Q1 2025 OneWater Marine Inc Earnings Call
Okay.
Colombia: Good morning, My name is Colombia, and I'll be a conference operator today.
Sam: Sam I would like to welcome everyone to the one water Marine Inc. Fiscal first quarter 'twenty 'twenty five conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you wish to ask a question. Please press Star then the number one on your telephone keypad.
Sam: If you would like to withdraw your question. Please press the pound key thank you.
Speaker Change: I would now like to turn the conference over to Jack Ezzell Chief Financial Officer. Please go ahead.
Austin Singleton: Good morning, and welcome to warm water Marines fiscal first quarter 2025 earnings conference call I'm joined on the call today by Austin, Singleton, Chief Executive Officer, and Anthony Asquith, President and Chief operating Officer.
Austin Singleton: Before we begin I'd like to remind you that certain statements made by management in this morning's conference call 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.
Austin Singleton: Differ materially from those described in the forward looking statements.
Austin Singleton: Factors that might influence future results are discussed in the company's earnings release, which can be found in the Investor Relations section on the company's website and in its filings with the SEC. The company disclaims any obligation or undertaking to update forward looking statements to reflect circumstances or events that may occur. After the date. The forward looking statements are made except.
Austin Singleton: As required by law.
Austin Singleton: Please also note that all comparisons to our fiscal first quarter 2025 results are made against our fiscal first quarter 2024, unless otherwise noted.
Austin Singleton: With that I'd like to turn the call over to Austin, who will begin with a few opening remarks Austin.
Austin Singleton: Thanks, Jack Thank you everyone for joining today's call. Our first quarter results came in better than expected driven by low double digit increase in new unit sales significantly outpacing the industry.
Austin Singleton: Overall revenue increased 3% with same store sales up 4% driven by the strong push from our sales team to gain market share and optimize inventory.
Austin Singleton: <unk> declined in the quarter, reflecting the impact of deliberate actions to drive sales <unk>.
Austin Singleton: Margins also vary by product current model year margins are holding up well while brands. We were exiting were discounted to close sales.
Austin Singleton: Given the impact of Hurricane Helene and Milton had on the West Coast of Florida, I am pleased with our top line growth in the quarter. As you may recall, we temporarily closed several stores in the fall in preparation for the storm affected Florida and the Gulf Coast.
Austin Singleton: While it is difficult to quantify lost sales that we recoup during the quarter sales in the impacted area were down mid single digits compared to the prior year.
Austin Singleton: Overall, we are making good progress on managing inventory, which is down 10% year over year. Our goal is to have cleaner inventories each quarter striking the right balance of bran make and model ensuring that we are well positioned to meet customer needs, while maintaining operational efficiency.
Austin Singleton: These efforts are starting to pay off.
Austin Singleton: As highlighted by our lower carrying cost on floor plan interest expense versus the prior year period.
Austin Singleton: We are also seeing the benefits of our ongoing cost reduction initiatives taken effect.
Austin Singleton: General and administrative expenses declined on both a dollar basis and as a percentage of total revenues between our inventory position and cost actions. We are setting one water up for success in the quarters to come.
Austin Singleton: Despite better than expected results in the first quarter, which is historically, our smallest quarter, we remain cautiously optimistic about 2025.
Austin Singleton: The industry continues to face uncertainty after a challenging 2024, and we have not seen any significant market changes that would alter our outlook for the year. As a result, we are reaffirming our guidance range for 2025.
Austin Singleton: Our focus remains on executing our inventory strategy as we prepare for the summer selling season, while remaining nimble to respond to any changes in market dynamics with that I will turn it over to Anthony to discuss the business operations.
Anthony: Thanks Austin.
Speaker Change: The quarter benefited from higher unit volumes offset by the lower average unit price as we work to drive sales during the slower winter months with all of our stores operational again after hurricane related closures, we developed promotional strategies and actions to give customers additional reasons to buy I am proud of the team's effort.
Speaker Change: To achieve the increase in sales in the quarter, that's seasonally experiences the slowest activity.
Speaker Change: Our attention now shifts to the boat show season.
Speaker Change: <unk> shows have been mixed results some.
Speaker Change: Facing challenges like unprecedented cold weather and snow in Atlanta, and significant rain at the St. Petersburg outdoor show. Despite these adversities customers had been active when weather permitted and overall sentiment has been positive.
Speaker Change: Premium category has done well and is in line with recent trends.
Speaker Change: All in all we are ready to serve customers at upcoming events.
Speaker Change: After a year marked by high inventory levels, our focused approach to inventory management has put us in a strong position as the industry works to clear out.
Speaker Change: Excess in non current inventory, while there's push caused some near term discounting. We are encouraged by our solid finance and insurance performance, which helped offset some of the impact and highlighted the benefits of our diverse business model.
Speaker Change: Total finance and insurance revenue grew 50 basis points as a percentage of total revenue compared to the prior period and finance penetration remains strong.
Speaker Change: Our diverse brand portfolio continues to be a key advantage, enabling us to deliver boats and to meet the varied wants and needs of our customers across different markets. Meanwhile, the promotional environment has continued with our manufacturing partners actively supporting sales initiatives and helping clear aged inventory, although we typically build inventories.
Speaker Change: In the winter months, we've added inventory from the fourth quarter at a slower pace compared to the prior year being mindful of the volume and model of 2025 boats, we are taking in.
Speaker Change: And with that I'll turn the call over to Jack to go over the financials in more detail.
Jack Ezzell: Thanks, Anthony the first quarter was a solid start to the year with revenue, increasing 3% to 376 million from $364 million in the prior year, New boat sales were up 3% to $248 million in the first quarter, while pre owned boat sales increased 7% to $57 million.
Jack Ezzell: Overall same store sales were up 4% driven by an increase in new unit sales. Despite the industry unit sales being down approximately 14% in the categories we participate in.
Jack Ezzell: Revenue from service parts and other sales for the quarter decreased 1% to $62 million as we have seen in the last several quarters reduced production schedules from boat manufacturers drove lower sales in our distribution segment, which were partially offset by increases in our dealership segment.
Jack Ezzell: Finance and insurance revenue increased 28% to $9 million in the first quarter and was higher as a percentage of total net sales.
Jack Ezzell: Gross profit decreased 8% to $84 million in 2025 compared to <unk> $91 million. In 2024. This was driven by lower margins of the brands. We are exiting in addition to new and pre owned boat pricing.
Jack Ezzell: First quarter 2025, selling general and administrative expenses decreased 1% to 79 million SG&A as a percentage of sales was 21% down 90 basis points as a percentage of revenue due in part to lower personnel costs in the quarter previous cost reduction actions and ongoing expense management. These.
Jack Ezzell: Savings were partially offset by certain inflationary increase in fixed and in administrative expenses.
Jack Ezzell: Operating loss decreased to $2 million and adjusted EBITDA was $2 million.
Jack Ezzell: Net loss for the first quarter totaled 14 million or <unk> 81 per diluted share compared to a net loss of 8 million or <unk> 49 per diluted share in the prior year.
Jack Ezzell: Adjusted loss per diluted share was <unk> 54.
Jack Ezzell: Compared to an adjusted loss per diluted share of 38 cents in the prior year.
Jack Ezzell: Now turning to the balance sheet December 31, 2020 for a total liquidity was in excess of $40 million, including $23 million of cash and additional availability under our credit facilities.
Jack Ezzell: Total inventory at December 31, 2024 was $637 million compared to 707 million at December 31, 2023, we continue to improve our current mix and aging while we execute on our brand rationalizations, we expect to see some incremental benefits from further inventory reductions as we progress.
Jack Ezzell: Throughout the year.
Jack Ezzell: Total long term debt as of December 31, 2024 was $428 million net of $23 million of cash resulted in net leverage of five two times trailing 12 months adjusted EBITDA, we are focused on reducing leverage in the latter half of 2025.
Jack Ezzell: Looking ahead, we are maintaining our previously issued fiscal 2025 guidance and anticipate total sales to be in the range of $1 7 billion to $1 85 billion with same store sales up in the low single digits. We continue to expect adjusted EBITDA to be in the range of $80 million to $110 million and adjusted.
Jack Ezzell: Earnings per diluted share to be in the range of one to $2.
Jack Ezzell: Our capital allocation priorities remain the same driving organic growth expanding our presence through strategic acquisitions and key boating markets. The pipeline is active but we will continue to deploy cash where it creates the greatest value for shareholders.
Jack Ezzell: This concludes our prepared remarks, operator would you. Please open the line for questions.
Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: Again, that's star then the number one on your telephone keypad, which I will pause for just a moment to compile the Q&A roster.
Speaker Change: Our first question comes from the line of Fred Wightman from Wolfe Research. Your line is open.
Speaker Change: Hey, guys. Good morning, I was hoping you could just talk about the cadence of the quarter Austin I think when you reported last or held a call last you talked about some encouraging October Travis. So I'm wondering if you could just update us on what you saw from sort of month to month.
Speaker Change: <unk>.
Speaker Change: And then there was a pretty solid quarter on every month. If you were comparing it over last year, but I would say if anything you know December the one month that you really can't pinpoint because.
Speaker Change: If it starts to get really cold in some places, but then people get caught up in Thanksgiving into November and running into just the year end and new year's and Christmas is just I would say October and November were pretty Dadgum strong in December was probably on average are flat Anthony you probably have a better feel for that than I do.
Speaker Change: Yes, I think you described it exactly.
Speaker Change: Cooper in November were very strong.
Speaker Change: With the December.
Speaker Change: Being what normally is a normal times.
Speaker Change: Hey, guys good morning.
Speaker Change: Right is that October in particular, especially the first half was was in our Florida locations were impacted by the storms, so that that kind of geography was a little bit light.
Speaker Change: <unk> to the rest of the the rest of the country.
Speaker Change: Okay that makes sense and then just on the front end grosses it was down a little down year over year, and then down a little bit sequentially. I know you guys are exiting some brands. So can you maybe just give us some some guide posts for what that looked like maybe on a like for like basis versus the exited brands how to think about that.
Speaker Change: Margin profile going forward.
Speaker Change: Jack you want to ask you as well.
Jack Ezzell: I'll, just say look great.
Jack Ezzell: Just latest and then you can kind of fill in what I don't yeah.
Wherever they.
Jack Ezzell: When when frame when we get to those exiting brands, we want those things don't I mean, there is no no support from the manufacturer.
Jack Ezzell: The sales guys don't like them because.
Jack Ezzell: There is no real long term future in them. So they gravitate toward the everything so I mean, it's tough sledding and we've done a really good job of pushing those through but those are coming in at zero margin or either either a negative margin and so it's having been a pretty good impact I think we mentioned.
Jack Ezzell: In the script up to hear that the new year model stuff is.
Jack Ezzell: Got it much better healthier margin and the further we get into this year the better off you know.
Jack Ezzell: That's what gives us a little bit of confidence.
Jack Ezzell: What we said last last quarter on the earnings call was one of those green shoots that we saw as we get rid of these exiting brands. We do feel like we'll get some margin lift because of the new boats are bringing a higher margin.
Fred Wightman: Yes, Fred I think.
Speaker Change: Next quarter, we will see some margin pressure continue as we.
Fred Wightman: We got through the rest of them.
Speaker Change: But I would expect once we get past.
Speaker Change: Our second quarter and kind of get into the heating season that margins may pick up a little bit but.
Speaker Change: Sure, we keep our inventory in check and we're balancing that with our model year 'twenty fives are coming a little bit slower than model year 2000, and forced then.
Speaker Change: You'll notice that buy inventory decline.
Speaker Change: Year over year, and we're going to continue to focus on bringing those numbers down and.
Speaker Change: And Jack just to be clear when you say pressure in <unk> was had a sequential comment year over year comment both what do you what do you mean.
Speaker Change: It's a year over year I would say.
Speaker Change: It's really you know, it's it's just flattish maybe even a little bit better.
Speaker Change: Again, it's really hard to move a lot of product in those winter months.
Speaker Change: Especially.
Speaker Change: Side of Florida, and the team did an outstanding job outside of Florida moving product.
Speaker Change: Perfect. Thanks, a lot guys.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Joe <unk> from Raymond James Your line is now open.
Martin: Hey, Good morning. This is Martin on for Joe.
Martin: I just wanted to touch on the comp do you have an idea of our comp was excluding Florida.
Martin: Yeah, it's going to move up.
Martin: You know.
Martin: Yeah, I'd say, it's probably it was probably in the range of 67%.
Martin: Okay, and then just quickly on the Cop again do you have a breakdown between units and Asps.
Martin: Yeah, I mean, it's larger units were up double digits. So I think it was in the 12% to 13% range.
Martin: Okay I appreciate it guys. Thank you.
Martin: Yeah.
Speaker Change: Our next question comes from the line of Mike Swartz from please Securities. Your line is now open.
Mike Swartz: Hey, Hey, guys good morning.
Mike Swartz: Maybe just starting with inventory Jack is there is there I guess at the inventory level you guys are actually in terms of new bulk of their inventory level. You guys are targeting for fiscal year end and maybe what does that look like relative to where we are today.
Mike Swartz: Yeah, No we made a concerted effort with our with the sales push as well as with how we're managing our orders this quarter in our target for September 25 is to be down year over year 10, 10, plus percent I think you know again, we while we were down nine little over.
Mike Swartz: 9%.
This quarter I think that could flux in next quarter as we take some additional boats.
Mike Swartz: And for the season.
Mike Swartz: So that'll be all fluid throughout the year, but our goal is to be down in excess of 10%.
Mike Swartz: Well.
Mike Swartz: Yes, our goal is to be down Mike our goal is to be down a little bit just because we've exited non brands, but we also are going to continue to do what we do everyday and monitor the market.
Mike Swartz: We feel pretty good about this year as we move into the back half I don't know if that means that we're going to see.
Mike Swartz: Big push on the retail side, but if if retail comes out better than expected.
Mike Swartz: That will probably not be the case I mean, we will have to plan accordingly based off what demand is and what we're seeing out there and we watch that on a weekly you really on almost a daily basis.
Mike Swartz: Yes, okay.
Mike Swartz: And just.
Sticking on the subject of inventory is there a way to think about maybe what used inventory or sorry, not used with aged inventory looks like today, maybe versus a typical whatever typical means a year and then also what.
Mike Swartz: I guess, how much inventory do you still have kind of wrapped up with some of these brands you're exiting I'm just trying to get a sense of.
Mike Swartz: How impactful that headwind is over the next couple of quarters relative to what we've seen the last call it six months or so.
Speaker Change: Yes, I wouldn't say, it's that impactful over the next couple of quarters I think we'll as Jack said, a little while ago will feel the pressure of it.
Mike Swartz: A little bit this quarter.
Mike Swartz: But when we look at it just from a total data standpoint, because all of those brands that we're exiting are really in my David box. So you've got current 2025% and then you've got data stuff and typically in a normal year pre COVID-19.
Mike Swartz: Two decades pre Covid, you really went into the off season, one somewhere around 20 or not warning, but the industry usually ended up going in there somewhere around 2025%.
Speaker Change: Carryover is going into the new year calendar, new year, and we always wanted to be slightly under that Jack I don't know if you have that in front of you, but I mean, we're probably less than 20% right now we're right at that are we.
Speaker Change: I don't have that right in front of me I would I would agree with the comment I did I did hear from some.
Speaker Change: Some data from wells that suggests that the industry as a whole was kind of getting to that point.
Speaker Change: Yes.
Speaker Change: It's.
Speaker Change: The inventory story to me not just one water, but for the industry per wells is that inventory is cleaning up pretty dadgum. Good I don't really get into total inventory out there from a wealth perspective versus what's the dated and they seem to be a lot happier today.
Speaker Change: And then they were a month ago three months ago six months ago.
Speaker Change: Especially forecasting going into the selling season. So the inventory itself from a data perspective is continuing on the trend that it's been on the last six months cleaning itself up slowly, but surely and that's some of the green shoots that we see in the back half of the year.
Speaker Change: Okay. Okay. That's helpful. Thanks Austin.
Speaker Change: It just.
Speaker Change: Likely right Youre quarter came in plus four in comp despite a lot of the headwinds and challenges that we had with some of the particularly some of the dislocation in the Florida market and Youre, maintaining your outlook for the full year, despite having some pretty easy comps going forward. I mean can you just give us a sense of.
Speaker Change: You know, what maybe what that discussing with like internally.
Speaker Change: In terms of just maintaining that that outlook, yes, yes, I mean, I think look a lot of it has to do with you know when you think about Q4 or excuse me. The December quarter right is the slowest quarter of the year.
Speaker Change: When I go out and I look also at consensus consensus has Q3 EBITDA of $50 million, which was seems feels a little strong and so I think if you you know if you layer in in Q2, and Q4 tend to be pretty close to one another.
Speaker Change: I think if you can bring down Q3, a little bit.
Speaker Change: And level out Q2, and Q4, I think that kind of keeps you around that 95 consensus number which is the midpoint of the range.
Speaker Change: Okay. Thanks.
Speaker Change: Yes.
Speaker Change: Jack I'm, a little bit more of an optimistic and im starting to really kind of you can see some of these green shoots, but I mean, we we thought we've seen some green shoots in the past had been thrown curve balls.
Speaker Change: So we really want to watch out.
Speaker Change: And be a little bit more cautious.
Speaker Change: Cautious until we get a little bit further into the selling season, you know in the back half of Miami.
Speaker Change: After that Miami show I think we will have a little bit more confidence and what's in front of us versus where we are today coming out of the like Jack said, the slowest quarter of the year.
Speaker Change: Yeah, and I'll just point out to write what once fell like a tailwind of interest rates you know.
Speaker Change: From the fed and whatnot it feels like rates.
Speaker Change: The latest forecast suggests that we're not going to get as many cuts as you know we thought.
Speaker Change: Three or six months ago, and so no I don't feel like it's a.
Speaker Change: Necessarily a headwind coming at us, but it just doesn't feel like we're going to get the some of that relief. We maybe we were expecting in the back half of the year.
Speaker Change: Got you Okay helpful. Thanks, guys.
Speaker Change: Our next question comes from the line of Neal was asking from Keybanc capital markets. Your line is now open.
Brian: Hi, This is Brian on for <unk>. Thanks for taking my question.
Speaker Change: I know, you're just kind of briefly.
Speaker Change: Briefly touched on it but.
Speaker Change: It'd be great to hear your perspective on the industry.
Speaker Change: No no we are in a difficult environment and it seems like that rate cut conversation has changed and maybe maybe you can put on pause for now.
Speaker Change: It'd be great if.
Speaker Change: Are you seeing any other green.
Speaker Change: Green shoots are.
Speaker Change: Changes in <unk>.
Speaker Change: Confidence.
Speaker Change: Coming coming out of this quarter.
Speaker Change: I don't know if theres a change in confidence I think that you know, we Jack and Anthony to talk about it a lot I mean, the green shoots that we kind of laid out.
Speaker Change: Last last earnings call are still out there and they still look reasonably achievable.
Speaker Change: And when you when you get into what really will be one of the biggest drivers of that and that's inventory cleaned it up because inventory cleans itself from a data perspective.
Speaker Change: I think if you just if you took the total industry took all the 2020 fours out an older dated inventory out and you just looked at what the industry has it just in 2025 as the industry is super healthy I mean, the manufacturers have been disciplined on cutting back production. The dealers are taking the right amount of inventory going into 2025. So when you look.
Speaker Change: That you are like Okay. That's that's we're in great shape from an industry perspective, it's getting the other stuff cleaned up and the quicker we clean it up that leads to several things from a warm water perspective that we look up and look at.
Speaker Change: It leads to higher margins on new boat sales. It leads to more turns on new boats, which saves us money that we can count because we know what our interest savings is when you increase your turns but theres dollars did are hard to quantify like if you move about 25 times around a lot versus one time that there is a cost associated with it and then you look.
Speaker Change: Interest savings, even if the rates don't move the more turns the less interest you pay.
Speaker Change: So, but then it is inventory cleaned itself up the manufacturers are going to get ready to increase production and going into 2026, which swaps over and helps T. H because th doesn't have to do anything today.
Speaker Change: To increase its revenue and bottom line all we need to do is have the manufacturers increase production, 10% and we'll get a 10% lift on what we sell to those manufactured with a 10% increase in sales there for those manufacturers that are increasing sales because they have to have the parts in order to build the boat. So there's all these little things that kind of.
Speaker Change: We're starting to really take shape, but a lot of it has to do with getting that inventory cleaned up and I would just say yes.
Speaker Change: Every every at the end of every quarter really at the end of every month and now really on a weekly basis that I'm talking to wells, we're headed in the right direction. We haven't we haven't trained hasnt come off the track in that that's starting to build confidence as we go into the selling season, and which just which.
Speaker Change: Just a little bit of a wait and see we just need that to continue.
Speaker Change: Yeah. Thanks, Thanks for taking my question.
Speaker Change: Maybe just pivoting a little bit.
Speaker Change: It would be helpful.
Speaker Change: Thoughts.
Speaker Change: Around the state of pre owned market.
Speaker Change: What what Youre seeing there and how youre thinking about used in 2025.
Speaker Change: Yes, I'd say, it's the same old broken record that we have been saying.
Speaker Change: For the last 25 years, you know, we don't have enough of them.
Speaker Change: You know it's that pre owned market is still extremely limited on an inventory it's still extremely limited on.
Speaker Change: <unk>.
Speaker Change: From an industry perspective, theres, just not enough out there and I don't see that getting better anytime soon.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of ice Mcclain from Baird. Your line is open.
Speaker Change: Yes, good morning, gentlemen, thanks for taking my questions on for Craig This morning.
Speaker Change: Maybe a little bit related to the pre owned question, but a little more focused on new just curious if you have a way to measure first time buyers versus trade and buyers in some markets like auto we're seeing some would be trading consumers sitting out.
Speaker Change: Because the monthly payment math, just doesn't make sense given inflation rates and trade in values. So wondering if youre seeing anything on that and how it's playing out in the marine category.
Jack Anthony I'll, let you I'll take that I mean, you you can speak really to the Atlanta boat show probably on that just what we saw there.
Speaker Change: Yes, I think we are seeing the amount of trades starting to reach up were prior.
Speaker Change: The Covid period, where the trades really dropped down significantly.
Speaker Change: This hole.
Speaker Change: Fiscal year has already started off with more of a demand in trades.
Speaker Change: People are trading boats in where they weren't before.
Speaker Change: We are blessed to be tied to a lot of manufacturers have continued to be innovative it gives people a reason to trade.
Speaker Change: Whereas 20, some odd years ago.
Speaker Change: <unk> came out and it was just a different color where today.
Jack Ezzell: Every year, our manufacturers are bringing in some incredible things. So it's making people want to trade. So the percentage of I don't know Jack I don't know if you have that in front of me what the actual percentage, but it has gone up dramatically where it was.
Speaker Change: Sure.
Speaker Change: And again right.
Speaker Change: It also was getting at our biggest challenge is supply when it comes to selling trades are selling used boats and so I think.
Speaker Change: We've seen some indicators of supply coming in at the shows like Anthony referred to.
Speaker Change: When you when you break down our sales our pre owned sales which are up.
Speaker Change: And six 5% year over year.
Speaker Change: Actually trades are up double digits in that countered by a little bit of people shifting from a downward trend in consignment right. So people can go ahead trading their boats.
Speaker Change: In there to get that new product.
Speaker Change: It was an easier more efficient process for them, where they can just hand over their trade and we will take care of the paperwork and everything else with getting them in any way.
Speaker Change: Well, but one other thing too, though that we need to kind of it's really hard for us to get really good clarity on this because we have we've been pushing for years in some of the states that we operate internet have now gone to.
Speaker Change: Basically a title so a lot of a lot of boats in the past with from consumer to consumer never went through the dealership because there was no tax advantage.
Speaker Change: And the way that if you sold it from person to person you didn't pay sales tax that's starting to change because when you go and get it was like that probably half the states. We operate in and we slowly been getting that pushed through you know from a legislation slightly lula standpoint to get.
Speaker Change: Once you go get a boat.
Speaker Change: A new tag you pay sales tax if you haven't you don't prove that you paid it at a dealership and that way more trades, probably starting to come to us too. So it's a little hard to really.
Speaker Change: To gauge that but I.
Jack Ezzell: I agree with what Anthony and Jack both said that do believe trades are up.
Speaker Change: Great. That's that's helpful color.
Speaker Change: I would just add switching gears, a little bit I mean, you called out higher F&I penetration mitigating some of the margin pressure from working down inventory, maybe let's dig into that a little bit what's driving that and is it something thats sustainable you know through the balance of the year.
Speaker Change: Yes definitely.
Speaker Change: Again, it's a concerted effort by the team I think it's a it's one of those areas and if youre not pushing as hard as you can take to get that finance you won't get it and so I think the team executed on some strategies.
Speaker Change: We had some price points and some.
Speaker Change: Special Finance.
Speaker Change: Auctions for some of the discontinued brands that help kind of drive a little bit, but you know we will continue to be very competitive in the F&I department kind of looking to expand and increase.
Speaker Change: <unk> increased our penetration and increase our income there.
Speaker Change: Great and then I think Matt just wanted to touch on the M&A pipeline I think you can call. It active maybe frame a little bit more on what that looks like today.
Speaker Change: Yeah, we're not we're in no hurry to do anything right now I mean, Tom.
Speaker Change: Tom every everyday time works in our favor.
Speaker Change: And I think we're just we're being cautious kind of waiting to see how things.
Speaker Change: Pan out over the next 30 to 90 days getting into the season.
Speaker Change: There's a lot of dealers out there that it's been a hard winter for them.
Speaker Change: We're just kind of wait and see.
Speaker Change: How numbers react and how they come down and what they look like going into the selling season compared to a year ago, especially since most of the deals that we buyer on a trailing 12.
Speaker Change: Just going to be very very selective and in and be a little bit disciplined on timing right now and just.
Speaker Change: Wait for stuff to kind of fallen rollout.
Speaker Change: Great. Thanks, guys. That's all for me.
Speaker Change: Okay.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Our next question comes from the line of Brian <unk> from D. A Davidson your line is open.
Brian: Yeah. Thanks, guys. Good morning. So what have you guys are seeing from a promotional aspect that these shows so far right I'm, assuming it's still competitive but maybe just some high level comments on what you've seen so far by category and maybe other dealers.
Brian: I think it's been a.
Speaker Change: Anthony you know what they did at the Atlanta boat show, what we've been doing at the boat shows, but I think it's been pretty much steady Eddie for.
Speaker Change: For the last year, I mean manufacturers are still being very supportive move.
Moving inventory they know they've got to be out there, helping specialty pushing the stated inventory through and I think they are all still doing that.
Speaker Change: Basically on the same level that they had been in that that's why we weren't expecting a whole lot last quarter or this past fall because there was really no incentive to buy in October when you get buy in January at the boat shows and still be ready for the boat show season. So I think it's just been pretty much on par with what it's been like over the last.
Speaker Change: You know year year, and a half of a promotion I think manufacturers are very committed to helping retail clean up the field inventory because that benefits us all you know moving forward.
Yes, I think it's been across the board.
Speaker Change: Every manufacturing not just our manufacturers our competitors manufacturers all of them are digging in with everybody.
Speaker Change: I haven't I don't see it slowing down at this point.
Speaker Change: But they are very helpful.
Speaker Change: Help facilitate putting deals together.
Speaker Change: Got you and what are you guys hearing from Oems on potential tariffs and how that may impact demand and margins overall.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Go ahead Jack.
Jack Ezzell: I think a lot of them have a wait and see sort of standpoint, I mean, I think there is too much.
Jack Ezzell: There's too much noise around exactly what things look like to try to do anything to prepare to counteract and I know through the over the course of time.
Jack Ezzell: Manufacturers have worked to diversify there.
Jack Ezzell: There are sources of product but.
Jack Ezzell: You know a lot of products are manufactured in the United States, which certainly helps.
Jack Ezzell: But I think it's just kind of remains to be seen on that.
Jack Ezzell: It's I don't want to say, it's not impactful meaningful or say that it's going to have nothing.
Jack Ezzell: No effect at all because it will depending on where the tariffs are and what their own but if you look at our boat whether youre looking at a pontoon boat.
Jack Ezzell: <unk> or center console fishing boats run about the majority of that pricing is in the engine.
Jack Ezzell: And in the raw materials to make them, but the aluminum the fiberglass all that stuff, that's where the majority of your pricing is just not like we're going to see 20% tariffs on.
Jack Ezzell: All of this stuff from all these different countries and all of a sudden boats are going to go up 20% because all the materials to build it went up 20%. It's just not a big enough piece of the boat to me, where it's going to have that big of an impact.
Jack Ezzell: And held there already so damn expensive now and it doesn't seem to be bothering people.
Jack Ezzell: Understood. Thanks, guys.
Jack Ezzell: Thanks.
Jack Ezzell: Okay.
Jack Ezzell: There are no further question at this time. This concludes today's conference call you may now disconnect.
Jack Ezzell: Okay.
Jack Ezzell: Okay.
Jack Ezzell: Yeah.
Jack Ezzell: Okay.
Jack Ezzell: Okay.
Jack Ezzell: Okay.
Jack Ezzell: Yeah.
Jack Ezzell: No.
Jack Ezzell: Yes.
Jack Ezzell: Yeah.
Jack Ezzell: [music].
Jack Ezzell: Okay.