Q4 2024 OneWater Marine Inc Earnings Call
Good day and welcome to the one water marine fiscal fourth quarter and full year 2024 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.
Speaker Change: There will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Jack Izzo Chief Financial Officer. Please go ahead.
Jack Izzo: Good morning, and welcome to warm water Marines fiscal fourth quarter and full year 'twenty 'twenty four earnings conference call I am joined on the call today by Austin, Singleton, Chief Executive Officer, and Anthony Asquith, President and Chief operating officer before we begin I'd like to remind you that certain statements made by management in this morning's conference.
Jack Izzo: Paul regarding one water marine and its operations may be considered forward looking statements under the securities law and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward looking statements.
Jack Izzo: Factors that might affect future results are discussed in the company's earnings release, which can be found investor relations sections of the company's website and in its filings with the SEC.
Jack Izzo: The company disclaims any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur. After the date. The forward looking statements are made except as required by law. Please.
Speaker Change: Please note that all comparisons of our fourth quarter 'twenty 'twenty four results are made against the fourth quarter of 2023, unless otherwise noted with that I'd like to turn the call over to Austin, Singleton, who will begin with a few opening remarks Austin.
Austin Singleton: Thanks, Jack and thank you everyone for joining today's call.
Austin Singleton: This past year has been challenging for our team our industry and our communities tragically.
Austin Singleton: Tragically in late September Hurricane Helena struck followed by Hurricane Milton in early October caused extensive damage and disruption across the west coast of Florida.
Austin Singleton: Our thoughts and prayers remain with those affected by the storms.
Austin Singleton: Importantly, I am pleased to report that our teams are safe and most of our stores.
Austin Singleton: <unk> only minor damage.
Austin Singleton: As of today, while a few blocks are still under repair all retail locations have reopened and are fully operational.
Austin Singleton: Despite the hardships the resilience and support within these communities has been remarkable I'm incredibly proud of our team's dedication to our customers and our communities during these difficult times.
Austin Singleton: As you would expect the disruption from hurricane Alina significantly impacted.
Austin Singleton: Our fourth quarter results.
Austin Singleton: As previously disclosed in our press release in late September we temporarily closed several stores in preparation for the storm and its insurance company has imposed a moratorium on writing new policies. As a result sales were disrupted during a typically strong selling period for us while the number of sales were closed in October.
Austin Singleton: It is difficult to predict when the remaining sales will deliver customers are starting to settle insurance claims and rebuild their lives and our teams are prepared to serve them when they are ready.
Austin Singleton: This past year was challenging for the marine industry as demand and pricing reset.
Austin Singleton: The reset to historical norms, our teams strong operational execution, along with our revenue brand and geographic diversity helped us mitigate these challenges.
Austin Singleton: We remain focused on disciplined expense management and keeping our operating model in line with current demand as.
Austin Singleton: As a result, we executed further cost saving measures in the fourth quarter, including rationalizing additional brands.
Austin Singleton: And consolidating certain parts and service facilities to more efficiently serve our customers. Although these restructuring actions impact margins in the fourth quarter, we expect to see benefit in 2025.
Austin Singleton: We implemented similar actions earlier in the year that are already yielding results as reflected in our lower SG&A expenses compared to the prior year period. We believe this positions us for success in the coming year.
Austin Singleton: Turning to full year results same store sales were down 7%, reflecting softer demand within the broader recreational marine market. While this fell slightly short of our target. It's worth noting that through August same store sales were down only 5% aligning with our expectations before the impact of Hurricane Elena.
Our distribution segment service parts and other sales were also negatively impacted throughout the year about lower production for manufacturers.
Austin Singleton: With higher interest rates on our floor plan and the current selling environment, we remain focused on managing our inventory to align with retail demand.
Austin Singleton: I am proud with the progress we've made in executing our inventory strategy.
And we are well positioned as we head into 2025 with inventory tracking in the right direction.
Austin Singleton: Turning to M&A, we were relatively quiet in 'twenty 'twenty four as compared to prior years, but the pipeline remains active opt.
Austin Singleton: Opportunistic transactions.
Austin Singleton: With a minimal capital outlay continue to be attractive and plentiful.
Austin Singleton: We are actively monitoring the market and pursuing targets that meet our disciplined financial criteria, while also supporting our strategic objectives.
Austin Singleton: As we look back on the year, our diverse revenue streams strategic brand offering and geographic reach have helped us offset some of the challenges from macroeconomic uncertainty and adverse weather. This has enabled us to navigate what remains a complex operating environment.
Austin Singleton: While cautious we hold an optimistic view as we move into 2025 as Anthony will touch on shortly the customers active and we are strategically managing our inventory and our cost optimization efforts for March and September are working.
Austin Singleton: Recent interest rate cuts and the inventory reduction have helped reduce our overall interest expense and carrying costs, while not embedded into our guidance future interest rate cuts should provide additional tailwind to our business.
Austin Singleton: With that I will turn it over to Anthony to discuss the business operations.
Anthony Asquith: Thanks, Austin the sales pace for the quarter started in line with the month of June with demand increasingly slightly in August. However September was challenged due to hurricane Harvey in October was further impacted by Hurricane Milton These.
Anthony Asquith: Disruptions on the West Coast of Florida impacted sales for September and we will continue to have an effect for the first half of the year as customers rebuild.
Anthony Asquith: We are pleased to report a record Fort Lauderdale boat show with a unit sales up double digits compared to the prior year. The strong activity highlights the sustained customer appetite for voting despite uncertainty in the election and overall economy.
At the time.
Anthony Asquith: Manufacturer partners unveiled a variety of new 2025 models.
Anthony Asquith: Adding to the excitement and driving demand.
Our diverse brand portfolio has been significant competitive advantage, ensuring we have the right vote for every customer regardless of their location promotional activity remains robust with the manufacturers consistently offering support to drive sales and clean out aged inventory.
Anthony Asquith: Elevated inventory levels have been a common theme across the industry. This year, although we typically increase inventory in the fourth quarter as part of our seasonal build.
Anthony Asquith: Our inventory was slightly down sequentially due to our optimization efforts as we redefine our product strategy and phase out certain brands, we expect inventory to decrease another 10% next year.
Anthony Asquith: Regarding our current inventory composition, we are comfortable with the mix of 2024 and 2025 models, we have reduced our orders for our model year 2025, and are being replaced at a slower pace than prior year.
Anthony Asquith: Our finance and insurance penetration remains strong and well within our target range customers have.
Anthony Asquith: I appreciate it at a slightly lower interest rate environment, so any future rate cuts should make financing options, even more attractive to them.
Speaker Change: So improving the economics of the boats finance through one water and with that I'll turn the call over to Jack to go over the financials in more detail.
Jack Izzo: Thanks, Anthony as mentioned, our fourth quarter results were impacted by Hurricane Harvey.
The closure of stores and insurance markets prior to the store directly affected our revenues.
Jack Izzo: Fiscal fourth quarter revenue decreased 16% to $378 million in 2024 from 451 billion in 2023.
Jack Izzo: New boat sales were down 18% to $217 million in the fiscal fourth quarter of 24, while pre owned boat sales decreased 20% to 73 button red.
Jack Izzo: Revenue from service parts and other sales for the quarter decreased 7% to $76 million.
Jack Izzo: Driving this was a reduction in sales at our distribution segment, which was partially offset by increases in our dealerships at finding.
Jack Izzo: Finance and insurance revenue decreased 12% to $11 million in the fourth quarter, but was slightly higher as a percentage of total boat sales.
Jack Izzo: Gross profit decreased 24% to $91 million in 2024 compared to 119 billion in 2023.
Jack Izzo: This was driven by the return to pre Covid margins on bed sales.
Jack Izzo: Lower margins on brands, we are exiting and restructuring charges included in cost of sales.
Jack Izzo: Sequentially gross profit margin decline, but absent the restructuring charges in cost of sales gross profit was in line with the June quarter and with our expectations.
Jack Izzo: Fourth quarter 2020 for selling general and administrative expenses decreased to $80 million from 85.
SG&A as a percentage of sales was 21% up 220 basis points on lower sales.
Jack Izzo: On a dollar basis SG&A was down 6%.
The previous cost reduction actions and ongoing expense management and lower personnel costs in the quarter.
Jack Izzo: Operating income increased $4 million from a loss of $117 million and adjusted EBITDA was $8 million compared to 30 million net.
Jack Izzo: Net loss for the fiscal fourth quarter totaled $10 million or 63 cents per diluted share compared to a net loss of $111 million or $6 89 per diluted share.
Jack Izzo: In the fiscal fourth quarter adjusted loss per diluted share was 36 cents.
Jack Izzo: Impaired to an adjusted earnings per diluted share up 42 sets again. These amounts were significantly affected by the impacts of Hurricane Harvey.
Jack Izzo: Okay protocols total revenue for 2024 decreased 8% to $1 8 billion compared to the prior year driven by a decrease in units sold.
Jack Izzo: For both new and pre owned.
Jack Izzo: Same store sales decreased 7% in fiscal 'twenty, 'twenty, four which was impacted by a softer retail environment and weather related closures.
Jack Izzo: Additionally, surface parking and other revenue decreased 10% to 291 million for fiscal 'twenty 'twenty four driven by lower sales from our distribution segment, partially offset by increases in sales from our dealership segment, which was up year over year as we expand as an important part of our business and service our customers.
Jack Izzo: Full year 2008, gross profit decreased 19% to 435 million as the changing market dynamics and gross profit margin for physical 2024 was 24, 5%.
Jack Izzo: Selling general and administrative expenses in fiscal 'twenty 'twenty four decreased to 333 million or 18, 8% of revenue from 346 million or 17, 8% of revenue in fiscal 2023.
Jack Izzo: Increase in selling general and administrative expenses as a percentage of revenue was driven by lower revenues.
Jack Izzo: However, our variable cost structure and targeted cost actions support lower SG&A on a dollar basis.
The cost reduction actions, we made in March and September will continue to moderate our overall SG&A.
Jack Izzo: We will continue to practice proactive expense management and have the flexibility to accelerate cost actions as necessary should the need arise.
Full year 2020 for operating income grew to 65 million compared to the prior year operating income of 18 billion.
Jack Izzo: Due to a noncash.
Jack Izzo: Impairment charge related to certain intangible assets during the fourth quarter FY2023.
Jack Izzo: Net loss for fiscal year, 2024 was $6 billion or 39 cents per diluted share compared to a net loss of $39 million.
Jack Izzo: Or $2 69 per diluted share in the prior year.
Jack Izzo: The business generated adjusted EBITDA of $82 million for the fiscal year 2024, and adjusted earnings per share of 98 cents per diluted share.
Jack Izzo: Impaired to $5.10 per diluted share in 2023.
Jack Izzo: Turning now to the balance sheet on September 30th 'twenty 'twenty, four total liquidity was 30 million, including $17 million of cash and availability under our credit facilities.
Jack Izzo: Total inventory on September 30th 'twenty 'twenty, four was 591 billion compared to 599 million on June 32024.
Jack Izzo: We are comfortable with our current mix and aging and as we execute on our brand rationalizations, we expected no benefit from inventory reduction.
Jack Izzo: Total long term debt as of September 30th 2024 was 423 million.
Jack Izzo: <unk> and all that leverage of four nine times trailing 12 month adjusted EBITDA.
Jack Izzo: The hurricane impacts on the business have push our net leverage higher than our expectation, but as the west coast of Florida recovers, we will reduce our leverage in the back half of 2025.
Jack Izzo: Looking ahead to 2025, we are cautiously optimistic as we expect demand to fluctuate with traditional seasonal cycles.
Jack Izzo: We anticipate total sales to be in the range of $1 7 billion and $1 85 billion with same store sales up low single digits.
Jack Izzo: Noting a softer start to the year as we work through the impact of Hurricane Helene and built in in the first quarter.
Jack Izzo: We expect adjusted EBITDA to be in the range of $80 million to $110 million and adjusted earnings per share to be in the range of one to $2.
Jack Izzo: To conclude we continue to focus on optimizing our cost story and that level as we adapt to the changing market dynamics, while the 'twenty 'twenty four was a challenging year, we have taken actions to position warm water success and look forward to 2020 fives.
Speaker Change: This concludes our prepared remarks, operator would you. Please open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star and then two are.
Speaker Change: First question comes from Joe <unk> Bello with Raymond James. Please go ahead.
Joe Bello: Thanks, Hey, guys good morning.
Speaker Change: First question for you Jack I guess, if you could quantify for us what the impact on revenue and EBITDA in the quarter was from Helene.
Speaker Change: Yeah. Thanks, Joe.
Jack Izzo: It's a tough one to actually get a very specific number on you know the period of time, it really was out a little over a week's time from from quarter end.
You know, but we're estimating it's probably in that 30 plus million range.
Jack Izzo: You know some of it we were able to we were able to get some deals.
Jack Izzo: On the East Coast of Florida, which wasn't impacted we had some insurance markets open up right on the 30th so.
Real fluid, but you know, it's it's somewhere in that you know I'll call. It all of that range.
Speaker Change: Okay helpful. And then in terms of the expectation for Helena Milton maybe help us understand how you're thinking about the first quarter in terms of EBITDA and does your guidance assume that you'll recoup any of those lost sales over the balance of the year.
Speaker Change: Yeah, Yeah, there's it's difficult to exactly he does see how it's going to play out obviously, our expectations will be next.
Speaker Change: The fourth quarter of 25 would be a you know a very easy comp for us to to overcome and expect to see that up significantly but I do think there is some expectation that you know the back half we'll see some.
Speaker Change: Some recovery from the West Coast of Florida, but you know just as you noted you're right. When you have a hurricane you know customers don't just rebound. The next day. Many people are having to replace homes cars businesses and unfortunately the boat.
Speaker Change: As further down the list.
Speaker Change: Sometimes it can take you know 18 months before they are ready to to purchase the boat. So it's you don't you don't ever really expect a big spike.
Speaker Change: Coming from a post hurricane event, but we do think after six month period certain customers well will be back in the market.
Speaker Change: And active but we're monitoring the west coast. Some you know we've had some a mixed results. Some some stores are tracking better than others, but you know we have about 11 store excuse me 10 stores in that let's call it Tampa Tampa Clearwater down to Fort Myers that span there. So a number of the number of stores.
And the impacted area.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks, Joe.
Speaker Change: And the next question comes from Craig.
Speaker Change: Kennison with Baird. Please go ahead.
Speaker Change: Hey, good morning, Thanks for taking my question Austin I'd Love to ask you just to give your point of view on the state of the boat consumer you know we've got.
Speaker Change: A difficult environment to predict whether it's a you know you mentioned the Fort Lauderdale show, which is positive you've got.
Speaker Change: A lot of other trends that are somewhat negative in the.
Speaker Change: The industry and then you've got the election result, which I assume is friendly towards the both consumer but how do you unpack all of that and digest the.
Speaker Change: That information to provide a boat outlook.
Speaker Change: Yeah, that's a tough one but I mean, if you look at Lauderdale Lauderdale was a great show it was kind of like.
Speaker Change: I'll, let Anthony jump in on this too because he was on the docks are pretty good bit.
Speaker Change: A breath of fresh air like it just it just seems different.
Speaker Change: And I don't know if it was just there were some relief that the unknown and the election was was over.
Speaker Change: Because the weather wasn't that great first couple of days, but it was it was a lot better than we were expecting we were kind of expecting it to continue on the on the let me recognize October was a pretty dadgum. Good months now we just you know some of that was.
Speaker Change: Pull forward from from September.
Anthony Asquith: But but it was just it just felt different Anthony you want to jump in and make a comment on that I mean, it's just it's just it's hard to explain but you just divide in the the tone just felt completely different than what we've seen in the last nine months.
Anthony Asquith: We didn't have a lot of the interest rate conversations with customers. We didn't have a lot of you know.
Speaker Change: Negative conversations where they were waiting for something everybody was pretty positive.
Anthony Asquith: No.
Anthony Asquith: The notes were priced accordingly, and aggressively to also move some older inventory. So it created a lot of Sterne.
Anthony Asquith: So very good go back not too worried about business, usually feels to me personally.
Speaker Change: And just to follow up on that it sounds like you didn't get a lot of pushback on interest rates. What are you seeing a customer that's more affluent and just not sensitive to rates and if so do you have any comment on how that rate sensitive consumer might be thinking.
Speaker Change: I think we've seen that for the last you know.
Speaker Change: Five years seven years.
Speaker Change: The fluency of R. R.
Speaker Change: Customer is just continues to increase and it's just.
Speaker Change: One of those things that you know when you look at from a financing perspective, we have to work really hard and we do work really hard and we were kind of still staying in that in a range of what we want is for from a penetration standpoint now we've just got a spread that margin, but yes. The the customer is definitely more affluent.
Speaker Change: And it was 10 years ago.
I mean, it's it's you know a lot of its access to water.
Speaker Change: More people getting to water, which is exciting because it just increases the churn so or more.
Speaker Change: A scarcity of access to water that's overloaded bias fluency is a good thing for the churn as we move the industry forward.
Speaker Change: That's great. Thank you.
Speaker Change: And the next question comes from drew Crum with Stifel. Please go ahead.
drew Crum: Okay. Thanks, Hey, guys. Good morning, So on your same store sales for the quarter a tiered the lagged the industry is it simply the geographic geographic concentration in Florida or are there any other factors you think contributed to the share loss and then I have a follow up.
Speaker Change: Yeah, 100% I think it was.
Speaker Change: How that we have so many stores kind of on that Gulf coast.
Speaker Change: And and so I think when you factor that in it at a you know we were slightly worse than you had the I think the industry for the segments. We participate in was around 13, 14%. So we are certainly a couple of points worse than that but since they have a much heavier concentration on that Gulf coast right because well.
Speaker Change: That storm was brewing in the golf, we had you know every store from the Florida keys.
Speaker Change: You know to Orange Smeech, Alabama, all of those coastal stores, you know in preparation mode and so right. The service departments shut down we're not we're not doing retail work, where I'm getting customer boats out of the water our boats out of the water battening down the hatches so.
I think that probably over weighted a little bit.
Speaker Change: Got it okay. Thanks, Austin, and then with your pro forma leverage approaching five times can you address what kind of flexibility you have around uses of cash and I guess M&A, specifically I think.
Speaker Change: You mentioned that.
Speaker Change: <unk> got a full pipeline entering fiscal 'twenty five.
Speaker Change: And where do you expect to be at year end. Thanks, guys.
Speaker Change: Okay.
Speaker Change: Yeah, No I think as you know we continue to look at acquisitions you know some of them last couple of deals. We've done have been minimal capital outlay and I think there's there's a number of them are in the pipe that are such there's also you know some some larger deals where you know they're still going through a normalization process of their earnings.
And you know they have to kind of anniversary that before there.
Speaker Change: Gonna be be realistic with our purchase prices. So we're conscious of.
Speaker Change: You know, where we're at we're working towards reducing.
Speaker Change: Reducing debt and driving things for you know with the cost actions that we took with the.
Speaker Change: Brand.
Speaker Change: Alignment that we took in reducing the number of brands all of that helps to simplify our business.
Speaker Change: Increase the profitability of our business and strengthen as we go forward.
Speaker Change: Thanks, Chad.
Speaker Change: No.
Speaker Change: And the next question comes from Fred Reichman with Wolfe Research. Please go ahead.
Fred Reichman: Hey, guys. Good morning, I was hoping you could just help us out a little bit with some of the segment level expectations, particularly when it comes to gross margins you mentioned fit.
Fred Reichman: New boats are sort of back to where they were from our pre COVID-19 perspective, but there's also a lot of promo in the market. So as you think about fiscal 'twenty five do you expect that to sort of be up down sideways, how should we think about that.
Fred Reichman: Yes.
Speaker Change: Let me jump in and Jack and I'm cautious cautiously optimistic that we can get a little bit of margin help on new boats as we move into 2025, the wood it'll be interesting is how the overall industry.
Speaker Change: The reduction in field inventory or David field inventory comes down and how aggressive or fast the promo dollars go away and those have to be back filled with just straight margin from us, but as you know as you get through dated inventory and everybody's not in a.
Speaker Change: I'm paying interest on this phone I got to get rid of it.
Speaker Change: You should see some sort of margin relief to the upside is it a half a point is at a point when the app, that's still be still to be determined but I don't think we see that till you get into the gut and the season till you get into those April may deals because theyre still going to be some flushing out when you look at an overall grew.
Speaker Change: Margin still going to be some flushing out of this old inventory. So you know.
Speaker Change: I'm expecting to see some some some bump up.
Speaker Change: But we just got we got to continue to keep chugging along like we are a it feels like every time, we do these calls unlike we're getting closer we're getting closer and it's just like it's like running through quicksand.
Speaker Change: A little while for all this inventory to flush through the system, but it's it's better today than it was yesterday and it's better this month than it was three months ago, and I think that Oh.
Speaker Change: With wells earlier in the week and that they've seen some good good positive trends I'm not only from the Lauderdale boat show with other dealers, but also just across the nation of increased payoffs and stuff, so things seem to kind of be lighter and easier than going in the right direction and we just need to keep doing that and we should see a little bit of margin bump.
Speaker Change: As we move into the back half of next year.
Speaker Change: Yeah, I'll I'll point out two things Fred we had some.
Speaker Change: Some restructuring charges.
Speaker Change: New low cost of sales right, so new boat seem to tick down a little bit when you back out those restructuring charges, we get right back to that 17 and change percent on new boats and then the same thing in parts service and other we've ticked down just below 40% because.
Speaker Change: Because of some we consolidated some.
Speaker Change: Some plants some some warehouses and there are some charges restructuring charges in there that brought that number down below 40, but on an ongoing basis. It will it'll be a you know about 40, and we expect that as well I think as we look into the first quarter with with some of these brands that we're exiting we could see some a little bit of margin pressure there but.
Speaker Change: You know we also have some exciting 25 product that we're getting for full margin on so it'll be a balance.
Speaker Change: Okay that makes sense and then on the cost saves will you just remind us or help us with sort of what the all unexpected benefits for that.
Speaker Change: <unk> is heading into 'twenty five I know I think you guys didn't action back in March and then there were some September actions too, but as we just think about the SG&A.
Speaker Change: <unk> into next year, what is sort of the all in benefit.
Interesting, we wanted to trimmed some cost.
Speaker Change: We've actually seen you know in many cases unit sales increasing.
Speaker Change: In recent months that we have to kind of keep this balance of.
Speaker Change: We want to make sure we're having adequate staffing to keep to support our customers and so you know we've made some cuts the March cut was around at around $10 million.
Speaker Change: You know about half of that now is baked in.
Speaker Change: Then we are we talking about another $5 million at the end of the year that'll that'll bake into 'twenty.
Speaker Change: <unk> 25.
Speaker Change: Great. Thank you.
Speaker Change: Yes.
Speaker Change: And the next question comes from Michael Swartz with Truest Securities. Please go ahead.
Speaker Change: Yes.
Speaker Change: Hey, Hey, guys good morning.
Speaker Change: Maybe just to drill down a little bit more on on your 25 guide in the low single digit.
Speaker Change: Comparable store sales growth expectation give me give us a little sense of the drivers there what's your outlook for the industry. During your fiscal year and are you embedding any benefit from share gains pricing et cetera.
Speaker Change: Yeah, I would say, we're definitely embedding some share gain I think we will outpace the industry.
Speaker Change: If if we're low single digits positive the industry is probably a low single digit negative.
Speaker Change: You know I think it's a I think theres some uncertainty for us in particular with that with respect to the west coast of Florida, and and how quickly that rebounds, and exactly what that impact is on the.
Speaker Change: On the.
Speaker Change: On the same store sales.
Guide as well as well as you know we have some exiting brands that we're pushing out we have some store closures that'll that'll that will come out of the base that we did earlier this year and so it's you know, it's a little a little little noisy.
Speaker Change: You know, but we are positive on the year.
Speaker Change: Okay.
Speaker Change: Hang on.
Speaker Change: Real quick clarify that store closings, it's not like I mean, it's it's it's one off satellite locations, yeah really small we're not exiting we're not closing any any of our.
Speaker Change: Major stores or anything that has any substance to it its all really just do we really need to have a satellite in its 30 miles away from the mother, the mothership of the <unk>.
Speaker Change: Spoken hub just because it was convenient we got a cheap lease.
Speaker Change: Consolidated nine down is helping us with personnel costs and stuff like that it just doesn't make sense, we wont we wont lose that business. So it's not like we're closing stores I know I don't want that to okay. It didn't sound right.
Speaker Change: Okay no. Thanks for the clarification Austin and then just just maybe put a finer point on the first quarter I mean, theres a lot of noise a lot of obviously disruption and it sounds like you did get maybe some business back that shifted out of the fiscal fourth quarter, but would you expect EBITDA to be negative in the first quarter I'm just trying to get a sense of how we should.
Model it.
Speaker Change: It wouldn't surprise me if it was slightly negative.
Speaker Change: Okay. Okay wonderful thanks, guys, Yeah, I, just I, just think with with the unknown of the West Coast, It's kind of hard to hard to see with and then you combined.
Speaker Change: Some aggressive actions on some of these brands, we're exiting and clearing out a model year 'twenty fours in calendar 'twenty four.
Speaker Change: You know I think as well as rate when typically the December quarter tends to be a slightly lower gross margin.
Speaker Change: Quarter, when you look at it just from a seasonality perspective as well.
Speaker Change: Okay great.
Speaker Change: Okay.
Speaker Change: And the next question comes from Noah is that skin with Keybanc capital markets. Please go ahead.
Speaker Change: Alright, Thanks for taking my question just wondering if you could.
Speaker Change: Do you have any thoughts around.
Speaker Change: Kind of the state of the the pre owned market.
Speaker Change: Any trends Youre seeing there and how youre kind of thinking about 25.
Speaker Change: Thanks.
Speaker Change: Yes, I mean, I would say the only thing that's.
Speaker Change: Really changed or has the only thing about the industry that doesn't seem to ever change the preowned market theres not enough of them.
Speaker Change:
Speaker Change: And that's pretty pretty steady.
Case out there still today, we know we.
Speaker Change: We can always use three times as many as we have so.
Speaker Change: That's something that we put a lot of emphasis on an image is important part of our business and.
Speaker Change: To focus on it and it's just a it's a tougher it's a tougher part of our business just because of the lack of inventory that's available.
Speaker Change: Thank you.
Speaker Change: That is the end of our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Yes.