John North: Yeah. I think in general, the way we model our acquisition is to the five-year kind of timeline. We certainly are looking to buy dealerships that we can improve. And the three dealerships we bought year-to-date are all profitable. So, I’m very pleased with what we’ve added to our portfolio in terms of their initial contribution to our organization. But none of them are really performing to where we think they can be. And that is really giving us time to ramp up and build obviously the consumer base. And then importantly, a lot of our OEM partners are interested in coming along with us as we go into a market. So as an example, we bought Las Vegas in February, and we’re able to add Tiffin, which was not part of that dealership’s mix prior to us acquiring it.
And so that goes back to our second strategic initiative, which is really to be the OEMs partner of choice. And I think what we believe and part of what Lazydays has stood for even prior to me joining was really to have an amazing relationship with our OEM partners. And so, in many cases, we believe there are acquisitions that will come that we can add brands to or we can add lines to from our OEMs because they want to partner with us. And so, in many cases, that allows us to ramp revenue. In terms of the $600 million, I mean, that’s probably like a year-three view. And obviously, I’m not smart enough to tell you what 2024 is going to look like. Are we going to see an up year, flat year, or a down year, I mean, who knows? We only think about 90 to 120 days out because that’s really the inventory that we’re managing to.
But our assumptions are in a normalized market, if we buy these locations, we think it could be plus $600 million or more. It’s not an insignificant revenue number and, at a normalized contribution margin, that’s a pretty attractive EBITDA or pre-tax income number relative to the $100 million we’re raising.
Daniel Moore: Very helpful. Last question for me. I apologize if it’s long-winded, but just focusing on gross margins a little bit. Obviously, you saw some pressure in the quarter, particularly on new unit sales. How much of that was mix and desire to clear out older inventory versus maybe a more strategic decision to focus less on gross margin for new units and more on longer-term opportunities than used in maintenance and repair? Just trying to get a sense for if this was a temporary decline or closer to sort of the new norm for at least the near term in terms of margins on new unit sales?
John North: It’s an astute question. I appreciate it. I think it’s both. We certainly are being very attentive to the 2023 model year. And like last year, as you see the model year changeover, which typically happens sort of April to July, you start to see some compression on those margins. And it’s a very competitive industry dynamic right now, because I think other private dealers have probably been less attentive in terms of 2022 and 2023. And so, they’re feeling more acute pressure. When someone is advertising a similar unit with the same floor plan at 40% off, it’s hard for us to not match that. And so, that’s a dynamic I think that’s happening. In terms of real-time color, in October, our margins actually improved. The health of our inventory is really good.
