RideNow Group, Inc. (RDNW) Q1 2021 Earnings Report, Transcript and Summary

Greetings. Welcome to RumbleOn's First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host Hilary Sumnicht. Thank you. You may begin.

Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleON's first quarter 2021 financial results. Joining me on the call today are Marshall Chesrown, Chairman and Chief Executive Officer; and Steve Berrard, Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at investors.rumbleon.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company’s corporate website. This conference call is the property of RumbleON and any taping or other reproduction is expressly prohibited without prior written consent. Before we start, I would like to remind you that the following discussion contains forward-looking statements, including, but not limited to RumbleON's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in RumbleON’s periodic SEC filings. The forward-looking statements and risks in this conference call, including responses to your questions are based on current expectations as of today, and RumbleON assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Also the following discussion may contain non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, please see our earnings release. Now, I will turn the call over to Marshall. Marshall?

Thanks, Hilary, and thanks everyone for joining us this morning. We reported solid performance in the first quarter, delivering 48% revenue growth quarter-over-quarter, $11.2 million total gross profit and positive adjusted EBITDA. As we will illustrate with our Q2 guidance, we continue to experience that momentum in Q2 by continuing to accelerate growth in revenue and gross profit in all facets of our business. We expect on a year-over-year basis, Q2 revenue and gross profit growth rates of 68% to 78% and 113% to 125% respectively and to deliver another EBITDA positive quarter. Our overall mission has not changed, but during the past year, we've continued to implement the planned meaningful enhancements to our strategy and technology stack, which we believe will enable us to participate in a tremendous share of powersport transactions over time with improved unit economics. In Q1, we announced a pending business combination with the nation's largest powersports dealer group right now, which we believe will transform the powersports industry forever. Though the transaction is not yet closed, both businesses are already benefiting from the synergistic nature of the proposed combination, which I will discuss at greater length shortly. We have taken meaningful steps to improve our margin opportunity and manage our limited liquidity and available capital over the past few quarters and we're seeing the impact in our results. As you heard us and other vehicle resellers discuss, there continues to be a significant imbalance in supply and demand in the market and we're certainly seeing that in powersports with extremely low new inventory availability, which is driving higher pre-owned vehicle prices in all segments. Even as we emerged from COVID restrictions in this country, manufacturers still haven't been able to ramp production back to normal level, leaving far fewer new vehicles and showrooms. While this has created significant supply constraints of new inventory across the industry, it has created a strong tailwind, an outstanding opportunity for RumbleOn, particularly with our buy direct from consumers strategy and our new B2B redistribution capabilities through DealerDirect. Clearly, our business has never been better aligned to realize sustainable and significant margin improvements than today in our short history. However, we recognized that like our peers, our Q1 margin to some extent is benefiting from macro trends, which we expect will normalize over time. Build a macro backdrop is a tailwind for our business in the near-term, it is important to understand that our model is a perfect solution for dealers and thus consumers in all macro environments due to our unique core capabilities, which we believe is evident in our Q2 guidance we are sharing today. First, our ability to efficiently aggregate and distribute powersports vehicles through rumbleon.com, which includes our highly successful buy direct from consumers strategy. As you know, we launched our RumbleOn.com 3.0 platform late last summer and continue to see very exciting momentum. As of quarter end, we had nearly 450 dealers on RumbleOn.com and continue to grow our dealer count. In fact, we added over 30 dealers in April alone. In the first nine months since we launched RumbleOn 3.0, we already have roughly half the number of listings at CycleTrader, who has been operated in this space for over 40 years. Recently, the industry has seen a more than 30% decline in average listings per dealer due to the supply demand imbalance, I just discussed. Based on our dealer count, we estimate that under normal new vehicle stocking levels, we would have expected 80,000 listings on our site. We are confident that the number of listings per dealer will grow significantly as OEMs get back to normal inventory flows, thus increasing dealer supply. We further believe that our opportunities for market dominance in listings and thus quality dealer lead generation to be market-leading in the very near future. Build today more than 95% of all inventory redistributed by RumbleOn is acquired directly from consumers, which is a compelling and a strong competitive advantage of our model. Most importantly, consumers now have the unique ability to work with our dealers in the locality where they live to sell or trade their vehicles for instant liquidity, which has significantly improved our overall conversion rates and incremental gross margin from the fees that generates for RumbleOn. The strength of our platform revolves around providing consumers with a transparent transaction experience, including the prequalification of financing and the transparent and fair evaluation of their trade-in, which creates quality leads, provides tremendous value to dealers and marries the current online consumer demands with traditional retail sales processes. And second, our enhanced Dealer Direct solution. In Q4, we launched the B2B online dealer auction technology for Dealer Direct. Dealers can now use our platform to buy and sell units to and from each other, enabling RumbleOn to participate in more transactions and earn sell-through fees without taking ownership. This is an industry first to offer participating dealers real-time access to more high quality inventory. From the very first day, our vision for RumbleOn was to completely disrupt the very inefficient pre-owned supply chain in powersports through the development and deployment of unparalleled software solutions for dealers all while improving the consumer experience to buy, sell, trade and finance online. Our tech enabled real-time auction platform for dealers is our newest innovation and has already experienced a 100% sell-through rate further reducing our already low average days in stock to new record levels. Dealer Direct will completely revolutionize how powersport dealers acquire and redistribute pre-owned inventory. The Dealer Direct online auction platform connects dealers with other dealers, reduces costs and creates a more timely and efficient process for inventory acquisition and wholesale sales, making the powersport pre-owned supply chain more liquid than ever, which in turn makes powersports vehicles more assessable to consumers. And we do this while eliminating expenses from our cost structure by not utilizing third-party reconditioning, no associated grade tasks or auction fees and multiple other benefits. Instead we earn transaction fees and the acquiring dealer pays for freight. All of which provides a significant increase to our gross margin has demonstrated in our current results and future guidance. We are driving rapid adoption. We sold 310 units through DealerDirect online auction in Q4; increase that by 235% to approximately 1037 units in Q1. And we are seeing substantial growth in Q2 and expect sequential growth on the platform to exceed 100%. It is clear that the demand is high and we expect to dramatically grow the number of units sold through our platform. Thus enabling RumbleOn to scale with higher margins from both the sale of company owned inventory, as well as buy and sell fees. The combination of RumbleOn 3.0 and our B2B application of DealerDirect is a valuable evolution of our business. For those of you who have been following RumbleOn for some time now, you know that we've had to operate RumbleOn as a lean organization since our inception. In 2020, we set a goal to achieve profitability and operational efficiency, and through maintaining this commitment we believe we are now in a position to achieve sustainable profitability. We managed our inventory and inventory financing nimbly, but Steve will discuss in more detail shortly. During Q4, 2020 and Q1, 2021 our unit volume capability was severely hampered by our limited access to capital and the customer operational limitations in connection with the proposed RideNow merger. However, on April 12th, we raised capital and as of May 14, 2021, we have a significant improvement of cash on our balance sheet. We've demonstrated our resilience over the past three years, and we will continue to March forward to unparalleled market domination with a significantly stronger capital structure. We believe our current liquidity and capital structure gives us the runway necessary to accelerate volume growth and gain significant market share as evidence by our Q2 guidance. As we look ahead, we are incredibly excited by the opportunity to become the first omnichannel customer experience in powersports in North America, through our pending business combination with RideNow. Our discussions with the multiple OEMs involved in this transaction have been very positive and we're encouraged that we'll be able to close in the very near future. This deal represents a meaningful evolution in the power sports industry and augments our mission to deliver an unparalleled solution for powersports enthusiasts nationwide. We are excited to bring public investors the opportunity to be part of this meaningful advancement in the powersports industry. The end-to-end platform will enable the combined company to reach more consumers in a secularly growing yet still highly fragmented market that is benefiting from changing consumer behavior. Combining RumbleOn and RideNow positions us to capitalize on the secular changes in consumer behavior accelerated by COVID-19. Together we will have significant market share on day one and we'll build a dominant position in the $100 billion marketplace for powersports. Our complementary business models offer tremendous growth opportunities, both organically and through industry consolidation. From online to in-store sale and the ancillary services such as financing, parts, service and merchandise RumbleOn will have an unmatched end-to-end omnichannel consumer experience. We strongly believe that the integration of RideNow is extensive geographic footprint and strong retail brand combined with RumbleOn's technology platform will transform the nation's largest powersports dealer group into the first and only omnichannel powersports platform in North America. As a combined company, we will offer the fastest, easiest and most transparent transaction process to consumers nationwide. Combined with our proprietary pre-owned vehicle sourcing, we are reinventing the purchase and sale experience for powersports enthusiasts, both online and in-store. The transaction is expected to propel revenue growth and drive meaningful cost synergies leading to improved monetization and margin expansion. And we are already seeing evidence that the combination will be highly lucrative to our combined businesses. For us, this transaction is about unlocking incremental sale by improving access to quality pre-owned inventory, improving the associated supply chain inadequacies, consolidating a fragmented industry with the intent to drive efficiency and most of all improve the consumer experience. For our customers, consumers and dealers this is about offering the most robust selection of inventory through a simple, safe, hassle-free and flexible online experience. As always, we have high ambitions and are excited about the next chapter for RumbleOn. April was another strong month for our business and it's shaping up to be a great Q2. RumbleOn is making powersports ownership assessable to everyone from the first time writer to the longtime enthusiast. And we are thrilled to give consumers and dealers what they want and need. We love meeting our customers at powersports rallies and events each year. We're hopeful that we'll continue to see a return to normal across the country and support an in-person event again this year. We became an official sponsor of the City of Sturgis Motorcycle Rally for the first time in 2018, and look forward to another successful event this year, this time as the first omnichannel customer experience available in powersports in North America. And with that, I'll turn it over to Steve. Steve?

Thank you, Marshall, and good morning, everyone. Our Q1 results are detailed in the press release we issued this morning and supplemental information will be available in our first quarter Form 10-Q that will be filed later today. This morning, I will provide a quick overview of our first quarter results and Q2 guidance; then we'll comment briefly on our pending transactions right now, before we open the call to questions. In the first quarter RumbleOn sold 3,500 units and generated revenue of $104.3 million, up from 2,647 units and revenue of $70.4 million in Q4. The sequential improvements were driven by strong market trends and increased demand as well as our ability to efficiently acquire high quality powersport vehicles directly from consumers and the continued growth in the volume of transactions through our dealer direct online auction platform. We sold 1,006 powersport units in Q1; generating $10.9 million of revenue, up 17% and 28% respectively as compared to Q4. We sold 2,494 automotive units generating $84.1 million of revenue, an increased the 40% and 52% respectively over Q4 of 2020. Q1 transportation and vehicle logistics revenue is $9.3 million, up 41% from Q4. The number of vehicles sold decreased on a year-over-year basis due to the adverse impact of COVID-19 on commercial activity resulting in lower levels of inventory available for purchase at acceptable acquisition price levels causing lower revenue but higher average selling prices and gross margins due to the supply and demand imbalance. Our level of available liquidity, which required that we reduce our historical purchasing levels of inventory for sale, our continued disciplined approach to revenue volume and margin growth in connection with the prescriptive steps implemented in 2020 to accelerate profitability and the elimination of powersport vehicle sales direct to consumers as we continued to shift our consumer activity to RumbleOn 3.0 and earmark available inventory to dealers through Dealer Direct. As the impact of COVID-19 abates over time, we anticipate that unit volumes will return to or exceed levels experienced before COVID-19, effective commercial activity. Total gross profit for Q1 was $11.2 million or 10.7% of total revenue down 20 basis points from Q4 and up from 7.2% in Q1 last year. Gross profit and gross margins for our vehicle distribution business was $9.2 million or 9.7% versus 9.3% in Q4 of 2020. The strength in Q1 margins was driven by the benefits of continued supply constraints on new inventory, the significant levels of profitability being driven through Dealer Direct, which is a result of not having to utilize independent third-party providers for transportation, reconditioning or the payment of auction fees. While we have benefited from the continuing supply chain constraints on new inventory, we don't believe that the supply chain effects on our increase in gross profit is sustainable over the long-term. We expect vehicle margins to remain strong, but begin to stabilize as demand levels and inventory acquisition opportunities rise. Total SG&A for the quarter was $13.4 million or 13% of revenue, down from 16% of revenue in Q4 of 2020. Our operating loss for the quarter was $2.8 million, an improvement from a loss of $4 million in Q4 of 2020. For the first quarter, RumbleOn’s net loss was $4.5 million and adjusted EBITDA was a positive $2,102,000 up from a net loss of $5.5 million and a $2.8 million adjusted EBITDA loss in Q4 and a substantial improvement from the $22 million net loss and $6.5 million EBITDA loss of Q1 2020. As of March 31, 2021, we had $2.1 million in cash, including $2 million in restricted cash. During Q4 and throughout the entirety of Q1 2021, our unit sales volume was severely hampered by the level of our available liquidity, limited access to capital and the customary operational limitations in place and connection with the negotiations of the proposed RideNow merger. Substance through the quarter end, we closed a public offering of 1,048,998 Class B shares with net proceeds of approximately $36.7 million. With a significantly stronger capital structure, we now have the liquidity needed to accelerate unit sales and revenue growth in Q2 and beyond. Before turning to outlook, I'll provide a quick update on RideNow. RideNow’s preliminary Q1 revenue and pretax income also benefited from strong market tailwinds. Their results will be available later this month or in early June once we file the combined RumbleOn and RideNow pro forma financial results with the SEC, while we expect potential upside to the full-year expectations we said in March for the combined company, we are reiterating our prior outlook for 2021, which was revenue in the range of $1.45 billion to $1.55 billion and adjusted EBITDA in the range of $110 million to $115 million. However, we are in the process of re-evaluating this outlook. We believe now more than ever that our business models are highly complementary and we expect to achieve significant levels of revenue, gross profit and earnings growth. We are excited about both the business opportunities that a combination with RideNow will bring to the table and the financial profile of the combined company. Turning to RumbleOn's standalone outlook, we're seeing continued improvements in the second quarter, reflecting the progress we're making on our objective of more disciplined approach to sales volume as we take prescriptive steps to achieve our goal of increasing profitability and the rapid adoption by dealers of our enhanced Dealer Direct solution. We are anticipating a strong second quarter and expect a return to year-over-year revenue and gross profit growth coupled with strong unit economics and positive adjusted EBITDA. In Q2, we are expecting a total revenue range of $140 million to $150 million, gross profit of $18 million to $19 million and another quarter of positive adjusted EBITDA in the range of $1.2 million to $3 million. As the impact of COVID-19 abates over time, we anticipate that inventory purchasing levels and revenue will return or exceed levels experienced pre-pandemic as we increased penetration in existing markets and continue to add new dealers. We expect our business combination with RideNow to close during the third quarter, so we're not providing full year guidance for standalone RumbleOn. However, we are very excited by the opportunities ahead and believe we have the strategy in place to continue to deliver revenue growth and profitability with strong unit economics. In 2020, we made a commitment to achieve profitability and deliver operational efficiency. We believe our Q1 results demonstrates the progress we have made and our Q2 guidance demonstrates our continued commitment to those goals. With that, I'll pass the call back to Marshall for closing remarks.

Thanks, Steve. We began building RumbleOn with the mission to disrupt the inefficient vehicle supply chain and we continue to make progress on that mission every day. We are taking advantage of a myriad of tailwinds in our industry both from the macro environment and the secular trends as dealers are increasingly looking for digital solutions. And we have spent the last several months enhancing our business model and technology solutions to enable us to capture more market share with better unit economics. We believe that the real winner in the vehicle retail space will be the best omnichannel concept and provider due to the optionality, convenience and transparency it provides the consumer. There is no future in which a company can thrive without an online presence, but the importance of bricks-and-mortar should not be underestimated. Service, parts, accessories, merchandise and the gross margin it provides will not only be meaningful to RumbleOn's profitability profile, but scalable with a more prominent online presence and process, make no mistake about it. We are transforming the powersports industry for all stakeholders and are very excited for the future. Operator, we're ready for questions.

[Operator Instructions] Our first question comes from the line of Ron Josey with JMP Securities. Please proceed with your question.

Great, thanks for taking the question, Marshall and Steve. So I've got several here, so maybe we'll just do one by one. Just on RideNow, Marshall, you mentioned, you're seeing progress in synergies already here ahead of the merger or the acquisition. Can you just talk about some of those synergies maybe what you're seeing the benefits here, maybe the synergies are because of the dealer-to-dealer distribution process you've talked about? And then on RideNow specifically just Steve, you talked about close maybe in 3Q, can you just give us an update on closing timeframes and financing around the acquisition. That's question number one. So synergies you're seeing and then timeframes and financing.

All right, synergies Ron, good morning.

Good morning.

I really looked at it from two perspectives in these early days. One is providing access to pre-owned inventory has been extremely accelerated with them from since the announcement. And I think as we get further along and their numbers are available to everybody, I think, you'll be able to see that dramatically starting in March. So as we anticipated one of their biggest part of them – one of their biggest shortcomings has been access to quality pre-owned inventory and they are – we've been able to fill that need in a meaningful way and it continues to grow every week. Second piece would be really with regards to RumbleON Finance. They have been part of our test. And what we have seen is that there is a much bigger opportunity on the consumer retail finance page than we originally anticipated. It's not only in the pre-owned space, but it also looks evident to us that there is a huge opportunity on the new vehicle side as well. So, we're working diligently and ramping our capabilities on the finance side and they are aggressively participating in Dealer Direct for additional inventory. So Steve, I'll let you take the second half of that question.

Sure. Good morning, Ron. On the timing, right now as you remember the conditions to close, we're getting OEM or manufacturer approval, Autosport and Scott [ph] are being the two biggest ones. We have now made all of our applications with the OEMs. So far they've been well received, they've been very cooperative. I think, it's just a question of how long they get in the RideNow situation, there's as many as 200 plus applications that need to be filed because every location is a separate franchise agreement. So, therefore, we have to – if you have 14 Suzukis, you file 14 applications, but all that has been pretty much done. And now it's just a question of going through the process had any pushback or resistance if anything, the larger ones have been extremely receptive. So I think that – short-term would we like to be done by the end of June? Yes, but not to set expectations and not to have to disappoint, I think it's better that we just take a view that we'll do it sometime and we believe early Q maybe – hopefully in July, let's start with that. On your financing question, just to recall, we have our letter commitment from Oaktree, which is 280 for the transaction plus another 120 for our future endeavors whether that would be acquisition or working capital and then we were going to raise 170 to complete the deal, we obviously did the interim raise here just a few weeks ago. So that results that – to close the deal, we need to raise probably another $84 million, $85 million then we want to have something extra on the balance sheet when I shared the balance sheets capitalize with somewhere between $75 million and $100 million. The only question left now is are we going to do offering or we've had a number of people step up and offer to do the entire transaction. So the only question that remains is when we get closer to closing, we will be filing a proxy here shortly in the next two or three weeks. Do we do it in an offering or we just do it with one or two individuals, that decision we haven't made yet.

Got it. That's super helpful. Glad to hear everything is going on plan, maybe another question on just guidance. We're halfway through, you mentioned, Marshall, I think April was a strong month. Just talk a little bit more about what you saw in April and the mix between consumer and dealer-to-dealer, just given the strings you talked about on. On dealer-to-dealer, since the launch, I think, you said was 4Q or as we've talked about, and I got one more follow-up.

Yes, no problem. Actually kind of started in March, we had a very, very strong March April. It's accelerated quite a bit from March. And May has been thus far halfway through, has been extremely good. We have basically six weeks left, so we're – we have a high level of confidence of our guidance. And I think the biggest improvement as we continue to march forward here would be in regards to gross margin. And I would really urge investors to take a look at gross margin of other online providers, whether that would be cars or anything in the vehicle space. And I think you'll see that the margin performance on the majority of our business, which is B2B including the vehicles that the company owns going to dealers is growing dramatically. And they are very, very strong gross margins in comparison to the industry. And I think the important part there is that you've heard me say before, Ron, is the retail consumer is easy to understand, and I think we understand the shortcomings of the consumer experience in different things in that regard. But if you look at the gross margins that this produces on the ASP that we are selling at, and then you consider the lesser amount of SG&A associated to a dealer transaction compared to a retail transaction, that is the difference between losing significant money as you ramp these models compared to being in a position to make money.

Ron, if I could add – I just going to give you some anecdotal thoughts on consumer side of it. Obviously, right now would be the representation of that and looking at their first quarter through April actually through today their results have far exceeded our expectations of what we originally thought. So, that continued growth that they've seen has just carried right over into Q1 into Q2. So I think from a consumer perspective, the whole fear of the COVID bubble I think their lifestyle changes really starting to take hold. And there are just more people coming into the marketplace that want to enjoy powersports.

There's definitely some tailwinds here, Marshall and Steve. Maybe one last one, I'll go back in the queue. Autos, we didn't really hear much talk about autos and maybe just some insights on where you see that business going, how that's contributing and that's it. Great, great quarter guys. Thank you for the time.

You bet. Thank you, Ron. Yes, the automobile has been very, very good, obviously with the pending right now transaction and all of our efforts with regards to technology improvements and launching our B2B and launching B3 for powersports. Our focus right now has been on powersports, but our automotive business, as you'll see in the reports, has been extremely strong. Gross margins are as high as I've probably seen in my career. In part, again, as we explained in the call, a lot of that has to do with the lack of new vehicle inventory that dealers are seeing. So we're seeing a lot of activity in the auction lanes, gross margins are extremely high at all times high levels. Our logistics company, which hauls well over 100,000 cars or dispatches over 100,000 cars last year, is seeing the same type of uptick in the business as well. So the whole automotive business is doing extremely well. Our retail group, we moved into a new location in Palm Beach, Florida with big success. And so, we like that business a lot. We think it's interesting from the standpoint that a lot of people still come through RumbleOn.com on a cash offer tool to acquire liquidity. However, there's a significant amount of players in that liquidity chain, whether that would be Carmax, Carvana, Vroom and regular dealers. On the powersports side, we really are the dominant player. So summation is yes, we're in the automobile business. It's been extremely profitable. We think that those tailwinds remain for quite some time, but the major focus in our – and basically most of our assets are deployed towards our powersports dominance.

Great. Thank you, Marshall. Thank you, Steve.

Thank you.

And our next question comes from the line of Rommel Dionisio with Aegis Capital. Please proceed with your question.

Thanks. And good morning guys. So two questions for you. I think a quarter ago, when you talked about RideNow, you discussed how they had an approximate 3-to-1 ratio of new to used vehicles in 2020. I just want to, given your prior comments Marshall about the supply demand imbalance and the supply constraints on the manufacturers, could you just maybe put that in some perspective of what that number might approximately be today, or just even if you can talk about it qualitatively, if you don't have the exact sort of ratio. I just wanted to get some perspective of how that's changed in the last few months? And second, the sort of a more general question, given the transaction about to close here. I wonder if you could just talk about how, if at all the relationships with RideNow with some of the OEM producers like Klim, Harley, Suzuki, Polaris, and others have changed at all in the last few months, if they've changed for the better for the worse? Thanks.

Okay. I think that with regards to the mix of pre – new to preempt, I think two things will drive a significant improvement when then when their numbers are released. Part of it is they do have a reduced new vehicle availability on their showrooms across the country as do all dealers, thus just mathematically obviously they're going to do a better job on the pre-owned side. So I – you will see an improvement from 3-to-1 to some number North of that, that we haven't announced and nor have we quantified publicly. I think that we are more confident today that over the long-term not only can it be but from a profitability perspective, it would be extremely exciting to have a one-to-one ratio and we think – I think across the company to be a one-to-one ratio is very, very achievable. And I think overtime you'll see some actual locations perform at even better levels than that. As far as the OEM response it's, as Steve mentioned in his narrative that, we've been very encouraged and I would say in some cases pleasantly surprised, we didn't see any pushback. We think it's very, very important to the long-term powersports industry. We know that the reception from the dealer community has been extremely strong. It is the last vehicle that we're aware of, last vehicle segments. You have public capital involved in RVs with the likes of lazy days and camping world. You have public capital in the boat and in the marine business with one marine and MarineMax. And of course, Steve was Co-Founder of AutoNation, which started all the public capital groups that now dominate the automotive space. So we think we're the first to the space. We think that there's always some hurdles to cross when you're first in the game. But as Steve mentioned, from my perspective some of the – some of the OEMs I think the response is bordered on excitement for what it could bring to the franchise system and powersports. So we're very encouraged. We do not have responses, but as Steve said all the applications are in. And obviously in most states there's time constraints on when they have to respond. So we expect responses in the very near future, and we have not seen anything that would lead us to believe that there's any, a negative response coming.

Great. Thanks very much, Marshall. Thanks for the perspective.

Thank you.

And with that ladies and gentlemen there are no further questions left in the queue, and this also concludes today's teleconference. So you may now disconnect your lines at this time. We thank you for your participation and have a wonderful day.