Michael Albanese

Michael Albanese asked about the correlation between value auto demand and consumer affordability, how the widening gap between new and used pricing impacts value autos, and the demand drivers for this segment, including customer progression.

Answer

Bryan DeBoer, President and CEO, confirmed that value auto demand is correlated with consumer affordability and has very little impact from new vehicles, as it caters to a different customer segment. He described the 9+ year old vehicle market (63% of the total used market) as a 'bulletproof segment' where most used car profits are made. DeBoer emphasized that sourcing is key, driven by a mindset shift in sales and service departments to keep all trade-ins, and noted that while some value auto customers remain in that segment, others use it as a stepping stone to higher-priced vehicles.

Michael Albanese asked about value autos, specifically their typical buyer's credit quality and financing, and whether demand for value autos is inversely or directly correlated with consumer affordability. He also explored how value autos fit into demand shifts if the gap between new and used pricing widens, and if certain segments (CPO, core, value) see a pickup in demand.

Answer

Bryan DeBoer, President and CEO, confirmed that value auto demand is inversely correlated with consumer affordability, as it caters to a different customer segment largely unaffected by new vehicle pricing. He explained that value autos represent 63% of the market (24 million units) and are a 'bulletproof segment' where significant money is made, primarily through sourcing cars from trade-ins. DeBoer noted that while some value auto customers use it as a stepping stone to CPO or new cars, about half are consistent buyers of depreciated, value-driven transportation. He stressed that the key is a mindset shift among sales and service leaders to keep and recondition these cars, despite potential 'comebacks.'

Michael Albanese of The Benchmark Company, LLC questioned the rationale for lowering the full-year new vehicle volume guidance. He also asked for the expected timeline and success metrics for the Pinewood DMS rollout across the store base.

Answer

President & CEO Bryan DeBoer explained the new vehicle guidance adjustment was an industry-wide recalibration based on H1 results and more difficult comps in July due to the prior year's CDK event. For Pinewood, he outlined a phased rollout starting with a few stores by year-end, 15-25 stores in 2026, and a full rollout in 2027-2028, which will drive future SG&A improvements.

Michael Albanese of The Benchmark Company asked about the labor market conditions franchisees are facing, particularly regarding wages, retention, and hiring for the growing Take 5 brand.

Answer

President & CEO Danny Rivera clarified that Take 5 hires from a broad, non-certified labor pool and trains them internally, so it faces different dynamics than the franchise brands like Meineke, which require certified technicians. He noted that franchisees are adept at managing their respective labor forces and there have been no recent material changes. He declined to provide specific retention numbers.

Michael Albanese asked about the visibility RecPro provides into aftermarket trends and sought to clarify how much of the aftermarket portfolio serves the used market versus new unit sales.

Answer

President - RV, Jeffrey Rodino, confirmed that RecPro offers a good view into a growing aftermarket. He clarified that the majority of their aftermarket products are for the upgrade and refurbishment of existing units, rather than being primarily tied to new unit attachments.

Michael Albanese asked whether the growth in the housing segment was driven more by builder inventory restocking or by underlying retail demand for affordable housing.

Answer

An executive responded that the growth is believed to be driven by strong retail demand for affordable housing. They noted that the manufactured housing (MH) industry has been particularly robust, as there has long been insufficient capacity to meet the underlying demand in that market.

Michael Albanese asked for historical context on the current divergence between strong boating activity and weak new boat sales, and whether this dynamic suggests the formation of significant pent-up demand.

Answer

CEO Brett McGill and CFO Mike McLamb agreed that this divergence is unique compared to past downturns like the financial crisis, where boating activity also declined. They believe the current environment is an uncertainty-driven purchase delay, not a lack of interest. McGill confirmed his belief in 'real' pent-up demand, citing direct customer feedback about their intent to buy once the economic outlook stabilizes.

Michael Albanese requested a quantification of the sales comp difference between Florida and the rest of the country, asked about demand in the superyacht division, and inquired about the M&A strategy in the current macro environment.

Answer

Executive Michael McLamb explained that while Florida performed well and lifted the average selling price, all regions showed good growth. He described the superyacht business as "very solid and resilient," citing strong Mediterranean bookings. On capital allocation, Executive William McGill noted they are being "much more prudent" with M&A, focusing on integrating existing businesses and developing synergies.

Michael Albanese of The Benchmark Company inquired about the potential for further expense reductions, particularly regarding store count, and asked whether the promotional environment is expected to normalize or remain elevated through the year.

Answer

Executive Michael McLamb explained that after closing about 10 duplicated locations in recent quarters, there isn't significant room for more closures. Current expense initiatives are focused on line-by-line reviews of costs like marketing and T&E to offset inflation. Executive Bill McGill stated that aggressive promotional activity from manufacturers and dealers will continue through the winter boat show season to right-size inventory levels and aging across the industry.

Michael Albanese asked for an update on the saltwater segment, which had been highlighted as an area of weakness in the prior quarter, and whether consumer behavior had changed.

Answer

CFO Bruce Beckman reported an improvement in the Saltwater segment, especially in Florida, which had been down significantly in Q2. He clarified that the segment's performance improved to align with the overall market trend rather than rebounding to growth, effectively returning to a more normalized pattern.

Michael Albanese asked for a breakdown of the drivers behind the Average Selling Price (ASP) increase, specifically the contribution from product mix versus price increases, and the outlook for future pricing strategy.

Answer

CEO Steven Menneto clarified that favorable product mix was the primary driver of the ASP increase, as price hikes have been modest, in the low single-digit range. He anticipates the mix benefit will moderate in the second half of the year. He added that the near-term focus will be on managing promotional levels to address affordability headwinds, rather than implementing significant price increases.

Michael Albanese of The Benchmark Company, LLC asked for details on OneWater's market share gains, specifically in which segments (premium vs. value), and questioned if the current promotional environment is a strategic choice to drive volume.

Answer

CEO Philip Singleton confirmed that market share gains are primarily in the premium segment, where the company predominantly operates. He explained that the promotional environment is indeed strategic, with aggressive discounting focused on non-current (model year 2024 and older) inventory to clear dated stock. Singleton noted that margins on current year models are healthier and expects overall new boat margins to improve as aged inventory is sold off.

Michael Albanese asked for commentary on the increase in warranty expense within the Towable segment, its impact on margins, and whether it was within historical expectations.

Answer

CFO Bryan Hughes explained the increase was due to two factors. First, the revitalization of the Winnebago Towables business has led to a transitory rise in warranty costs to address historical quality issues. Second, the Grand Design business saw its warranty expense ratio increase slightly above historical norms to address specific quality campaigns, following several years of unusually low expense levels.

Michael Albanese asked about the impact of insurance costs on consumer affordability and requested clarification on whether unit volumes were positive for both Barletta and Chris-Craft in the Marine segment.

Answer

CEO Michael Happe noted some chatter about rising boat insurance costs in parts of Florida but has not seen a material issue for their business or on the RV side. He confirmed that total marine unit deliveries were slightly positive year-over-year in Q1, driven primarily by Barletta, but described overall volume as "pretty steady" rather than showing significant growth.

Michael Albanese of EF Hutton inquired about the macroeconomic trends affecting Upexi's brands, the composition of the $100 million revenue guidance, the specific drivers for improving EBITDA margins, and sought confirmation on the company's debt status.

Answer

CEO Allan Marshall noted that consumer demand is holding up better than anticipated, with stable order volumes despite slightly lower average ticket prices. He confirmed the $100 million guidance includes organic growth from existing brands. Marshall detailed that EBITDA margin improvement will come from reducing advertising spend, implementing further price increases, and realizing G&A efficiencies. CFO Andrew Norstrud confirmed that proceeds from the Infusionz asset sale were used to pay off all debt associated with the E-Core acquisition.