Good morning, and welcome to Camping World Holdings Conference Call to discuss Financial Results for the Fourth Quarter and Fiscal Year of 2021. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that this call is being recorded and the reproduction of the call in whole or in part is not permitted without written authorization from the company. Participating on the call today are Marcus Lemonis, Chairman and Chief Executive Officer; Brent Moody, President; Karin Bell, Chief Financial Officer; Tamara Ward, Chief Operating Officer; and Lindsey Christen, Executive Vice President and General Counsel; and Matthew Wagner, Executive Vice President. I will turn the call over to Mr. Moody to get us started.

Thank you and good morning, everyone. A press release covering the company's fourth quarter and year ended December 31, 2021 financial results was issued yesterday afternoon and a copy of that press release can be found in the Investor Relations section on the company's website. Management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks may include statements regarding the impact of COVID-19 on our business, financial results and financial condition; our business goals, plans, abilities and opportunities; industry and customer trends; our 2019 strategic shift; our recently disclosed cybersecurity incident; increases in our borrowings; our liquidity and future compliance with our financial covenants; and anticipated financial performance. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our Form 10-K, our Form 10-Qs and other reports on file with the SEC. Any forward-looking statements represent our views only as of today and we undertake no obligation to update them. Please also note that we will be referring to certain non-GAAP financial measures on today's call such as EBITDA, adjusted EBITDA and adjusted earnings per share diluted which we believe may be important to investors to assess our operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial statements are included in our earnings release and on our website. All comparisons of our 2021 fourth quarter and fiscal year results are made against the 2020 fourth quarter and fiscal year results, respectively, unless otherwise noted. I'll now turn the call over to Marcus.

Good morning. Thank you, Brent. I'm here with our entire senior management team. And throughout the call or the question section, they'll be able to answer any questions you may have as we review both the fourth quarter and the 2021 year. On today's call, we'll also lay out a few short-term and long-term objectives. Look, 2021 was a great year for our company and we're confident that the long-term trends and strategies in areas like used RV sales, finance and insurance, service operations and our Good Sam business, coupled with optimized new inventory levels and strong demand, resulted in our best year ever. We retailed a record 126,000 RVs for the year, and our company is proud to announce that it has officially surpassed selling 1 million RVs. Last year, we pursued a disciplined and opportunistic approach to capital allocation, with capital investments in the growth of our business, share repurchases and the return of capital to shareholders through dividends. Our management team's capital allocation plan is to continue investing our excess cash flow as efficiently as possible. We have a focus on three core things. We want to grow our company like we have over the last five years. In 2021, we added 16 new locations, bringing our total to 185. It is our plan to continue that cadence for the foreseeable future. We're either operating or scheduled to operate within 18 months in 45 of the 48 states. We also want to reduce the overall share count. For '21, we repurchased $156 million worth of shares, with almost $70 million coming in the fourth quarter. As we previously mentioned, our Board has authorized an additional $150 million of buyback availability. And now adding that to our bucket, we have a total availability of $200 million as we march into this calendar year. We also want to continuously improve the overall return to our shareholders. In April of last year, we increased our annual dividend to public holders of our common stock by over 8.5%. And in August, we doubled the annualized dividend from $1 to $2 per share for our public holders of Class A common stock. This week, the management team with Board approval announced another 25% increase in our annualized dividend going from $2.00 to $2.50 a share. I want to give you a brief summary of our Q4 2021 financial results. We recorded record revenue of $1.4 billion, an increase of $244 million or 21% and record net income of $59 million, an increase of 47%. Our adjusted fourth quarter EBITDA was $131.5 million, an increase of $40.3 million or 44%. We grew our Good Sam business during the quarter, both in revenue and gross profit, driven by our core offerings like roadside assistance, credit card, warranties and insurance. Our used vehicle revenue, which is a big goal of ours, went from $205 million to $412 million, an almost 100% increase. During the quarter, we finalized our exit of non-core, low margin, low-turning products like fishing, hunting and firearms, resulting in a reduction of products, services and other revenue. However, we have redeployed that capital into higher margin, better performing segments of our business. We ended the quarter with nearly $360 million of cash consisting roughly of $267 million of cash and equivalents on our balance sheet and $92 million of cash available in our floor plan offset account. Additionally, at the end of the quarter, we owned used RV inventories of $374 million without related floor plan financing and real estate of nearly $225 million without related mortgage financing. It's been a little over five years since Camping World went public, a lot of reflecting to do. In that time, the company's revenue has nearly doubled. But more importantly, our adjusted EBITDA has more than tripled. In 2016, with just over 100 locations selling and servicing RVs, we generated close to $1 billion in gross profit, and we made about $286 million in adjusted EBITDA. Fast forward five years, we have almost 200 dealerships, generated nearly $2.5 billion in gross profit and over $942 million in adjusted EBITDA. But when you peel back the onion on that remarkable growth from around $290 million to over $942 million, you can see a few major drivers. And those drivers don't change going forward. First, our used business has more than doubled in size from $703 million to $1.7 billion of revenue. Additionally, we will continue to make acquisitions of new and used RV dealerships like we have since the inception of the company. Second, our high margin products, services and other businesses, have substantially grown from $540 million in '16 to over $1.1 billion in 2021. Third, our crown jewel, the Good Sam services and plans business with high margin recurring revenue, has grown gross profits by over 30%. Fourth, and maybe most importantly, we have become a structurally more efficient business. In 2016, for every $1 of gross profit, we spent $0.70 on SG&A. In other words, we have a 70% SG&A to gross ratio. Today, it's 64%. With every passing year, we intend to do more with less. Within the RV industry, we're pioneering investments in technology and processes that enrich both the customer experience while unlocking additional operating efficiencies for us. Our ability to leverage our scale, our sourcing capabilities, our database and our unique proprietary technologies make acquisitions more accretive for us than any other entity in the industry. In generating over $942 million in adjusted EBITDA in '21, look, we benefited from the supply/demand imbalance in new RVs and the elevated margins that came from it. But we've also significantly grown the parts of our business that benefit from the ever-growing installed base of RV-ers, that is used RVs, service and repair, aftermarket products and services and obviously, our big crown jewel, the Good Sam business. We generated double the gross profit from these businesses that primarily benefit from the installed base of RV-ers, and we did it with fewer incremental operating expenses. In summary, we're more proud of what we've accomplished over the last five years. And looking forward, our objectives are simple. Our primary goal is to replicate the growth we've enjoyed over the last five years for the next five years. How do we get there? Well, first, we want to continue to acquire dealerships like we have since the inception of the company. Second, we plan to grow our used RV business from $1.7 billion to $3 billion. At our historic average of 20% to 26% gross margins, this should generate $300 million to $400 million of incremental gross profit, and a meaningful portion of that will flow to the bottom line. Third, we want to grow our service parts and renovation business. We currently operate around 2,600 servicing collision bays and we plan to add at least 500 more to our existing stores, acquisitions and new store openings. Last, we want to grow the Good Sam revenue by 10% per year. This business generates $181 million of revenue for us. And growing this by over 50% should result in another $90 million of revenue. And with its current margins around 60%, much of that incremental gross should fall right to the bottom line. In many ways, the goals for the next five years look a lot like the last five years. We want to continue to grow in the areas of our business that benefit from the installed base of RV-ers, while always taking full advantage of the new RV environment presented to us. Let me finish by summarizing a few key points. I remain extremely excited about Camping World today, even more so than I was when we went public five years ago. The optimism around outdoors and RV-ers has never been higher for manufacturers, suppliers, dealers, campgrounds, but most importantly, consumers. The growth has brought new consumers to the RV lifestyle, and they have fed our installed base of RV-ers. This will continue to grow and benefit us for many years to come, and we remain steadfast in those goals. Starting in 2022, we are moving away from our approach of giving annual guidance. But suffice it to say this year has started very strong, similar to the start we experienced last year. But as we see with too many public companies, managing the business to deliver an annual metric carries the risk of compromising long-term value creation. We believe each month and each quarter are only as important as the role they serve as markers on our road to continued growth of this company and maximizing value to our shareholders. Again, our goals are clear. Grow the company, repurchase shares and give capital back to our shareholders in a smart and accretive way. This is what we are singularly focused on. I will now turn the call over to the operator.

We will now take our first question from Brett Andress with KeyBanc. Please go ahead.

Hi. Good morning, Marcus.

Good morning, Brett.

So I understand you're not providing guidance for 2022, but could you assist us in thinking about vehicle profitability for this year? It has decreased a bit from the third to the fourth quarter. I'm more focused on a GPU basis, as you mentioned 13,000 new and 9,000 used. How much do you think you can maintain for the remainder of 2022?

Look, I think as we talked about last year, as the supply starts to return to some level of normalcy, those GPUs are going to come down. And we saw a little bit of that in Q4, particularly on the new side that was really driven by our need to want to continue to grow the market. On the used side, we made a decision to actually get rid of some aged inventory. So we expect that our used margins should maintain themselves pretty well. But we are forecasting that our new margins are going to come down, and we think they're going to come down a little bit more than what we saw in Q4. I think partially, we want to continue to dominate the sale of RVs in the market as a company. And we're going to always be managing and monitoring what the supply levels are, how other dealers are selling. And while we don't want to participate in the race to the bottom, we don't like to lose at anything that we do. And so we want to continue to maximize the grosses on the new and used side, but we're not going to compromise our volume gain in '22. Because as we learned and studied '21, the volume feeds the rest of our business. The new RV sale is nothing more than a fire-starter for what really matters to our business, which is it creates the trade for our used, it drives service, it drives Good Sam, it drives our aftermarket business. And I think we want to really focus on now that our supply on towables is where we want it, we want to really focus on grabbing share both through acquisition, through new store openings and most importantly, organically.

Got it. Okay. If I can just follow up, I think you said your towable inventory is where you want it. But I think you mentioned the word also in your prepared remarks optimize speaking around new inventory. So does optimize mean running it high returns, or how do you think about your appetite to acquire new inventory from here on out?

Yes. So the optimize in my script was really talking about how in 2021, we looked at maximizing every single transaction for gross, because the supply was limited. But the optimize that you're referring to, and I like more, is how we're thinking about inventory going forward. And one thing that we learned through 2020 and 2021 is that we're able to do more with less. And we know that the manufacturers, as we go into '22 and '23, are going to be far more responsible about manufacturing inventory than they were in the past and not flood the market. And I think both the manufacturers and dealers alike enjoyed better margins than it had historically because it learned that if it managed the supply chain a little more responsibly, we can do that. Now that's my hope. But I don't control what other people do. And so we have to make sure that we're responsible about our own inventory. And so when we wake up every day and we look at what other dealers are pricing at, we want to make sure that we're keeping our day's supply at a level that avoids aging and avoids unnecessary margin compression. But we will never wake up on a Tuesday without every single product that we need being at every single store. That is the most important thing. So there's that fine balance between managing your aging and never being out of stock in core items.

Got it. Okay. Thank you.

Brett, I want to give you one more bit of color, because I know that you and I always have these discussions. We are anticipating, just so everybody can sort of forecast volume, I've given you kind of the roadmap on the margin side. But we are forecasting slightly positive same-store sales in 2022. So we don't want anybody thinking that there is some sort of margin compression coupled with this demand thesis that people had that the demand was elevated and not, it was fake news. We believe, as we've seen already, at the start of '22, that the demand is real, and that the demand is there. And by the way, we're not living in most states with mask mandates, and things are wide open. So we want to be clear that we are very confident as we look at our e-leads, as we look at our foot traffic and as we look at more importantly, our actual transactions, we feel positive. In fact, this last Saturday, in the middle of February, we ended up selling over 1,000 units. And that has not happened on a Saturday since June of last year. And it's February. So we are very confident that we are doing what we need to on the inventory side. And we're doing what we need to on the used side, because the mix of new to used has continued its dominance of that used growing every single day. So when we're talking about selling 1,000 units on a Saturday, we believe that our fourth quarter and the start of our year is going to look different than a lot of other dealers. Because while the market was down double digits in Q4, our same-store sales numbers new and used, they were positive. So we think that this used game that we're going to be playing is going to change which is why we've always been agnostic of whether the customer buys new or used. We are planning and expecting for positive same-store sales, and we believe that used is the driver regardless of what happens on the supply side.

Got it. Just to clarify, the same-store sales are not fully positive this year. What do you expect for used sales and what do you expect for new sales?

We expect, because of where our agnostic nature of selling to the customer when they walk in the front door, we believe that our total same-store sales, new and used combined, are going to be positive. And we had our biggest year ever just to be clear. We did 126,000 units last year. That was our biggest year ever. So when we say positive, that means 126,000 and at least one.

Thanks a lot. Good morning. Congrats on a great quarter. I'd like to follow up on SG&A. So in the event that GPUs do pull back, I'm curious how much can be cut from SG&A, how much flexibility you have there?

Well, we don't ever like to think about cutting SG&A. We'd like to think about being more efficient with the available dollars that our gross profit provides us to run our business. And while we have made specific decisions to cut about $15 million in marketing that we believe did not provide us the kind of return that we need, we expect some SG&A improvement there. But in natural course, because we are a variable built business on the compensation side, reductions in gross profit result unfortunately in reductions in wages. And I say unfortunately because we want our team members to always be striving to make more. That will drive them to try to accelerate the volume to make up for it. So GPU reduction doesn't necessarily always have to correlate to earnings reduction. It can, but I want to be clear. It doesn't always have to. I think the one thing we've learned since we went public, and you can see it in our numbers, is how we learned how to be more efficient. And I think the thing that we've enjoyed in the last 12 months is every time we stacked on a new location, and that new location came with a better use performance, a better service performance, and our Good Sam business kept getting better, we started to notice that we were able to hold the line on overall margins for our company. And as that mix changes and we sell more used, and we can tweak that overall margin even with new compression, we really feel like that number will move, Rick. It could move up from 64. But we feel very strongly that on an annualized basis, we'll be able to stay away, far away from where we were when we went public at 70%. But it's work. And that's what we're focused on.

Thanks for that color. Also I'd like to follow up on the acquisition environment. The pipeline, the multiples that you're seeing out there in the highway acquisition versus stock buyback?

We currently have several acquisitions that are either closed, about to close, or under letter of intent, and we have identified more rooftops than we opened in 2021. This doesn’t account for the new stores we plan to open. In fact, our new prototype Camping World Supercenter in Lincoln, Nebraska opened today. With 1,500 RV dealers in the U.S., we still have fewer than 200 locations, which shows we're far from finished. It's important to note that we consistently find opportunities to acquire stores at attractive prices, and if that’s not possible, we consider alternatives. Over the last five to ten years, opening new stores has been our alternative, and these stores have yielded excellent returns over five years. The cash-on-cash return is impressive. We’ve learned, and are proud to share, that as we assess our overall business, we rank gross margin contributors by segment. Good Sam is our top contributor; it has always been our favorite yet often receives the least credit, as it generates substantial cash flow. Next is our finance and insurance office, which incurs no cost of goods and minimal labor. Following that is our service parts, collision, renovation, and refurbishment business, which generates exceptional labor margins and good parts margins. The used RV sales come next, with new RV sales last. This hierarchy guides our decisions on technology investments within our business; we focus resources on areas that drive higher margins. We recognize the significance of the lower-ranked segments, but we aim to maintain our position as the largest new RV dealer in the country. Moving forward, we’ve decided to begin opening pre-owned Supercenters. These will resemble our current Camping World stores but will have smaller real estate footprints, accommodating 150 to 200 used units instead of 250 new ones. They will offer increased service capacity, including two collision booths for extensive insurance work, a set of 12 to 14 conventional service bays, and four to six renovation and refurbishment bays. The retail experience will shift significantly, focusing on refurbishment, installation, and repair of high-ticket items such as awnings, towing systems, and satellite dishes for customers looking to enhance their RVs. We see an exciting opportunity in taking our most profitable businesses to locations where competition is minimal and where there is no margin compression, as these unique locations can provide exclusive offerings unavailable elsewhere. Over the last two years, our RV Valuator tool has demonstrated our ability to procure inventory, showing that barriers to entry are limited. Based on preliminary estimates, we believe these new locations could become our most profitable in terms of cash-on-cash returns. We typically do not hold much real estate; we collaborate with third-party REITs and utilize a floor plan for our inventory. The estimated cash investment for opening one of these locations is around $4 million. In 24 months, these locations could generate $20 million to $25 million in revenue, returning our initial investment within one to two years. We are transforming our used business significantly, having proven our capability over the years. Revenue from used units increased from $703 million in 2016 to approximately $985 million by 2021. This year, we made a strategic decision to adapt our operations due to supply chain issues, which resulted in a jump to $1.7 billion over the past year. Our management team realized we couldn't rely on manufacturers for inventory; thus, we took decisive action to differentiate ourselves from competitors. While our target is $3 billion in revenue, we believe we can achieve this within 18 months, aiming for $5 billion thereafter. This sector represents our core strength, and we are confident in our ability to add value for our shareholders.

Thanks for the color, Marcus. Good luck.

Thank you, Rick.

And our next question comes from Michael Swartz with Truist Securities. Please go ahead.

Hi. Good morning, everyone. Marcus, maybe touching on new vehicle margins is a big focal point for people obviously. Maybe looking at it a different way, is there any reason why we should believe maybe over the next 18, 24 months that new vehicle margins would revert to what we saw pre-pandemic more in the mid-teens level?

I don't really think that's the case, and here's why. Even though the manufacturers are projected to produce 600,000 units this coming year, we are seeing a larger installed base and greater excitement about the industry than ever before. The demand reflected in our website traffic and inquiries is unprecedented. While we anticipate margins may decrease and we're comfortable with inventory levels beginning to stabilize, manufacturers have significant work ahead of them; it will take years to build capacity to reach 700,000 or 800,000 units. Given the growth of the installed base and the continued strong demand, even amid inflation, the financing options over periods of 180 to 240 months allow consumers to manage their monthly payments despite inflationary pressures. I don't foresee any issues unless manufacturers can ramp up their capacity more quickly than we expect, and unless they maintain discipline in manufacturing according to demand rather than trying to create demand through increased production. The manufacturers we work with, Forest River and Thor, are excellent financial managers of both the industry and their dealer networks. They truly care about the health of their dealers, which bodes well for the overall industry. I can't comment on the intentions of other manufacturers regarding mass production. We just don't know.

Okay, that's very helpful. Thank you for that. And then just on the product service and other in the quarter came in a little lighter. And I think you said there's still some cleanup going on with some of the lower margin categories you were getting out of, and I think you called out on the third quarter call. But maybe I'm just trying to understand how much of a headwind that creates to 2022? Is there any way to think about how much revenue some of those lower margin categories actually contributed to '21?

Yes, we actually know that on an annualized basis, it was around $200 million of revenue that we got out of. And unfortunately for us last fourth quarter, in that business, that hunting, firearms, ice fishing business, is more of a fourth quarter business. And so we had some pretty big headwinds in the fourth quarter that we just overcame. But we made a lot of it up with our service business. Unfortunately, we didn't make up enough. As we head into the first quarter, second quarter and third quarter, we're dealing with about call it $120 million, $130 million over those three quarters. So we have some wood to chop to be able to get ahead of that. However, more importantly, we expect that you'll see meaningful improvement in the gross margin. And you'll feel really good about the fact that we exited these categories and then took that cash and redeployed it into our furniture business, our mattress business, these things that A are not only going to be driven by our used business, but provide better returns, better margins and it gives us something different than other dealers. But there is some headwind for sure.

Our next question comes from Martin Mitela with Raymond James. Please go ahead.

Good morning. Thank you for taking my question. Congrats on a good quarter. A quick question regarding the dividend. Now that we have increased significantly in less than a year, should we expect to grow along with earnings from here?

Can you repeat the last part of the question?

Absolutely. So now that we've seen the dividend increase significantly in less than a year, should we expect it to grow along with earnings from here?

Our goal is always to increase earnings, particularly earnings per share, which is crucial for us. To achieve this, we need to buy back shares at an aggressive rate. As long as we perceive a disconnect between our assessment of the company's value and the market's view, we will wisely use our capital to buy back shares as authorized by the Board. We will continue to pursue buybacks consistently. Share buybacks are fundamentally ingrained in our approach, especially when we disagree with the market's valuation. I anticipate this strategy will be a long-term fixture. Regarding dividends, I hope to see that grow as well. We aim to use our capital responsibly, with the primary focus on company growth. The next best use of our capital is buying back shares below market value, which yields exceptional returns. Lastly, dividends are important because many investors appreciate all three aspects—growth, buybacks, and dividends—and we are striving to find the right balance among them to enhance returns for our shareholders.

Great. So that does also segue extremely well to my next question, which is you spent over $150 million last year on share repurchases and stock is well below your average cost. How quickly do you expect to deploy that $200 million left on your authorization?

We are going to be very disciplined about deploying it. But larger the dislocation, the less discipline we'll have. We have the capital. We have the cash. We have the availability. And so if we continue to feel like the dislocation is extreme, we'll accelerate it. I think part of fixing what we believe is the dislocation in value is part of the dividend model, right? You got to have that perfect balance between having people know that if you're going to short the stock, there's going to be a heavy dividend. And if you own the stock, there's going to be a heavy dividend while shares are also being repurchased aggressively when possible.

Hi. Good morning. Thank you for taking my question as well. Also, we appreciate the 2026 goals. Wondering if you can translate that into EBITDA goals?

The 2026 goal? I'm sorry, Craig. What was the 2026 goal?

Well, I thought you mentioned that you aim to replicate the growth from the past five years over the next five years. I took that to mean 2026. You also discussed some segment goals. I'm just curious how that fits in.

Our goal is to obviously recreate the pace of acquisitions and the size of the growth. But obviously, as you know, as you get to $7 billion, going from $3.5 billion to $7 billion is a lot easier than going from $7 billion to $14 billion. But when you look at our free cash flow and you look at our ability to open stores and you look at our access to capital and you look at our access to inventory and you look at the available markets that are out there, sure. Would we love to double the business in the next five years? Absolutely. But we also have to be responsible with how we actually do that. Because to go from $7 billion to $14 billion means we're taking on another 14,000 employees, and 14,000 employees require a lot of training and a lot of support and a lot of infrastructure. And we would never want the pace of our growth to not be able to handle the necessary training both for our associates and the customer experience. So growth has to be very much tempered not by capital, but by the experience that we're going to create inside of your company, because ultimately that bad experience and hyperbolic growth can end up having a hyperbolic problem at the same time. And so I don't know that I want to pay a certain number. But I will tell you that it is our continued plan to accelerate acquisitions and new store openings in the 15 to 18 to 20 range. We'll do about 20 this year, I can tell you that already. And we already have nine markets on the board, both in '23 and in '24. So if you just compound that and look at the average size of a dealership that we acquire or build, ends up maturing and being somewhere in that $25 million to $30 million range. We sort of do the math that way and say, okay, you're going to add $300 million to $400 million in year one and $500 million, $600 million in year two, and it starts to compound. And that's ultimately how we see that growth compounding. So if we were sitting here five years from now, we should have approximately almost 100 more stores, 90 to 100 more stores than we have today, averaging between $20 million and $30 million of top line. And then the rest of our business gets that same level of growth at the same time, march it up just the same way you did when we add one store. And over the next four or five months and potentially earlier than that, we're going to be providing to the market some basic assumptive models around what a new store looks like and what it costs to build, and what the returns are, what an acquisition looks like and what it costs to build and what our used Supercenter will look like. And I think that will help build the model for people to say, if you're adding this many stores and you're projecting this much revenue, and they take on this sort of EBITDA margin in that period, you can extrapolate that out pretty easily. And the only flux in that is improvements in SG&A and variations in margin. It becomes far more predictable for all of us.

That's extremely helpful. I appreciate that. Just to follow up on the collision piece there. I think you said you want to go from 2,600 bays to adding another 500 bays. What's the economic contribution of increasing the number of bays by 500?

So every bay contributes around $0.25 million of gross profit on an annualized basis.

Hi. Good morning. On the service bays, could you tell us sort of how we're running capacity utilization of the current 2,600 bays? And then maybe, as you look at adding to that business, sort of what is the staffing environment like? It sort of seems like a RV technician is probably a plumber or an electrician and a mechanic kind of hybrid. Could you talk about the rollout of this incremental service capacity?

Acquisitions are always a huge part of what our company does, because we're picking up human capital, which is far more important than financial capital. And so we're able, as we make these acquisitions and do 10, 15, 20 acquisitions a year, whatever that number may be, we're picking up team members at the same time. And there's a bit of a farm system there. I think where we have some wood to chop and work to do is growing our own farm system. And so we've started to identify specific regional locations across our country where we're bringing people into an educational platform and an apprentice platform. And while we're working with third parties to do that, we've had to take matters into our own hands. And our goal is to try to create far more technicians than we have bays. If I told you what our utilization was, you'd laugh because it's over 100%, especially in peak season, because there's times when we're working in the parking lot and we're working with two units in the bay. But there are other times of the year where there is capacity. And so we're looking much like a hotel would or much like a campground would look like. We're looking at our utilization on an annualized basis, but we're also looking at it at different times of the year and trying to figure out what we can do to generate more revenue and generate more opportunities in those shoulder seasons. That's part of what drove us to get into this renovation and refurbishment business. And it's also a big driver of why used can be massively important. When we go into a new calendar year, we want to start with a lot of inventory. But when we get to August, we start driving our inventory down. When you look at our service bays in November and December, they're not as busy as they are in June and July. So as we accelerate our used purchases, particularly from other dealers that need cash or from consumers that don't want to storm over the winter, and we're buying deep in September and October, we're now able to utilize the capacity inside of our service department in November and December to create that reconditioning work that gives us great inventory starting on January 1. So that's part of what we're trying to improve. And we said, we want to do more with less. It's looking for nighttime shifts, maybe having seven-day operating systems at our service department, looking for shoulder seasons. We know that in order to really improve this business, we can't just keep buying and just keep opening. We have to take the orange that we have now and we got to get more juice out of it. And I think we've gotten a lot better. And to be honest, I think the pandemic actually helped us. It really was a catalyst for us to learn how to do more with less. As people were out sick or people quit, or whatever happened, we had to learn how to do more with less. And I think that was maybe the silver lining in all of it. We learned how to pick fix our used, we learned how to better manage our service, we learned how to do more with less. And that may be the silver lining coming out of this, which is why we believe the next five years are going to be really profitable for us.

And I guess on that five-year forward, the pre-owned Supercenters, could you sort of talk about how you see this as a percentage of the mix in five years? And are these existing RV stores that you're converting to used only? And how do you sort of see it as a percentage of the pie five years out?

I'll share a little insight with you. There’s some discussion among our management team about whether to purchase and convert certain locations or to build new ones. What we’ve learned is that we need to be very strategic and efficient, considering both our environmental responsibilities and our financial obligations, aiming for a balanced approach. We believe we’ve developed a model for an approximately 8-acre store with a 31,000 square foot building and 175 parking spaces, while also considering restroom placement and customer experience. We are looking to make this operation highly efficient in terms of labor and enjoyable for customers. I anticipate that we will begin opening these stores this year. In fact, we plan to launch our first one and host our Investor Conference in the fall in Detroit, Michigan. This state ranks among the top six in the country, and we have significantly enhanced our presence there. By the end of 2022, we will be the largest dealer in Michigan, thanks to recent acquisitions, newly opened stores, and forthcoming announcements. In Detroit, we have an old Camping World location that wasn’t selling RVs, which we are currently refurbishing, adding 14 bays. This will be the site for our first pre-owned Supercenter. Over the next five years, most of our superstores will be located in the top 12 to 14 states for RV registrations in America, as our used stores will also act as buyers in the market. For instance, we can initiate a campaign on a Sunday, and within 24 hours, receive 5,200 leads from individuals wanting to sell their RVs using our RV Valuator tool. This is real data, not a hypothetical scenario, as it happened just this weekend. Our focus in the used market isn't merely on selling; it’s primarily on buying, and we need to demonstrate that we can execute this with precision. My aspiration is to establish at least 30 standalone used Supercenters over the next five years. That’s the goal, and I intend to pursue it responsibly.

Thank you.

And by the way, when you do that - we’ll take our next question.

Our last question comes from Gerrick Johnson with BMO Capital Markets. Please go ahead.

Great, thank you. Marcus, you split on getting aged inventory and used had an impact on your margin. Can you talk a little bit about that? I'm a little bit surprised to hear that there's an aged inventory in this environment.

Well, our definition of aged and a typical dealer's definition of age, they're very different. I was brought up in the used car business. And so my expectation for used aged inventory is probably, by some people's opinion, too tight. But I believe that the most important asset in the company is the used inventory, because it really moves and the market moves. And if you don't keep a tight and a really tight days supply in aging, you get yourself in trouble. And I always believe that your first loss is your best loss. And so when it really starts to be past 120 days, we don't like it. That's the honest truth. When we buy dealerships, we find inventory that's been there 500 days. And that's the kind of difference that we put in through our process. And so when we got to the end of the year, there were certain makes and models or certain manufacturers or certain age of units, eight years old, nine years old, 10 years old, and you're going to have things that once in a while you make a mistake on when you take a trade in. That's part of what happens in the market. You have a human element is an element in the process. And so we don't ever like to hide where our used inventory is. We want always to know that our shareholders know that we manage that like it's a pot of gold. And so we do take losses from time to time.

Okay. It doesn't sound like it's a certain dollar modular brand, but it's just a cleanup of inventory that's been at dealerships you've purchased and things that would be a disruption?

Yes, sir.

Okay. Now one more question on sort of the macro and how it impacts your business. I want to talk about inflation. And I'm not just talking about the price of an RV, but everything that goes with it; the tow vehicle, the gas, but also family's budgets will be I think compressed, cost more for groceries, more for clothes, things like that. Do you see that as having an impact on your business, particularly on the pre-owned? And sort of part b on that, what is the average monthly payment for one of your customers, particularly a pre-owned customer?

The majority of what we sell is in the travel trailer and towable category, with an average payment under $200. We acknowledge that inflation is a concern. However, we believe two factors work in our favor. First, renting an RV is the most affordable vacation option available, which is a factual statement rather than just marketing. When you consider the costs of airlines, hotels, theme parks, and cruises, the expenses add up. In contrast, with an RV, including the tow vehicle, insurance, and campground fees, you're typically looking at costs in the hundreds, not thousands. This makes us a strong alternative. Additionally, we began shifting our approach last year due to supply issues and excellent returns, also recognizing that inflation was impacting new RV prices. This could affect margins and slow dealer volume, especially for those selling only new units. We believe inflation will be a challenge, but our focus on used RVs mitigates some of that because it offers better value to customers. Our campaign will emphasize getting more for less.

Okay. Thank you.

There are no further questions at this time.

Thank you for joining us for today's call. We will see you as we report the first quarter in the spring. Thank you so much.

This concludes today's call. Thank you for your participation. You may now disconnect.