OneWater Marine Inc.

Good day, and thank you for standing by. Welcome to One Water Marines Fiscal Fourth Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After this week's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11. or on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Jack Azell, Chief Financial Officer. Please go ahead, sir.

Good morning, and welcome to One Water Marines' fiscal fourth quarter and full year 2023 earnings conference call. I am joined on the call today by Austin Singleton, Chief Executive Officer, and Anthony Asquith, President and Chief Operating Officer. Before we begin, I'd like to remind you that certain statements made by management in this morning's conference call regarding Longwater Marine and its operations may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. Factors that might affect the future results are discussed in the company's earnings release, which can be found in the investor relations section on the company's website and in its SCC filings. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

except as required by law and with that i'd like to turn the call over to austin singleton who will begin with a few opening remarks austin thanks jack and thank you everyone for joining today's call i would like to begin by thanking the one water team for their solid execution in a challenging operating environment despite the return to historical buying patterns and normalized pricing we delivered record revenue in 2023 which increased 11% on top of a 42% growth in 2022. Furthermore, the team delivered same-store sales growth of 3% for the full year. For the quarter, same-store sales of 14.6% significantly outperformed the industry, which market data indicated was down high single digits. Full-year revenue from our higher margin sales Service parts and other sales grew 26%, which helped us offset the expected decline in new boat margins as the industry returned to normalized pricing. Margins in the fourth quarter were in line with the third quarter, which is encouraging. Overall, we believe that margins will continue to fluctuate with seasonality and model mix, but it does seem to feel like boat margins are stabilizing. Windwater's proven track record of managing through various economic cycles served us well during 2023. Over the past year, our proactive and aggressive approach to inventory management resulted in inventory levels at 19 weeks on hand compared to an industry average of 25 weeks on hand. We continue to aggressively work down non-current inventory, saving on interest expense and other carrying costs. This positioned us with a good supply of model year 2024 boats compared to 2023, which provides a more compelling sales opportunity. This competitive positioning in a market flooded with non-current inventory is driving results today and sets us up for success in the quarters to come. I am pleased to announce that earlier this week, despite the difficult banking environment, we were able to increase our floor plan facility by $100 million, to a total capacity of 650 million. This will support the business and recent completed acquisitions. It's important to note that while same store sales inventory hasn't grown in terms of units compared to 2019, it has increased more than 40% on a dollar basis. This additional capacity provides us greater flexibility, especially as we integrate the dealers we have acquired over the past few years. We also completed a sale leaseback agreement for Rossioli Yachting Center, which bolstered our cash flow and allows us to sharpen our focus on Sunseeker yacht sales, warranty, and service operations. The proceeds from the sale were used to pay down a portion of our long-term debt and to acquire the remaining 20% interest in quality boats located on the west coast of Florida. As a reminder, we first acquired a major interest back in December of 2021 and have been pleased with quality's performance in one of the most attractive boating markets in the country. On the M&A front, the deal pipeline continues to be attractive, and our strong balance sheet provides the drive power for the right dealer. While we are seeing plenty of activity, we are being extremely selective and scrutinize every opportunity to find the right dealership to add to our portfolio. In summary, I'm proud of our team's execution while navigating industry challenges as we return to a more normalized operating environment. We continue to work tirelessly to provide our customers with the boat of their dreams. We remain nimble in our response to changing market dynamics and continue to focus our efforts on strategic priorities that position OneWater for long-term success. With that, I will turn it over to Anthony to discuss business operations.

Thanks, Austin. Despite the normalizing the sales environment, our team remained active and delivered a solid close to the summer selling season. Customer sentiment is holding up, and the fourth quarter same store sales growth was over 14% was supported by strength from new and pre-owned boat sales. Our manufacturing partners continue to be very innovative, unveiling exciting new models in the premium segment with unique features that customers want. We saw this excitement firsthand at recent boat shows, including the Fort Lauderdale International Boat Show, which longed strong activity. While we're too early in the boat show season to draw any conclusion, we are off to a good start. Turning to our higher margin businesses, financial insurance income for the fourth quarter was also up slightly, though not proportionally to boat sales due to the current spread on the interest rates. The average customer seems to be getting used to higher interest rates, and credit continues to remain widely available and widely used. We believe the majority of the customers use some degree of financing to pay for a portion of their purchase. To this point, approximately 70% of Nubo customers in the September quarter financed a portion of their purchases directly with us, which is on the high side of historical averages. From where we sit today, our customers are generally adjusting to higher costs of financing their boats and tend to be somewhat insulated from interest rates and economic headwinds. Overall, we believe our retail strategies position us to continue to outperform the industry. With that, I'll turn the call over to Jack to go over the financials in more detail.

Thanks, Anthony. Fiscal fourth quarter revenue increased 13% to $451 million in 2023, from 398 million in the prior year quarter. New boat sales grew 12% to 264 million in the fiscal fourth quarter, while pre-owned boat sales increased 36% to 92 million. We are pleased with the pace of boat sales that have outperformed industry reports despite the challenging macroeconomic environment. Revenue from service parts and other sales for the quarter increased 1% to 82 million compared to the prior year and finance and insurance revenue grew 2% to $13 million in the fourth quarter. These sales gains generated over 14% same-store sales growth for the quarter, which significantly outpaced the industry. Gross profit decreased 6% to $119 million in the fourth quarter compared to $126 million in the prior year, driven by the normalization of gross margins on boats sold. Gross profit margin appears to be stabilizing when compared to the June quarter that has declined from the fourth quarter of last year. We now expect margins to fluctuate with historical seasonal patterns and model mix. In the pre-COVID era, we typically benefited from stronger margins during the summer selling months with a mixed shift to higher unit volumes and lower ASP, as opposed to the slower winter months where the mix shifts to higher ASPs with lower margins. Fourth quarter 2023, selling general administrative expenses increased to 85 million from 80 million. SG&A as a percentage of sale was 18.8%, down 120 basis points from the prior year driven by the variable cost structure of the business, cost optimization, and integration efforts of the acquired parts and service businesses. In the fourth quarter, the company recorded a non-cash impairment charge of 147 million. The charge is primarily related to the write-down of goodwill and identifiable tangible assets that were recorded in our distribution segment and was largely driven by the recent decline in the segment results, the stock price, and the overall valuation. We believe this tremendous value in our distribution segment, which will be realized as part of our long-term growth strategy. As a result, we posted an operating loss of $117 million compared to income of $40 million in the prior year. Net loss for the physical fourth quarter totaled $111 million or $6.89 per share compared to net income of $22 million or $1.28 per diluted share in the prior year. Excluding the impairment charge and other adjustments, we reported adjusted EBITDA of $28 million compared to $45 million in the prior year. We have also introduced a new metric, adjusted earnings per share, to assist with the comparability of the results. Accordingly, for fiscal fourth quarter of 2023, our adjusted earnings per deleted share was 42 cents compared to $1.68 in 2022. Turning to our four-year results, total revenue for the year 2023 increased 11% to $1.9 billion compared to the prior year, driven by an increase in the average unit price of both new and pre-owned boats, an increase in the unit sales of pre-owned boats, and sales growth from higher margin businesses. Same-store sales increased 3% in fiscal 2023. Additionally, service parts and other revenue increased 26% to $322 million for the fiscal 2023, driven by contributions from our recently acquired businesses and dealer operations. Full-year 2023 gross profit decreased 3%, to $535 million compared to the prior year as a result of industry-wide normalization of boat pricing, partially offset by meaningful contributions of acquired parts and service businesses. Gross profit margin for fiscal 2023 was 27.6%, a decline of 410 basis points compared to fiscal 2022. Selling general administrative expenses in fiscal 2023 increased to 346 million or 17.8% of revenue from 302 million or 17.3% of revenue in fiscal 22. The increase in SG&A as a percentage of revenue was driven by the return of a more traditional promotional environment and higher costs associated with our acquired service parts and other businesses. We will continue to moderate costs with our variable expense structure and bring the higher expense structures of the acquired businesses in line with the legacy business. Full year 2023 operating income fell to 18 million compared to the prior year's operating income of 218 million, primarily driven by the $147 million impairment charge recorded in fiscal year 2023. Net loss for fiscal year 2023 was $39 million or $2.69 per share compared to net income of $153 million or $9.13 per share in the prior year. The business generated adjusted EBITDA of $167 million for the fiscal year 2023 and adjusted earnings per diluted share of $5.10 compared to $10.55 per diluted share in 2022. Turning now to the balance sheet, on September 30th, 2023, the total liquidity continues to be in excess of $100 million, including $85 million of cash and availability under our credit facilities. As Austin mentioned earlier, we entered into a sale-leaseback transaction, which closed on September 30th, but did not fund until October 2nd. As such, the $45 million proceeds were collected as receivable on our books at the close of the year. While the sale has a slightly negative impact on adjusted EBITDA, overall it increases cash flow on an annual basis. Subsequent to year-end, we used $25 million of proceeds to pay down long-term debt and the balance to purchase the non-controlling interest of quality boats. Total inventory on September 30th was $610 million compared to $373 million at September 30th, 2022. As a result of improved lead times, and industry normalization, our boat inventory has returned to pre-COVID levels, and boat units are up less than 1% compared to fiscal 2019 on a same-store basis. Long-term debt currently stands at $458 million. Our net debt-to-adjusted EBITDA ratio is 2.2 times. We are comfortable with our liquidity and leverage position and will continue to monitor the macro environment as we manage our balance sheet. Looking to head to 2024, we expect demand and margins to continue moderating to more traditional seasonal cycles and are not assuming a major economic downturn or recovery as part of our outlook. We anticipate same-source sales to be up low to mid-single digits. We expect adjusted EBITDA to be in the range of $130 million to $155 million and earnings for Duluth's share to be in the range of $3.25 to $3.75. We would like to note that beginning in fiscal year 2024, our adjusted EBITDA calculation will exclude stock-based compensation and will remain part of our definition for both guidance and results on a go-forward basis. We feel this methodology is more in line with industry standards and provides better insight into the company's true performance. Our physical fourth quarter and full year 2023 results are provided under the historical definition, but I'd like to direct our investors to the reconciliation tables in this morning's press release for further explanation of these measures. Finally, our capital allocation priorities remain unchanged. We will continue to monitor the macroeconomic environment as we conservatively evaluate opportunities to deploy cash. We will also continue to explore opportunities like the sale-leaseback transaction, which improves the balance sheet and annual cash flows. We remain disciplined in our approach and am waiving our commitment to drive long-term value for shareholders. This concludes our prepared remarks. Operator, will you please open the line for questions?

Thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Michael Schwartz with Truist Securities. Your line is now open.

Hey, guys. Good morning. There was a lot of static on the line during the pre-recorded comments, so I apologize. I missed a few things. But in terms of the, I guess, the transaction, the sale-leaseback combined with the purchase of the non-controlling interest in quality, did you quantify or could you quantify what I guess that actually means to the P&L or to guidance for 2024?

Yeah, when you look at it, right, so when you look at our two divestitures we had in late September, that was about a $3 million hit to EBITDA. You know, there's no, the purchase of the remaining portion of quality doesn't impact EBITDA, but it certainly will, it impacts cash flow, right, because we were having to pay out earnings of that business through distribution. So it's, it nets out the whole, those two transactions end up netting out, you know, a positive, you know, about a $3 to $5 million cash flow when you look at the reduced interest costs and the reduced distributions, even though we have those lost earnings.

Okay. Okay. That's awesome. Thanks, Jack. And then just maybe as it pertains to your broader commentary on fiscal 24 guidance, I mean, I think you said you expect a normalization of I guess seasonality and margins. Should we be thinking about, on the new boat side, should we be thinking about new boat margins, kind of getting back to that high teens, whether that's 18, 19% level going forward?

Yeah, I think if you look at the last two quarters, that's kind of where we've been. We've been right around 20. So I think in that high teens is kind of where it feels like it's normalizing. You know, certainly as we go forward, what that means is, you know, the June and September quarters, we had that reset on new boat margins. So now as we look into Q1 and Q2 of next year, right, we're up against much higher comps in terms of that new boat margin. And so I think that will, you know, certainly as you think about modeling and as you lay out the quarters, you know, got to remember those, we still need those first half of the year kind of to reset on the margin standpoint. And so that means, you know, Q1, if we go back many years, I know you've been around a while, Mike, we can remember times when, you know, the Q1 was a break-even type quarter. I think we'll be, you know, positive from an EBITDA perspective, but, you know, certainly as you look at, you know, net income, earnings per share, you know, we're probably getting back to that type of environment. But that's just kind of the normal seasonality of the business where, you know, in the December quarter, things slow, and then they pick up with the winter boat shows and, you know, into the spring and summer.

Okay, great. And then just a final one for me is, I guess, just with the new store or comp store sales, sorry, outlook for the year ahead. Maybe give us a sense of what the pieces are there in terms of your industry volume outlook versus price versus maybe market share.

For sure. Look, I think we're always looking to exceed the industry and gain market share as we think about the industry. I don't think anybody's expecting, you know, unit volume to be up dramatically. I think we're looking at, you know, probably more around a flat unit volume, you know, a little bit of price increase. You know, it's not, you know, I think that's probably the best way to characterize it.

Okay. Thank you.

Thanks, Mike.

Thank you. One moment for our next question, please. Our next question comes from the line of Craig Kennison with RW Baird. Your line is now open.

Hey, good morning. Thanks for taking my questions as well. It seems like the big story in the last few months has been the rise in interest rates until recently. And I'm just wondering if you see in your consumer profile a profile that's somewhat immune to those interest rate increases and then a consumer profile that really is reacting to that impact on the monthly payment. I'm just wondering if you see in your data where that line of demarcation might be.

Craig, I don't think we really deal – the products that we carry don't – I think are a little bit more – that buyer is a little more insulated to the point. I mean, Anthony has a good number. He's kind of been playing around with this. I'll let him jump in. But I think we're a little bit more insulated and it's not affecting our buyers much. Now, one thing I do want to point out is, I mean, we spend a lot of time and effort in training and making sure the process that we've had in place for years is the best in the industry that gives us and keeps us in that, you know, mid 60% penetration rate on financing, where I think the industry is much, much lower than that. And if we didn't work and have a process that we, I mean, enforced with an iron fist, I don't think we would be that high. And, you know, even as high as we are, we still feel the majority of the customers are financing. They're just getting their money from somewhere else. So, Anthony, you want to jump in on that stuff that you kind of played around with?

Yeah, I mean, if you look at it, you know, at $100,000 mark is basically when you take all the noise of the big bucks out, right? From three years ago to today, it's about $183 a month difference in the payment. And really, we're not seeing people back away from $183 more a month than they did two or three years ago. So that's really what the math comes down to. And you take three percentage points over 240 months, it's $183 more a month that the consumer is having to pay. So we're not seeing anybody falter or back away from that at all.

And I think I heard during your prepared remarks, Anthony, something with respect to the F&I penetration rate. And I guess I'm curious, you know, how does the F&I penetration rate change over time? I know it's a very good number for you. I think you said over 60%. But I'm curious if, you know, consumers who have the option to take it or not, just based on their own personal situation rather than the need to finance a boat, if you see your penetration kind of slip a little bit.

No, not actually. In the quarter, our new boat penetration was at 70%. We honestly believe that about 90% of all customers finance just maybe not all through us. They're borrowing against their own money. They're borrowing against their HELOC on their home or what have you. They're not actually fully paying cash for the boat. Over the years, our target has always been 65 plus percent. Our new boat um, finance penetration rate for the fourth quarter was actually 70%. It's just a process that is in place in our way. We sell.

I think real quick, Craig, one thing like, you know, when we talk about this process, it's pretty easy for you train and you got not only the business manager, but the sales guys, if they talk, if they talk and start setting this up from the beginning, it's not hard to tell somebody, Hey, this is a simple interest loan, no prepayment penalty. If you're buying a $200,000 boat, sure, you've got $200,000 sitting over here somewhere else. You can always pay that boat off. You can always pay it off tomorrow. But don't you think that that $200,000 could be used somewhere else, you know, at a better use? And so just crafting the way that we script and we talk to people and stuff like that, it's kind of like, yeah, I can pay my boat off anytime. It's more of a luxury. Well, why don't I take the money and put it in the market? Or why don't I do this with it? Or why don't I keep it just as fresh liquidity soon? you kind of build that story through the whole process. And that's kind of one of the things that we've done over the last, you know, seven years that's really allowed us to increase that rate. And I think that's why our penetration is higher. It's just, again, it goes back to the process starting from the minute you meet the customer. And it's just the little things that you add in on, you know, as you're going through the sales process to get to closing that boat. Great.

Thank you.

Thank you. One moment for our next question, please. Our next question comes from the line of Joe Altabello with Raymond James. Your line is now open.

Good morning. This is Martin on for Joe. Just wondering if we can get a little more color around EBITDA guidance for next year. And I believe you are now including stock-based comps, so just wondering if we can get a number or some kind of direction around that as well.

Yeah, no problem. Just on the stock case comp, it's about a $9 million number for next year. You know, when you look at the guide, right, and you look at where we printed this year, you think through the first half of the year and normalizing margins. So I think if you go through a process in calculating kind of what's that margin differential, then you back out, you know, that $3 million that I mentioned before for you know, for Rossioli and the lookout divestiture, you know, it gets you right back to a, it gets you to about that 155 number. You know, so while we're cautiously optimistic about next year, you know, I think there are a fair amount of headwinds. You know, we recently got some, you know, some good inflationary type news or, you know, some moderation of inflation news, you know, here in the last day or two. But it seems like that information is, you know, People are real excited about it one day, and then something else comes out two days later, and we're back in a different camp. We're going to control what we can control. We're going to sell as many boats as we can and stay hyper-focused on that, stay hyper-focused on making sure we have the right inventory at the right locations, that it's ready and available for sale.

Got it. That's very helpful. Just another question, you know, guys, does that assume the current trends when it comes to retail throughout the fiscal year, or do you think they'll start improving into summer?

Yeah, you know, I think, you know, I think there's a lot of unknowns at this point with the year as we look, you know, look towards recent boat shows and, you know, most recently with Fort Lauderdale, we're certainly encouraged, you know, but I think it's just a little too early in the year to tell. I think as we get through the The winter boat shows, you know, often, you know, kind of that boat show season from November, you know, Lauderdale to Miami type timeframe typically gives you a good sentiment for what the rest of the year is going to look like and what the season is going to look like. And, you know, so we're cautiously optimistic, you know, the, you know, low to mid single digit guide is, you know, like I said earlier, I was assuming basically, you know, a flat unit you know, type environment. So we're being cautious. But, you know, like I said, there's just a lot of unknowns with the macro that, you know, could be headwinds against us.

Got it. Thank you very much.

Thank you. One moment for our next question, please. Our next question comes from the line of Griffin Bryan with DA Davidson. Our line is now open.

Yeah, thanks. This is Griffin. I'm for Brandon. Can you talk about any recent category trends you've seen over the last 45 to 60 days and anything to call out there as we head into the show season?

Well, I mean, I don't think anything over the last, you know, 45 to 60 days has changed. There's been any significant change. I mean, obviously we've had, you know, a good coming out of the good Fort Lauderdale boat show that that's a bigger boat mix. So that's, you know, but it's not a fair evaluation of the last 45 to 60 days. I think that it's, It's really been the consumer. If there's any trend that we're seeing, it's the consumer is shopping a little bit harder, and it's pretty broad across all brands, makes, models, segments. You know, I think when you look at the SSI data, it kind of speaks probably to the best generalization of the industry, you know, where you have certain segments that are doing better than others. But when you look at us, you know, Anthony, if I'm wrong, let me know, but it just seems like everything's kind of toe in the line. It's just, you know, it's, it's, it's a hard battle out there, but I don't, I don't have, we don't have any shining stars or anything that we're like, Oh my gosh, we got to get rid of these things.

No, not at all. There's nothing, but we still have several of our manufacturers that continue to be very innovative that make people want to buy the boat. So there's new boats that continue to come out that are doing very well.

Okay, great. And then can you just give any color on OEM promotions you've seen as of late and how those promotions may compare versus previous years?

We really didn't have them in previous years. And yes, they're plentiful now. The manufacturers are standing behind the dealers and making sure we're moving through inventory.

I think the manufacturers, you know, it, You know, going into the month of June, I think they were, we're not going to have to do this. We're not going to do this. And I think it was just, you know, that last couple of weeks of June was a reckoning for us all. And I think they understand that, you know, dealers are nervous about inventories building. You know, they're not ordering as many 2024s, you know, and so they came out and got pretty aggressive. you know, into that, uh, into the summer. And I think they're continuing that knowing that we've got to get the inventory in the field. Right. I mean, you know, and we're actually today, I'm, I'm much more positive about the industry than I was in the last quarter. Um, you know, having a lot of conversations with Wells Fargo and how their book of business on the floor plan looks, it's, it's looking a lot better. And if we can continue that momentum and that trend through the end of the year, Waterdale was a good sign. Everybody was feeling really good coming out of there. If that continues through the end of the year, we could go into the next selling season with a very healthy industry compared to what we thought, you know, 90 days ago. So, you know, that could be a little shining star or, you know, a bright light that, you know, we just kind of got to wait and see what happens over, you know, through the end of the year or through January. Great. That's all for me.

Thanks.

Thank you. As a reminder, to ask a question, you'll need to press star 1-1, and please wait for your name to be announced. Our next question comes from the line of Nora Zaskin with KeyBank Capital Markets. Your line is now open.

Hi. Thanks for taking my questions. You know, maybe just one on the same-store sales strength during the quarter. How much of that would you attribute to your customer relative to the broader industry consumer market? versus inventory versus operating differently than maybe the broader industry dealer base. Just any thoughts around the strength relative to the industry would be helpful.

Thanks. Well, I mean, of course we want to jump in there and talk about, you know, how our CRM system we feel gives us a leg up over our competition, you know, our processes and the things that we do or why we're able to continue to take market share and grow. I mean, but I think a little bit of it is You know, the consumer is still active. You know, I'm still going to beat on the drum that, you know, it appears that a lot of people are still moving on or near water. And when people move on or near water, they want to vote. And then so, you know, that's still happening. And then you've got the churn of the of the what I would call the professional voter that, you know, owns several boats that kind of was out of the market during COVID because, they didn't want to wait that long. They didn't want, you know, they knew the pricing wasn't going to be there forever. So, I mean, it's just, it's an overall good market. And, you know, I just think that our processes and our procedures help us along with that. And then, you know, we're out there for the first time, what in like three years with promotional rebates coming from the manufacturers as incentives. So that helps a lot too. So I think that, you know, those, those two things are helping one water, uh, kind of, you know, buck the industry and gain market share.

Really helpful. And maybe kind of relatedly, I know you touched on this, but just in thoughts, you know, in terms of your thoughts around M&A, just given relative outperformance, taking share, like is the pipeline more full than it was three months ago? Or how do you think about the opportunity into next year?

No, I think the pipeline, you know, is kind of held steady, just like it didn't jump up. You know, it didn't decrease. It's just kind of been steady. I think that when you look at the pipeline, the main driver behind the pipeline, which is what we said since day one, it's an aged industry with no exit strategy. And so as, you know, every day that goes by, things change. For us, as we look at the pipeline, you know, we are a little bit more probably cautious right now than we should be because we feel like there's still some room for some other, for the dealers that we're looking at to normalize, you know, these next two quarters, like Jack spoke about earlier, you know, we need to adjust those margins to what they are today because they were hired the first two quarters last year of what we would, the way we look at it. And some, some dealers are just still convinced in their head. Oh no, they'll hold, you know, they're going to come back or whatever. So there's all these little things that kind of really need to normalize. And so, you know, we do have a couple of guys that we're talking to that have kind of come to the realization that, hey, yes, I'm not going to have as much EBITDA. So our approach is our multiple really hasn't changed. It's we're trying to get to a normalization and make sure that everybody's comfortable with, you know, how we look at what we're paying a multiple on. And that's, you know, normalizing, you know, the higher interest rates on floor planning across the board. you know, making sure the margins and stuff are in line with what they're going to be on a yearly basis. So that brings their number down even further than they are. And then the biggest issue that we're wanting to make sure is we don't want to go buy somebody and have to clean up, you know, 27 weeks on hand of outdated inventory. So that inventory thing's got to kind of flush through. And I think that's what's given us a little bit more of a, you know, pause right now or continuing the pause that we've been on is we know that, Three months from now, six months from now, things are going to look a lot different, and that money, that's going to come back, you know, the EBITDA is going to continue to kind of normalize on a year-to-year trailing 12. So, you know, we're looking at some stuff, and we're just, you know, not rushing out there to just jump in and do anything right now. Very helpful. Thank you.

Thank you. As a reminder, to ask a question, please press star 1-1. Please wait for your name to be announced. I'm not showing any further questions at this time. I'd like to hand the conference back over to Mr. Austin Singleton for closing remarks.

Well, I don't really have any closing remarks. We just appreciate everybody on the call, and thank you all.

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Everyone have a wonderful day.