Good morning, everyone. Thank you for joining us for what I think will be a rather interesting discussion on the marine space. Given the many different dynamics that are going on right now, in the industry, we thought it'd be helpful to get the perspective of both a dealer and a manufacturer. With that in mind, we are very pleased to have with us today OneWater Marine Founder and CEO, Austin Singleton, and as well as Malibu Boats CEO, Jack Springer. Welcome to you both. OneWater is one of the largest boat dealers in the United States, and one that has shown the ability to deliver healthy organic growth while complementing that with an aggressive yet thoughtful M&A strategy.
Conversely, Malibu is one of the largest boat manufacturers in the United States, with a portfolio of brands that includes Malibu and Axis towboats, Pursuit and Cobia saltwater fish boats, and Cobalt luxury day boats, just to name a few. Some of you may have seen that Jack announced that last month he's leaving Malibu after 15 years at the helm. So we're glad to have him with us, as he rides off into the sunset. So with that, let's dive right into the Q&A. I wanted to start big picture. Both of you have been in this industry for a long time, been through cycles. So maybe, Austin, let me start with you on this.
In terms of the current demand environment, it's certainly not where we were in 2020 and 2021, but there does seem to be buyers out there. Unfortunately, they don't seem to be in any rush to be buying a boat, and they probably need some sort of incentive in terms of promotion to do that. How would you assess the current environment versus where we were, let's say, pre-COVID, for example?
Yeah, so I would say that the consumer is active. They're out there now. I don't really think they need incentive to buy now. I think they need incentive to make a purchase at all, just 'cause there's so much inventory out there. So during COVID, when we were doing this, you were basically an order taker, and that's kind of gone away. So now it's back to what we did pre-COVID in 2016, 2017, 2018, and 2019, where you actually have to sell the customer on the features and benefits of the boat. You have to talk about fiberglass, which, you know, during COVID, you didn't have to talk about anything.
So I think the inventory buildup that we saw towards the end of the calendar year, going into this year's boat show, the incentives that the manufacturers have come out to help us move through this inventory has set us up in tracking to be in a really good position at model year change. I think that as long as this momentum that we're all on from an industry perspective, that things are looking a lot better than they were nine months ago, six months ago. I don't want to call the bottom, but it feels like we saw the bottom from a margin perspective and, you know, the consumers tends to be still active in buying, and so it looks really good for the remainder of this year.
Why have margins gotten better in the last nine months?
I wouldn't say margins have gotten better. They've just kind of stabilized. So when we saw that big drop last June, at the end of June, it was a little bit of a shocker. It happened really quick, and then it... You know, we expected or were worried that it would continue to decline a little bit, but it kind of flattened out from there. And, I mean, you might see a little bit of uptick for us, you know, a little uptick in margin or a little downtick with model mix through the fall and into this quarter that we're in now. But that's really just a model mix. But it seems like from an industry perspective, it's kind of flattened out, and it's kind of, I would say, bottomed.
Okay. Jack, what are you seeing from the demand environment?
I think, you know, I support what Austin said from the standpoint of the buyers there. We probably see a little bit more across our dealer spectrum of the value buyer, what we call the value buyer, that's buying on interest rates.
Mm-hmm.
They're the ones that are really sitting on the sideline. The premium buyer, they're out there. We've seen our premium buyers go from 50% paying in cash to 62%. That's on Malibu, Cobalt, and Pursuit. And so I think the buyer is there. Austin made a comment I think it's important to understand. Our VP of sales attended their sales training going into the boat show season for Atlanta, and, you know, they're clearly, OneWater's clearly gotten back to, "We're not order takers." And they were challenging their sales force: "You have to sell. You have to sell the boat." And I would say that across our dealer network, that's a message that not necessarily has taken hold up until recently. And I think now, across the board, dealers are to the point that we have to sell boats, not take orders.
We're back to basically pre-COVID-
Absolutely
... in terms of the sales process, et cetera. Gotcha. If you ask several people, you know, in the industry when we see retail inflect, I think you'll get several different answers, unfortunately.
Mm-hmm.
I think the consensus is probably maybe later on this selling season, but maybe more likely in model year 2025, call it late summer. Where do you guys see that inflection point this year?
I'll tell you, I think we're at the trough. I think we're in the trough right now, and we're gonna start that process. We're setting up for 2025. It's incredibly important, and I think Austin is gonna agree, that channel inventories get to the right level. And when we look across our spectrum, by the time we get to the end of June, channel inventories need to be at that 22 weeks. I think OneWater tries to be a little bit less than that, but ultimately, setting up with the channel inventory is the right thing. The other factor, and I say this to everybody, for us, is that value consumer. You know, we've seen the interest rate decreases that were promised go from March to May to June.
If they happen in June, we still have selling season, but ultimately, once that happens, there's a psychological change that's going to take place, and then additional interest rates will come, and I think it brings that value buyer back into the market.
Lower inventory is lower rates.
Absolutely.
Would you agree, Austin?
Oh, definitely. I mean, lower inventory is just gonna kind of get the reset that we need right now. I mean, it's a battle out there, and you're battling on every deal. And so as inventories start to get to what we would call normalcy, then we can start to raise the margins a little bit more. We won't be relying on the manufacturers for promotional activity, and it'll get back to a more stable, you know, I would say, pre-COVID environment that everybody's used to. Interest rates definitely, you know, will have an effect on the consumer.
Hopefully, the interest rates start to trickle down just because it's time for them to trickle down, and it's not, "Okay, we're going into something." The one concern I have with interest rates is if they start to come down, why are they coming down? And so hopefully, the backdrop is not super negative on that, but it definitely will help. I think the only other thing that we rely on in Malibu and Cobalt and Pursuit, you know, we're three, definitely in our top five. I know Pursuit's number one, but they're our biggest, you know, our biggest partnership is that they continue to innovate. They continue to bring new things to the platform as models and just innovation, technology, and stuff. That's really important to keep the churn of that-
Mm-hmm
consumer to come back, and that trading pattern of two to four years, you know, that churn to keep going.
Mm.
They've done a great job so far.
You mentioned promotion. I wanted to go there next. You know, we hear all about heightened promotion levels. Well, well, yeah, off 2021, when there was no promotion going on. So, how would you describe the promotion environment? Is it kind of normal at this point, or are we a little bit higher than we were, let's say, pre-COVID?
Well, I would say that going into the boat shows, there were national programs. I think the manufacturers have realized that this inventory needs to get flushed through, and that we need to be as clean as we can going into the 2025 model year. So they've stepped up and done a little bit more than normal, but it's not like it's fivefold or tenfold. I mean, it's just, you know, if it was $750 in 2019, maybe it's $1,500, $2,250 now, but it's not on everything, because they're not having to really do promotions on the newer brand boats. It's some of the stuff that's kind of gotten, I would say, dated or needs to be refreshed, or that, you know, a new model needs to come in and replace.
So it's just some of the, the stuff that, I hate to use the word stale, but the new stuff, they're not really having to do a whole lot on. It's just pushing everything through and getting it kind of cleaned up, and it's just, you know, some of that, that older stuff that, that they're really having to work on. So it kind of varies.
Got it. Pricing. You know, we look at RVs, we look at boats, we look at power sports. During COVID, pricing went up pretty significantly, and I just walked out of an RV meeting, and you know, during the 2020 to 2022 period, RV pricing was up 40%. Boats are not as egregious. We're starting to see pricing coming down in RVs, on towables. Do you see the same pricing dynamic going on in boats, or just less a slower increase?
Well, first of all, egregious is a new word for you. That's good.
I looked it up.
Okay.
Preparing.
Go ahead.
Well, I think this is funny, 'cause, like, if you ask me where pricing is, it's always too much. And then if you ask Jack, you know, what do I need to be...? I need to be selling more boats. So, you know, we have to work as a partnership. You know, one thing I would say about boat pricing is we've seen a significant increase. You know, I have never seen boat pricing, in 30 years I've been in the industry, I've never seen it come down. You know, I've seen it kind of remain flat. But one of the unique things about this, I think, is that when you look at new boat pricing, the increase we've had over the last several years, there's been a constraint of new boats being built. Pre-owned has followed that.
Okay, so we work a lot with our sales associates about how we're talking about cost of ownership from, you know, purchase. Don't focus on the $350,000 purchase price, right? If that boat was $200,000 four years ago, and you used it for three years, and you sold it for $175,000, now you're paying $325,000 for it, but you're selling it for $295,000, the cost of ownership is basically the same.
Mm-hmm.
It's not just inflationary. There's a lot of technology that have gone into boats. So there's a little bit of a misconception that pricing's through the roof. I mean, of course, I want pricing to come down. I would love for all my manufacturers to drop their pricing 20%. Makes our job easier. But when you really look at the content and innovation that's been put into the boats and how the pre-owned has followed that, and it's gonna be really hard for pre-owned to really fall off the face of the earth, 'cause there's just never enough of those. In 30 years of doing this, I've never had enough pre-owned boats. I wake up at night going, "How can we get more pre-owned boats?" Not, "How do I get rid of them?" I do not have enough.
So with that gap not dropping and that spread staying the same, we're able to pass that pricing on to the consumer. We've consistently done it for 30 years.
If pricing doesn't come down, how do we get that lower-end consumer back into the market?
I don't sell to the lower-end consumer, so I don't know. Jack, how we do that?
That would be other brands-
Yeah
... or other OEMs that sell 16- 22 ft cheap boats.
I mean, it's just, it's not only the pricing of the boats, it's, you know, there's other factors into that, that have kind of starting to push that consumer out.
So if you think about, and I think Austin makes a really good point, if you think about the lowest priced boat that we have on a normal basis, it's over $100,000, going up to $2 million on the Pursuit side. So the, what we've seen, and we've had a lot of questions around stern drives, our I/O market. "Oh, it's a bad market. It's going down." No, it's not. We're increasing that stern drive market. We play in the 24- 30 ft, and now in that cruiser market, it's going gangbusters. If you look at stern drives, 16- 22 ft, have been down 50% year-over-year, year-over-year, year-over-year. So the premium buyer, the premium boats, are the ones that are selling. I think they're gonna continue to be there.
But we don't lose that consumer. That consumer just starts with a pre-owned.
Right.
And we've seen that. So instead of somebody coming in and buying a 20 ft brand-new, whatever, Cobalt, you know, the value is not there. So they come in, they buy a four-year-old, 24 ft Cobalt or a six-year-old, you know, something equivalent to that. So the consumer's still coming in, they're just starting their boating journey as a new boat buyer in the pre-owned market.
Mm-hmm.
which puts more constraint on that, which, you know, again, makes pre-owned boat pricing hold steady-
Mm-hmm
... and allows the churn just to continue.
Got it. So if we shift over to the supply side, you know, the consensus in the industry, I think, is that we're still a bit heavy on inventory. We've seen several manufacturers, including Malibu, you know, dialing back on production-
Mm-hmm
... recently. If we think about the upcoming selling season versus model year 2025, how are you guys thinking about positioning? You touched on this a little bit earlier. Is there a risk that you wanna get in, you know, the channel as clean as possible for model year 2025, that you risk losing sales for late, late, late season model year 2024s?
... No, from my perspective, no, because you're still, if you go back to norms, it's still 20 weeks on hand of inventory. A person ought to be able to find a boat. If you look at our model, our model, 50% of the buyers will buy a stock boat from Austin. 50% of them will say, "Hey, I want to customize my boat." I mean, that's our model. It may not necessarily extend across all other OEMs or dealers. So the inventory is gonna be there. If you go back to COVID, we were down to four weeks of inventory. Not enough inventory out there, but at 20, we'll be fine.
Mm-hmm. Got it. Just to follow up on that, you know, Jack, you've expanded into towboats and other segments, or expanded beyond towboats into other segments. Recently, you made no secret of the fact that you wanna do more M&A.
Mm-hmm.
You've talked about, you know, pontoons, potentially saltwater fish. Maybe help our audience understand your acquisition strategy and why, why it's beneficial to expand to these new categories.
So I'll give you two or three things. Number one, our philosophy. What we try to do is we try to acquire a great brand that we know we can improve. And so when we talk about Cobalt, you know, Cobalt was a great selling company that made boats. Operationally, there was a lot of opportunity that we could put into place. And so the result of that is we doubled EBITDA at Cobalt in two years. Pursuit was a great engineering company that built boats. Not as strong operationally, not as strong from a sales and marketing perspective. We doubled that EBITDA in three years. So through an M&A strategy, if we're on a cadence of buying a reputable brand every two to three years, we're quickly growing the company.
That's why you see our CAGR, since we went public in 2014, at well over 30%. And so that, that's a key part of our strategy. The other factor that I'll talk about, we throw off so much cash. I mean, we're a 50-- we throw off 50% free cash flow, and we're 80%-90% variable above the gross margin line. We're gonna be at net leverage here in a couple of months, and so we have an ability to return capital through M&A. We have an ability to return capital through buying our stock back, so there are multiple avenues, but M&A is a preeminent way to do it.
Why pontoons? It would seem like, you know, that industry is pretty crowded, inventories are generally pretty heavy. So I'm curious, why now?
So, and Austin can vouch for this, but it's very, very similar to the freshwater, our Cobalt and our Malibu brands. Many of our customers, they'll have a Malibu, they'll have a Cobalt, and they'll have a pontoon. You also have one of the fastest-growing segments in pontoons. Very quickly, once we came out of the 2008-2009 recession, went from 40,000 to 65,000. If you can just keep them from being RV-ish, you know, this is a very, very profitable area to be in. So first of all, is the adjacency, but the second one is that saltwater outboard market. We play in a very small portion of that. It's a $6.4 billion total addressable market that we can enter into in a lot of other segments and categories, not the highest premium, and capture the market share.
You talked about if you can't find a good acquisition, potentially making or creating a brand new, you know, business in that category. How are those efforts going at this point?
Well, they're not right now. We'd rather make the acquisition. I mean, that is an option that we'd do. One of the things that gives me a lot of confidence and hope is that over the last year, we have seen the market come back. There are more people coming to market with brands that we would be willing to acquire, and they're no longer at 11x multiple like they were 18 months ago.
Got it. Just shifting over to you, Austin. You made a comment, I think it was last earnings call, maybe two earnings calls, about your competitive environment and how a lot of smaller dealers, you know, one, two location dealers, are really constrained with higher floor plan costs, more promotion spending, et cetera, et cetera. What does your competitive set look like today? Is it getting better for them, or are they still really cash constrained at this point?
Well, I think they're really cash constrained at this point. I think in the next 30-60 days is when that kind of turns back on. So as we come out of the spring, we're starting... They will be starting to get into the, what we call cash flow generation time. So they're gonna really start to turn the cash flows. If they've made it this far, there's a good chance that a lot of them will make it. But I mean, when you look out there in the environment and some of the people in our pipeline and that we're talking to, they're not used to 10, 10%+ interest rates. I mean, and that's what the majority of the industry is paying on floor plan, and then the 2% curtailments they've been paying all winter has just sucked the operating cash out.
So there's a lot of them running on really thin, you know, cash flow right now. They just need to make it about 30-45 more days, and then it'll kind of flip back over, and they'll be good to go. And so, you know, there's gonna be some opportunities for us from an M&A standpoint, but we're really not out there looking for somebody that's struggling to, to survive with cash. We're looking for the premium, the best, the guys that are doing the best in the best boating markets, which I don't really wanna turn around.
That's where I was going next.
Yeah.
You talked about Malibu's M&A strategy. You guys have also been very active on the M&A front. You've also done some divestitures recently, so maybe help our audience understand the strategy behind that.
Well, I mean, there was just two. It wasn't like we did a bunch.
Right, right, right.
So, the Rosciolis, we bought a yacht center in Fort Lauderdale. Heck, I don't even know where it was. But we bought a yacht center. That, the reason we did that had to do with getting or setting up the U.S. distributorship for Sunseeker. We needed that. Once we got in there and figured out exactly what we need, we didn't need that whole marina. Had a lot of cash tied up in it. And so we were able to do a sale-leaseback that to a very friendly landlord, who was actually the guy that owned the marina next door to us. And so we were able to come in, pull the cash out, retire some debt, and get exactly what we needed out of that operation to do what we needed to do with Sunseeker.
So it was kind of a win-win for us. It netted positive cash flow. We lost a little bit of EBITDA, but it netted positive cash flow for us, and we got to retire some debt. The other one was like, I mean, it was tiny. I need Jack up here to give you the numbers on this, but I mean, it was like something that was one of our first acquisitions. It was. It's the old 80/20 rule. I mean, we were putting 80% effort in it, you know, and it just, it was just like one of those things where we could, you know, work on a used boat center in Atlanta and probably get more return than having something up in, you know, in Kentucky. And so it just made more sense.
Plus, the original, the guy that we bought it from, we made a great return on our money on that, but the son wanted to buy it, and it just worked out right. And it was really just a focus thing. So we don't really feel like we got rid of anything.
Okay.
Kind of like just reshuffled it a little bit.
Got it. Got it. You've typically done, call it four to six acquisitions a year. I think you've put that a little bit on the back burner during COVID, coming out of COVID. Where do we stand today with that strategy in terms of that four to six deals a year?
So, I think we're gonna re-message that, and we're not really concerned about four to six.
Right.
We're gonna be looking at how do we grow the company, you know, double digits. And so we're gonna always have organic growth based off, you know, pricing and units, and then we're gonna look at our M&A strategy to kind of supplement that to get us to where we need to be. I think we're gonna be more or less looking at strategic opportunities, 'cause some opportunities might be really big, and some opportunities might be really small, and so do you do six small deals, or you do two big deals? So I don't want to get hemmed in anymore on two to six deals. I think we're really gonna be looking at a certain amount of EBITDA that we're gonna purchase, and we're gonna be using our free cash flow in order to do that.
So, I mean, we've got a pipeline that'll easily support that for a couple of decades if we take that approach, even if we went back to the two to four.
I was gonna ask about that. Just given what you said earlier about, you know, the cash-constrained competitive environment, is it a, is it a pretty proactive M&A market right now?
Well, no, it's not, not really. I mean, we're still. This is the last quarter. When we look at stuff, we look at stuff on a trailing 12, and this is really the last quarter that I would say that COVID had any impact on. So once we get to the end of this quarter, and it rolls off from last year, there's really no COVID funniness in the numbers. And so that'll give us a better clear of the trailing 12, but we're active. Like, we've already done three deals this year, and, you know, we'll get. And that's not calendar year, that's fiscal year, and then we'll, we've got several on the plate right now.
Right.
That's actually a good point. You know, people talk about the trailing 12, and you're getting at the tail end of COVID. The discussions I've been having, is talk to me about a trailing six and the future 12. I really don't want to hear about trailing 12.
Okay. Well, let me stop there and let's see if anybody in the audience has a question. Go ahead.
Hi, thank you for the presentation. The CEO of... yesterday, and we are quite upset. Going back to 2012, we had the registrations, the new boat, the boat registrations in the U.S., and I think it was 10.5 in 2012, and it's never crossed 10.5 in the 12 years since. I think during COVID, it went to 10.3, and the last year was 10.1. So you, and when you look at the market value, it's about 3x that. So it's all come from this premium migration pricing.
Mm-hmm.
My question is, how sustainable is that, especially when you have, you know, it's a discretionary budget and probably demand on the dollar?
So in my opinion, it's very sustainable. And I'll go back to 2000—the Great Recession. We came out with Axis, so call it a value brand at that point in time, in the middle of a recession. People don't do that. But we did it, and we tried to price Axis at $39,995. The first year, you know how many we sold? One. Everybody wanted to add features and options, and so our average selling price was about $49,000. And what we've seen, we've always heard that price, price, price, but what the consumer wants is, to Austin's point, they want innovation. It's the proliferation of innovation has led to pricing, has led to ASP.
The consumer that we're dealing with, which is a $250,000 demographic to $1 million or more, they're willing to pay for the product that they're wanting. So at least the product that we offer at that premium level, I don't think it goes away.
Jack, Jack, I also think, I mean, it goes back to what I was saying about how pre-owned is following that. And so it really goes down to the price of ownership. And if you look at that and say, "Okay, well, 10 years ago..." It's really close. It's not exactly the same, but I mean, if you're talking big numbers, it's pretty much the same. So when you don't have that huge gap, and so somebody makes a bigger investment, it is more money out of their pocket, but if they're in that churn where they're doing it every two to four years, they're kinda not really worried about it. And I think it's very sustainable too. I wish I could figure out how to parallel, you know, the movement to on or near water.
I mean, go try to buy a house in Jupiter. Go try to buy a house on 30A. Go try to buy a house on Lake Martin. I mean, the movement to water, and we've—we say this all the time, nobody goes and buys a $3 million-$12 million property on water and goes and sits at their dock. They always have a boat or really two boats at their dock. So I believe it's sustainable on the premium side, the upper end. I think that that consumer is a little bit more insulated, and they're gonna continue to boat that. The value side of it, I don't know where that goes.
I do have some ideas on that because the value proposition between, you know, and I'll use brand X and Cobalt seven, eight years ago, was. I'm making up numbers, $25,000, and now that value proposition is probably closer to $3,000. And this product is no better, it's actually worse, and this product is probably slightly better, and so there's no, where, who's the consumer for this? And so I really have faith in the premium side of this and the sustainability of the long-term, you know, opportunity that's out there in front of us, and that's why we stay in that space.
I'll give you an example from this room. Clancy is one of our investors from Winnipeg. He has a 2021 model. Clancy, in the next couple of years, is probably gonna go to a 2022 or a 2023. I do have my order book here with me, Clancy. But people, what they do is they go upscale... and they buy more. We have consumers that have owned four, five, six of our product, and every single time they go up in length and the amount of features they have.
You know what that's called? Two free items.
Two free items, that's exactly right. God bless those people.
I don't want to give up. Anybody else?
I'm just thinking, talk about the new, where I love hearing you wake up at night wanting more used inventory. But I guess it's really hard for, for us to, to have a feeling of where that was. I don't know if you have any historical context of where that is, why versus-
Yes, so rough numbers, usually pre-owned is about 4x-4.5x new. So if you say new's at $250,000, pre-owned's usually around $1 million. Now, that's all boats, and that's NMMA, that's industry numbers that we get. So when we look at that, we feel that the pre-owned market's probably about 3x the size of the new boat market, because you gotta take out kayaks and, you know, jet skis and stuff like that. So it's about 3x that. I mean, when we look at this, you know, we have six guys that do nothing but buy boats. They get paid when they buy a boat. It doesn't matter if we sell it, they have. If they buy a boat, we pay them money. And they, we can never get enough.
I think a little bit of it is when you go back to 2008, 2009, there was a huge disruption in manufacturing, and that kind of slowly ramped itself back up, so we missed a lot of years there. There was a gap because of COVID, with everybody, I mean, everybody was shut down for 45 days, 60 days.
Mm-hmm.
There was a gap there, and it just seems that the pre-owned market just continues to be stable. And I don't really have a better answer than that. It's just... I don't know really how to answer that one.
On a more immediate basis, I'll give you one. This doesn't go back 10 or 15 years, but what happened during COVID? You saw it in the automobile industry. People on the dealer basis, many, many dealers started charging MSRP or MSRP plus, and so that's a 40%-42% margin. You start bringing it back to a normal level, you know, there's an automatic situation where a person that bought a boat from 2020- 2023, they're paying or a new boat is almost what they would get out of that boat. And so they're not gonna buy that used boat because it's about the same price, but it's a couple of years older.
The other phenomenon I think that exists is that consumer, if they're gonna take- if they're gonna try to move that boat, they have to go underwater, and they're not willing to do that. So I think for the foreseeable future, he's gonna struggle to find enough used boats out there. And then, to his point, it's an, it's a dynamic that you can't fully explain, but it's been in place for two decades.
All right, time for one more.
So this industry has about 4,000 dealers in our nation. If you leave out Austin and MarineMax, up to 90% of the hands are very large by banking innovations. So how do you assess the health of the innovative where the government is in five years? Are you better so by having a hundred dealership chains, like Austin, or is it better to have large banks? How do you answer that?
Don't mess this one up.
It's a hard question.
Yeah, I know.
So you get the, you get the plaque for the most difficult question. We've only had three, but you get the plaque. So I'm gonna answer this in this way: It is very, very important to have a dealer like Austin, like OneWater, that you can partner with, because the partnership is very solid. But I'm gonna use a term. We also have to be very careful that we don't have a Walmart situation. And, you know, you look back at Brunswick and Sea Ray, they got into that situation many years ago. And so the way that... You know, we're in communication, and we talk at multiple levels all the time. So I think that Austin knows where we're at, we know where Austin's at. With the other dealer network, Wells Fargo is a key partner for us. We have monthly calls with them.
We're talking about dealers that may be stressed or somewhat. But at the same time, you know, we're following that, and we want to know what the dealer health is, and we actually have a report card on that, and so that's been in place since the Great Recession back in 2009. That'll continue on for the next decade. But as a new dealer comes up, one of the things that we do, if I think that Austin might be interested in it, I'll pitch it to him and say, "Hey, is this somebody that you might be interested in?" And vice versa, he'll do the same thing for us from a manufacturing point of view.
I think to add to that, you know, we have to work as a partnership. We've screwed up before and hurt them in a way, and then, you know, the communication just evolves, and we continue to make that partnership stronger. I think one of the things that, you know, we've been always worried about is, like, what's too much concentration with the manufacturer?
Mm-hmm.
You know, not only is it dangerous to them, but it could be dangerous to us. So, I mean, we kind of look at that. But then when you look at the industry, and let's say there's 4,000 dealers, there's 4,000 dealers, but there's really only probably, like, 3,000 or 2,500 that are, that are, like, what we consider, like, real dealers. That's still a lot. It's an aged-out industry. So what's the solution for Jack or other manufacturers when their number one dealer, and I'm just picking a city, I'll pick a weird one, Tulsa, they have their number one dealer dies or retires? It's not like there's just, like, new people coming into the industry.
Sure.
And if there are new people coming into the industry, you probably don't want to, you know, get in bed with them because they don't know what they're gonna do. So there's we're kind of caught to where they need to keep some of that concentration separate. We want them to keep some of that concentration separate, but I don't think inevitably it's gonna collide the way it's gonna collide. And you know, I don't know if that's seven years, 10 years, 12 years, but there's not another alternative.
Well, I think we're about out of time. So Austin, Jack, thank you.
Great job, Joe.
Enjoy the rest of the conference.
Thank you.