Good morning, and welcome to Camping World Holdings conference call to discuss financial results for the third quarter of fiscal year 2023. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Please be advised that this call is being recorded, and the reproduction of the call, in whole or in part, is not permitted without written authorization from the company. Joining on the call today are Marcus Lemonis, Chairman and Chief Executive Officer, Brent Moody, President, Karin Bell, Chief Financial Officer, Matthew Wagner, Chief Operating Officer, Lindsey Christen, Chief Administrative and Legal Officer, Tom Kirn, Chief Accounting Officer, Will Colling, Executive Vice President, Good Sam, and Brett Andress, Senior Vice President, Investor Relations. I will turn the call over to Ms. Christen to get us started. Thank you, and good morning, everyone. A press release covering the company's third quarter 2023 financial results was issued yesterday afternoon, and a copy of that press release can be found in the Investor Relations section on the company's website. Management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks may include statements regarding our business plans and goals, industry and customer trends, inventory expectations, the expected impact of inflation, interest rates, and market conditions, acquisition pipeline and plans, future dividend payments and capital allocation, and anticipated financial performance. Actual results may differ materially from those indicated by these remarks as a result of various important factors, including those discussed in the Risk Factors section in our Form 10-K, our Form 10-Qs, and other reports on file with the SEC. Any forward-looking statements represent our views only as of today, and we undertake no obligation to update them. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as EBITDA, adjusted EBITDA, and adjusted earnings per share diluted, which we believe may be important to investors to assess our operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial statements are included in our earnings release and on our website. All comparisons of our 2023 third quarter results are made against the 2022 third quarter results, unless otherwise noted. I'll now turn the call over to Marcus. Good morning, and thanks for joining us for Camping World's 2023 third quarter earnings call. I'm joined in the room today by members of our senior management team, but participating on today's call is Matthew Wagner, Camping World's Chief Operating Officer, and Lindsey Christen, Camping World's Chief Administrative Officer. The last 48 months was the fastest and most profitable growth period our company has ever experienced. During that period, we generated over $2.4 billion of adjusted EBITDA. Look, while we recognize the cyclicality of our business, we also stand strong in recognizing how the business performs consistently over time. Early last year, we boldly forecasted the industry slowdown we saw coming. We immediately canceled over $900 million of new RV orders and further accelerated our shift towards the used business to help bolster revenue and gross profit. To start this year out, our company had over 16,000 model year 2022s in stock. Today, we have less than 100. Today, we're also sitting with less than 11,700 new model year 2023s, and we're on track to be around 9,000 by the end of December, a significant improvement year-over-year. And with the new model year 2024 is quickly arriving, the cost of those units in our core segments are coming in more than 12% less, and we must remain steadfast in this model year elimination strategy. The execution of rigorous inventory management, however, comes at a short-term cost: higher wages to maintain the stability of our top performers, higher digital marketing costs to generate the activity, and compressed front-end margins. This management-mandated strategy will likely result in fourth quarter, historically, our industry's toughest quarter, with an EBITDA in the neighborhood of breakeven to slightly negative. Our investment, in that, our team feels, is absolutely necessary. We believe this prudent approach to managing our inventory sets us up for market share and earnings growth in 2024. As a management team, we are adamant that this strategy will set us up for the next 48 months. We want to materially outpace our competitors and gain market share. We want to build strong alliances with manufacturers around the proper inventory levels and forecasting for them and us. We want to maximize the return of working capital to continue our supercharged acquisition plan. We want to increase the velocity of our turns in this higher floor plan interest environment. Lastly, we want to continue to build our active buyer file to bolster Good Sam's unprecedented growth. Speaking of Good Sam, our high-margin recurring revenue business, it set records in many categories. It will be the first time in its company's history that it exceeds $100 million in contribution to the overall business, driven by our roadside assistance product, extended warranties, and vehicle insurance. Our leader, Will Colling, has done an outstanding job over the last three years of streamlining the operation, launching the company's first loyalty program, and renegotiating agreements with partners. We feel strongly that the Good Sam products and programs are both undervalued and underappreciated for its contribution and consistency to our company. When I think about our company's most greatest achievements, I land on one in particular: the tenure and strength of our team. In order for our company to achieve the growth I expect, we must continue to build, train, and promote our leaders. Going forward, you will be hearing from more of them. New and innovative ideas, fresh perspectives, and a bench that is built for several decades. Truth be told, it's the most exciting part of my assignment here. Most of you know Matthew Wagner, our Chief Operating Officer. For a little color before I hand the call over to Matt, Matt has been with our company since 2007. He began as an intern, and over the last five years in particular, has been one of the most instrumental members of our team, and I could not be more proud to turn the call over to him to cover the financial results, as well as his perspective on the future of the business. Matthew? Thank you, Marcus. Within the quarter, we sold over 32,300 units, an increase year-over-year, including 17,000 used units, a record for the third quarter. Our sales team absolutely crushed it. The used business continues to thrive, and while we are focused on growing our market share of the used business by adjusting our procurement and remarketing efforts, we believe that we are positioning ourselves to substantially grow our market share of new units in 2024. As a reminder, we pivoted hard into the used business a couple of years back. This was a direct response to the significant price increases of new model year 2022 and 2023 units. During that time, we informed our manufacturing partners that RV consumer demand is highly influenced by price changes, both up and down. Over the last few months, we have worked extensively with our key manufacturing partners, such as THOR, Forest River, and Winnebago, to identify segments and price points that will yield a greater volume of new RV sales while maintaining healthy margins. Three months ago, we informed the market that we started to see an improvement in the year-over-year trend line of same-store sales. At that time, we saw the affordability curve beginning to bend. As we pushed that curve further into the quarter, we established greater evidence of the favorable impact of these price modifications. Throughout the fourth quarter, we will be focused on cleansing our inventory, refining our used procurement, and setting the stage to grow our overall market share in 2024. Our performance for the third quarter is as follows: We recorded record revenue of $1.7 billion, a 7% decline from last year, driven primarily by lower new unit volume and, more importantly, lower ASPs. Good Sam, what we believe is our most stable and predictable business unit, posted record revenue and gross for the third quarter with $50 million in revenue and $40 million of gross profit. A portion of that improved gross profit resulted from the successful negotiations with vendors of our roadside assistance business. Total adjusted EBITDA for the quarter was $95 million. While we experienced compressed margins on vehicle sales for the quarter, we were able to offset some of that gross profit through the recognition of additional finance income through improved performance on finance product cancellations. We ended the quarter with roughly $260 million of cash, broken up by $207 million of cash in the floor plan offset and additionally, $53 million of cash on our balance sheet. We also have about $388 million of used inventory, net of flooring, and $203 million of parts inventory. Finally, we own about $160 million of real estate without an associated mortgage. I'd like to turn the call over to Lindsey Christen, our Chief Administrative Officer. Lindsey has been with our company since 2008 and started on the legal team under our President, Brent Moody. Today, Lindsey oversees our entire human capital efforts, our training organization, real estate group, our M&A process, and our legal department. Lindsey? Thanks, Matt. We've been adamant over the last 15 months that we would be thoughtful and forward-looking when reviewing SG&A options that impact our workforce. We're planning for leaner operations in our manufacturer-exclusive locations, as well as at a number of our planned acquisitions, which have smaller footprints. We also believe we can run our existing stores more profitably in the current economic climate with a realistic view of the impact of gross profit reductions. As a result, we made the difficult decision at the end of the third quarter to reduce headcount by over 1,000 people, around 7% of our workforce, and right-size variable pay plans, resulting in about $60 million in annual SG&A savings.... We will continue to balance investment in our workforce and growth. We have and will continue to invest in our employee experience and aim for best-in-class training, wages, and benefits. We have and will continue to close locations that haven't performed as expected. During the third quarter, we closed two retail locations and a distribution center. We also identified up to seven locations that were underperforming and will be closed in the fourth quarter. We have a corresponding plan to eliminate the real estate obligations for these closed locations through sale, sublease, or lease termination. We've also been on a robust acquisition path. Over the past year, we've added 16 locations and continue to add to our pipeline, including a 12-store chain we announced last week. While some deals fall out of our pipeline during the diligence process, the overall influx of potential deals remains very active. All in, we hope to end the 2024 calendar year with no less than 220+ locations. Marcus? The willingness to take decisive action and mobilize quickly to execute is what makes our management team and our company unique, nimble, decisive, and effective. With the last 48 months having generated over $2.4 billion in adjusted EBITDA, we are up for the challenge for the next 48. It is our expectation that in 2024, total company revenue and same-store unit sales will be positive and that Good Sam will continue to improve top line. Additionally, we expect overall company gross margins will be flat to slightly positive. With our disciplined approach to managing inventory, reductions in expenses, elimination of underperforming assets, it is our expectation to improve our SG&A as a percentage of gross by no less than 2%. These items, coupled with our store count growth, could result in an earnings increase in excess of 30% in 2024. We'll now turn the call over to the operator to lead Q&A. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question we have is from Joe Altobello of Raymond James. Please go ahead. Thanks. Hey, guys. Good morning. So Marcus, you mentioned price elasticity earlier. How are you thinking about pricing over the next few quarters? As you're well aware, the indication from manufacturers is that total pricing on model year 2024s, you know, could be down mid- to high singles and maybe even low doubles. Is that how you see that, or do you think we need to see a steeper decline in order to drive demand growth in 2024? Morning, Joe. This is Matt Wagner. I'll field that one, if you don't mind? Sure. Great question, and it's been a topic that we've heavily discussed on these calls, as well as at a number of post earnings calls, to walk through our general mindset related to price elasticity within this marketplace. I can tell you that we've been super proactive as a management team, monitoring every price modification we're making and the resulting demand impact. Where you could look at our used margins, even this past quarter, and recognize that we did face some compressed margins. However, it of course resulted in positive same-store sales. Conversely, on the new side, while we were down, we continued to see that same-store trend line continue to improve. That same-store trend line is really a by-product of that second derivative, that change of rate of the change of rate. Where we saw our new same-store sales continue to improve as we started to toggle the prices beginning in July, which is when we first started to speak to the group, when we had our earnings call in August, about the results we were seeing in July, and that continued to transition through August, September, October. So really, Joe, we've been working steadfastly with the manufacturing partners to ensure that we're starting to target these right price points, and it's going to vary based upon the segment. I can tell you that in certain entry-level price points, especially travel trailers, we're seeing some price concessions to the tune of 15%+ in some cases. Yeah. There's other cases where we're, at the current moment, just seeing, say, high single digits, give or take. We're being as particular as we can to target those certain segments where we know it's going to yield an improvement in demand as we head into next year. That's really where we're continuing to place our focus on driving ASPs down. Yeah, Joe, you know, what's interesting about it is that we have always been consistent that the lower the price is on our in-stock units, the wider the funnel is to the addressable market. And I think when we look at growing our file to bolster Good Sam, we know that every single $1,000 that we drive down ASP, the funnel of available buyers equally gets wider. And so as we look to gain market share, turn our inventory faster because Tom and Karin require us to, and then realize that we can address some of the other issues that are affecting consumers, like higher rates or whatever it may be, that that's really our path to success. We do not believe that demand for this lifestyle and customers' enthusiasm from staying in the lifestyle has changed at all. But when we look at interest rates and we look at rising costs that have existed over the last 24 months on units, well, that's a suppressor itself. And so we want to unlock that as fast as we can. Used clearly accomplished that, but Matt and his team have been instrumental in understanding that in working with these manufacturers, lower priced units means more volume. In order for us to get there, though, we have a little bit of work to do in the next three, four, five months to ensure that going from $43,000 as an average ASP in the last couple of months, we need to get down to, like, $38,000-$39,000. We are driving towards that target. Keep in mind that a lot of people are not going to forecast this properly. When you drive down ASPs, you will ratchet up volume, but you will have less revenue. That's okay for us. We're looking for transaction count, because transaction count leads to more service, more F&I, more Good Sam, more parts, et cetera. So we want to tell everybody upfront, this is going to be a ASP widen the funnel volume game, and that we will make up the revenue drop from declining ASPs with incremental accretive acquisitions. Very helpful. Just one point of clarification. I think, Marcus, you mentioned that you could see earnings growth north of 30% next year. Are you thinking EBITDA or are you thinking EPS, just to be clear? I'm gonna go ahead and, you know, not try to get pinned down on anything specifically. I'm thinking adjusted EBITDA, and obviously, if adjusted EBITDA is growing, so are all the other numbers. And, you know, with our A and B shares, it gets a little wonky around how we look at EPS, but I guess the simple answer is we expect growth in all of it, and we said no less than 30%. You're right. Thank you, guys. The next question we have is from Tristan Thomas -Martin of BMO. Please go ahead. Good morning. Just right off the bat, can we talk about your expectations for stock calendar 2024? I think last quarter you said, 370-400 industry shipments. Is that still the case? Are you asking about just wholesale or wholesale matching with retail? Because we think there's a very interesting dynamic there, that story needs to be told. Honestly, whatever story you want to tell, I'd like to hear however you're looking at it. Great. Great. Morning, Tristan. This is Matt again. You are correct. Last quarter, we did speak with... I think Alice had asked that question, and we were suggesting that retail could end up anywhere in that 370-400 range in particular. I would maintain that that still holds true on the wholesale side. I think that wholesale could honestly end up anywhere from 370-400. Insomuch as there's been such a rapid destocking on dealers' lots, where I believe the manufacturers are very well positioned to actually yield the opportunity to replenish the lots of dealers in certain segments and price points. In terms of retail activity, however, I could see retail perhaps mirroring that 370. I do not necessarily see retail going up beyond that. I think it could be in a range, though, perhaps of like 360-370 over 2024, which we're taking this each moment by moment, but what we are confident of is our ability to yield more market share heading into next year. And when we look at the overall market, we're saying new and used, which I know oftentimes these questions are just focused on the new market. Within the used space, I don't know that anyone's really reporting on the fact that our market share has grown so considerably, where we're at all-time market share levels between new and used combined. We're nearly touching 10% of the overall new and used marketplace, which we are laser focused on growing that, in combination with our efforts on used and continue to enhance the new side. Okay, thank you. And just one more. You called out 9,000 model year 2023s, or that's your target at the end of the year versus 16,000 2022s. How does that 9,000 compare to model year 2020 or model year 2021? That's an excellent question. Obviously, model year 2020 was a little wonky because we were in the middle of the COVID process, and with the manufacturer shut down, the 2020 and 2021s exited at a much faster rate because production had been hampered so dramatically. What we're using as a benchmark for us, and we clearly know we have a greater opportunity to improve, is how do we start out the beginning of 2023? We had over 16,000. It's our goal to be under 9,000 as we end the year, hopefully starting out, you know, at almost half of the aged inventory we had a year ago. The good news is, is that the number of 2024s that will be on our lot as a percentage of the total will be materially higher than the number of 2023s we started last year. That's what gives us confidence to, quite frankly, have a slightly higher overall gross margin. I think the piece that we really want to focus on is while Matt's forecasting 370 in overall wholesale shipments and retail in the same neighborhood, it is predicated on driving down those ASPs. And I think the manufacturers, in working with them, have finally realized through the data that we've provided over the last 90 days, that that's how you're going to drive replenishment, you know, increasing turns, et cetera. Well, that's why we are so adamant, and we're asking the market and our holders to really understand and trust us in this process over the next 60, 90 days to continue to accelerate the exit of those old model years, because we're replacing a brand-new unit... with the same make, model, floor plan at a significantly lower cost. That's really what's driving this. We believe that the investment in liquidating these 2023s over the next 90-120 days is going to pay massive dividends in 2024. Tristan, if I could even back up to your initial question too, to clarify one thing. There's kind of a false corollary of ever trying to compare 2020 model year and 2021 model year to 2022 and 2023 model year. As such, the manufacturers changed their cadence of model year switches in 2021. So they used to change the model year in April and May. However, when they introduced the model year 2022, they actually had introduced that in July. Ergo, you missed a solid three months of selling season. So really, this is kind of a totally new set of norms that we're establishing, where we feel really good, given that we really just have two model years to compare with the progress that we continue to make on this front. Awesome. Appreciate all the insight. The next question we have is from Noah Zatzkin of KeyBanc Capital Markets. Please go ahead. Hi, thanks for taking my question. Just maybe one from me, and you mentioned expecting gross margins to be flat to slightly positive next year. So in terms of vehicles, particularly given ASP is coming down, if you could provide some color on your thoughts around vehicle gross margins and, and kind of how that dynamic will impact your ability to kind of hold margins there? Thanks. Sure. I think what... This is Tom Kirn, the Chief Accounting Officer. Just piggybacking off of what Matt stated earlier, I think moving out of those 2023s, as quickly as we can is really going to help bolster our margin position on new heading into next year, where we should be able to maintain somewhere in the neighborhood of where we have historically on those new margins. I think we feel very, we feel very strongly about that. On the used side, you know, I went to Matt in the quarter, and we, we were going through aging, we were looking at some of the stuff that was, you know, sitting on the lot for one reason or another, and we said, we looked at each other and said, "Look, we have to get the turns up. That's actually not how it happened. You went to Matt and said, "You better clean up your inventory." It was that clear. So many words. Yeah. Yes. So, that said, while we do see some of that margin compression on the news or on the used side, in Q3, and we may see some of that in the short term, we are confident in our ability to start procuring at these new price points as we kind of work through updates to our evaluation tools and our used procurement policy heading into 2024. Very helpful. Maybe just one more. I think you mentioned a 7% headcount reduction at the end of Q3. Did I hear you right, that should be viewed as a $60 million kind of annualized SG&A benefit? Yeah. Hey, this is Lindsey, Tristan. We are looking at that savings to be combined with total headcount reductions, as well as the modifications we made to variable compensation plans. It was, you know, a difficult decision, but the right thing to do for the overall health of the business. Thank you. Thanks. The next question we have is on Brandon Rolle of D.A. Davidson. Please go ahead. Good morning. Thank you for taking my questions. Just first, on used inventory, what percentage of your used inventory still needs to be adjusted to the new, the new versus used pricing spread that you guys are looking to achieve? I think the way that I'm thinking about it, and Karin and Tom have been instrumental in providing the roadmap, is that they are not satisfied with where our turns are. We've historically been in that four range, and when we made the decision to go for it, to really try to grow that overall business, they dropped down below 3.5. A level that, you know, Karin and Tom said: Look, I'm comfortable with 3.5, 3.75, but I want to see a quarter turn better improvement. So Matt and I, with the rest of the sales organization, have some wood to chop. We probably have about 700-800 units that we need to flushed out of the system. In a lot of cases, it's not about the fact that we own them wrong, it's about the fact that the accounting team wants the cash brought back into the system, and then allow that cash to be redeployed in the first quarter by bringing in those units from consumers at a lower cost. So they're looking for a quick 60, 90-day swap. As we add more stores, I would expect that our overall used inventory will get back up to the same total number, but on a same store basis, we'll have brought that down by probably 6% or 7% to get that turn back up to where they really want it, which is north of 3.5. Actually, Matt, you'd probably say closer to four, is what they've been telling us, right? Ideally, yes, but we're also in such an environment where we're going to just follow the money trail. Where if we understand that we can get a better yield on some of these used segments compared to some new segments, depending upon what's happening in the new marketplace, we're relatively agnostic to whatever needs to happen, Brandon, to fulfill that demand that exists out there. So there might be these moments which I know Karin and Tom put me under a lot of pressure to actually make sure that we clear these KPIs, but in certain environments, 3.5 turns is pretty damn good. At least I'm looking at- That's our sales pitch to the accounting team. It's pretty damn good. They haven't necessarily bought it yet, so we're trying to find that middle ground. What we have acknowledged is that we have some improvement to be made. The good news is, the gamble that we took, the very calculated strategy that we took to grow the used business, really paid off in the last 24 months. And if you look at the overall margin profile of the business, it has really benefited from the total gross dollars. If you look at the gross margins on used in Q3, you can see that they're lower. But that's a decision to inflict a little bit of pain on ourselves to accelerate that flywheel, to get that thing turning. I would expect that suppressed margin profile that you saw in Q3 to linger for probably another 90 days, and quite frankly, it could dip another 1%, because we're making the decision to bring our cash back in by year-end and then redeploy that. We know that whatever margin we give up in the next 90 days, we will more than make that up in the following 180-270 days. Great. And then just on your industry wholesale side, what gives you confidence that dealers will wanna take on inventory above retail levels in 2024, given current floor plan rates? I understand there's been some destocking, but it seems like above a 1-to-1 ratio is a little tough in this environment. Look, I think when you look at overall inventory across the entire channel, we're probably slightly understocked from where we need to be. But the key to that $370,000 number in our opinion, and the manufacturers have already started to address this, and I include THOR, Winnebago, and Forest River in that equation, is understanding that ASPs need to be driven down, and the way you drive ASPs down is you drive actual cost of production down. There's been a lot of discussion around that, and I wanna be clear that both the dealers and the manufacturers aren't going to just drive ASPs down by decontenting. The customer, the consumer, cannot be the loser in that equation. Efficiency, proper forecasting, proper ordering, both on the raw material side and the dealers taking them, is the key to that. We also feel confident that our company sets the pace, and that's really, really important. And we believe that we may be necessarily contributed to the slowdown by saying to everybody, "Look, we see these trend lines moving." Matt runs regression analysis all the time, and we can see where the things are going. We wanna continue to be a bit of a bellwether for the overall industry. We're telling everybody now, yes, rates are a little bit higher. Yes, it's true that the consumer is more sluggish. But we also know that buying an RV and financing it anywhere from 180-240 months is still the most affordable alternative for families to take a vacation over any other activity they could provide. We just have to make it more affordable for them, and that's on us to do that. Great. And just lastly, I know you want—you said you wanted to take down pricing about 10%, from where it is right now. I know you've had conversations with OEMs. What are they telling you about their conversations with suppliers, and who ultimately do you feel like needs to give back a little margin here to help out the industry? Thank you. Brandon, I feel like that's a setup question. Or it's a leading question, I should say. I think that the manufacturer's been exceedingly effective at towing that fine line of knowing that they need to protect their margins, and they need to maintain healthy margins because they need to continue to innovate and grow, while at the same time, decontenting products. However, not to the extent whereby consumers are gonna be turned off by it. But finally, and most importantly, where I saw your question going, they need to put a tremendous amount of pressure on suppliers to ensure that we're cleansing ourselves of products that could still be lingering from some suppliers well over a year and a half, two years ago, which I think, that's unfortunately something that we need to work together between the suppliers, the manufacturers, OEMs, and the dealers. We have to understand that the dealers were the first to feel the pain and pressure, us, in particular. The OEMs started to feel the pain and pressure after us about last year, and now, frankly, just continues to go up this vertical supply chain. So I think the quicker that we reconcile whatever sort of lingering overpriced supplies exist out there in all these funnels, I think the better off we'll all be. Look, let's, let's even dissect it a little bit more. When you look at the overall manufacturing process, you segment it into towables and motor homes. And we know that on the motor home side, you know, that's a, it's a bit of a tough road for motor home manufacturers because they're dealing with OEMs who are providing chassis, who could potentially continue to drive up prices, having to deal with labor issues, the UAW, all those things. The core meat of the market for our company, while we still are a big part of the motor home business, is on the towable side. And if you start to break it down and dissect how that product is made, it starts with the frame. And whether it's the frame, whether it's furniture, whether it's slides, whether it's appliances, those things that I just mentioned make up the bulk of the unit. I think this industry needs to continue to diversify its sources of those products to ensure that there's diversity in options for those manufacturers. And whether manufacturers are starting up their own frame business or there's other entries into the market, we have to figure out, as an industry, how to have a more healthy environment so that competition drives innovation, so that competition drives down prices, so that competition drives down options. Those are things that we believe we have to see as an overall industry. The part that we play in that? Well, we believe that as the largest provider of products to the consumer, we have to have a little bit of a heavier hand, which is why we're in the furniture business, which is why we play a big part in the appliance business, which is why we wanna work with manufacturers on how to re-engineer and re-innovate these products to make them more affordable for consumers for one simple reason: We know that more consumers will enter this lifestyle, the more affordable we make the product. Rates are gonna come back down at some point, for sure, but the product itself has to be more affordable. If you go back and look at what it was 36 months ago, we may not get back to that... Even out of a normal inflationary environment, but we got to come off where we were, and the suppliers are a big contributor to that. Great. Thank you. The next question we have is from Craig Kennison of Baird. Please go ahead. Hey, good morning, for taking my question. Matt, you mentioned your affordability curve. I know you have good insight into consumer behavior, and I'm curious where the sweet spot is today in terms of a monthly payment and how that compares to, you know, last year or 2019. That's a great question, Craig. That is exactly what we've been preying upon, because we've recognized that consumers aren't necessarily turned away from the RV industry right now, rather, it's quite the opposite. We continue to see relatively stable leads actually being submitted and general interest maintaining a certain level for the entirety of this year, which we were kind of flummoxed to start out the year saying, "Okay, why aren't these consumers actually converting once they arrive?" And we realized it's simply just initially when the consumers are seeing the payments, they're ultimately just not having a willingness to put that down payment to buy. So our e-lead conversion this year has been down considerably as a result of these consumers not necessarily having a willingness to put the money down. Historically, we try to target that $200-$225 monthly payment, and frankly, that monthly payment has gone up based upon our overall product mix. We've been working diligently to get that back down to where it once was, which is going to be an assortment of products that we're gonna be able to retail for $20K and under. And that's where we're gonna continue to focus more and more of our efforts, because we've seen those consumers that used to be able to afford that on the new side, just transition over to the used side. But frankly, some customers still would prefer new over used. Yeah, we have to find a balance, though, Craig, of making sure that we don't ever abandon any one segment. Right? There are other segments, and so whether that's the destination trailer, that's a housing alternative for people, or whether that's an entry-level fifth wheel or an entry-level C class. As we look at the various segments, we think that there needs to be ASP declines in all the segments, starting with diesel, to gas, to Cs, to fifth wheels. This isn't just gonna turn into an industry that just sells inexpensive trailers. But as we want to bring new entrants into the market, as we want to attract new people into the flywheel of this great lifestyle, we have to do it in the most affordable way. I don't know if anybody knows what the word flummoxed is. I think I learned that, Craig. Do you know what it is? Matt just used that word. I'm hoping that's something that's gonna make us money. I don't know what that is. Yeah, I'll Google it, but, That's the problem with having Matt on these calls. I always feel stupid. Oh, that's great. Very helpful. Appreciate that. And maybe just to follow-up, as you sort of run the math on model year 2024, given lower prices but higher rates, do you think you'll come out with a lower monthly payment next year versus this year? And is that a factor in your retail outlook? It is a goal. I, I have always been, and if you look at our advertising across all the different mediums, we are a payment retailer. We are not a price retailer. We do not want to have a race to the bottom to sort of all of a sudden have compressed margins for us or any other dealer. Everybody needs to make money in this process, and so when we look at it, we look at $180, $210, and $240 and the payment strata and really try to work towards a $5, $10, $15, $20 a month, excuse me, a day payment option for people, going from the entry-level towable all the way up to the motorhome. It is an absolute goal of ours as we build the matrix, that we think about where the prices need to be, and we connect that into the formula where the interest rates are and know we have to hit that number. That's how a consumer buys. They buy on monthly payment. They don't know if $17,950 is a great deal, but they do know if they can afford $189 or $239. We start bumping up over $350, $400, it becomes a bit of a head scratcher for people. We need to take the head scratching away from the fun that they're going to have in being in the RV lifestyle. Head scratching. That's simple. Thank you. Okay. Head scratching is easier than flummoxed. Okay. The next question we have is from Daniel Imbro of Stephens Inc Please go ahead. Yep. Hey, good morning, everybody. Thanks for taking our questions. Marcus, I wanted to follow-up on maybe the real estate strategy Lindsey talked about. You mentioned that you consolidated a few locations, you found some more across the portfolio. Can you provide any more color on what those are? Are those maybe recent acquisitions that weren't as strong as you thought? Were those legacy stores that just could be optimized? And then can you marry that with the M&A strategy? You know, the pace has slowed, but you're still doing big deals. Can you just talk about the portfolio optimization and maybe how you see that evolving in the next, like, three to six months as you work through these industry changes? Yeah. Well, first, maybe I'd like to say, I think the pace really hasn't slowed a bit. I think we've been on a pretty aggressive acquisition march, and been opportunistic about those deals that we focused on. It's true that some of those deals have fallen out of the pipeline for various reasons during the diligence process. That's pretty typical. When we looked at finances, culture, leadership, for various reasons. When we looked at the stores and how they were performing, however, in our own mix, we looked at really consolidating and tightening up certain markets. We were making sure that our operating structure and costs were right, and that we were able to serve the RV consumer really well in that market. ... On digging back to your consolidation question on, and store closures and how we kind of analyze those, it's not always about, you know, the specific kind of underperformance of those stores. We look at a market taken as a whole, where we might have a few stores in a general area, and as neighborhoods change, as population centers shift over time, where we've invested in a community for a number of years, things change. And we take a look at what the market looks like and where we want to concentrate our efforts and our resources, and if it makes sense from an SG&A perspective and from a cost perspective to do it, we'll do it. Yeah, I wanna be clear about one, you know, one thing. We set a target to get to 320, you know, over the next four to five years, 320 locations, and that is an absolute mandate to march towards. But we will not do deals just to get to 320. And the way we balance it is that Matt and I sort of sit on one side of the table looking at the opportunities because we're aggressive growers, and we wanna see the company grow, and we're grow, grow, grow. And then Lindsey and Tom are the balance of that, where they get in the car, a different car than us on a different day, and they visit the same acquisition. More often than not, they call and tell Matt and I like: "Hey, no, we're not doing this deal." We think that that dynamic inside of our company is the key to us doing the right deals while maintaining a very aggressive growth strategy. In a lot of cases, right, it's a different lens that we look at it. And Matt and I look at the market share opportunity, the brands that they carry, the facility that they have. Tom and Lindsey go in and look at what are the underlying financials? What are the risks associated with it? What's the culture look like? Lindsey does a deep dive with the people. You know, what's the overall environment? And if both parties don't feel comfortable that all the boxes have been checked, we fall off. I think also we realized that as we went through the year, the deals got better, and so we have to be smart. Unfortunately, to some of the potential sellers, the deals got better, and if they were unwilling to adjust to whatever was happening in the overall market, then we had to necessarily... We had to take a pass, and we had to go pick up other things. A 12-store chain that's going to generate, in our opinion, over a mature period of time, could be $150 million-$200 million of revenue. But when those stores are a little bit smaller with a lower fixed cost, we think those things will perform at a higher EBITDA margin, which means for our shareholders, we're delivering a better return on capital, which is the mandate that they expect from us. Got it. That that's helpful. And maybe if I just couple that with the cost outlook. I'm talking about SG&A here. You came in in the high 70s% of gross profit. I'm assuming you're closing maybe less profitable stores, and I think you mentioned $60 million of lower compensation. If we see a return to unit growth, we see gross profit dollars, you know, go in the right direction, and you have $60 million of lower comp, could we see a low-to-mid 70s as a percentage of gross profit again? Our goal since we went public and even prior to us going public is that the optimum level is for us to be in the 72%-73% range of SG&A as a percentage of growth. And our EBITDA margin goal has always been 8% over time. We've achieved those things over time. We're struggling right now between the balance of holding on to what we believe is the best talent in America and compressed margins. And as a management team, and we understand that we may, you know, get beat up a little bit for this, we believe more in investing in our people and holding on to our people, and providing better wages for our technicians and better wages for our management, as we are also a growth company. We will end the year probably somewhere around 81%-81.5%, driven largely by compressed margins. Normalize the margins, we would be probably in the 76%-77% range because revenue's down. As we look forward, we know we have to take no less than 2% of those costs out. It all cannot come on the backs of our people, and it will not. We've renegotiated leases. Tom and Brent have been very successful in that. We have eliminated locations. We all collectively have been successful in that. We've unfortunately had to terminate certain marketing relationships that were big, sticky, fixed costs, and that contributes to it. But we don't want anybody to leave this call thinking that we're going to make more money on the backs of our people. We're gonna make more money by driving revenue and then adding costs back in on the people side in a more variable way. That's always been our model. I think COVID's explosive growth probably made us a little sloppier than we should be. We held on to people longer than we should be, and we always wanna be that employer of choice. I tend to be a bit of a softie for things like that. This group basically said to me in September: "Okay, softie, party's over. We got to make some changes." So that's why we went through a significant reduction in headcount. We always do it seasonally around this time. I think the total headcount reduction was north of 1,600. The reason that Lindsey and Tom outlined 1,000 is 'cause some of those folks are gonna come back as the spring selling season returns. So we did not wanna have people pro forma a number that was anything other than that. Understood. So just 80%-81% and then a couple hundred basis points down year-over-year, is how, is how you think about the next 18 months playing out, Marcus? Yeah. I mean, when I, when we say no less than 2%, like, our goal is to get to 77, 'cause we know margins are still not gonna be as good as we want them to be next year. But that, that, how you laid it out is a good goal. Understood. Appreciate the color. Yes. Thank you. The next question we have is from James Hardiman of Citigroup. Please go ahead. Hi, this is Sean Wagner in for James. You've talked about kind of your breakdown of aged inventory, aged new inventory. Do you have an estimate of where the rest of the industry is as far as model year 2022 and 2023 inventory as a percentage of total? ... It's tough to gauge the entirety of the industry, but I can tell you, based upon a number of the deals that we are taking a look at right now, most of our competitors in are far less advantageous position compared to us, and that's really the only insight that I could share at this point. But we feel really good about where we're, we're trending right now, where we continue to trend, especially in the landscape that we saw last year, and based upon our conversations that we're having with manufacturers, we head into this upcoming year. I'm gonna be a little more transparent than that. We know that inventory aging is our path to accretive and opportunistic acquisitions, period, end of story. And if we look at some of the ones we've done recently, it unfortunately is because of mismanagement of inventory. The only reason we have 100 22s on the ground is 'cause we bought dealerships that had 22s on the ground. That inventory is largely not anything that we purchased ourselves, we purchased it through acquisitions, and that was a factor in the goodwill analysis of that transaction. As we look to make more acquisitions, please understand that that 22 number could potentially grow again, but they're coming in at the appropriate values. Our transactions today are anywhere from 65%-70% of the original invoice value, is how we're approaching those, transactions where the acquisition is gonna be made. So if you scrape our data and you see that the number went from 100 to 400, please know that that's because we made a massive accretive acquisition, and we factored in the goodwill associated with that transaction in writing down or valuing that inventory at 30%-35% off that number. We'll be able to move through those units quickly, and we will fully disclose the nature and the genesis of those 2022s as they come back on. The reality of it is, is that other dealers around the country probably didn't do a good enough job saving acorns during the COVID process. And when you get back into a tougher environment like we're in today, when that aging happens, manufacturers and banks alike want curtailments. That's a pay down on the inventory on their line. When you don't have sufficient working capital to do that, and your margins are compressed, and the business is slow, it leads you to a situation where you may need to be acquired. That is really how we see the acquisition path over the next four or five months, and we have also made the decision to lower some of our used inventory levels, knowing that there may be an opportunity to pick up some of that inventory from dealers who, unfortunately, and not to our happiness, may not make the cut and may end up putting, you know, product back in the marketplace, which we will have the cash, the available floor plan, floor line, and the opportunity to absorb, but at the right value. Okay, thank you for that color. And, just I guess another quick one. You've talked about sort of your full year, calendar year, wholesale and retail expectations for the industry. I guess, what sort of cadence are you expecting for the year? Is there a point where you expect each to inflect positively? And is that, is that demand driven, demand improving gradually, or is that just maybe comps get easier at one point in time? Yeah, Sean, that's a tough question. I mean, 'cause you're talking about two separate subsets of information, and the cube of wholesale is, of course, gonna have some sort of impact based upon retail activity. But ultimately, I think the manufacturer is gonna have to weigh in on that based upon their production schedules heading into next year, where it seems to me that many of them are building pretty healthy backlogs based upon what we're receiving from them as of this moment. What they're planning out beyond that, really, time will only tell. From a retail perspective, I can see new, perhaps for the industry, starting to continue to slow down through the end of Q1, probably even bleeding a little bit into Q2 before it starts to take off again in the back half of next year. Yeah, but the gaps are still better. They're still on a year-over-year basis- Exactly. They're still better. It's slowing down in the sense that it's a seasonal piece. But when we look at the gaps, right, the same store performance on new, for example, in the month of September or the month of October. In September, well, we showed the best improvement we have in September as we have in 16 months, actually. So it's the best same-store new comp that we've seen in 16 months. And we- Where I feel good about our trend line- Yeah. I can't necessarily speak to the broader industry. Yeah, we know that's largely being driven by our identification of where the pricing needs to be to generate that activity. That's what that's ultimately what's given us the confidence, is we went into Q3 almost looking at it in a petri dish and said, "If we stratify pricing and move certain segments down, can we actually generate more leads and generate more conversion?" That's what's given us the confidence as a management team to be as aggressive as we were in the back half of Q3, and in the full quarter of Q4, and in the early part of Q1, to bring in that 2024 inventory that's lower, knowing that we're going to beat everybody else to the punch. That's the key for us. Okay. Thanks a lot, guys. The next question we have is from Bret Jordan of Jefferies. Please go ahead. Hey, good morning, guys. This is Patrick Buckley on for Bret. Thank you for taking our questions. On the F&I side, how are you guys thinking about new normal GPUs heading into 2024? Is Is that just structurally higher compared to pre-COVID, or should we expect lower ASPs and a tougher consumer backdrop to start to weigh more on things there? We typically don't look at F&I as a company at on a GPU basis. We really try to look at it as a percentage of our new and used ... revenue. And so over time, I think you've seen that kind of historical average hovering around the 12% mark? Yeah, 11%-12%. 11%-12%, and I think that's a, that's a good target that we always try to, try to hit, moving forward. Yeah, I mean, one of the things that's for sure putting a little pressure on that is the current rate environment. And, you know, it isn't, we have not had a hard time creating the interest and the demand for the product. But if you listen to our thousands of salespeople and sales managers, the folks that actually are on the front lines, they'll say to you, "It's a lot harder to convert somebody from I'm super excited to RV, to please sign this piece of paper." And interest rates have definitely caused people to, you know, to maybe take a little bit more time to make that decision. What hasn't really been affected terribly by that is our ability for our finance team in the field, through our Good Sam Business Centers, to actually convert and to sell other products and services. Our penetration of our Good Sam warranty roadside hasn't really been affected much. We've made a little less on the finance reserve portion of our business because obviously the rates are a little bit higher. But even as early as yesterday, we started to see some banks even lower their rates for consumers. And I'm sure they're looking ahead at the yield curve, and they're trying to be ahead of what's actually happening in the market. We had some banks issue us a 0.25-0.5 point rate reduction yesterday. I do want to address one other thing on this topic. We have not seen any modification at this point in the availability of credit. We have not seen that at all. We have seen consumers pause a little bit more when they look at the rate, particularly on a more expensive asset. As we've lowered the prices and as we've brought in new lower ASPs, that has relieved itself a little, but we're not naive to the challenge that's out there of a consumer looking at a much higher rate than they did three years ago. Maybe they're accepting it a little bit more, but we're not taking it lightly and having to work a little harder to be in that 11%-12% range. From my perspective, I would expect that over the next six to eight months, we'll probably be closer to 11-11.5 than we will 12. We've made a lot of that up with some of the SG&A reductions, and we expect that to return to some level of normalcy as the rates come back down, hopefully at the middle of next year, but we're planning on it being a little longer than that. Great. That's helpful. Thank you. And then, could you talk a bit more about how demand in capacity has trended on the parts and service side? Where does bay expansion rank within your M&A strategy, and how is technician availability trended as of late? Bay expansion is one of the key components, the key pillars in making that acquisition decision. As we look at the acquisition, sure, the market share that business has, how good or bad their used is, how good or bad their F&I is, the brands that they carry, those are all factors. But if we find a dealer that sells a lot of product but doesn't have service, we tend to not want to buy that business. That's not our business model. We're sitting today with 2,800 bays up from, you know, recent, recent reports, and we're sitting around 2,300 technicians. We continue to invest millions of dollars in multiple training universities for technicians on our own dime inside of our own company to supplement what the industry is trying to do. It just wasn't doing it at the pace and the rate that we wanted it to, so we took on that water on our own. We have to continue to attract skilled labor in this country for this lifestyle to continue to bolster. Look, you got 11 million± reported RVs in the marketplace, and maybe the total bay universe is- Maybe 10,000 bays. I mean, there's never going to be a universe where there's ever going to be enough bays or enough technicians. The beauty of that, it's like the white space will go on in perpetuity. For us, that is part of our acquisition strategy, 'cause when you're adding just on the labor side alone, 70%+ margins and on a combined basis with parts in the mid- to high-60s margins without a lot of inventory involved, I mean, those are, those are really attractive margins. Which is why historically, our company has overall company gross margins in the 30%+ neighborhood. You take Good Sam, you take the service business, like that's our differentiator. Got it. Really helpful. Thanks, guys. There are no further questions at this time. I would like to turn the floor back over to Marcus Lemonis for closing comments. Thank you again for joining our call. We want to reiterate our outlook for 2024 with positive revenue, positive same-store unit sales, an improvement in our overall gross profit, an improvement in our SG&A as a percentage. And lastly, and most importantly, a better return on investment for shareholders with our adjusted EBITDA growing in excess of 30%. As a management team, we're committed to delivering those results. We obviously know that there are factors outside of our control that could affect those. We're gonna work like hell to ensure that we beat that, we beat that, beat those numbers. Thanks again. We look forward to seeing you in February. This concludes today's call. Thank you for joining us. You may now disconnect your lines.