Brett McGill: Yes, I actually don’t have that data handy, but I’m fairly certain if you do the turns on our rolling 12, we’re in the 2.4 to 2.5 [ph] range something like that. Where I think the industry, industry historically would be about 1.8 times. We were usually better than that. Our inventory itself is not in what I’d call bad shape at all. I mean, we have some pockets of opportunities like probably most people do. But I think we’ve been more proactive at moving product. Our non-current percentages and all that are, better than other dealers out there by a long shot that we’ve seen. And, for us, we would love to see inventory. We’d like to see our turns, north of three times. It’s going to take a lot of work to get there over time, before COVID we would be 2.5 sometimes a little bit higher than that.
I don’t know if that’s answering your question, Mike, but it’s. We have some opportunities for share in inventory, but we’ve been also aggressive moving like we were in the March quarter, too.
Mike Swartz: No, that’s helpful. I appreciate that. And maybe there’s been a lot of talk about the NOAA regulations on offshore speed. And maybe just if you want to go on the record and give us maybe your quick thoughts about those regulations as proposed and any impact that might have on your business.
Brett McGill: We haven’t studied the direct impact on our exact stores and locations yet. We’re still trying to learn more about what it means and kind of relying on some industry information there. So we haven’t studied it exactly for our stores and business. It potentially in some locations, it could be not very impactful at all because of the seasonality, of where those restrictions are in those stores kind of the seasonality is okay, but it will have an impact on. I think when you’re reading, there’s a lot of commercial industry impact that’s getting most of the media. I’m not at all trying to underestimate that it couldn’t have a recreational impact, but for sure on the commercial.
Mike McLamb: And the final rules are not out yet, Mike, I think you know that. But so we’re, I think the industry’s waiting to see the final rules to really understand what the impact is. So it’s something that we’re all watching.
Brett McGill: That helps Mike?
Mike McLamb: Hello.
Mike Swartz: Thank you.
Mike McLamb: Okay, thank you.
Operator: Our next question is from the line of Eric Wold with B. Riley Securities. Please go ahead.
Eric Wold: Thank you. Good morning, guys. I guess I want to go back to kind of the guidance change. I know obviously you don’t like to change guidance, a lot of moving parts in there, but just want to get a better sense of the key drivers. I know that if I recall correctly, you were not assuming any rate cuts in the previous guidance in terms of drivers of demand and whatnot. So obviously that hasn’t changed. And if Q2 is the miss versus your expectations is more a reflection of increased seasonality or seasonality coming back in the market, you’re seeing possibly evidence of that kind of on the reverse side in April, how much of the remaining cuts of the year? I know it’s probably all these things, but can you kind of rank, is it increased concern, kind of underlying kind of demand pressures in general, even if rates don’t change, is it increased competition from others, the need to drive more promotional activity to get people cross lines?
Sure, all those play into it, but how do you kind of rank those if seasonality was kind of probably the bigger driver to the miss in Q2 versus what you would have thought going into it?
Mike McLamb: Yes, I’d rank them as a tougher industry environment. Granted, where there are signs that maybe seasonality is going to play a role here and help with the summer selling season, but we’re assuming that we’re going to be in a tougher retail environment and we’re going to keep kind of both feet on the gas pedal, including being more aggressive on margins. So number one, it’s going to be the tougher environment combined with margins is probably the biggest driver of the change in the back half. Combined with, we’re – we’ve commented a couple of times. We did expect additional revenue in the March quarter. The March quarter, we were up against a negative 13% comp, so we expected higher than 2% same store sales growth.
And so we had some revenue that didn’t close. Without getting into all the specifics of that, we, our inventory is elevated a little bit, which means our interest expense is going to be a little elevated in the June quarter, although it will start coming down as we get close to the end of June quarter and then a little bit higher interest also in the September quarter, as we said in the call. So it’s really margin, tougher environment and then interest, Eric, if that answers your question?
Eric Wold: It does. And just to follow up on inventories, obviously ending the quarter higher because sales came in below and you said that you’re kind of, the OEMs are being a little more accommodating, kind of adjusting production. Where do you, if you ended, September of last year, $813 million of inventories, where do you expect inventories to end this September? Would you expect them to be higher than last fiscal year, end, lower in line, and then kind of assuming we get into a better environment in fiscal 2025 and demand improves, is this a good inventory level for, the inventory at the end of this current quarter, the kind of a hurdle change at the end of fiscal year, is that a good inventory level for a low single digit retail increase environment or would you need to move higher than that?
Mike McLamb: Inventories will move higher in dollars than they ended last summer. Last summer, inventories were building, but there were still some brands that had not gotten product out to a reasonable level compared to prior times because of supply chain issues or manufacturing issues or whatever it may be. So I would expect inventory levels to be higher. I don’t recall our exact estimate of where it’s going to be, but it’s going to be higher. And then within that, the [indiscernible] always in the detail, by brand and by segment. And how do we work with the manufacturers on what do we think about 2025 and production and incentives? I think most people in the industry, I know Brunswick’s got a couple of slides on this where they’re looking at 2024 kind of being a low point, and then model year 2025, the industry begins to pick up from there, which makes a lot of sense. We just, we got to get to that point to see that that’s actually playing out that way.
