John Healy

John Healy asked about the margin outlook in relation to the tariff environment, specifically if there's a linkage between input costs and tariffs that would provide automatic relief if tariffs are reduced. He also questioned if suppliers are more willing to share costs to address affordability issues.

Answer

CEO Michael Happe detailed a robust tariff exposure risk management process, noting high transparency from tier-one suppliers regarding tariff pressures. He stated that suppliers have agreed to defer or share increased tariff costs on a case-by-case basis. Michael Happe also mentioned efforts in engineering design, bill of material management, and raw material inventory to mitigate costs, with the current guidance embedding the tariff exposure. He added that Winnebago Industries is maturing its material cost management, with significant savings targets for fiscal 2026, potentially involving supplier consolidation.

John Healy asked about the margin outlook in relation to the tariff environment, specifically if Winnebago Industries has established a direct linkage between input costs and tariffs, allowing for automatic relief if tariffs are reduced. He also questioned if suppliers are more willing to share or mitigate tariff-related costs to address affordability issues.

Answer

CEO Michael Happe detailed Winnebago Industries' robust tariff exposure risk management, involving transparency with tier-one suppliers, agreements to defer or share increased tariff costs, and internal mitigation efforts through engineering design and bill of material management. He confirmed that the fiscal 2026 earnings guidance already embeds current tariff pressures. Michael Happe noted that if the Supreme Court rules against IEPA tariff powers, the company would quickly assess potential recovery. He also highlighted ongoing efforts to manage material costs, secure savings, and potentially consolidate suppliers to make products more affordable.

John Healy asked for management's view on the current state of insurance premiums for consumers, specifically whether 2026 would still see consumer headwinds or if industry profitability might lead to lower prices, impacting repairable claims. He also inquired about the reasons for not being active on the share buyback front, given record cash levels and a share multiple close to previous buyback periods, asking if economic uncertainty or other gating factors were at play.

Answer

CEO Jeff Liaw declined to offer a prognostication on insurance premiums, citing numerous complex variables and suggesting direct consultation with insurance carriers. CFO Leah Stearns stated that Copart prioritizes deploying capital for long-term value through business expansion (CapEx or M&A) and will use share repurchases to return capital when valuation opportunities arise, with no change in strategy. Mr. Liaw added that Copart maintains disciplined capital allocation, treating cash as precious, and will buy back shares again when appropriate.

John Healy asked for management's thoughts on the continuum of insurance premium to consumers for 2026, and later inquired about the reasons for not being active on the share buyback front given record cash levels and current share valuation.

Answer

CEO Jeff Liaw deferred on insurance premium prognostication, citing numerous dynamic variables like consumer sentiment, inflation, and insurance rates, suggesting it's better to ask carriers directly. CFO Leah Stearns stated Copart's priority is deploying capital for long-term value through business expansion (CapEx or M&A). She affirmed that share repurchases are the lever for returning capital to shareholders when valuation opportunities arise, and nothing has changed on that front. Jeff Liaw added that Copart maintains disciplined capital allocation, treating each dollar as precious.

John Healy asked about Copart's key operational and market presence priorities for the new fiscal year, as well as the company's approach to capital allocation, including share buybacks and M&A, given its record cash levels.

Answer

CEO Jeff Liaw highlighted auction liquidity as a fundamental priority, encompassing member recruitment, friction reduction in the member experience, and synergistic growth with non-insurance sellers. On capital allocation, he reiterated a long-term strategy of returning cash to shareholders via buybacks and described a two-pronged M&A approach focused on compelling standalone investments that enhance Copart's service offering.

John Healy asked for clarification on accident frequency trends, questioning if a decline was implied by the data, and sought more detail on the strategic importance of the Title Express service offering.

Answer

Executive Jeffrey Liaw addressed accident frequency, noting it has been on a long-term decline due to safer vehicles, a trend historically offset by rising total loss frequency. He confirmed that Title Express represents a strategic forward integration, leveraging Copart's scale to provide a more efficient titling solution, which demonstrates the deep trust insurance carriers have in the company to handle critical policyholder interactions.

John Healy of Northcoast Research inquired about Avis Budget Group's summer season RPD performance in the U.S., seeking clarification on the main factors contributing to the observed RPD decline and the current continuum of pricing. He also asked for an outlook on interest expense for the upcoming year, considering recent rate movements and refinancing activities.

Answer

CEO Brian Choi acknowledged the 3% RPD decline for Q3, noting stronger performance in July and August followed by softening in September, consistent with seasonal behavior. He expressed dissatisfaction given inflationary pressures but highlighted RPD stabilization on a two-year stack, expecting a modest improvement in Americas RPD for Q4. CFO Daniel Cunha explained that $3 billion in term maturities next year would require refinancing, with half at higher rates and half at lower rates, while corporate interest expense is expected to remain relatively steady, potentially decreasing slightly with debt paydown.

John Healy inquired about Avis Budget Group's summer season performance, specifically the factors contributing to the U.S. RPD decline and the overall pricing continuum. He also asked for an outlook on interest expense for the upcoming year, covering both fleet and corporate levels.

Answer

CEO Brian Choi addressed the 3% RPD decline in the Americas, noting stronger performance in July and August followed by September softening, attributing it to typical seasonal behavior. He expressed dissatisfaction given inflationary pressures but highlighted stabilization in the two-year RPD stack and anticipated modest improvement in Q4. Regarding interest expense, Brian Choi and CFO Daniel Cunha explained that $3 billion in fleet maturities next year would be refinanced at mixed rates, while corporate interest expense is expected to remain relatively steady, potentially lowering slightly with debt paydown.

John Healy of Northcoast Research sought more detail on the Waymo partnership, asking about expansion plans and the evolution of the business model toward a true partnership. He also asked about gains on vehicle sales for the quarter and their inclusion in the full-year guidance.

Answer

CEO Brian Choi confirmed the intent to expand the Waymo partnership to future cities, emphasizing it is a true partnership with shared risk and co-created value, not a simple service contract. Regarding financials, Choi acknowledged there were gains on sale, though smaller than the prior quarter. SVP David Calabria added that gains are minimal as cars are depreciated close to zero gain/loss, and this is factored into the net depreciation guidance.

John Healy from Northcoast Research sought more detail on the Waymo partnership, including market evolution and its nature as a true partnership, and asked about the level of vehicle disposition gains in the quarter and full-year guidance.

Answer

CEO Brian Choi stressed that the Waymo deal is a true partnership with shared risk and co-created value, not a simple service contract like past arrangements, and that Avis expects to expand with Waymo to future cities. Regarding financials, Choi and SVP David Calabria confirmed that gains on sale were minimal in the quarter. The full-year guidance is for a net depreciation number, but the ability to realize gains is currently limited by slower-than-planned fleet rotation due to OEM delivery delays.

John Healy asked for perspective on the magnitude of holding cost reductions from the new fleet buy and whether investors should shift focus from RPD to the overall profit spread in a lower-cost environment.

Answer

CEO Joseph Ferraro noted that while it will take more than one cycle to fully rotate the fleet, they have been aggressively de-fleeting older cars. CFO Izilda Martins stressed the importance of a holistic view, stating that while cost reduction is key, stabilizing revenue per day (RPD) remains critical, and the ultimate goal is the contribution of all metrics to the bottom-line margin.

John Healy of Northcoast Research questioned the nature of the partnership with Cox Automotive for retail sales and its effect on the Carvana relationship. He also asked for clarification on the characterization of industry pricing being down mid-to-high single digits, contrasting it with competitor reports.

Answer

CEO Gil West detailed the Cox Automotive partnership, emphasizing its role in digitizing the sales transaction process and leveraging Cox's data for AI-driven pricing, which opens up a larger market. EVP & CCO Sandeep Dube responded to the pricing question by stating that year-over-year comparisons depend on each company's strategy and reiterated Hertz's focus on optimizing RPU (Revenue Per Unit) by balancing rate and utilization, which differs from last year's approach.

John Healy requested more detail on depreciation, asking what level of gains are included in the sub-$300 DPU target for Q2 and what the depreciation rate is for new cars. He also asked why the rate environment remains soft despite industry-wide fleet reductions.

Answer

CFO Scott Haralson clarified that the gross DPU on the new model year 2025 fleet is already below $300, before any gains on sale. CEO Gil West added that rising residual values are now creating gains on older vehicles being sold. CCO Sandeep Dube attributed recent rate softness to a temporary pullback in certain segments post-tariff announcements, but noted stabilization and expected seasonal improvement.

John Healy questioned whether lower future fleet and interest costs would lead to Revenue Per Day (RPD) moving closer to 2019 levels and asked for specifics on which business segments would be downsized to rightsize the fleet.

Answer

Chief Commercial Officer Sandeep Dube responded that the focus remains on maximizing Revenue Per Unit (RPU) by fleeting inside the demand curve and improving asset utilization through better coordination between fleet and commercial teams. Dube clarified the strategy is about continuous optimization and contribution margin across all segments, not eliminating a specific part of the business.

John Healy questioned whether the long-term target of approximately 325 stores remains valid, given the recent emphasis on store consolidation and improving productivity per location.

Answer

Chairman and CEO Marcus Lemonis reaffirmed that Camping World is a growth company with a long-term goal of operating over 300 locations and reaching $10B+ in revenue. However, he stressed that the immediate priority is qualitative growth, improving profitability, and deleveraging the balance sheet. Future growth will be smart and opportunistic, focused on upgrading the store portfolio.

John Healy asked a strategic question about Camping World's private label business, seeking its current penetration rate and how the company plans to use this differentiated strategy to augment market share gains in 2025.

Answer

CEO Marcus Lemonis and executive Matt Wagner detailed their 'contract manufacturing' strategy, which now represents just under 36% of new unit sales. They leverage proprietary data to partner with manufacturers on exclusive brands (e.g., Coleman, Eddie Bauer), allowing them to innovate on floor plans and features. This strategy provides a competitive advantage and enables entry into new markets without being limited by traditional OEM franchise agreements, effectively widening their addressable market.

John Healy asked for CarMax's perspective on Amazon's entry into the auto space, questioning whether they are viewed as a competitor or a potential partner.

Answer

CEO William Nash responded that Amazon's current focus appears to be on listings and lead generation, positioning them as a facilitator similar to others CarMax already works with. He sees the potential for collaboration to complement Carmax.com traffic. He also noted that Amazon's entry reinforces the value of CarMax's established omnichannel model, which combines physical and digital assets and represents a significant competitive moat.

John Healy asked a big-picture question about the company's reconditioning operations and whether they are satisfied with the current approach. He also followed up on the year-over-year decline in advertising expense.

Answer

President & CEO William Nash confirmed that reconditioning is a key area of focus, alongside logistics, with a goal of capturing 'a couple of hundred bucks' in savings through many small initiatives like parts utilization and capacity improvements. EVP & CFO Enrique Mayor-Mora reiterated that the Q2 advertising spend decline was purely a timing issue and that the full-year spend per unit remains on track with previous guidance.

John Healy from Northcoast Research inquired about the outlook for SG&A levels, specifically how they might grow relative to same-store sales in fiscal 2026. He also asked for clarification on the price point and margin profile differences across tire tiers 1 through 4.

Answer

CFO Brian D'Ambrosia explained that while back-office optimization has kept SG&A flat in recent years, recent increases are due to investments in front-shop labor for the ConfiDrive initiative, which will continue. The goal is for SG&A growth to remain below top-line growth. CEO Michael Broderick clarified the tire tiers, stating there is roughly a $20-$30 price difference between each tier, with margins generally being stronger in Tiers 1, 2, and 3 compared to the lowest tier.

John Healy of Northcoast Research requested more detailed granularity on the specific drivers behind the Q1 gross margin improvement and asked about the company's view on a more steady-state, long-term gross margin profile.

Answer

Executive Michael McLamb identified the primary driver as the growth in higher-margin businesses, such as marinas and superyacht services, which grew to over 30% of the business mix in the quarter. He reiterated that the low 30s percentage range is the right target for the full fiscal year. Long-term, McLamb stated the strategy is to continue acquiring higher-margin businesses, which are more stable and resilient, suggesting that margins could be a topic for future upward revision.

John Healy inquired about the company's capital allocation strategy, particularly its M&A pipeline and areas of focus, such as dealerships, marinas, or manufacturing.

Answer

CEO Bill McGill stated that the company maintains a full M&A pipeline and will look for opportunistic deals. He specified that the near-term focus will be on expanding the IGY Marinas portfolio and the superyacht business, where they see significant international opportunities, while also remaining open to dealership acquisitions in the current environment.

John Healy inquired which commercial segments—rental, repo, or off-lease—are showing the most traction, and he also asked for an update on the company's international expansion plans.

Answer

CEO George Chamoun identified repo and rental vehicles as the primary sources of commercial volume at present, noting that the off-lease segment is an area they are just beginning to develop. On international expansion, he revealed that ACV is being pulled into European markets by OEM partners and is in the early stages of developing an asset-light, self-inspection-based model, with more details to come next year.

John Healy asked for perspective on 2025 commercial volumes, questioning if OPENLANE can achieve aggregate volume growth despite industry headwinds and whether a contraction in off-lease supply could pressure ARPU.

Answer

CEO Peter Kelly acknowledged the 2025 headwind from lower lease maturities but noted it could be offset by a declining rate of pre-term payoffs, pointing to Q3's commercial volume growth as a positive sign. He expressed confidence in the long-term commercial opportunity beginning in 2026. CFO Brad Lakhia added that internal models show that even a worst-case 2025 scenario does not present a significant headwind to the marketplace business's overall financial performance.

John Healy asked for perspective on the expected commercial volume headwinds in 2025, questioning if OPENLANE could still achieve aggregate volume growth and whether lower volumes could pressure ARPU.

Answer

CEO Peter Kelly acknowledged the headwind from lower off-lease maturities in 2025 but noted it could be offset by a lower rate of lease payoffs, pointing to Q3's commercial volume growth as evidence of their ability to navigate this dynamic. He expressed confidence in continued dealer volume growth. CFO Brad Lakhia added that internal models show that even a worst-case 2025 scenario does not present a significant financial headwind to the marketplace business.

John Healy of Northcoast Research asked about Goodyear's confidence in achieving its 2025 margin targets despite raw material and volume headwinds, and also questioned the company's exposure to ATD's bankruptcy and its effect on distribution strategy.

Answer

CEO and President Mark Stewart explained that margin confidence stems from the Goodyear Forward plan, fundamental manufacturing efficiencies, and a strategic push into premium, 18-inch+ SKUs. Regarding ATD, he noted the situation validates Goodyear's TireHub strategy. Executive Vice President and CFO Christina Zamarro quantified the ATD receivable at $135 million but stated that a payment agreement for substantially all pre-petition claims means no material impact is expected.

John Healy asked how management intends to govern the company's growth rate and what the potential impact of a 100-basis-point drop in interest rates would be.

Answer

CEO Ernie Garcia stated the company aims for rapid growth to achieve greater scale, balancing the pace with the focus required to capture further efficiency gains. Regarding interest rates, he noted that while lower rates are helpful by making cars more affordable, it's a second-order effect and not a central driver of performance.