Camping World Holdings (NYSE:CWH), a prominent player in the recreational vehicle (RV) industry, reported a robust first quarter for the fiscal year 2024, with notable same-store sales growth and market share gains. The company's strategic initiatives, including the sale of an RV dealership and a definitive agreement to sell their furniture manufacturing business, are aimed at improving financial performance and streamlining operations.
CEO Marcus Lemonis highlighted the importance of affordability in driving demand for lower-priced RVs, expressing confidence in the company's approach to market share expansion and inventory management. Despite challenges such as higher floor plan interest expenses and the need for more affordable financing options, Camping World remains committed to its growth plans, including dealership expansion and exploring opportunities for its Good Sam business.
Key Takeaways
- Camping World Holdings experienced double-digit same-store sales growth and expanded market share.
- The average selling price for new RV units is expected to be at or below $38,000.
- Strategic moves include the sale of an underperforming RV dealership and an agreement to sell the furniture manufacturing business.
- The company aims to return to normal levels of selling, general, and administrative expenses (SG&A) and continue growth plans.
- CEO Marcus Lemonis emphasized the strategic decision to reduce inventory, manage balance sheet well, and invest in the business.
- The company remains focused on driving down average selling prices to increase market share.
- Camping World is maintaining double-digit growth in April and expects this trend to continue.
- Executives are confident in achieving double-digit new same-store sales growth and a 30% adjusted EBITDA growth goal despite challenges.
Company Outlook
- The company plans to open two more dealership locations by year-end, with the possibility of additional acquisitions.
- Camping World is exploring opportunities to expand the Good Sam business into new areas.
- The company is focused on growing the overall RV industry and collaborating with other companies.
Bearish Highlights
- Higher floor plan interest expenses are expected to be $15 million more than anticipated due to lack of rate reductions.
- The potential delay in rate reductions negatively impacts affordability and gross profit margins.
Bullish Highlights
- Camping World has effectively managed its inventory to be in a strong position by September-October.
- The company's strong balance sheet enables it to withstand challenges and invest in market share, clean inventory, and strategic acquisitions.
Misses
- Q1 financial results did not meet company expectations.
- The company has taken losses through auctions, but this is not a recurring expense.
Q&A Highlights
- Lemonis confirmed that sales performance in April is consistent with previous months' double-digit growth.
- The company is adjusting product mix to drive down average selling prices and improve finance and insurance performance.
- Executives highlighted efforts to establish themselves as the market maker in the industry through their auction process.
- Gross profit margins for new units were around 14% in Q1 and are expected to be around 15% in Q2 and Q3.
Camping World Holdings' first-quarter performance paints a picture of a company strategically navigating the challenges and opportunities within the RV market. With a focus on affordability and market share, the company is adjusting its inventory and pricing strategies to meet consumer demand. As the company continues to streamline its operations and expand its dealership network, it maintains a clear vision for growth and profitability in the evolving landscape of the RV industry.
InvestingPro Insights
Camping World Holdings (CWH), amidst its strategic initiatives and market share expansion, shows a mixed financial landscape according to recent InvestingPro data. The company's Market Cap stands at $1.71 billion, indicating a significant presence in the RV industry. However, its high Price/Earnings (P/E) Ratio of 161.61 suggests that investors are paying a premium for earnings, which aligns with the "InvestingPro Tip" that the stock is trading at a high earnings multiple. This could be a point of caution for investors looking for value-priced stocks.
The "InvestingPro Tip" that CWH has maintained dividend payments for 9 consecutive years is a testament to the company's commitment to shareholder returns, even as it navigates through operational adjustments. With a Dividend Yield of 2.49%, investors might find an attractive income stream, despite the company's current challenges and market adjustments.
Additionally, the Price/Book ratio of 17.32 further emphasizes the premium valuation of the company, which might be justified if the expected net income growth, as highlighted in the "InvestingPro Tips," comes to fruition. It's also worth noting that the company's stock has experienced a significant price drop of 24.58% over the last month, which could be an entry point for investors, considering that the Relative Strength Index (RSI) suggests the stock is in oversold territory.
For readers interested in a more comprehensive analysis, InvestingPro offers additional insights and tips on Camping World Holdings, which can be accessed at https://www.investing.com/pro/CWH. There are 9 more "InvestingPro Tips" available that could provide further clarity on the company's financial health and market position. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, for a deeper dive into Camping World's investment potential.
Full transcript - Camping World Holdings Inc (CWH) Q1 2024:
Operator: Ladies and gentlemen, good morning, and welcome to Camping World Holdings Conference Call to discuss Financial Results for the First Quarter of Fiscal Year 2024. 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 a 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 Curran, Chief Accounting Officer and Brett Andress, Senior Vice President, Investor Relations. I will turn the call over to Ms. Christen to get us started. Please go ahead.
Lindsey Christen: Thank you, and good morning, everyone. A press release covering the company's first quarter 2024 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 plan, 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 Factor section in our Form 10-K, our Form 10-Q, 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 2024 first quarter results are made against the 2023 first quarter unless otherwise noted. I'll now turn the call over to Marcus.
Marcus Lemonis: Thanks Lindsey and good morning, and welcome to our 2024 first quarter call. On today's call, the team will cover both the operational and financial highlights of the quarter, while providing comments on the exciting future ahead. As we entered the quarter, we had very specific targets to execute on, gaining market share on new, while improving year-over-year margins, the recalibration of our used inventory levels, driven by the unparalleled reduction of new pricing, open up 14 new locations and eliminate non-performing assets. The double digit same-store sales momentum and market share growth during both the first quarter and the second quarter to date, proves our thesis around demand and its interdependency on lower priced units, essentially affordability. We continue to feel strongly about driving our efforts towards the intersection of strong demand and affordability. We expect the average selling price of new units in our company to be at or below $38,000 and could see flexibility up slightly once interest rates retreat in 2025. Consumers ultimately build their monthly financial models around monthly payments. So in addition to change in mix and average selling price, we continue to be successful in working with retail lending partners in a higher rate environment to provide intelligent and thoughtful solutions around financing. This strategy has led to delivering another successful quarter, both in finance income and product penetration, which ultimately enhances the total gross profit per unit. In working to achieve our 2024 earnings growth, we identified the need to continue to eliminate underperforming or non-core assets. Through the quarter, we have sold one RV dealership location and signed a definitive agreement to sell our furniture manufacturing business. These moves are not only unleashing locked up capital, but have evolved in one case into a holistic strategic partnership that we believe will provide material sales and margin improvement in our parts and aftermarket business. The sale and entrance into a new parts and aftermarket supplier agreement will positively impact our financial results going forward. In addition to the above, our earnings growth goals have required us to make tough cuts around SG&A in the last six months. Our target on SG&A as a percentage of gross has and always will be rooted in the low 70% range. We believe that we have made the cuts that allow us to return to that level, once gross profit sequentially returns to normal levels. As we unpack the quarter on SG&A, only our January and February results were outside of our standards, but it was exclusively driven by the temporary compression on RV margins caused by our rigorous inventory management plan. March started to return to a more acceptable range, and we expect that to improve in Q2 and then seasonally sequentially improve as margins normalize. As a reminder, our business is largely built around the installed base of RV-ers and that is evidenced by our continued solid performance in Good Sam and our parts and service business. Those categories provide unparalleled stability and predictability, unmatched by anyone else, as one would expect, our management team has the responsibility of always looking at ways to improve and unlock value in the company. We've been working with Goldman Sachs (NYSE:GS) to explore alternatives, as it relates to our Good Sam business, which was coming off a record year in 2023. Through that process, we have been pleased by the number of interested parties who see the strength of the brand and the opportunity and the value associated with it. Our team has continued to discuss this internally and we believe that our ability to grow this business by allowing our Good Sam team the flexibility to expand into the larger recreational space, not just RVs, with not only yield-enhanced earnings, but would allow us to widen our spot prospect audience from the boating and power-sports categories, while we continue to explore alternatives. As we continue through the balance of the year, our focus is simple. Continue to see material sales and profit improvement in our existing 211 RV dealership locations, find ways to continue our new market share expansion, expanding our market making ability on use, which Matt will discuss further and return to our internal expectations on SG&A, while maintaining the same opportunistic approach to acquisitions as we drive towards our goal of 320 locations by 2028. I'd like to turn the call over to Matt Wagner to discuss the operations.
Matthew Wagner: Thank you, Marcus. As mentioned, we are experiencing meaningful new unit sales growth to start the year, with same-store new units increasing 16% and momentum continuing through April. Our new unit trends are significantly outpacing the broader industry, resulting in material market share gains in both January and February, based on the most recently reported that survey information. We attribute this performance to our intentional and disciplined inventory management, supporting our previously stated thesis that lower priced RVs are a highly elastic good. Today we are sitting with less than 3,800 model year 2023, continuing to significantly outpace the industry with almost 90% of our new inventory and current model year 2024s. We sold nearly 16,900 new units in the first quarter, an increase of over 20%. As we move throughout the year, we anticipate that new average selling prices will hover around the $38,000 range. Against this backdrop, we maintained a regimented approach to procuring used inventory, having purchased 60% less used through the first four months of this year. As we sit here today, we have 35% fewer used in inventory compared to last year. We largely did this because the used RV market lacks the infrastructure and institutional participation needed to create an efficient market. We responded to this need and we launched CW auctions in December. We witnessed immediate interest from consumers, wholesalers, banks and manufacturers alike. Over the course of the last five auctions, we amassed over 2.2 million unique views and hundreds of unit sales during the soft launch period. As this business matures over the coming quarters, we see this serving as a profitable, cost effective remarketing channel that has never existed in this industry at scale, allowing for greater used procurement flexibility, while improving the velocity of our sales. We continue to expect our used volumes to improve over time as appropriately valued inventory is intelligently brought back into the system. We expect our used margins to improve sequentially starting the second quarter and to normalize to historical levels by the fourth quarter. As part of our growth plan for 2024, we'll continue to focus on expanding upon the tremendous progress that we have made with Good Sam, service our used RV business, all while focusing on market share growth of new RVs and continuing to add accretive acquisitions to our dealer network. We opened 13 net dealership locations in the first quarter, five of which were manufacturer exclusive locations, and we plan to continue to remain acquisitive with the goal of growing our store count to 320 stores by the end of 2028. I'll now turn the call over to Tom Curran to discuss our financial results.
Tom Curran: Thanks Matt. For the first quarter, we recorded revenue of $1.4 billion, a decline of roughly 8% from last year, driven primarily by used unit volume, while new vehicle revenue of $656 million marked the first year-over-year increase in six quarters. Our Good Sam services and plan segment continued to post record quarterly gross profit of $30.5 million. Within our product, services and other revenues, our core service revenues showed continued growth, while product sales declined primarily due to lapping our active sports restructuring from last year and lower retail attachment due to fewer used vehicles being sold. Our adjusted EBITDA for the first quarter was $8.2 million, with the primary drivers of the year-over-year decline stemming from used vehicle gross profit pressure, about $10 million to $20 million of which was related to rebalancing HG's [ph] inventory as Matt mentioned. We also incurred a couple of additional expenses worth highlighting, including new store and auction start-up costs as well as professional fees that represented approximately $7 million of impact to the quarter. As we remain focused on extracting additional value from certain non-core and underperforming assets and returning cash to our business, on the balance sheet, we ended the quarter with about $177 million of cash, including $148 million of cash in the floor plan offset account. We also have about $220 million of used inventory net of flooring and roughly $219 million of parts inventory. Finally, we own about $116 million of real estate without an associated mortgage. Marcus?
Marcus Lemonis: Thanks Tom. Our strategy and execution is keeping us well ahead of our competitors and the trend lines are clear. We expect 2024 to be a much better year. I'd like to turn the call over now to the operator for Q&A.
Operator: [Operator instructions] Our first question is from the line of Joe Altobello with Raymond James. Please go ahead.
Joseph Altobello: Thanks. Hey guys, good morning. Just want to start with demand. Have you guys seen any improvement as the spring has progressed overall? And how did your new unit sales on a same-store basis look in April?
Marcus Lemonis: We continue to see demand, Joe, and what hasn't been the problem for our company is demand. What has been the problem, I think for our company in the back half of '23 and probably for the industry is really this affordability factor, which is why at the beginning of the year, we were very vocal about driving down these ASPs to find the intersection with new interest rates at a payment level that was affordable. So we have no demand problem. What we were struggling with was a conversion problem, which is why we made this really heavy pivot into lower priced units, so that we can gain market share. April has continued to perform double digits on a same-store basis on new and quite frankly, we don't expect that to slow down. Now as we go through the balance of the year, we think that there's an opportunity to continue to accelerate that, but we need the macro to help us a little bit to get to where we really want to get to. As you know, the macro has been pretty tough for the first four months. So we're really proud of our team and the positive results, particularly, I think in the month of March or April, excuse me, in February, we recorded the highest market share in the history of our company.
Joseph Altobello: Very helpful and just on the affordability issue, in terms of pricing, it sounds like you don't think we need a further decline in invoice prices on new RVs next year? Maybe, talk about the thinking on that.
Marcus Lemonis: Look, I always would love to have lower prices because lower prices means that the funnel is wider, but I don't anticipate any time soon that we're going to see any material movement off the '24 pricing. I want to make a finer point about that though, because as we finished the back half of 2023, we still internally had a lot of uncertainty around where invoice pricing would settle. We did a great job of negotiating like-for-like pricing down on '24 models, but we were still feeling a little flat footed on if that continue to decline. That is why you saw us pull back, so feverishly, and so disciplined on our procurement of use and when you look at the used results for the first quarter, I want to make sure that people hear me loud and clear that there is no issue with RV demand on used units. We made the conscious decision to not put the shareholders money at risk by investing in assets, while we believe there was potentially still a falling sword. Now that we feel more confident that the pricing on new units have relatively stabilized, and that doesn't mean they couldn't go up by a percentage or down by a percentage, but no violent moves up or down that would cause our used inventory to be out of whack, we will start to step on the gas again, probably around the middle of May and slowly and cautiously start to ramp back up again as we get back to levels that we believe we need to have in stock to meet our sales goals. So when you look at the overall financials, we want you to not be alarmed by the drop in used sales, because it is not a function of a drop in demand. It is a function of us caring materially less than we did a year ago and we think it was prudent and us deciding to take a lot of pain in Q1 and a little bit in Q2 as it related to our used margins, so we can right size our inventory. We never want our shareholders to feel that we're holding on to assets that we don't really feel strongly about the value. So we made that aggressive move.
Joseph Altobello: Got it? Okay. Thank you. Thank you.
Operator: Thank you. Our next question is from the line of James Hardiman with Citi. Please go ahead.
James Hardiman: Hey, good morning. Thanks for taking my call. So, Marcus, you already talked about sort of timing surrounding the model year '20 or not timing pricing surrounding the model year '25, but maybe delve into just the broader landscape surrounding that model year changeover. It feels a little bit like Groundhog Day yet again, as we sort of brace for that changeover, the timing of the release, is there any chance that that might shift or not and just any wrinkles that you think that's going to bring along, particularly how much dealers, maybe some of your peers, are sort of holding out for the '25 and whether or not there's going to be enough inventory between here and there to satisfy retail demand. Thanks.
Marcus Lemonis: Yeah, that's something that we're thinking about every day. One of the things that we are concerned about, and it definitely went into our used thesis, is, unfortunately, the number of 22s aged inventory that is sitting on our competitors lots and there seems to be gridlock and that was the gridlock that we told all of you both in the Q4 call and in our investor conferences that we were unwilling to participate in. We were going to take whatever financial pain on a short term basis that we needed to. We don't believe that every dealer has necessarily taken the steps to do that. So that's probably why you see us a little tepid on leaning into use, because we don't know if there's going to be some surplus of 22s that could be out there in a foreclosure or liquidation scenario. We believe that the manufacturers have been very intelligent and very smart in listening to the dealer body around the rollout of '25 and we're anticipating probably a late summer; July, August start on '25s, for the most part. There may be a few motorhome manufacturers in very small scale that start to leak out some '25s. This idea that our competitors are sort of waiting to buy '25s, I sure hope that nobody is running their business that way because they're going to miss an entire selling season and that entire selling season is going to lead to a lack of cash flow, a lack of margin, and continued aging on their part and when you look at shipments, we still do believe that shipments and retails are going to be in the 335,000 to 345,000 range. So we could be off by a couple thousand, but that's kind of where we see the general ball of wax. When we see that, we know that there has to be some replacement, because if you have retails and replacements, we don't believe that there's going to be destocking here in 2024 and we're hopeful, like in our business, that we're going to accelerate into better same-store sales and then a restocking in the back half. But we don't think that the manufacturers are going to play any boogeyman surprise on us because it's not in their best interest. If they roll out '25s earlier than they should or earlier than they've committed to. They're kind of doing themselves a disservice at the same time, because there are still '22s out there. There are still '23s out there. We're down to, I think, Matt, you had said like 3500 or 3800 in that range. We're much better than we were a year ago. Can't say that for everybody, but we're prepared for it. We also do believe that certain dealers have made some miscalculations on bringing in fresh inventory. We don't know if it's miscalculations on their part or the floor plan lenders preventing them from bringing new inventory in while they still have age. That's why we feverishly wanted to get rid of that.
Matthew Wagner: Just even further add to that, James, to speak more directly about the model year changeover. I believe that motorized model year 2025 will start to hit the market slowly here over the coming month, actually beginning this month, and will start to accelerate here over the ensuing months. Motorized, however, have never necessarily been the issue in terms of aged model year units; rather towables could potentially for the future, but we believe that we've managed our inventory very effectively. We believe that the model year 2025 towable units, both travel trailers and fifth wheels, will at least turn over and start to be produced in July, but there won't be meaningful amounts of them really hitting the marketplace until maybe October, November, December timeframe and when we think about where we were this time last year, we're at least 1,000 units better in terms of the aged multi-year removal. So as I take a step back and look at how we've played this game and even be very direct about the wholesale shipment numbers that came out recently, if I'm not mistaken, the travel trailer segment was up about 10,000 units, and that's really where you saw the most material gain. Just to be clear, we were up over that same time period in terms of wholesale shipments, about 10,000 units. We've been largely having the foresight to play this game more intelligently than our peer group and we've been identifying these certain segments, price points that have been turning, which is why we've been picking up material market share. We believe that this thesis will continue to play out exactly as we've suggested through the balance of the year and as such, we think we'll be sitting in a really advantageous position by September-October to re-up once again and start to play a whole new cycle, a whole new game on the news side, while at the same time, picking up the momentum from new and starting to translate that to the used side. We feel good as we sit here today, but check back obviously in the next three months to ensure that we're hitting all of our goals.
James Hardiman: Got it. That's really helpful and then, obviously over the last month or two, the financial markets appear to be pricing in or at least bracing for rates to be higher for longer, maybe walk us through sort of the RV ecosystem and whether or not you think the various players have adjusted any of their activity as a result of that. I guess first, starting with lenders like, how have rates trended as of late and then customers to the April question, did things get a little bit better, a little bit worse in the month of April to sort of that 1Q run rate and then I guess, lastly, dealers, you guys have made it no secret that a lot of your peers have been unwilling to take their medicine, maybe hoping that they'll get bailed out by lower rates. Any change in that stance? Thanks.
Marcus Lemonis: Yeah, I'll start with our own business because that obviously is what matters most. The potential delay, which seems to be more affirmed than it was a couple of months ago on any rate reductions, has a negative impact on everybody because it affects affordability. So we have a lot more wrangling to do with our retail lenders trying to figure out how to make things affordable for people. The unfortunate thing and the simplest thing is we look at the rate reductions, and we have been planning on rate reductions in our P&L for the year and the lack of rate reductions, unfortunately for us, something as simple as floor plan interest is going to be $15 million higher than we anticipated at the beginning of the year. Not anything that we have control of, not anything that we're doing, but that's $15 million that we have to really work hard to try to find somewhere else. We do believe that the consumer has started to settle in around where rates are, and that doesn't mean that they're accepting it, but they're not as shell shocked by when all the rates were moving up in 2023 at a really rapid pace and people just couldn't deal with it. We've had to really pivot our mix, and I think our mix has really given us two benefits. Number one, our change in mix, in driving down those ASPs, has allowed us to find a wider audience, and that's evidenced by our massive, massive market share growth that we've never seen in the history of our business. Secondarily, when you drive down your ASPs and you drive down affordability, you could see in the performance of our finance and insurance business is really, really performing nicely. Had we not driven down ASP's, we believe our volume would have been lower, and we believe our F&I performance would have been lower, because when a customer's buying off on a monthly payment, that includes a warranty that they need, roadside assistance that they need, and the other product that we sell, had we not been able to drive down the price, and unfortunately some of that's through margin, we would not have been able to recapture some of that margin on the back end. So when people look at our overall GPU's, we strongly, strongly encourage them, as we have since the beginning of our company, to take the front-end gross profit and the back end gross profit and look at the combined GPU. From our perspective, we're agnostic of how we accumulate gross. We'd like to accumulate more gross on the front end, but we feel like we've been very successful in doing that. I worry very significantly about a small subset of dealers that could be anywhere from 4,000 units to 5,000 units to 6,000 units that could be out there that are still 2022s, people that have been unwilling to take their medicine. Now I say that so cavalierly. The reality of it is that some dealers may not have the financial wherewithal to stomach taking on that pain and whether it's dribbling it out through curtailments or taking on transactions that have negative gross profit, our balance sheet and the strength of our balance sheet and our willingness to part with non-core assets and our willingness to liquidate things that don't make sense to us have given us that dry powder to be able to stomach that. I think that's a unique thing in our company is that we have managed this balance sheet, in our opinion, so well that in these types of moments where we need to dig a little deeper into our pocket and invest in our company, we're able to do that. Look, we're not happy with our first quarter financial results, but if you normalize margins just back to some like normal level unused, our EBITDA would have been just fine, but we made a conscious decision to take that gross profit pain, which ultimately is using some of our working capital to invest in that; seeing the dividends of that in market share, seeing the dividends in that, in the clean inventory, seeing the dividends in our ability to buy stores at almost a zero time multiple, that's how we built this business and the amount of stores that we've added in the last 12 months, my best recollection, I think we're at about 33 new locations since the beginning of this down market in '22, down market at the beginning of '23, those things are going to start to pay dividends. So as you really, really study our financials, we encourage you to do a little pro forma work, like we do. A lot of people have put pressure on me. Why aren't you firing more people? Why aren't you getting rid of more people? We want to invest in our people because our market share is a function of our people's performance, not Matt and I. Our performance on Good Sam is a function of our people. Our solid service and parts business is a function of our people. We're not willing to just start gassing people because we also know that this business returns like a hockey stick. We can go from up 10% on a new market to 25% in a matter of six to eight months. We need people to do that and as you open up new stores, as you add new locations, as we add our auction business, as we continue to make acquisitions, as we want to improve training, those things require people. One little fun fact around the importance of investing in those people; our NPS scores, which is a very, very, very important thing that determines the long term health of any business, is at an all time high in service. We went from negative NPS scores three years ago when we were selling like you couldn't stop us to raising that number to north of 32%. That is unheard of in our industry. We have spent several million dollars reframing up the process, restaffing the business to be able to take care of our customers in a good way. In our mind, we know it's running through our P&L. Those are investments. Those types of investments is what's going to allow us to really continue to grab share here in the next 12 months to 24 months and I can promise you, Matt and I are laser focused on managing the balance sheet, using our cash very intelligently, liquidating or selling off non-core assets and reinvesting those in our people, in our used inventory and our ability to be market makers and in strategic acquisitions.
James Hardiman: That's great, Colin. Thank you.
Operator: Our next question is from the line of Scott Stember with ROTH MKM. Please go ahead.
Scott Stember: Good morning and thanks for taking my questions. Can you maybe talk about I guess the tenor of sales in April. You said that they were still up double digits. Has there been an acceleration on the new side -- new units from March into April?
Marcus Lemonis: An acceleration meaning on a percentage of same-store?
Scott Stember: Yeah. Or year over year, just in general?
Marcus Lemonis: Yeah. I think the answer is we're running at about the same pace, but what is a nuance inside of that is that we had a pretty good April, decent April last year. And so while we're up double digits again in April, it actually, in my mind, means we're even doing better than March because we had a really, really rough March last year. So if we were up, call it mid double digits or 15, 16 in the month of March, we were coming off a pretty low comp. April was a really good year for a really good month for us last year on a volume basis, it could have been the way, the weekend fell or the days fell in the calendar. We were up against not a terrible number, and we still performed on a double digit basis. So in our estimation, we either stayed even with March or even outpaced it a little bit on a comparative basis.
Matthew Wagner: Scott, we oftentimes look at it week-to-week, and it's consistently through the first four months of the year, oscillated between high single digits to 20%-plus week-to-week in terms of our year-over-year gains. That's actually the cleanest way to look at it and through the balance of a quarter, it all just shakes out.
Scott Stember: Got it. And then on the products and services side, if you were to back out the furniture business and the discontinued active sports business, what is just pure service, parts and service? You said it sounded like in your prepared remarks it was going quite well, but can you just give us a flavour of how that business is doing? Yeah.
Marcus Lemonis: Yes. So we look at our parts and service business in two distinct categories; our external work, which is when we're taking in customer pay work, which is up nicely over a year ago. That's always by the way, a great bellwether for the health of the industry is our people coming in, booking appointments, getting repair work. Our customer pay, which is actually not provided by us internally, our customer pay work is up over last year. Our internal work, that's the work that we do to repair trade ins or purchases that we make, is down. But it's down because we elected not to go out and procure used inventory. We could have easily manipulated that number by chasing used inventory, buying things we shouldn't be buying and that number would have looked good. So we know that when the used business is down, we know the internal work is down. When the used business is up, the internal work subsequently goes up, but we determine the health of our overall industry and our company based on how customers show up to actually give us currency to repair and replace things on their unit. So we feel very good about that indicator.
Scott Stember: Got it. And then just the last question, it seems that you're looking for lower retail sales for the industry this year. Is that changing your view of camping world's ability to sell more units at retail this year and also, I think last quarter you gave just some EBITDA growth expectations, is there an update on that?
Marcus Lemonis: Yes, I wouldn't call them expectations. I would definitely call them goals. Our goals haven't really moved. We know what we need to do to deliver value to our shareholders. We're facing a few more headwinds that we didn't anticipate that have nothing to do with us. Like the fact that the rates aren't going to drop or the fact that the macro isn't that good, but Matt and I, along with Tom and Lindsey and the rest of the team have said, okay, we have to figure out what other pivots we have to make. If we can't control certain factors in the marketplace, there are things we can control. So we have to be very prudent about how we're opening stores and how we're thinking about that. As a small example of that, we have two stores that are ready to open. The stores are built, they're ready to go. We have elected to push those off to the end of the year or the first of next year because every single choice that we make has an impact on the bottom line and we have a goal of achieving that, our own goals and we don't want to do anything that's going to put those goals in jeopardy, at least in the areas that we have control of. We expect our sales Matt.
Matthew Wagner: And even just to hopefully rely largely upon that stat survey information. I think we've proven that we could buck the trend of the larger industry. So regardless of what's happening, we feel like we've hit the goals that we set forth and broadly proclaim that we're going to hit double digit new same-store sales and we're going to continue to experience growth in that new same-store number heading into the back half of the year. I believe pretty material growth based upon how we've played our hand with our inventory procurement.
Scott Stember: Got it. That was great. Thank you so much.
Matthew Wagner: But we wouldn't mind if they dropped the rates a little bit. We could use a little interest expense relief for sure.
Operator: Thank you. Our next question is from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead.
Noah Zatzkin: Hi. Thanks for taking my questions. Not to put too fine a point on this, but in terms of kind of the 30% adjusted EBITDA growth goal for the year, working towards that, has anything changed in terms of the calculus to get there? You noted expecting $38,000 around the $38,000 level on the new ASP, and I think used margins came in a bit stronger than I was expecting. So just wondering how you're kind of thinking through kind of the new and used businesses, maybe relative to a few months ago, as you kind of work towards that goal. Thanks.
Marcus Lemonis: Yeah, I think that's a great question. Our goals remain the same, but variables have been thrown in our face that we're having to sort of reach into our rabbit hat and try to find new opportunities. The interest rate expense on the floor plan piece is a real number. It's $15 million. It's not like maybe it'll happen. It's just factually correct. I think secondarily, had interest rates started to drop, we may have experienced, we all anticipated that maybe by summer, something would have pushed. We now have taken any interest rate cuts out of our calculus entirely and that's putting a little bit of pressure on ASP and as ASP's get pushed down because we want to drive market share, that puts pressure on the overall GPU on the front end side. While we can make it up on the back end, if it's a $40,000 ASP and the margin is X or it's a $37,000 ASP and it's the same margin percentage, there's just less gross dollars available. So that's put a little bit of pressure that we're having to sort of work around. I think the other piece is we're not going to take our foot off the gas, as we've seen the positive results in continuing to rebalance our inventory. And we will have continued pressure on the used side, both on margin and in demand here in April, and it will extend over into May and that's something that Matt and I have looked at and said we're going to take whatever pain people are going to give us, but we know if we own this business, just the two of us, we would be doing this because it's the right business decision. And we've seen the fruits of that and I think Kim and I have gotten really excited by when you make these really conclusive decisions to drive ASP down and you see the results, it becomes like a drug. You want to chase it some more. When you make the tough decisions to get rid of the youth and to rebalance, and you see the positive results, you want to chase that some more. We want to do the things that we think we would do if it was just us and that's how we're running the business and we know that optically, the results don't necessarily reflect where we want them to be or where other people want them to be, when you see market share growth. When you see us hitting our other goals around Good Sam, when you see us hitting our internal customer pay work, when you see the F&I results, we hope that you feel as good as we do about those results.
Matthew Wagner: I couldn't be more proud, too, of how we managed through this used portfolio and that was perhaps the biggest variable that threw a wrench into some of our plans in the short term. We're being down on 60% -- to the tune of 60% of used procurement through the first four months of the year with something that wasn't necessarily in our calculus. We believe that it was the right play for our company, for investors knowing how risk averse we were in a relatively volatile segment in that short term, while there was, for the first time ever in our history as an industry deflation of new invoice prices. Now that that market has stabilized on the new side, that's directly impacting the use, which gives us a clear focus and a clear path whereby we can start to ramp up procurement, but as Marcus said earlier, it's going to take us until about mid-May for us to really get this machine revved up again and to start to target those segments, price points that we know are going to yield the highest return on investments.
Marcus Lemonis: And it isn't because the machine isn't ready to rev, it's because him and I kind of wake up every morning and we're like, are we there yet? Should we just wait a little bit? Let's test it in this market and Matt has been the absolute genius in setting up this auction idea, and we're excited. We'll be glad to post a link on maybe even our Investor site just to show people what this auction process is looking at. We've had both in-person and virtual auctions, and we were just in the early stages of testing it. We only ran 500 units plus or minus through the auction process. We had dealers, consumers around the country flying to places to see it. There is no market maker for the RV industry, and we believe for the growth of our new business because we need to be able to take in a creative blend of trades for the growth of our used business. We have to firm ourselves up between our Good Sam RV valuator and our CW auctions, we now believe we will become the market maker on establishing used values. When you control 20%-plus of the new side and you control the largest portion of the youth side, and you can create a market through this open, independent process, you now start to establish yourself as the authority and that is really the investment that we spent. We spent about $7 million launching the auction process in the first quarter. We know that that $7 million is a very, very small price to pay to become the market maker in the industry.
Operator: Thank you. Our next question is from the line of Mike Swartz with Truist Securities. Please go ahead.
Michael Swartz: Hey, guys. Good morning, Marcus. Just wanted to follow up on the CW auction business, I guess just curious of what spurred that decision and maybe within that, how much of an investment are you making? I think you said $7 million in the first quarter, but if we think about that just on an annualized basis, how much are you planning to spend there? And then what are the -- I guess, what do the economics look like within that business as it pertains to camping world?
Matthew Wagner: Mike, let me take a step back and the impetus behind auctions was to enable us to procure more used assets. In some respects, site unseen. When I say like virtual, we could take pictures, we could basically explore the asset, but we had no idea what it actually smelled like. If there were some finer tooth details that required someone actually to go out there and inspect the asset, we could never quite figure out a way whereby we could buy more assets night unseen but offloaded, in case we made a slight mistake. And really, that's representative of an efficient marketplace in a free enterprise environment within the used side of the business, which has never existed. So we have largely been a bit timid from a centralized perspective to buy too much because we didn't want to make too many mistakes. The auction concept really sprung out of that, and that's why we've been working diligently for the past couple of years to figure out, okay, how do we centralize more functioning of used procurement, while at the same time knowing that if we step into something and unfortunately make a mistake here or there, or if we want to just allow more assets to be run through the market, to procure more information and actually start to set more accurate market based supply pricing of all the used marketplace, we knew that the auctions needed to take form. Through this process, we've learned a tremendous amount, and in a lot of ways, we've had to build the market and prime the pump for this marketplace, which is why these are largely just upfront, one-time costs, we referenced with the $7 million. This is not going to be an annualized expense. Rather, we view this as a business that we're building and we realized how much bigger this business could be more than we even imagined at first, given that wholesalers, banks, different manufacturers, consumers alike have all started to raise their hand and participate. Yesterday, for example, we held our first ever virtual auction and what I mean by that is it was literally entirely online. We ran just 35 through the chute. We were able to sell 31 and these consumers and or wholesalers and our banks, whomever was bidding literally did not even see these assets. This is the first time they were bidding on them and for us to successfully sell through that many tells us that, wow, we could actually improve this velocity of sales to an even greater extent. Furthermore, as Marcus referenced earlier, when we think about the opportunity on trade-ins that are coming in, we think that we can open up all these trades, whether we want to retail it, we could do that as we always do, and that's just our normal course of business, or if we need to get a wholesaler bid, we think we can get more real time feedback quicker to turn around and make a quick buck. Where today we're wholesaling about 8,000 units on an annualized basis, I believe we can pull down at least another couple $100 of front end gross profit. Never mind the fact too that we're going to start to be able to run different bank reposition as well as different wholesalers that want to list their own assets. Off of that concept, we've taken a page out of the larger auction houses books where we'll be able to charge sellers and buyers fees on both sides of the transactions and as this thing starts to expand, we'll have an auction at least every other week beginning this month, somewhere in the country, be it a virtual auction, an in person auction, where we see a lot of consumers looking to participate. I'm super excited for this, on the backside of this, of how this becomes a true revenue stream and profitable for our business.
Matthew Wagner: One thing to keep in mind, it is acting independent of our dealership operations, so that we truly believe that the values are not contaminated by any influence other than whatever the free market provides and when we run our own units, we adhere to that free market principle. And so when you look at the losses, some of those or us taking some of those losses through the auction, some of it was the cost to stand it up, but just to reiterate, it is not $7 million on an annualized multiplied times three more quarters of that. You should not expect that at all. We feel like we've gotten it down to a bit of a science, and we've taken kind of the big steps that we needed to, to launch it.
Michael Swartz: Okay, that's extremely helpful. I appreciate that. And one of the -- I guess the second question is just on your expectation for new door additions. This is always kind of a difficult thing for, I think, most of us to model just in terms of timing and I think you've given us some framework for how many doors you expect to open this year. But it sounds like you may have put some of those on hold or delayed some of those, just given some of the macro considerations out there, but any way to think about, just from an updated standpoint, how many doors you expect to open this year?
Marcus Lemonis: Yeah, so we opened 14 already. We did mention that we sold one location. We actually sold that location, I think, for around $3 million. It was much more than we had in that transaction. So we netted to 13. We have two more stores that we expect to open internally by year end, potentially three and then, as always, we're always looking for opportunistic acquisitions. As we look at the landscape of dealers who potentially are sitting with more inventory than they would like to, we're always a great source. We did fall off a number of deals that we had contemplated, and we didn't fall off because of anything internally on our side. We fell off because through the diligence process, they didn't meet certain standards and they weren't willing to do the things that we felt were necessary to receive our money quite frankly. We are not in the business of just adding doors. We are in the business of being accretive in our acquisitions, which means I'm not going to pay much, and we expect to get a lot out of it, and anything absent of that, we're not interested in. So I would expect that we'll have no less than 17 stores, potentially one or two more than that, but we could turn around in the fourth quarter and see a deluge of opportunities and capitalize on four, five, six of them. We're not going to do anything that's going to flex our own business or put our own balance sheet at risk or put our own human capital at risk for anybody or anything.
Operator: Our next question is from the line of Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys.
Bret Jordan: Good morning, guys. On the Good Sam, continuing to explore alternatives comment, I guess it sounds like you're also simultaneously expanding the business into things like Marine. Should we expect that that's going to sort of push back the alternatives that you're pursuing there as you develop more of the in-house strategy?
Marcus Lemonis: No, I think what happened was, when we talked about this internally before we disclosed it to the market, we have that unique relationship inside of our company between our Camping World management team and our Good Sam management team and Matt and I are always put in the middle of that, like two parents. And the Good Sam team wants to do certain things, and the dealership team wants to ensure that they're not being compromised. And we kind of just put everybody in their own corner and said, look, you're chartered and you're incentivized financially to run your business and the response from the good sand team is, well, great, let me go run my business. I understand that you're not in the boat dealership business, but that doesn't mean that I can't go explore the recreational landscape. We have the policies. We have the process. We have the relationships with the vendors. So we have given, Matt and I have given permission to the Good Sam team to grow their business in ways that they believe are going to be financially accretive to the business and if they choose to get into the boat warranty space, which they're getting into, or the power-sports space, which they're getting into, it really is none of Camping World dealership's business and I think historically, we tried to keep everybody happy, and we were probably holding that business back a little bit. Now, that's a long maturation process, but while that's happening, we'll continue to explore ideas and as everybody knows, I was very matter of fact in the first quarter that I have a certain perspective on what I think the value of that business is. It's $100 million contribution in 2023 and I don't believe that the market properly recognizes the value of that business. I put a marker out there, and shockingly enough, the inbound activity that Goldman received from that statement that we made was surprising and pleasing. At the same time that we explore those ideas, the board wants to understand how does that work with the database? What happens with a variety of questions and we will get the board all of those answers over the next several months, but it doesn't mean that Good Sam management team has to wait to pursue their initiatives, to pursue their path at the same time. So we see those as parallel paths. We obviously are focused right now on growing our business and so Goldman is handling that process and if something interesting comes up, we'll present it to the board, we'll look at all the options, we'll see if it makes sense for the shareholders, and we'll make a decision, but at this point, we're still exploring it.
Bret Jordan: Okay. And then you also commented about a new aftermarket supplier agreement. Is that changing your strategy around the aftermarket side of the business and I guess, who's the agreement with, or is it at scale?
Marcus Lemonis: Yes, so we believe, as we looked at our retail business, and retail is a dirty word, but as we look at our parts and expenses, an aftermarket business, which is a foundation of our stores, the Camping World brand, we really thought to ourselves, we have to kind of reset. We have to reset how we're approaching the market. We have to reset how we're deploying money in inventory. We have to reset our partners. Years ago, we made the acquisition of a furniture business. They were manufacturing furniture, and we were selling it in the aftermarket space successfully, and we were selling it directly to OEMs. We have a very, very good relationship with Lippard [ph], which is a very dominant force outside of frames in the aftermarket, with Furion, with SOLARO, with CURT hitches and when we look at wanting to minimize our risk in that business and enhance product development, product rollout and all of those things, we ended up signing a definitive agreement to sell our furniture business to Lippard. As part of that consideration, we entered in -- we're going to enter into a supplier agreement that gives us the proper pricing for giving them the proper amount of business. So we see margin expansion there for us and for them, and we have an opportunity to earn additional rebates based on our performance. I believe that an acute focus with a small number of suppliers, Lippert being one of them, Ericcel [ph] being one of them, LKQ (NASDAQ:LKQ) being one of them, is going to put a hyper focus on the product assortment that we have in our stores. Ultimately, we need better terms in that business and we need better margins, and we believe that that's going to happen. We will take on an entire reset of our retail business in 2024. We're going to spend around $10 million resetting all the stores to one standard. As most people know, we accumulated all 200 stores over 20 years, 30 years, 40 years. They have different iterations inside of them, based on where we were in our lifecycle. We're going to press the reset button one time. We've now come up with the proper assortment to address aftermarket parts repair, replacement and enhancement. We've nailed down our suppliers to be largely Lippert secondarily, EricCel [ph], which we have a great relationship that's a company [ph], and using suppliers and distributors like LKQ. That doesn't mean we still won't have import of our own products for margin improvement and there are a variety of other vendors that will be there, but we needed to do the same thing on the retail side, that has given us the dominance on the RV sales side and years ago, we used to sell everything, and today we hyper focus on the companies [ph], Forest River and Winnebago, and we're taking that same approach to do business with less people and have it be more meaningful so that the performance would be more meaningful on the bottom line.
Operator: Our next question comes from the line of Brandon Rolle - D.A. Davidson. Please go ahead.
Brandon Rolle: Thank you for taking my question. Just piggybacking on the supplier environment right now, I think back in 3Q, you had talked about wanting a diversification of sourcing within the industry. Could you update us on kind of what you've seen over the past six months and in terms of maybe new suppliers entering the market and maybe, having a say within the model year '25 bidding process?
Marcus Lemonis: Are you talking about on the aftermarket side or on the RV manufacturing side?
Brandon Rolle: On the rv manufacturing side.
Marcus Lemonis: You know, Brandon, we continue to work and develop products with THOR, Forest River and Winnebago and I think proof of our effectiveness in doing that is what has resulted in what's happened with Coleman. Many, many years ago, Matt and I decided to, I think it was actually maybe ten years now. We decided to get into the Coleman licensing business, and we went down to Wichita, Kansas, and we did a deal with Coleman. And we connected, Coleman and Thor and us together. In the first quarter, it appears, at least through January and February, that Coleman will be the number one selling travel trailer in America, period and by the way, that product is only sold by us and so our ability to influence the way things are made or the design or the engineering is probably stronger than ever, not because we have a heavy hand, but because we have a lot of data and that data is very useful to manufacturers and whether they're looking at repair records or whether they're looking at turns or whether they're looking at ASPs or whether we're looking, looking at innovation, we do have a significant influence, but that influence over the market isn't something that only we benefit from. In order for our company to meet our goals, which is to be in excess of $10 billion, $12 billion of revenue, we need the TAM of the overall industry to grow and the only way the TAM of the overall industry grows is if the industry is healthy and the way that it becomes healthy is that we use our data to make it available to everybody. Here's what we have. Here's what we know. And I think this idea of everything having to be proprietary in some cases applies, but in other cases, if we want the industry to manufacture and ship and sell 750,000 units, we have to share some of our secret sauce so that the industry as a whole is more successful and whether that's working with Lippert [ph] to develop better ways to do hitching, or working with Lippert to do other things, or working with Thor, between Ericcel [ph] and Keystone or Jayco to develop more innovative products, or working with Forest River, whatever it may be, we have a duty and an obligation to grow the overall industry because we're primary benefactors of that.
Operator: Thank you. Our next question is from Tristan Thomas-Martin with BMO (TSX:BMO) Capital Markets. Please go ahead.
Tristan Thomas-Martin: Hey, good morning. Last quarter, you said 25 new dealerships to 30 new dealerships by the end of the year. Now it's 13 new dealerships. Is that just due to falling off some deals, or did something else change there?
Marcus Lemonis: No, we didn't say 13 new dealerships. We've already opened 13 new dealerships as we sit here today. What's that?
Tristan Thomas-Martin: I just said no less than 17 new dealerships.
Marcus Lemonis: Yeah, well, you said 13 new dealerships, so we've opened 14 new dealerships. Since January 01, we've sold one. So that's a net of 13 new dealerships. We have two stores to three stores that will more than likely open hopefully by the end of the year and that's before we even open the kimono to look at what acquisitions are out there in the back half. But I'm not going to -- I'm not going to meet a number by just buying something. We know that deals are brought to us every day and every week. Right now, as we sit here today in May, June, and July, Matt and I are focused on one thing, and that's crushing our same-store, new number and growing our market share. The deals that are out there are going to be out there in the fall, in the winter, and we believe they're only going to get better. So we're not in a rush to have money leave our vault at a level that we believe we could deploy that later and get better. The goal is always going to be to do acquisitions. That's the blueprint of our company from the beginning of time and whether it ends up being 25 stores or 35 stores or 18 stores, it always needs to be smart, profitable and accretive. Got it.
Tristan Thomas-Martin: I missed this, but how was OEM promotional support in the quarter and then how's that been trending so far in 2Q.
Marcus Lemonis: We didn't really have that much promotional support in Q1 like we did in Q4 of last year because we had taken the bulk of our bath back then, but manufacturers have always been helpful, particularly Thor, Forest River and Winnebago have always been helpful in addressing it. We want to always find the balance and the balance is, I'm not going to take money if I need to buy more inventory in exchange for it. We don't want to get hooked on, on that drug, where you have to buy something to get something. We want you to help us with the product we bought, and the period needs to be at the end of that sentence. And then we want to make good inventory purchasing decisions that are separated from that assistance. So we did not have much in the quarter at all, Tom.
Tom Curran: No, not much at all.
Matthew Wagner: And just as well. We like the manufacturers in a healthy position and continue to maintain and innovate their products just as well. So never do we want to take needlessly just any sort of promotional support, knowing that just as well, we can both be profitable together as we pursue certain price point segments which we worked very well with, especially the three entities that Marcus has named already, Thor, Forest River and Winnebago, to continue to target those segments.
Marcus Lemonis: Yeah. One more thing just to point out on top of that, and I think Matt alluded to it. We've also invested, and so have they, in launching some exclusive locations and we have, I think, how many we have now total?
Matthew Wagner: We just launched five within this segment or within this period? I think we're up to eight now.
Marcus Lemonis: Yes. So the exclusive locations that we've launched, and whether that's grand design of Green Bay or Keystone of Northern Michigan or whatever it may be, are performing really nicely and I think we're learning that the future growth of this business, in addition to Camping World stores, we may have cracked the code on a way to have incremental store growth and incremental acquisitions with a lower cost of capital deployed to do those deals, not building out big retail stores. They're not on 20 acres. They don't take on big rent factors. So the true rollout on those is pretty good. The return on investment has been pretty spectacular in those areas, and I would expect this to continue to double down on those. The manufacturers are spending some money on that. So when you talk about a system, assistance from manufacturers can come in the form of training, which they've all been amazing, investing in parts and service systems, which they've all been doing, investing in aging processes, which they've all been doing, and investing in this exclusive store concept. We couldn't be happier with the partnerships and the participation that the three core manufacturers have provided; not only our company, but we believe the other dealers as well.
Operator: Our next question is from the line of Alice Wycklendt with Baird. Please go ahead.
Alice Wycklendt: Hi, guys. I'm for Craig this morning. Thanks for all the commentary so far. I think just one question. I wanted to dig in on the new margin side. I think the gross profit dollars came in around 5,400 per unit, gross margin percentage just under 14%. Sounds like there maybe weren't any significant transitory factors from OEM support in the quarter. But how should we think about that number through the balance of the year?
Matthew Wagner: I think that this is largely indicative of what we normally see in the first quarter of most years. If you look at pre-pandemic margin levels. So I would suggest then that for the next two quarters, probably could bump up around that 15% range, if not a little bit higher, depending upon what that general mix is of inventory and then generally the fourth quarter kind of settles in once again a little bit lower, but perhaps like 14.5%, give or take.
Marcus Lemonis: To your point, Alice, there was no manufacturer assistance putting that number at 14%. That was true performance, I'm hoping and I think Matt and I are definitely on the same page about this. As we work through the last three thousand eight hundred twenty three s and we sort of shrink that down, that is really what could prop it up to 15%. I think 15% is probably a good number for 2Q and Q3. We obviously still want to take care of the customer. We still want to actually grow market share and then as you get back into the fourth quarter, it's going to fall back down again because we want to clean inventory, going into the end of the year, things are a little quieter. You have to incentivize the customer a little bit more. But we're feeling good about where our new margins are. We always want to have more. One of the downsides of driving ASP's down is even though you open up the dam and you find more people, the total gross profit dollars on the front end, when you lower ASP, even when margins are good, they're a little lower. So hopefully over time, as interest rates come back down and affordability becomes a little easier, those ASP's could start to rise. 1,000 here, 1,000 there, and get us back to where we think it really should be, which is right around that $39,000 to $40,000 range.
Alice Wycklendt: Perfect. Thanks for the color.
Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now hand the conference over to Marcus Lemonis for his closing comment.
Marcus Lemonis: Great. Thank you so much for joining the call. As we continue to deal with the headwinds, we want the market to understand that we are very disciplined about our balance sheet. We're very focused on delivering on the results and we thank you for your support. So we'll see you on the next call. Take care. Thank you.
Operator: Thank you. The conference of Camping World Holdings, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.
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