OneWater Marine Inc. (ONEW) on Q1 2024 Results - Earnings Call Transcript
Operator: Good morning and welcome to the OneWater Marine Fiscal First Quarter 2024 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn to the conference over to Jack Ezzell, Chief Financial Officer. Please go ahead.
Jack Ezzell: Good morning and welcome to the OneWater Marine’s fiscal first quarter 2024 earnings conference call. I'm joined on the call today by Austin Singleton, Chief executive officer, and Anthony Aisquith, 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 call regarding OneWater Marine and its operations may be considered forward-looking statements under 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 would cause actual results and events to differ materially from those described in the forward-looking statements. Factors that might affect future results are discussed in the company's earnings release, which can be found on the Investor Relations section of the company's website and in its SEC filings. The company disclaims any obligation or undertaking to update the forward-looking statements to reflect circumstances or events that occur after the date that the forward-looking statements are made, except as required by law. And 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. We delivered a solid quarter despite the industry-wide return to seasonal selling patterns and moderated pricing. In an increasingly competitive environment, our team remained active, closing deals and driving same-store sales growth of 2%. We continued to outperform the industry, which market data indicated was down about 4% for the quarter. With the anticipated return to historical seasonal mix, demand softened as expected and customer preferences turned towards our larger boat offerings. Unit sales were flat in the first quarter, reflecting the effectiveness of our sales team and our strategic approach to inventory management. As expected, we continued to operate in a more competitive environment. Boat margins across the industry continued to reset during the quarter, and we expect this to continue through the first half of the year. Additionally, quarterly margins will continue to fluctuate with seasonality and model mix, similar to traditional pre-COVID year. As a reminder, we typically benefit from stronger margins during the summer selling months with a mixed shift to the lower ASPs with higher margins and increased unit volumes, compared to the slower winter months with the mixed shifting to higher ASPs with lower margins. Before I turn this over to Anthony, I would like to emphasize our strategy and our path to get to where we are today. When we went public in February of 2020, we had a solid growth strategy consisting of steady organic growth, coupled with a battle-tested M&A. COVID created a lot of disruptions, both good and bad. The transition back to historical trends has been challenging, but we believe we are approaching the new normal. As we move forward, OneWater is a fundamentally stronger company, having grown significantly with a more robust and diversified product offering. Compared to where we were pre-COVID, our baseline has been reset higher and we are off to a great start in 2024. Adding to that, we are encouraged by what we've seen at the boat show so far, giving us confidence in the coming year. Even as we navigate the challenging macro environment and inventory overhang in the industry, we are still very confident in our ability to deliver on our growth strategy. We are excited about the future as we continue to grow market share, optimize costs, enhance profitability through our higher margin businesses and pursue M&A opportunities to amplify shareholder return for years to come. With that, I will turn it over to Anthony to discuss business operations.
Anthony Aisquith: Thanks, Austin. Our team delivered first quarter same store sales growth of 2% supported by higher average unit prices as customers shifted their preferences to our larger boat offerings. We are excited about the boat shows we have participated in so far this year and are seeing strong demand for our manufacturer's newer models, which is a positive sign given our inventory strategy. We are pleased to report growth in customer orders at the boat shows that were not impacted by inclement weather. We are looking forward to the Miami International Boat Show in a few weeks, which is an important event for us and the industry. Our aggressive inventory management approach has positioned us well in an industry flooded with non-current models. We opened the year with a healthy model mix and will continue to work down non-current inventory where we can favor newer models. Inventory levels were up sequentially as is standard in the winter build months in preparation for the selling season. That said, our 24 weeks on-hand inventory continues to outperform the industry at approximately 38 weeks on hand. While boat sales are up year over year, total finance and insurance revenue was down moderately as we faced the challenges of higher rates. However, finance penetration during the quarter tracked consistent with our target of 60% of new boat customers financing a portion of their purchases directly with us. Credit availability and the use has remained strong and we feel good about where we stand today. And with that, I'll turn the call over to Jack to go over the financials in more detail.
Jack Ezzell: Thanks, Anthony. Fiscal first quarter revenue decreased 1% to $364 million in 2024 from $367 million in the prior year quarter. New boat sales grew 4% to $241 million in the first fiscal quarter of 2024, while pre-owned boat sales decreased 4% to $53 million. The increase in new boat sales was primarily driven by an increase in the average selling price of customers gravitated towards larger boats in the quarter. The decrease in pre-owned boat sales was due to a drop in brokerage consignment sales, partially offset by an increase in pre-owned sales from trade-ins. Revenue from service parts and other sales for the quarter decreased 10% to $62 million compared to the prior year. As a reminder, we sold Roscioli Yachting Center and Lookout Marine in our fiscal fourth quarter of 2023, which primarily drove the decline. Additionally, we saw a reduction in parts and accessory sales to original equipment manufacturers. These OEMs have reduced production of boats as a result of the elevated industry inventory levels. Finance and insurance revenue fell 18% to $7 million for the first quarter, primarily due to a decline in income earned on loans given the current high interest rate environment. Overall, gross profit decreased 17% to $91 million in the first quarter compared to $110 million in the prior year, driven by the normalization of gross margins on those sold. Gross profit margin fell sequentially with expected seasonality and a preference towards larger boats, partially offset by increases in margins on our service parts and other sales. We anticipate gross margins to continue to stabilize through the first half of the year as the cycle returns to normal. Though we anticipate this new normal will level off higher than what we saw prior to the pandemic, given structural changes in our business and the industry. First quarter 2024 selling, general, administrative expenses increased to $80 million from $78 million. SG&A as a percentage of sales was 21.9%, up 70 basis points from the prior year period. SG&A as a percentage of sales is typically higher in the first quarter, which is historically the slowest quarter as lower revenues reduce our fixed cost leverage. We continue to monitor the sales environment and proactively manage costs to optimize the business. Operating income decreased to $6 million from $27 million in the prior year period, and adjusted EBITDA was $7 million compared to $30 million in the prior year period. The decline in adjusted EBITDA was primarily due to lower gross profit and heightened floor plan borrowings and related interest costs. Net loss for the fiscal first quarter totaled $8 million or $0.49 per diluted share compared to net income of $11 million, or $61 per diluted share in the prior year. In the fiscal first quarter, adjusted loss per diluted share was $0.38 compared to adjusted earnings per diluted share of $0.73 in 2023. Turning now to the balance sheet. On December 31, 2023, total liquidity was in excess of $65 million, including $45 million of cash and additional availability under our credit facilities. Total inventory on December 31, 2023 was $707 million compared to $610 million at September 30, 2023. This inventory build is reflective of our preparation for peak selling season, and we expect inventory levels throughout the remainder of the year to mirror the seasonal patterns we have historically experienced. Total long-term debt currently stands at $440 million. Our net debt to adjusted EBITDA ratio is 2.6 times. Our liquidity and leverage position remain in a comfortable range and we are utilizing our cash to pay down our floor plan which carries the highest interest rate. Looking ahead, we are maintaining our fiscal 2024 guidance and expect margins to stabilize with seasonal norms. We anticipate same-source sales to be up low to mid-single digits, and we expect adjusted EBITDA to be in the range of $130 to $155 million, and adjusted earnings per diluted share to be in the range of $3.25 to $3.75. On capital allocation, our priorities remain unchanged, and we are focused on delivering organic growth and increasing our footprint through strategic M&A of top-performing dealers in the best boating markets in the country. As always, we are prudent in our approach and will allocate cash where we believe it will provide the most value for our shareholders. For our M&A deals, we look to utilize free cash flow as our funding source, which has historically given us the best return on our invested capital. As always, we remain disciplined in our approach when evaluating acquisition targets, and the pipeline remains active, and we are poised to act when the right deal comes along. This concludes our prepared remarks. Operator, will you please open the line for questions.
Operator: We will now begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. The first question comes from Drew Crum with Stifel. Please go ahead.
Drew Crum: Okay, thanks. Hey guys, good morning. On same-store sales, can you address how the plus 2% performed versus your expectations and the level of promotional spend you deployed relative to plan in order to achieve that figure? And I guess, will you need to be more aggressive here in order to hit your same store sales target for the year? And then I have a follow-up.
Austin Singleton: Jack, you want to take that or you want me to?
Jack Ezzell: Yeah, I would say we're fairly close to plan, where we expected it to come in during the quarter. I would say from a promotional activity, I would say it continues to be elevated similar to that we saw in the fourth quarter. I don't know that trends have really changed a lot. I think we continue to be very aggressive in the marketplace. Customers are still coming through doors. Initial boat show activity has been good, and we continue pushing on.
Drew Crum: Okay, perfect. And then on the service parts and other business, you mentioned the sales leaseback transaction contributing to the down 10%. Do you see the year-on-year declines moderating going forward? I think with lapping the retailer de-stocking, the comps would get a little easier, but you also have the cuts in production by OEMs, which you flag. So curious as to how you see this business trending over the next few quarters. Thanks.
Jack Ezzell: Yeah, for sure. I mean, it's going to be challenged for the year. I would expect the decline, right, because the December quarter is such a small quarter, I would expect that percentage decline to moderate some, like you suggest. But I do expect it probably to be, service parts and other for the year to be down, I don't know, if we're in that 5% to 7%, but it's going to be an impact, right, because we closed on the transaction right at September 30th, so you have a full year that you have to bake out.
Drew Crum: Okay. Got it. Thanks, guys.
Jack Ezzell: Thank you, Drew.
Operator: The next question comes from Craig Kennison with Baird. Please go ahead.
Craig Kennison: Hey, good morning. Thanks for taking my question. I think you mentioned the acquisition environment. I'm just, I'm curious. I imagine there are some dealers on your target list that are ready to get out in the current environment. Is it a more active environment today and how aggressive could you be if those who want to sell are ready to sell?
Austin Singleton: Well, like Jack stated earlier, Craig, we're going to use free cash flows. So that will put some limitations on it if the spigot just opened wide open. But we want to be strategic about what we're looking at doing. And so when you kind of look at the environment right now, one of the things is still trying to pinpoint what a true, not that multiple’s easy, because we have that set, but what we're paying a multiple on, we're expecting to see some margin decline. I don't know what -- how much more a dealer can absorb right now with inflated floor plan interest costs. There's a lot of dealers. I think where something that we thought was going to happen last fall is probably fixing to start happening more now because dealers have gone through the winter. Not only are they paying in a pretty double-digit floor plan interest rate cost, margins are continuing to drift down a little bit, but also cash flow is tight because of curtailments. And so it is kind of like the perfect storm. So I just, I wouldn't say that it's picked up any more than it was. Even the good and bad parts of COVID, we tended to add a deal or two to the pipeline a month. That was something that we would really consider. I mean, we get incoming calls and emails and stuff, probably a couple -- half a dozen to a dozen a week. And a lot of those is just stuff we're not looking at or even have any interest in. So I'd say it's pretty much the same. I wouldn't say it's increased. I think we might see some increase and there might be some strategic deals that we could pick up on somebody that's just throwing in the towel as they go into the early spring months and say, hey, I just don't want to do this again. Because I do think people are going to have to start reaching into their pockets, i.e., leveraging up real estate or whatever to cash flow to get to the earning months of April, May, and June. And then if we have a bad weather spring, that can even push it to where they really don't start to see that income and cash flow to build back what they put out till May, June, and July. So it's kind of like we're just -- we've got some things we're working on, but we're going to be very opportunistic as we move forward.
Craig Kennison: Yeah. Thanks, Austin. And then I'm trying to reconcile a weird dynamic in my mind, which is, retail looks to be somewhat in line with your own expectations, but it feels like every OEM has agreed it's actually time to cut production and help you and other dealers get right with inventory. It was just like a realization on the OEM's part that it's things are different or the pain is so severe for some dealers on floor plan expense that they had to do it. What do you think changed in the minds of OEMs when frankly retail is about what you thought it would be?
Austin Singleton: Yeah, so that's a really good question. When you look at retail and where we sit right now and how that works, we're able to probably be a little bit more opportunistic -- not opportunistic, but optimistic versus the OEMs because we have the inventory that's already on hand. So, they're having to replenish inventory where we have too much. So we sell through that inventory where they need to build boats today. And so as that kind of shifts, we have plenty of inventory. I mean, I think, Anthony, if I'm not wrong, if we just didn't order another boat from here on out, we'd have plenty of inventory to sell through probably a good chunk of the summer.
Anthony Aisquith: Correct.
Austin Singleton: And so when you look at that, that's why we're a little optimistic is because we have all the inventory on hand. So now all we got to do is perform and sell where an OEM is like, okay, well, I don't have anywhere to put my inventory. And so with that they can't build it if they don't have anywhere to put it. So I think that it's just been a timing and a lapse that's kind of happened that caused the OEMs maybe not to have that oh crap moment as much as it's a lag behind us. And so we feel we're in a good spot. When you talk about individual dealers and the promotional activity, I don't think that, we've been in the position that we're in right now today in, I mean, almost two decades, where you have floor plan interest costs in double digits for the majority of the dealers. Not only is that a big expense, margins have contracted. The floor plan curtailments pre the great ‘08/’09 weren't really enforced, so that wasn't an outflow of cash flow. As we've gone through this winter every month, dealers are out there having to cut checks for curtailments. Now that's marking the inventory to market, which is a good thing, it's a discipline thing. The industry needs that. But they're not used to that, they've never seen that, and they're not really sure how to navigate that. And so when you look at that and say, okay, where do they sit today, it's probably a pretty scary point for a large majority of the industry. They're looking at something that they're not used to having to deal with and they got to shift what they're doing to navigate this. And so, that's kind of -- it's just a tough spot for some dealers, I imagine, out there that are coming through going, okay, where's all my money? And that's going to go back to what we've kind of been waiting on, I think, a little bit is for the dealers that navigated ‘08/’09, sure, they can navigate this. I'm not being -- saying that they're doomed. It's going to be hard, and now is the right time. Maybe it is the right time to throw in the towel or to look for that exit strategy.
Craig Kennison: Great. Hey, thank you.
Operator: The next question comes from Joe Altobello with Raymond James. Please go ahead.
Joe Altobello: Thanks. Hey, guys. Good morning. Just to follow up on that comment you made, Austin, about non-current inventory in the industry. How long do you think it will take for your competitors to kind of work through that non-current?
Austin Singleton: Well, I mean, it really just depends on how strong this spring early selling season is. I think we're doing, we're seeing good things at the boat shows. Things are going really good at the boat shows for us. I imagine you've got several other dealers out there that are performing very well at the boat shows. People are coming through the door and they're buying boats. And so as that inventory kind of pushes through a good early spring selling season, we'll accelerate that. If you have weather or pockets that aren't as good, that can change things. And so, that's a crystal ball I just don't have. If you just wanted, Anthony probably has a better gut at that than me, I'd take a swag at it and say, that once we get to model your change going into 2025, that lag point of June and July, I think we should be in pretty good shape unless there's something out there that we're not seeing from a macro standpoint. Anthony, you got any feeling on that?
Anthony Aisquith: No, I think that we're heading that way. And we have a plan in place to ensure their inventory is right.
Jack Ezzell: Yeah, I think the only thing I would throw in there, Joe, is we had gotten some indication that dealer inventory is around 38 weeks. And so if manufacturers cut 20%, 30%, let's say 25%, right, if I just say, okay, well, then that reduces, and retail's flat, does that reduce it back down 25% and that gets them closer to that 26 weeks on hand, that two turns that historically the industry has seen? That sounds like some math you can get around that that would make sense assuming this season is a flat year.
Joe Altobello: Okay, that's very helpful. Maybe just to follow up on that, you talked about normal seasonality several times this morning. Maybe help us understand what you mean by normal seasonality because your business has changed a little bit since COVID. So as we think about the next three quarters, for example, how do we think about the cadence for the year from maybe a sales and EBITDA perspective?
Austin Singleton: Jack, let me jump in, then you can backstop it a little bit. I think, Joe, one of the things that the exercises that we kind of went through is we wanted to go back and look at ‘17, ‘18, ‘19 as individual years and seasonality by month and quarters and then also took an average of those three and kind of applied that to where we are today for the first quarter. And it's -- it was a really good exercise and it gave us a lot of confidence on where we sit today. There's a lot of things out there in front of us that we can't control on the macro that could change some things. But when you look at just how it used to be, and then what we're seeing as far as like the transition to bigger boats in the winter months, because those are a longer build time, just the way the customers buying patterns and not the urgency in the September, October, November to order smaller boats, they're waiting to the boat shows, it just -- it feels just like it was ‘17, ‘18 and ‘19. And I mean, we had great years at those times. Now, I do agree that we've shifted the EBITDA contribution to some of these higher margin businesses. So that changes it a little bit. But if you just kind of really look at the seasonality of new boat sales, which is still the predominant driver of our EBITDA and you go back and you look at it pre-COVID, take all the COVID noise out of that, it's a pretty compelling story where we sit today. And I think that's something that's got us optimistic, feeling pretty good. Boat shows have helped a little bit. But then, we got to really be careful and watch really tight, inventory and all this stuff as we move forward, because there's some things out there that could stump us that we can't control. So going back to what we kind of say all the time, we're controlling the things we can control and we're watching it really tough. And if this shifts, we're going to make big adjustments. But right now, if you look at what the seasonality was pre-COVID and take all that COVID noise out of it, it kind of feels like we're back to this new normal of this something very similar to what we saw pre-COVID. Jack, I probably rambled too much, but you can add to that.
Jack Ezzell: No, you pretty much stole all my thunder. I think the only thing I would add to when you work through the math of it, I think as I look out at consensus guidance, right, I think we got the front half of the year just a little too heavy and the back half of the year a little light. And when you think about that, right, you go kind of over the last several years with COVID, right, and scarcity of inventory, the first half of the year we accelerated so much, we shifted so many sales into that beginning part of the year. And we were selling pontoon boats and ski boats in the December quarter when that customer wasn't even really using the boat. Normally that was a spring and early summer boat buyer. And so now I think we're seeing those sales transition back and that's our expectation. But like Austin said, we're cautiously optimistic that if those sales don't come in the back half, or as we're going through the boat show season lining up orders, we'll adjust. But as of right now, we're constantly optimistic.
Joe Altobello: Okay, great. Thank you, guys.
Operator: The next question comes from Michael Swartz with Truist Securities. Please go ahead. Go ahead Mr. Swartz, your line is open.
Michael Swartz: Hey sorry about that, forgot there was a mute button. Just trying to understand, with regard to the guidance, I would assume there's some sensitivity to the path of interest rates, both on consumer demand, your flooring expense, F&I revenue. So maybe just help us understand, what exactly are you embedding in your guidance as it pertains to the path of interest rates over the next 12 -- six to 12 months?
Austin Singleton: Jack, I don't think we embedded a whole lot of [indiscernible] interest rates.
Jack Ezzell: I wouldn't say we embedded any material changes. I would say in our models, right, we get some yield curves from a couple different banks, including Truist, and we kind of synthesize those together, and we drop them in the model. So we're not baking in some additional shift or curve or a significant reduction, if that's what you're getting at. I think as far as retail goes, we are baking in that -- the pressure we've seen on the F&I line where we're just not able to make the spreads we've made in the past. So that's probably the biggest, I'll say it's more of a negative impact versus a positive. Should rates ease a little bit, maybe that gets better. But again it’s, as you know, it's a highly profitable business, and it has certainly can impact the model, but it's just a small piece.
Michael Swartz: Got you. That's helpful. And maybe just expanding, I think, Anthony, you had some commentary around the boat shows, and I think, we kind of look at the boat shows and compare them to a year ago and maybe if we can go back to pre-COVID, maybe back to the 2019 level, not so much concerned about what you're seeing demand-wise there, but just the level of promotional intensity maybe versus back then, and I'm sure the answer's a little different pertaining to model year ‘23 or model year ‘24, but is there any way you can just frame what discounting looks like this year versus maybe a normal year?
Anthony Aisquith: I think it's back to the way the boat business was in 2018 and 2019. Everybody's being pretty competitive and the manufacturers are being great partners and helping us move boats. As far as the volumes are concerned, I'm pretty impressed of what -- we've had some shows that we've had some, unfortunately, pretty bad weather in the northern markets that were affected. But the boats shows that we had in the southern markets were up over the prior year and continue to do very well. It is with the help of great manufacturing partners though, which we had that help in 2018 and 2019. During COVID, we didn't have any help, we didn't need any help. But as things get more competitive and as the inventory rises, they are staying with us, if you will, helping us make -- ensuring that we have great shows and they have been .
Michael Swartz: Great. Thank you.
Operator: The next question comes from Fred Wightman with Wolfe Research. Please go ahead.
Fred Wightman: Hey guys, good morning. You've talked for a few quarters now about working down your inventory to position OneWater for what you were seeing on the horizon in terms of slowing retail and some dealers getting a little bit heavy. Do you just feel like your mix of current versus non-current compared to what you're seeing in the industry today really positions you to do that? And can you maybe just talk about your ability to capture, maybe where that would show up? Is it more on the comp side? Is it more on the margin side? Like, where do you think that proactive approach that you've taken is going to be most visible?
Austin Singleton: Well, I mean, I think it'll show up everywhere. I mean I think one of the things that we're -- what's happening now comparing us, the weeks on hand, when you look at that, we don't really know the makeup of that 38 weeks on hand from an industry perspective. That's information we get out of the weeks on hand out of Wells Fargo, but it's not diced up between 22s, 23s, 24s. We don't get, we can't get that kind of detail out of them. But when you look at [38] (ph) compared to where we are, that's a pretty good competitive advantage that we have. I think the one thing that probably would give us a little bit of concern, the further we get into the year, the more of that 23 inventory that we have left is the harder inventory to sell. So like if you have, there's certain 23s that are like popcorn, you can sell just as many of them as you can get, but then you get into some other ones that aren't really the right boats. And I think that's a little bit of any concern that we've had in the last several weeks is, as we keep moving forward, it's going to get harder and harder to sell that 23. The hope is that means we're going to be selling that many more 24s to offset whatever kind of margin we're going to have to take, margin decline on this 23. So but I think it's going to show up in same store sales. I think it shows up in gross margin. It all depends on how quick we can work that down and then get into being able to sell 24s against 23s, then you don't have to be as competitive, especially on the new models.
Fred Wightman: That makes sense. And is there any way that you can just give some context to the pricing or margin benefit for those 24s versus the non-current stuff just to sort of help us think about what that blended margin opportunity could look like?
Austin Singleton: Well, I mean, I would think, Anthony, it's probably double, isn't it? If you take our 24s, put it against the competitor's 23, we could probably get twice the margin they're getting. If they're getting a 6%, we're getting a 12%. If they're getting a 10%, we're getting a 20%. If they're getting a 12%, we're getting a 24%. I would say it's close. Yeah, go ahead.
Anthony Aisquith: And it's very mixed by model. I mean, whether it's brand or whether the specific model is a recent renewal or it's a model that's a little bit more stale. So there’s a -- it's really hard to break down that number, Fred.
Fred Wightman: Okay. Thanks a lot, guys.
Operator: The next question comes from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead.
Noah Zatzkin: Hi, guys. Thanks for taking my question. You kind of touched on this a little bit, but in terms of you know kind of the levers that you have available to you should retail potentially soften, I guess first like internally, how are you thinking about those levers? And then second, like is there an expectation that that OEM incentives could step up where units not to be moving come spring and summer? Thanks.
Austin Singleton: Jack, I -- to the levers, we've covered this a lot in several of the quarters. We have a lot of levers to kind of pull themselves. When you go back and you look at what we had pre ‘08/’09, as far as our biggest expense on the P&L is employees. Most everything's tied to bottom line or the performance of that department. So, if things slow up a little bit, that kind of [rides its ship] (ph). There's a lot of other levers that we have from just different cost-cutting methods that we can do, just stuff that we kind of have in our playbook that it's been hard for us to really deploy some of those right now because the revenues have kept up. And so it's like, you go out and you make a bunch of cuts and then nothing slows up or doesn't slow up dramatically. Then you start performing bad from a service perspective to the customer and that just doesn't work. So we're watching that really good and we feel we have a lot of levers, but there are several levers that just automatically pull themselves based off the performance of the business. So we're confident in our ability, if things were to dramatically shift from a macro standpoint or something that's completely outside of our control. We have a pretty good game plan in place and ready to deploy that if we're needed. As far as, manufacturer's incentives, I can't answer that for the manufacturers. I think that if things slow up, they're going to have to. I mean, because again, you're looking at a dealer network that's out there and I'm really talking about the single off, one off dealerships that have interest on their floor plan that they've never seen before. It's a big number. And if they got a lot of carried over inventory, those curtailments eat a lot of cash flow. I've heard -- once somebody reached out to me about a curtailment holiday and they were like what does that mean to you and I'm like, well -- I've never heard that but a curtailment holiday is probably something that could be needed if it softens up because that sucks cash out of a dealer's cash flow for operations. So when you look at a slowing up, I mean, I sit today and I look, the dealers probably cannot afford to take any more promotional activity on their P&L. And that if they have to, are we going to lose some? I think so. When you look at the increased floor plan, all the other just incremental increases, but then you look at the cash flow that curtailments are sucking out of there also, and they're not making any margin if they have too many 23s and they're not getting a blend of 23s and 24s, that could be very devastating to a one-off dealership. One of the blessings that we have and one of the things that have been a fundamental competitive advantage that we think we have is that we can move inventory between a lot of different stores. So you can have one market that's hot, one that's not, we're moving product to the hot market. And so, that'll help us as we go through. But I would suspect, and -- but I can't speak for them, but if they slow up dramatically, the manufacturers are going to have to step up or they're going to lose a lot of their dealers.
Noah Zatzkin: Very helpful. Thank you.
Operator: This concludes our question and answer session. Thank you for attending today's presentation. You may now disconnect.
