know that our lenders have not accelerated any amounts due or made any repayment demands on our outstanding debt.

John North: Hopefully, knock on wood, somewhere we don't have any more storm disruptions, but I wouldn't call it anything else specifically from a geographic perspective. Understood. And then what are you guys seeing in terms of comparable pricing for model year 25 units versus model year 24s? And then maybe any level of like decanting that there may be happening within the towable and motorhome segment? Yeah, hey Griffin, this is Amber.

Speaker Change: But that happened, hopefully knock on wood somewhere we don't have any more storm disruptions, but I wouldn't call it anything else specifically from a geographic perspective.

Speaker Change: Understood. And what are you guys seeing in terms of comparable pricing for model year 25 units versus model year 24s? And then maybe any level of like decanting that there may be happening within the towable and motorhome segments?

Kelly Porter: I want to thank our bank partners for their continued partnership to allow us the flexibility and room to navigate the current economic environment and focus on improving operating results throughout 2024. As of yesterday, we had cash and cash equivalent of $25 million, not including the incremental $5 million, we should be receiving in the next few weeks. We have taken significant actions to further reduce our overhead expenses by over $2 million per month and have deferred all non-essential spending. We are confident we have adequate liquidity to continue to navigate the current economic environment and let's forward to updating you on our progress as we seek to raise additional capital in the future.

Amber Dillard: I would say that our travel trailer pricing has been the most impacted year over year. So we've seen a pretty significant decrease both because we've been working with the OEMs and they've been able to decontent to kind of attack those entry level price points. So we've seen double digit reduction in the travel trailer pricing. And as John mentioned earlier, you know, in motorized we've been able to successfully, you know, decontent some of our models and offer some more affordable options in class C's and B's specifically. So we've seen some single digit reductions there between 24 and 25. Class A's, again, due to chassis prices, primarily, we have not seen the movement as much.

Amber Dillard: Yeah. Hey, Griffin. This is Amber. I would say that our travel trailer pricing has been the most impacted year over year, so we've seen a pretty significant decrease, both because we've been working with the OEMs and they've been able to decontent to kind of attack those entry-level price points. So we've seen double-digit reduction in the travel trailer pricing. And as John mentioned earlier, you know, in motorized,

John North: To the end of the second quarter, we have continued to focus on preserving the clarity, maintaining our healthy inventory levels and differing all non-essential spending. We are also pleased to announce that Coliseum Capital Management is committed to advancing another 5 million against their outstanding mortgage facility, which will be a further boost to provide operational flexibility to the fall.

Speaker Change: We've been able to successfully, you know, de-content some of our models and offer some more affordable options in Class C's and B's specifically, so we've seen some single-digit reductions there between 24 and 25. Class A's, again, due to chassis prices primarily, we have not seen the movement as much.

Kelly Porter: With that, we can open the call to questions. Operator? Thank you.

Amber Dillard: Okay, got it. And then this last one for me is, what are you guys expecting to get out of open house next month? And then maybe just any early thoughts on restocking levels as we head into the fall here. I think our primary goal at Open House would be to continue to refine the mix that we have in some of our newer stores and continue to look for affordable options and greenfields and acquisitions that we opened late last year. In terms of stocking, you know, we will continue to be very judicious about how we run through the winter and what we stock based on what the market's calling for on a regional basis.

Amber Dillard: So I don't see any large restocking efforts coming into Open House. Great, that's all from me. Thanks, guys. Thank you. I'm showing no further questions at this time, so I'd like to hand the call back over to John North for any closing comments. Thanks, everybody, for your interest, and we'll talk to you next quarter. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker Change: Okay, got it. And then this last one for me, I guess, what are you guys expecting to get out of open house next month and maybe just any early thoughts on restocking levels as we head into the fall here?

Speaker Change: I think our primary goal at Open House would be to continue to refine the mix.

Daniel Moore: Our first question has come from the line of Daniel Moore with CJS securities. Please proceed with your questions. Thank you.

Speaker Change: that we have in some of our newer stores and continue to look for affordable options in greenfields and acquisitions that we opened late last year.

John North: We remain confident in the earnings power of our company and look forward to unlocking its full potential as the industry recovers, with that all handed to Amber.

John North: Good morning, John, Amber Kelly. I appreciate color. Maybe starting with just your kind of near-term outlook, how are you thinking about Q3 at the stage from a new and used unit sales perspective and revenue? You see Q3 being similar to Q2 sequentially and a little bit more challenging. How do you see it shaping up so far? Good to hear from you, Dan. Good morning. I think July was pretty consistent with the run rate we saw at the end of June in terms of unit volume.

Amber Dillard: In terms of stocking, we will continue to be very judicious about how we run through the winter and what we stock based on what the market's calling for on a regional basis. So I don't see any large restocking efforts coming into Open House. Great, welcome to each length, guys.

Amber Dillard: Thanks, John.

Speaker Change: In terms of stocking, you know, we will continue to be very judicious about how we run through the winter and what we stock based on what the market's calling for on a regional basis. So I don't see any large restocking efforts coming into open house.

Griffin Bryan: Thank you.

Speaker Change: Great, that's all from me. Thanks, guys.

Operator: I'm showing no further questions at this time.

John North: So I'd like to hand the call back over to John North for any closing comments. Thank you very much for your interest, and we'll talk to you next quarter. Thank you.

Speaker Change: Thank you. I'm showing no further questions at this time so I'd like to hand the call back over to John North for any closing comments.

Amber Dillard: Good morning, everyone.

John North: Thanks, Arie, for your interest, and we'll talk to you next quarter.

Operator: This just conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time.

John North: About halfway through August. I would say August is historically when you start the seasonal slowing. Probably too soon to tell what the fall looks like and I'm probably not smart enough to be a good prognosticator anyway. Our baseline assumption is that things are going to bump along here but obviously a lot's dependent on what happens with interest rates and then certainly there's some political uncertainty that's probably adding to some odds of different consumers.

Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Operator: Enjoy the rest of your day.

John North: I think we're not expecting a big improvement. Our best view is that things are going to bump along at a similar trajectory with maybe some of the normal seasonality coming in as we move through August and September. We do have quite a bit of concentration in Florida and Arizona and usually August and September are the slowest months in those markets just given the heat and kind of back to school stuff, today.

John North: Really helpful. You know, a big picture. You made a ton of progress, obviously, on, you know, right sizing inventories, you know, clearly most of the recovery thus far in, in RB, has been at the lower lower and price point, century level units, much more so than maybe we would have anticipated the year ago. And, you know, I guess, how are you thinking about adjusting your inventory further, you know, set another way.

Amber Dillard: On a same-store basis, we saw a decline in both new and new unit volume relative to the first quarter, partially offset by significantly improved growth profit per unit, reflecting the benefits of the inventory actions we took earlier this year. As a result, on a same-store basis, our total growth margin improved to 19.4% in the second quarter compared to 14% in the first.

Amber Dillard: A particular bright spot was an F&I where our same-store result was over $5,300 per unit of 6.9%, despite average selling prices being lower by approximately 17% on a blended basis. Of note, our finance penetration in the quarter was 75%, compared to 64% in the first quarter.

Amber Dillard: We have continued to focus on maintaining our healthy inventory position while increasing our efforts to procure more use units directly from consumers, as trade-ins on vehicle sales in 2024 have been lowered by approximately 50% compared to our historical averages. As of today, our new inventory has comprised of 26% model year 2025 units and 69% model year 2024 units with less than 140 2023 units remaining. Also worth highlighting, over 75% of our inventory is towable product, up from 70% at the same time last year.

John North: What's the right mix of kind of high, middle, low, cost RVs versus your historic or current mix from an inventory perspective? Yeah, I think it's, um, it's a nuanced question for us. I think big picture. Everybody's looking for lower price units, whether you're talking about totals, whether you're talking about fifth wheels. And I think we seen some pretty good reductions in 2025 relative to 2024. I think I saw a stat last night, the totals were up, but 24% or something, Amber, is that right?

John North: 24% increase in price. Yeah, 25 to 24. So, I mean, that's a meaningful change. And that's, you know, the OEMs are working hard, obviously, to try to make affordability. And that pain and worry and reach with consumers. I think the challenge is more on the motorized side because chassis costs are still up 15% and if you're talking about four or Mercedes or whoever, you know, or even, you know, the bigger stuff that's coming from the façade, et cetera, I mean, those, you know, those underpin kind of chassis have not come down similarly in price.

John North: And so, you know, I think the ability to find more affordability is more elusive on the motorized side. So, I think it's kind of a mixed bag, certainly on the, on the total piece where the OEMs control more their destiny, we're seeing some pretty good movement there, and then just generally a shift toward the entry level stuff, whether you're talking to ovals or fifth wheels in particular. And you see that in the in the sales data and, you know, certainly what's moving in the marketplace.

Amber Dillard: We continue to evaluate our product mix on a store-by-store basis, refining product classes, brands and stocking levels based on market demand and the local competitive landscapes.

John North: You know, I think for us more specifically, historically, as we grew through the pandemic, I think we tried to replicate a lot of the inventory and the stocking across the country that, you know, was kind of the hallmark of what we did in Tampa, you know, which tended to be higher end and more motorized based. And I think, you know, as we've gotten on the other side of the pandemic, you know, we've seen that in, you know, some of these markets, we probably need to be more of a total bull and more of an entry level focus dealer, which is more of what the market, you know, bears.

Amber Dillard: We have placed a greater emphasis on more affordable travel trailers to appeal to payment driven and first-time buyers and are being judicious with stocking levels around motorized inventory, particularly in the class A segment.

Amber Dillard: Earlier this year, we implemented a consignment option for consumers interested in selling their RV where we are unable to agree upon a purchase price.

John North: And so, that's been something that Amber and the operations team has been pivoting in, you know, some of our locations that are farther afield from the home base here in Florida. So, I think that's in play too. And as you mentioned on the call, my credit remarks, I mean, we're up to 75% total inventory, you know, versus 70 last year, but on almost a thousand fewer units year over year. So, that's a pretty meaningful change, if you think about the mix relative to those proportions, and then just the absolute reduction in inventory.

Amber Dillard: We've had incredible success with the program as it continues to ramp up and resonate in the marketplace. Specifically, of the units we sourced from customers, 53% of our June units and 61% of July units acquired were consignment versus an outright purchase. These units still generate a normalized growth profit, but do not incur floor clean expense and do not expose us to inventory risk because evaluation changes or completed reconditioning work that we cannot recover when the unit is sold.

John North: And, you know, some of that's a function of pivoting to the market, some of the function of being really cautious on the heavy motorized stuff in particular. Classes, you know, which are certainly the probably the most challenged part of the market right now, you know, which unfortunately excuse more toward us, just given historically the mix and the markets we played in, really helpful. I'm going to ask a couple more just because if you would move in quotes, you know, obviously kind of where we sit today.

John North: Just beyond the incremental 5 million from Coliseum, is there anything you can say, you know, at this stage about what are the forms of potential financing you're contemplating? No, you know, words, you have to be careful there, but you know, I think as we as we try to elude in the prepared remarks, you know, we've got what we believe is a really good foundation of stores, you know, certainly when we look across the portfolio, the markets that we're in, and you know, thankfully the brands and the partners that we have, you know, I believe are among the best in the industry.

Amber Dillard: As John mentioned, we have taken further action since the end of the quarter that should drive over $2 million a month in incremental savings in the future.

John North: You know, I think we're doing with the industry challenges that everybody's facing and then probably, you know, there's a compounding effect because of where we play in the market, which, you know, some of those segments have been even weaker than the overall, you know, which is tough to parse when you're just looking at like SSI data or something like that, you know, when we deconstruct it, you know, it certainly seems like we're holding our own and, you know, kind of a very difficult part of the market. And so I think we've got, you know, an ability to run processes and to evaluate certain transactions and do appeals to investors that can take a long review that know that this industry has a typical ups and downs and eventually we're going to come on their side of it.

Amber Dillard: With that said, there is not a store in our network that does not have significant opportunities to improve performance without relying solely on a market recovery.

Amber Dillard: We continue to work closely with our general managers to identify ways to increase volume, improve SNI, and drive incremental service revenue.

John North: And so, you know, I would say we've had very constructive conversations in that regard. There's certainly interest out there. And, you know, obviously, as you have stuff to share, you know, we'll continue to update you. I would also highlight that, you know, our lender group has been incredibly supportive, you know, certainly they understand our inventory is in really, really good shape. We've done a phenomenal job of, you know, optimizing and making sure that we kept things healthy.

Amber Dillard: In addition, we are laser focused on continuing to grow and integrate the stores we added to the portfolio last year.

Amber Dillard: We look forward to providing incremental updates around our success in these areas in the quarters to come.

Amber Dillard: We'd also like to take a moment to clarify some of the rumors that have been circulating in the industry.

Amber Dillard: We would note that we are not contemplating nor are we in discussions with counterparts regarding strategic transactions involving significant store divestitures or business combinations at this time.

John North: And, you know, that was a very painful part of last year and the first quarter of this year. And you can see the sequential improvement as we got through it. And, you know, what we have is generating, you know, good profitability. And there's, you know, there's good dollars to be had. We just need more of it. You know, and that's going to come eventually. And so, you know, from here to there, we've got to figure out how to just try to continue to take costs out to scale the revenue and look for those incremental opportunities to raise capital. But that's through the path forward for us. Very helpful, John.

Amber Dillard: While we remain open to potential transactions that are in the best interest of our shareholders, currently we believe the most prudent course of action is to focus on strategic financing so that we maintain scale and gain additional flexibility to operate the attractive platform of dealerships in our asset portfolio.

Kelly Porter: With that, I'll turn the hall over to Kelly.

Kelly Porter: Thank you, Amber.

John North: Last one for me, and I'll jump back to the Nikolops. The restructuring, 25 million targeted cost savings, anything to say about kind of primary buckets, but maybe more important, what's the cash cost to achieve them and when you anticipate hitting that full run rate? Thanks again for the color. There's not a ton of cash costs. I mean, we obviously are looking really in probably three buckets. I mean, there's really only controllable costs and the dealership are people marketing and foreclan.

Kelly Porter: Please note that unless stated otherwise, the 2024 second quarter comparisons are versus the same period in 2023.

Kelly Porter: Total revenue for the quarter was $238.7 million, a decrease of 22.6%.

Kelly Porter: From this point on, all metrics will be on a same store basis unless stated otherwise. New unit sales declined 15.2% in the quarter and gross profit per unit, excluding LIFO, declined 48.6%.

Kelly Porter: Compared to the first quarter of 2024, however, we saw new gross profit per unit increase more than 200% to $6,552, as a result of the aggressive inventory actions we took earlier this year.

Kelly Porter: Use retail unit sales decreased 30.7% and gross profit per unit decreased 25.7%.

Kelly Porter: Compared to the first quarter of 2024, gross profit per unit increased more than 150% to $10,075.

John North: I mean, that's really the things you can get out of the near term. And within corporate, it's really just people and inventors. You know, those are those are the things you can adjust in a 60 day timeline. I would say that over an infinite timeline, every fixed cost becomes variable, but when you're talking about something in your term, it's a month or two. Those are the levers to pull. So we certainly made some very, very painful personal decisions both in corporate and in the field.

Kelly Porter: Finance and insurance revenue declined 18.8% during the quarter, primarily due to decrease in unit volume and higher chargebacks. As Amber mentioned, F&I per unit increased 6.9% despite average selling prices decreasing approximately 17%.

Kelly Porter: Our service body and parts revenue decreased 12.2% and our gross profit decreased by 5.1%. Our gross margin on service body and parts increased 390 basis points.

John North: And those are just totally gut wrenching. And certainly not the first time we've had to make some of those reductions. And that was a big part of what we had to do in July and feel see some of that. They got in August. And then, you know, from there, it's looking at marketing and vendors and really trying to get as aggressive as we can to, you know, what are the absolutes that we have to have versus what are the things that might be strategic priorities, you know, things that we believe there's an ROI on, you know, and any of those investments or any of those transformative efforts have been effectively paused at this point outside of a very, very select list of stuff with an incredibly high ROI.

Kelly Porter: We view this accounting convention as not painting a complete picture of our financial condition.

Kelly Porter: We would know that our lenders have not accelerated any amounts due or made any repayment demands on our outstanding debt.

Kelly Porter: We have taken significant actions to further reduce our overhead expenses by over $2 million per month and have deferred all non-essential spending. We are confident we have adequate liquidity to continue to navigate the current economic environment and let's forward to updating you on our progress as we seek to raise additional capital in the future.

Kelly Porter: With that, we can open the call to questions.

John North: So, you know, those are, those are really the buckets. I wouldn't say there's going to be a lot of incremental costs to get there. But, you know, as we, as we talked about, it's going to take the third quarter to kind of get through it. So you really won't see the full run rate effects of those until the fourth quarter, you know, which is not coincidentally, you know, focused on the fact that if things do see a seasonal slowdown from here in the fourth quarter, like they would, you know, that way we're better prepared for that.

Operator: Operator?

Operator: Thank you.

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

Operator: If you would like to ask a question, please press star one on your telephone keypad.

John North: Now, I certainly hope that doesn't happen and we just sort of bump along here at the nadir of, you know, what's expected with unit volume. But we also have to, you know, hope for the best, but prepare for things to potentially get tougher. And that's what we're doing. All right, thank you again. I'll jump back when you follow us. Thanks, Dan. Appreciate the questions. Thank you.

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

Griffin Bryan: Our next question has come from the line of Griffin Bryan with DA Davidson. Please proceed with your questions. Yeah, thanks.

Operator: You may press star two to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Operator: One moment please while we pull for your questions.

John North: So I guess the start, can you guys kind of speak to how performance varied from a regional perspective over the quarter? We just kind of seen some of our other power sports companies be affected by less than optimal weather. So it's kind of curious if there's anything to call out there that happened within the quarter and then maybe what you're seeing in July and August from that perspective as well. I don't recall anything in particular in the second quarter.

Daniel Moore: Our first question has come from the line of Daniel Moore with CJS securities.

Daniel Moore: Please proceed with your questions.

Daniel Moore: Thank you.

Daniel Moore: Good morning, John, Amber Kelly.

John North: I would say when you're looking at a group of stores and this predates even my time at Lazydays but you know you have a basket of stores you'll see one store have a good month and then the next month though maybe not have a good of a month and then conversely a store that didn't have a good month has a better month. I mean they'll kind of you know triangulate around some normalized distribution of performance but I don't have anything specific to call out by region that I can think of as top of mind other than the normal seasonality.

Daniel Moore: I appreciate color.

Daniel Moore: Maybe starting with just your kind of near-term outlook, how are you thinking about Q3 at the stage from a new and used unit sales perspective and revenue?

John North: Certainly the southern stores tend to slow as you move into summer and then the northern stores pick up as the weather changes and people start to come out of hibernation and I wouldn't say it was necessarily any different we just did and see the volume recovery that we had hoped you know in particular in the north and I think that's reflected you know more broadly in the industry looking at the SSI data for those three months as we talked about the period remarks. In terms of July and August August in particular you know the hurricane that came through here in Florida a couple weeks ago probably cost us a weekend you know at a few of our stores you know just there's always some disruption when that happens and anytime insurance companies start or stop originating insurance policies which is their MO when a hurricane is coming in you can't deliver anything.

Daniel Moore: You see Q3 being similar to Q2 sequentially and a little bit more challenging.

Daniel Moore: How do you see it shaping up so far?

John North: So you lose some sales and some time there and how much of that is made up and you know is deferred versus loss is always a very difficult question but that happened you know hopefully knock on wood somewhere we don't have any more storm disruptions but I wouldn't call out anything else specifically from a geographic perspective.

John North: Good to hear from you, Dan.

Amber Dillard: Understood and then what are you guys seeing in terms of comparable pricing for modular 25 units versus modular 24s and then maybe any level of like deconcing because there would be happening within the towable and motor home segments. Yeah hey Griffin this is the hammer I would say that our travel trailer pricing has been the most impacted year over year so we've seen a pretty significant decrease both because we've been working with the OEMs and they've been able to decontent to kind of attack those entry level price points so we've seen double digit reduction in the travel trailer pricing and as John mentioned earlier you know in motorized we've been able to successfully you know decontent some of our models and offers more affordable options and class fees and fees specifically so we've seen single digit reductions there between 24 and 25 class days again due to chassis prices primarily we have not seen the I think our primary goal is open house to be to continue to refine the mix that we have and some of our newer stores and continue to look for affordable options and greenfields and acquisitions that we open.

John North: Good morning.

John North: I think July was pretty consistent with the run rate we saw at the end of June in terms of unit volume.

John North: About halfway through August.

John North: I would say August is historically when you start the seasonal slowing.

Griffin Bryan: Great, welcome to each length guys. Thank you.

John North: Probably too soon to tell what the fall looks like and I'm probably not smart enough to be a good prognosticator anyway.

John North: Our baseline assumption is that things are going to bump along here but obviously a lot's dependent on what happens with interest rates and then certainly there's some political uncertainty that's probably adding to some odds of different consumers.

Operator: I'm showing no further questions at this time.

John North: So I'd like to hand the call back over to John North for any closing comments. Thank you very much for your interest and we'll talk to you next quarter. Thank you.

John North: We do have quite a bit of concentration in Florida and Arizona and usually August and September are the slowest months in those markets just given the heat and kind of back to school stuff, today.

Daniel Moore: Really helpful.

Daniel Moore: You know, a big picture.

Operator: This just conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Daniel Moore: You made a ton of progress, obviously, on, you know, right sizing inventories, you know, clearly most of the recovery thus far in, in RB, has been at the lower lower and price point, century level units, much more so than maybe we would have anticipated the year ago.

Daniel Moore: And, you know, I guess, how are you thinking about adjusting your inventory further, you know, set another way.

Daniel Moore: What's the right mix of kind of high, middle, low, cost RVs versus your historic or current mix from an inventory perspective?

John North: Yeah, I think it's, um, it's a nuanced question for us.

John North: I think big picture.

John North: Everybody's looking for lower price units, whether you're talking about totals, whether you're talking about fifth wheels.

John North: And I think we seen some pretty good reductions in 2025 relative to 2024.

Amber Dillard: I think I saw a stat last night, the totals were up, but 24% or something, Amber, is that right?

Amber Dillard: 24% increase in price.

Amber Dillard: Yeah, 25 to 24.

John North: So, I mean, that's a meaningful change.

John North: And that's, you know, the OEMs are working hard, obviously, to try to make affordability.

John North: And that pain and worry and reach with consumers.

John North: I think the challenge is more on the motorized side because chassis costs are still up 15% and if you're talking about four or Mercedes or whoever, you know, or even, you know, the bigger stuff that's coming from the façade, et cetera, I mean, those, you know, those underpin kind of chassis have not come down similarly in price.

John North: And so, you know, I think the ability to find more affordability is more elusive on the motorized side.

John North: So, I think it's kind of a mixed bag, certainly on the, on the total piece where the OEMs control more their destiny, we're seeing some pretty good movement there, and then just generally a shift toward the entry level stuff, whether you're talking to ovals or fifth wheels in particular.

John North: And you see that in the in the sales data and, you know, certainly what's moving in the marketplace.

John North: And so, that's been something that Amber and the operations team has been pivoting in, you know, some of our locations that are farther afield from the home base here in Florida.

John North: So, I think that's in play too.

John North: And as you mentioned on the call, my credit remarks, I mean, we're up to 75% total inventory, you know, versus 70 last year, but on almost a thousand fewer units year over year. So, that's a pretty meaningful change, if you think about the mix relative to those proportions, and then just the absolute reduction in inventory.

John North: And, you know, some of that's a function of pivoting to the market, some of the function of being really cautious on the heavy motorized stuff in particular.

John North: Classes, you know, which are certainly the probably the most challenged part of the market right now, you know, which unfortunately excuse more toward us, just given historically the mix and the markets we played in, really helpful.

Daniel Moore: I'm going to ask a couple more just because if you would move in quotes, you know, obviously kind of where we sit today.

Daniel Moore: Just beyond the incremental 5 million from Coliseum, is there anything you can say, you know, at this stage about what are the forms of potential financing you're contemplating?

John North: No, you know, words, you have to be careful there, but you know, I think as we as we try to elude in the prepared remarks, you know, we've got what we believe is a really good foundation of stores, you know, certainly when we look across the portfolio, the markets that we're in, and you know, thankfully the brands and the partners that we have, you know, I believe are among the best in the industry.

John North: And so I think we've got, you know, an ability to run processes and to evaluate certain transactions and do appeals to investors that can take a long review that know that this industry has a typical ups and downs and eventually we're going to come on their side of it.

John North: And so, you know, I would say we've had very constructive conversations in that regard.

John North: There's certainly interest out there.

John North: And, you know, obviously, as you have stuff to share, you know, we'll continue to update you.

John North: I would also highlight that, you know, our lender group has been incredibly supportive, you know, certainly they understand our inventory is in really, really good shape.

John North: We've done a phenomenal job of, you know, optimizing and making sure that we kept things healthy.

John North: And, you know, that was a very painful part of last year and the first quarter of this year.

John North: And you can see the sequential improvement as we got through it.

John North: And, you know, what we have is generating, you know, good profitability.

John North: And there's, you know, there's good dollars to be had.

John North: We just need more of it.

John North: You know, and that's going to come eventually.

John North: And so, you know, from here to there, we've got to figure out how to just try to continue to take costs out to scale the revenue and look for those incremental opportunities to raise capital.

John North: But that's through the path forward for us.

Daniel Moore: Very helpful, John.

Daniel Moore: Last one for me, and I'll jump back to the Nikolops.

Daniel Moore: The restructuring, 25 million targeted cost savings, anything to say about kind of primary buckets, but maybe more important, what's the cash cost to achieve them and when you anticipate hitting that full run rate?

Daniel Moore: Thanks again for the color.

John North: There's not a ton of cash costs.

John North: I mean, we obviously are looking really in probably three buckets.

John North: I mean, there's really only controllable costs and the dealership are people marketing and foreclan.

John North: I mean, that's really the things you can get out of the near term.

John North: And within corporate, it's really just people and inventors.

John North: You know, those are those are the things you can adjust in a 60 day timeline.

John North: I would say that over an infinite timeline, every fixed cost becomes variable, but when you're talking about something in your term, it's a month or two.

John North: Those are the levers to pull.

John North: So we certainly made some very, very painful personal decisions both in corporate and in the field.

John North: And those are just totally gut wrenching.

John North: And certainly not the first time we've had to make some of those reductions.

John North: And that was a big part of what we had to do in July and feel see some of that.

John North: They got in August.

John North: And then, you know, from there, it's looking at marketing and vendors and really trying to get as aggressive as we can to, you know, what are the absolutes that we have to have versus what are the things that might be strategic priorities, you know, things that we believe there's an ROI on, you know, and any of those investments or any of those transformative efforts have been effectively paused at this point outside of a very, very select list of stuff with an incredibly high ROI.

John North: So, you know, those are, those are really the buckets.

John North: I wouldn't say there's going to be a lot of incremental costs to get there.

John North: But, you know, as we, as we talked about, it's going to take the third quarter to kind of get through it.

John North: So you really won't see the full run rate effects of those until the fourth quarter, you know, which is not coincidentally, you know, focused on the fact that if things do see a seasonal slowdown from here in the fourth quarter, like they would, you know, that way we're better prepared for that.

John North: Now, I certainly hope that doesn't happen and we just sort of bump along here at the nadir of, you know, what's expected with unit volume.

John North: But we also have to, you know, hope for the best, but prepare for things to potentially get tougher.

John North: And that's what we're doing.

Daniel Moore: All right, thank you again.

Daniel Moore: I'll jump back when you follow us.

Daniel Moore: Thanks, Dan.

Operator: Appreciate the questions.

Operator: Thank you.

Griffin Bryan: Our next question has come from the line of Griffin Bryan with DA Davidson.

Griffin Bryan: Please proceed with your questions.

Griffin Bryan: Yeah, thanks.

Griffin Bryan: So I guess the start, can you guys kind of speak to how performance varied from a regional perspective over the quarter?

Griffin Bryan: We just kind of seen some of our other power sports companies be affected by less than optimal weather.

Griffin Bryan: So it's kind of curious if there's anything to call out there that happened within the quarter and then maybe what you're seeing in July and August from that perspective as well.

John North: I don't recall anything in particular in the second quarter.

John North: I mean they'll kind of you know triangulate around some normalized distribution of performance but I don't have anything specific to call out by region that I can think of as top of mind other than the normal seasonality.

John North: In terms of July and August August in particular you know the hurricane that came through here in Florida a couple weeks ago probably cost us a weekend you know at a few of our stores you know just there's always some disruption when that happens and anytime insurance companies start or stop originating insurance policies which is their MO when a hurricane is coming in you can't deliver anything.

Griffin Bryan: Understood and then what are you guys seeing in terms of comparable pricing for modular 25 units versus modular 24s and then maybe any level of like deconcing because there would be happening within the towable and motor home segments.

Amber Dillard: Yeah hey Griffin this is the hammer I would say that our travel trailer pricing has been the most impacted year over year so we've seen a pretty significant decrease both because we've been working with the OEMs and they've been able to decontent to kind of attack those entry level price points so we've seen double digit reduction in the travel trailer pricing and as John mentioned earlier you know in motorized we've been able to successfully you know decontent some of our models and offers more affordable options and class fees and fees specifically so we've seen single digit reductions there between 24 and 25 class days again due to chassis prices primarily we have not seen the I think our primary goal is open house to be to continue to refine the mix that we have and some of our newer stores and continue to look for affordable options and greenfields and acquisitions that we open.

Amber Dillard: In terms of stocking, we will continue to be very judicious about how we run through the winter and what we stock based on what the market's calling for on a regional basis.

Amber Dillard: So I don't see any large restocking efforts coming into open house.

Griffin Bryan: Great, welcome to each length guys.

Operator: Thank you.

Operator: I'm showing no further questions at this time.

John North: So I'd like to hand the call back over to John North for any closing comments.

John North: Thank you very much for your interest and we'll talk to you next quarter.

Operator: Thank you.

Operator: This just conclude today's teleconference.

Operator: We appreciate your participation.

Operator: You may disconnect your lines at this time.

Operator: Enjoy the rest of your day.

Q2 2024 Lazydays Holdings Inc Earnings Call

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