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.