Debt Repayment Plans
Q: How quickly can Houston generate cash to pay off debt?
A: The Houston project is expected to generate cash returns that are "pretty good". " We expect to pay off our converts in early 2025 with cash generated throughout this year. " We were cash positive in the first part of the year and expect to be cash positive in the back half. "

Confidence in 2026 Targets
Q: How confident are you in achieving the 2026 strategic plan despite a weaker baseline?
A: We remain confident in reaching our 2026 targets. " Economic challenges are expected to pass, and we anticipate help from OEM partners and new product innovations. " We are optimizing our cost structure and see exciting opportunities, including the preowned market and potential acquisitions. "

Incremental Cost Savings
Q: Is the $30 million cost savings program incremental to prior cuts?
A: Yes, the $15 million in cost reductions for the back half of this year, annualizing to $30 million, is incremental and new optimization work. " It is in addition to previous cost-cutting efforts. "

Gross Margin Compression
Q: What's causing gross margin compression, and how is inventory reduction progressing?
A: The vast majority of gross margin compression is due to inflated industry inventories. " We are a bit behind expectations on inventory reduction but are making progress. " We remain confident in reducing new inventories by $60 million by year-end. "

Impact of New Inventory on Used Sales
Q: Has higher new inventory affected your ability to bring in used vehicles?
A: The elevated new inventory hasn't significantly impacted our ability to acquire used vehicles. " However, attractive financing and aggressive pricing on new units may influence customers to choose new over pre-owned. "

Exiting Noncore Products
Q: What products and brands are you exiting?
A: We've almost entirely exited the marine business except for PWC and some Yamaha jet boats. " We've also exited several niche products and some brands in specific stores where it didn't make sense. "

Interest Rate Impact
Q: How would interest rate cuts affect your business model?
A: Lower interest rates would help our showrooms immediately by positively influencing customer mindset. " On debt, a 25 basis point reduction would save about $1 million annually, though impacts wouldn't be immediate. "

New Preowned Store in Houston
Q: What are the costs and expectations for the Houston project?
A: Startup costs for the Houston preowned store are minimal. " We're using floor plan financing for inventory. " The project is a pilot with positive cash return expectations. "

Withdrawing Top-Line Guidance
Q: How should we think about top-line trends for the rest of the year?
A: We have decided not to provide guidance going forward. " The environment is challenging with inflated inventories and macro issues, so we expect similar trends as the previous two quarters. "

CDK Outage Impact
Q: Did the CDK outage affect your results?
A: The impact was minimal. " Our dealer management system wasn't affected, and while some platforms were impacted, it wasn't meaningful to the quarter. "