Q1 2021 Mastercraft Boat Holdings Inc Earnings Call
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I hand, the conference over to your Speaker today Mr., Tim also Chief Financial Officer. Thank you. Please go ahead.
Thank you operator and welcome everyone. Thank you for joining us today as we discuss master crabs first quarter performance for fiscal 2021.
As a reminder, today's call is being webcast live and will also be archived on our website for future listening.
Joining me on today's call are Fred Brightbill, Chief Executive Officer, and Chairman and George Die Barker, Our Chief revenue Officer.
Fred will begin with an overview of our progress on our strategic plan review, our operational highlights from the quarter I.
I will then discuss our financial performance for the first quarter and how we see 2021 shaping up recognizing that conditions may change.
I'll turn the call back to Fred for some closing remarks before we open the call for Q and I.
Before we begin we'd like to remind participants that the information contained in this call is current only as of today November 11 2020.
Company assumes no obligation to update any statements, including forward looking statements.
They miss that are not historical facts are forward looking statements are subject to the safe Harbor disclaimer in today's press release addition.
Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude special or items not indicative of our ongoing operations reach non-GAAP measure. We also provide the most directly comparable GAAP measure our fiscal 2021 first quarter earnings release, which includes a reconciliation of these non-GAAP measures to work.
GAAP results.
We would also like to remind listeners that there is a slide deck summarizing our financial results in investors section of our website.
With that I'll turn the call over to Fred.
Thank you Tim and good morning, everyone. I appreciate you joining us today. This continues to be a dynamic and challenging time, and we sincerely hope that you and your families remain healthy and say Oh.
Also on this veterans day, we'd like to take a moment to recognize all the brave men and women who have served this country. Your service and sacrifice was kept our country safe and free we thank you.
Mastercraft Bold holdings delivered record first quarter financial results exceeding the guidance, we provided last quarter.
Our performance this quarter, the most profitable quarter in Mastercraft history demonstrates continued momentum on implementing and executing against our strategic plan and the continued robust retail demand across all our brands.
I'm very proud of the hard work and disciplined execution of our team members, who continue to prove their resilience because we've shifted from addressing the COVID-19 related shutdowns to restarting operations and aggressively ramping up production to meet demand, while even further differentiating our product quality.
We've talked about it before but it bears repeating our culture and employees are key drivers of our strong performance in this dynamic environment.
While the results are a testament to the strong retail demand for recreational boating. They are also a function of our continued execution on our value enhancing strategies.
As a reminder, our strategy is centered on four key pillars designed to achieve one overarching objective to drive sustainable accelerated growth.
First we shifted our focus to providing consumers with the best and an experience in the industry. This means getting closer to our consumers to better understand what they expect from our brands and how we can work with our dealers to meet those expectations and improve their lifelong journey.
It also means that we are using what we learned from consumers earlier in our development process to meet their needs.
The insights we have gained through this have informed our recent investments in expanding our product development and engineering team.
In the last three months, we've aggressively recruited and hired leading engineering talent that can be leveraged across all our brands as we look to accelerate our product development and innovation lifecycle in particular at Mastercraft and Nordic Star.
These investments will be an important component of our market share and financial growth plan.
For example, our two most recent model introductions at Mastercraft. The NXT 24 in the iconic Prostar has been extremely well received and both are sold out for the year.
Second we activated a consumer driven marketing strategy across our organization to increase brand awareness create a community of interest expand our target market improved lead generation and ultimately drive sales and market share gains.
We have re purpose a portion of our sales and marketing expenses investing in the talent and the infrastructure required to elevate our digital marketing capabilities, while working closely with our dealer partners in their local markets to help them drive consumer traffic to their websites and showrooms, leading to greater consumer acquisition and shortening consumer reach.
Purchase cycles.
This investment will lead to increase market share across all our brands.
Third we accelerated our operational excellence program across all our manufacturing facilities to drive efficiency improvements and enhance quality across.
Across all our brands, we expertly managed the supply chain related issues dirt.
During the COVID-19, pandemic executing an aggressive production ramp up.
At each of our facilities, we are now running a production rates above pre cobot levels and plan to continue to increase production throughout the year to meet the robust retail demand.
Despite the inefficiencies realized during a production ramp up the dynamic supply chain environment, and increasing labor costs. The company delivered gross margins of 25.3% in the first quarter up 200 basis points versus the prior year.
The Nordic start turnaround is proceeding according to plan and we were encouraged by the early results Scott will Mack and his team delivered.
While there's still work to do we are confident in the long term prospects of the Nordic Star brand and our ability to generate gross margin levels approaching 20% over the next few years through a combination of operational excellence and new product development initiatives.
And fourth we strengthened our high performance organizational framework to attract develop and retain a highly skilled and specialized workforce.
Like many other recreational product manufacturers, we are aggressively recruiting skilled labor to increase production at all our facilities.
While the market for talent remains tight we're encouraged by the pace and quality of our recent hiring which gives us confidence that we are heading in the right direction.
We've seen some labor rate inflation due to the tight labor market, but is but as evidenced by our gross margin performance, we've been able to mitigate most of this increase through our superior material cost management and overhead absorption as volume increases.
Our people our most valuable asset as we have prioritized their health and safety throughout this time.
This safety first culture is critical to our success.
I'm, so proud of the more than 1200 men and women that drive the success of this business everyday through their professionalism and dedication to delivering the best products on the water.
Looking more closely at the quarter. We are encouraged by the momentum we are seeing all around our four growth priorities and we will continue to proactively adjust our strategy to the business environment.
Delivering on our core dealer and consumer propositions is at the center of this growth strategy.
Our results reflect progress on our work to accelerate production and efficiently manage our supply chain to meet increased demand.
As of today crossed our brands our wholesale production plan is fully committed.
In addition, the percentage of our order book that is already retail sold is at record levels.
Dealer inventories remain at historically low levels and consistent with our message last quarter. We believe it will be fiscal 2022 before dealer inventories reach optimal levels.
Combined with the current supply and demand dynamic in our industry. This provides us with wholesale growth visibility greater than at anytime in the recent past.
As we have continued to execute our consumer focused strategic plan, we are well positioned to outperform relative to competition and generate tremendous value for shareholders.
Against this backdrop promotional activity has remained relatively benign.
Although we do expect to see greater promotional activity heading into the boat show season as competitors adapt to the likely scenario, where most in person boat shows are either severely limited were canceled.
We are actively working on non traditional boat show alternatives and believe the premium nature and leading market share positions of our brands are relative insurance sophisticated dealer network and our digital marketing capabilities provide us a competitive advantage over our competition.
Let me now briefly review some of the latest developments across our brands.
And obviously, we continue to be pleased with the retail performance of the brand to date nearly 70% of the RV ours, we have shipped at wholesale have been delivered to a retail consumer this.
This extraordinary performance combined with the unprecedented retail demand and voting has let us to the point, where we have accelerated our growth plan for obvious for.
As previously announced on August 17th 2020, we entered into a contract to purchase a boat manufacturing facility and Merritt Island, Florida.
On October 26, 2020, we closed on the purchase and we've begun to prepare the facility to start production of Bobby our us in early fiscal Q3.
As many of you are aware remarks are only RV RV dealer recently acquired a large dealer in the Midwest, adding 20 additional locations.
This provides abhi era with a great incremental opportunity to grow in a large boating market.
While the near term increase in overhead due to the acquisition of the Merritt Island facility and subsequent transfer of Bobby or production, we'll have a dilutive near term impact on margins and profitability. We believe the additional capacity will set up the brand for many years of future growth in sales and profit.
It is important to note that moving obviously from the Mastercraft facility frees up much needed capacity for Mastercraft. In addition to the increase in obviously capacity.
At crest, we experienced record retail performance during the fiscal first quarter. This underscores the attractiveness of the crest brands the.
The value it delivers at an attainable price point and the easy to use and new boater friendly nature of the pontoon segment.
Most recently crest enhance its leading position in the ultra luxury category with the release of the redesigned Savannah.
Additional model refreshes and launches are in development for model year 2022.
As we fully expected crest delivered a strong quarter financially with higher gross margins and profitability on lower sales.
As we continue to ramp up production at crest, we are realizing the benefits of our operational improvement initiatives.
As we have stated our long term goal is to achieve gross margins in the low 20% range and we are well on our way.
Similarly, if not exceed our we experienced record retail results in fiscal Q1, as the brands model lineup and attainable price point attracted new boating consumers in strong boating markets.
While we're pleased with the increased demand we strongly believe there is room for continued growth.
Got Womack, who joined US in August is president of not start is executing a number of initiatives to ramp up production improve overall quality refresh the product offerings.
While we expect it will take until next year to see the full benefits of these efforts. We are confident that we have the right leader in place and that the brand is on track to deliver meaningful and sustainable profitability improvement.
At Mastercraft, the retail performance during the fiscal quarter was phenomenal and even more impressive.
Given the tough comparison to last years late summer selling season.
Our new model introductions and model refreshes for model year, 2021 have been well received and demand for our product is at an all time high.
We continue to grow distribution in markets, where demand for ski wake boats is strong as demonstrated by adding new dealers in southern California, Northern California Long Island, Charlotte in Western Canada.
These incremental distribution points provide a significant runway for mastercraft to take market share this year and beyond.
On a financial basis, excluding the impact of of Euro. The Mastercraft brand saw increased net sales on lower units and achieved record fiscal first quarter gross margin levels driven by consumers continuing to add features and options to their orders as.
As previously stated we expect to continue to ramp up production throughout the year, which will drive some labor inefficiencies in the short term, but allow us to better meet wholesale demand from our dealers as they look to stock up heading into the summer selling season.
Importantly, our progress and business fundamentals are setting us up for an outstanding fiscal year 2021, and I feel confident in our ability to continue driving long term momentum.
We remain committed to building on this progress through investments to further strengthen to strengthen our competitive position grow our categories deliver long term shareholder value guided by our strategic priorities.
Looking at how far we've come over the past several months gives us confidence that we can continue to deliver superior growth in sales and profits.
I'll now turn the call over to Tim will provide more color on our financial results Tim Thanks Fritz looking.
And yet the top line net sales for the first quarter was three.
$3.7 million compared to 109.8 million for the prior year period.
The decrease was primarily due to lower sales volume at each of our segment as each segment continues to ramp up production.
Partially offsetting the impact of lower sales volumes was a favorable mix of higher price and higher content models.
Lower dealer incentives and higher parts sales volume driven by unprecedented boat usage this past boating season.
As Fred mentioned this was the most profitable first quarter in the company's history gross.
Gross profit increased 8.7 million or 2.7% to $26.2 million compared to 25.5 million to the prior year period.
This increase was principally driven by lower dealer incentives higher prices.
Favorable model mix and higher parts volume.
Our gross margin was 25.3% for the first quarter, an increase of 200 basis points compared to the prior year period.
The increase was primarily attributable to lower dealer incentives and a richer product mix driven by continuing strong retail demand, partially offset by lower overhead absorption driven by lower sales volume and higher labor cost as a percentage of sales as we ramp up production across each of our facilities to restock or dealers inventory.
Operating expenses were 12.8 million for the first quarter and flat compared to the prior year period, as lower selling and marketing costs were offset by higher general and administrative expenses due to the additional spend related to product development and variable compensation.
Turning to the bottom line adjusted net income was $10.9 million or 58 cents per diluted share computed using the company's estimated annual effective tax rate of approximately 23%.
This represents an increase of 7.8% compared to adjusted net income of $10.1 million or 54 cents per diluted share in the prior year period.
Adjusted adjusted EBITDA was 17 million for the first quarter compared to 15.9 million in the prior year period.
Adjusted EBITDA margin was 16.3%.
From 14.5% in the prior year period.
Turing to our liquidity and balance sheet as of October four we had close to 9 million of cash on our balance sheet. We also fully repaid our revolving credit facility, resulting in liquidity approaching 45 million at quarter end.
As we look at the end of the fiscal year, while uncertainties in the marketplace remain our visibility has continued to improve and we remain confident in the strength of our business and our brands.
With the continued increase in retail demand and the strength of our order book, we are raising our guidance for the remainder of fiscal 2021.
For the full year fiscal 2021 consolidated net sales is expected to grow in the mid 30% range year over year with.
With adjusted EBITDA margins approaching 15% and adjusted earnings per share growth and the mid 80% range year over year.
For the fiscal second quarter consolidated net sales is expected to be up in the mid teens percent range year over year with adjusted EBITDA margins in the mid 13% range and adjusted earnings per share growth approaching 20%.
As Fred commented in his prepared remarks. The addition of overhead with the new RV or facility combined with the investments we are making for future growth, including new talent in our product development and engineering Department and investments in digital marketing will impact our adjusted EBITDA margins in the short term.
As we ramp up production and gain efficiencies and new I'll be your plan and see the benefits of these strategic investments later this year and beyond we expect to drive meaningful operating leverage to the bottom line I will now turn the call back to Fred.
Thanks, Tim.
To reiterate my earlier comments, we're pleased by the progress we've made during the quarter to accelerate production as we efficiently manage our supply chain to meet increased consumer demand across all our brands. We continue to believe the changes in consumer behavior that began with COVID-19, including how consumers engage with our brands will.
Lead to meaningful long term growth for our company.
As we look to capitalize on this opportunity we remain focused on our mission to deliver the best experience to our consumers. We believe this is our differentiator and what brings people to mastercraft and the reason they remain with us.
I also want to thank our employees, who have been instrumental in our ability to deliver such a successful quarter.
Their health and safety remain our top priority as we continue to ramp up production across all our facilities. We are committed to maintaining rigorous health and safety standards and closely monitoring all our facilities.
As we manage through the unprecedented business environment near term, we remain committed to the long term value creation.
Our shareholders and all our stakeholders.
We will continue to be a purpose driven business committed to our consumers our dealer and vendor partners and our people.
Operator, you May open the line for questions.
Thank you as a reminder to ask a question you will need to press Star then one on your Touchtone telephone to withdraw your question from the queue. Please press the pound key.
Based on my when we come out of the queue in a roster.
First question comes I will also follow with Raymond James Your line is now open.
Thanks, Hey, guys good morning.
I guess first question just quick housekeeping item the sales growth guidance of mid Thirtys could you break that down between unit growth at ASV improvement for this year.
The ASP improvement is going to be modest so primarily its going to be unit growth driven.
Got it thanks.
Thanks, Tim.
Last quarter, you guys talked about the significant under inventory position that you guys were I think you quoted something around 21 like it though it's what about what about half of that Mastercraft.
We said today have you been able to attack that number at all in Q1, yes.
Hey, Joe It's George.
We saw retail really continued to be robust in the first quarter.
While while dealers were light on inventory just given the demand we still were able to to exceed prior year comps from a retail perspective across all the brands and while we did ramp up wholesale production I think the strong retail offset the increased production and filling the pipeline. So we're kind of in.
The same place Joe with in terms of the Updip Chick Fil and opportunity that we guided to last quarter. So we think that's further reinforces why we believe it's going to take into our fiscal 2000 to two to get that dealer pipelines, where we want them.
Got it thanks, George just one last one for me in terms of the ramp up in production sounds like it's gone fairly well with the bottleneck being mostly lever are there any lingering supply chain issues that you guys experience at this point.
I wouldn't call them lingering issues there are ongoing issues that we deal with every day. They are not systematically concentrated in any particular area and so this is just part of managing through.
Environment that we're in so far we've been able to do it successfully.
Got it great. Thank you guys.
You're welcome Joe Thank you.
Thank you. Our next question comes from Craig Kennison with Baird. Your line is now open.
Okay.
Hey, good morning, Thanks for taking my questions as well.
I'd say there is a general concern among investors that this pandemic created this.
One time.
In the marketplace and it may be followed by something much weaker than that how would you address that particular concern.
What's the retail outlook embedded in your guidance and how confident are you that theres theres more to it than just a onetime pandemic bone.
Let me, let me start off with perspective in the other fellows can chime in but first of all we have very conservative retail growth embedded in our guidance.
Secondly, I think that we've.
We've attracted a number of new participants to the industry and I think our strategy focuses on giving them a superior experience and as a result, I think we are going to fare very well in terms of retaining them.
And I think that even if there is a vaccine.
And we're thankful that there will be and look forward to drawing this pandemic to an end, it's going to take some time to get into distribution and get fully accepted in the most recent reports I've heard suggested that sometime late summer. So I see it likely having very little impact this summer selling season as we said.
We think it will take into.
The following fiscal year for us to really get pipelines, where we want them to be so.
I expect to head into next fiscal year with a tremendous amount of momentum.
Yes, Craig it's George I mean, I would add as Fred mentioned in his prepared remarks, I mean, we're seeing record levels of retail sold orders throughout all of our brands as a as a percentage of our total orders.
Further.
Increasing that.
Constraining to us that there's there's this very strong retail demand as consumers look for alternatives as weve introduced more people to the boating lifestyle. We've heard anecdotal story after story about how much they love the time that they are spending with their family being out on the water being in nature. So we think that this there. They are truly has been a shift.
For for a lot of people across the country and globally on how they want to spend their discretionary time, we don't just compete for dollars, which we compete for discretionary time and.
Certainly we look forward to getting the pandemic behind us we think that the.
Theres been a nice shift towards that and we think that will be a long term benefit to our industry and certainly our brands.
And that helps thank you and then regarding neurotic star.
Could you help us understand the priorities for that brand under new leadership to take Theres, a turnaround at work but.
Love to hear some details on and the plants.
Well.
As I indicated in our comments first and foremost is a focus on operational excellence, we have very experienced leader there.
In in that area Gray.
Great process graded turnarounds and that's the first and foremost focus getting the processes in place that create the foundation that we can build upon we're well on our way there and as we continue to move down that path then.
Then we will continue to move into other areas.
Accelerate new product development refresh the product offering and then of course move on to <unk>.
To expanding distribution and using all the digital tools available to us for marketing.
I will say I'd like to add that given the very small town. They are a Mississippi I think they probably have the most challenges as they are and ramp up with people.
Just because of their geographic location, but they're making good progress.
Great. Thank you.
Right.
Thank you. Our next question comes from Eric Wold with B. Riley. Your line is now open.
Thanks, and good morning, guys couple of questions I guess, a follow up question on production can you, maybe just give a better sense of.
What had been the main drivers of boosting production above pre coated level so far.
And what will it take to do it going forward how much of that is its production Fridays being added and then when when do you expect to be able to fully take over the.
The the vacated space at Mesquite facility.
Yes.
First of all I mean, this train is rolling down the tracks and gaining momentum. So we continue to bring new people in we've expanded our training programs, we understand how to do that successfully now we've stepped our quality levels up to us to a new high and we're feeling very very good about all those things so with that momentum be.
Hi, and us.
We expect to continue to ramp up throughout the year now at some point, we would have reached a constraint with regard to our ability to produce mastercraft that this facility with footprint, we had but is of euro moves out of here and that transition is taking place as we speak.
We will be able to replace that with mastercraft capacity and so there is a significant step change available to us that allows us to continue to ramp up through the year with regard to the timing, we see that phasing in in the third quarter of this fiscal year, and then really hitting full speed in the fourth quarter.
Sure and that exit speed that we'll be at in terms of rate of production.
Gives us tremendous confidence in the outlook for next year, where we won't be ramping up as we had to this year will be entering that you're at a very very high level of production. So.
It's really third quarter, where we see the transition to have Europe being produced in the in the Florida plant and the utilization of the capacity here the reconfiguration utilization, but the move is taking place this quarter to set us up to be able to produce in the third quarter, Eric I would add that our production Fridays are done.
Primarily when we see a temporary increase in demand and we think this demand is is sustainable so that we're going to go ahead and make the investment in the new employees and training, yes. So just a bell showing that point, we use them as necessary we are not consciously.
Utilizing fridays as a way to add capacity that's not the approach that we're taking we're going to hire people and do it during our normal shifts.
Perfect and then.
You talked about getting.
Dealer inventories back to normal levels by fiscal 22.
Any hesitancy out there among dealers to get back to normal levels, maybe operate on leaner inventories or is that just not not.
They want to take.
Well first and foremost we expect the optimal levels to be substantially lower in terms higher turnovers, therefore relatively lower inventory levels in the dealer pipeline than we've had in the past we fully expect that.
We think we've learned some things about how to distribute how to be smarter about it and we will take cost out of the channel as a result, so when we speak to optimal adaptable is not a return to the past it's a return to a substantially higher turnover level, having said that you know the seasonality. That's involved so we're going to be ramping up here such that I think.
Our dealers are going to be in pretty good shape for this busy selling season in terms of inventory levels and we expect to make a big impact on market share during that period, and then of course during that all important fourth quarter.
Inventories will be reduced and we'll run into the next year can continuing that ramp up.
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Thank you and then just final question for me can you just remind us.
What percentage of sales typically comes from.
The boat shows that are directly at the shows are or direct leads that lead to sales near term efforts. Thank you.
Hey, Eric storage. It does vary by brand tended to be a higher percentage for our craft and not extensive not istar brands excuse me kind of in that 30% to 40% range. It's a much lower number for mastercraft.
And obviously, but.
We're highly confident that actually in an environment, where there are no physical boat shows we actually believe that the competitive advantage for for our brands given our leading market share positions. The investments that we're making in digital marketing strategies. We've got some alternatives that we won't provide a lot of detail on the call, but we think theres some things that we can do.
That are unique in the in the marketplace to drive consumers to our brands into our dealers.
And then the relatively more mature and sophisticated nature of our dealers. We believe gives us a competitive advantage. So quite honestly a lot of our dealers are very happy that there might not be boat shows in their markets. Because they believe this is an opportunity for them to really differentiate and take market share. So.
We're encouraged by that.
Perfect. Thank you guys.
Thank you. Our next question comes from Mike Swartz with true Securities. Your line is now open.
Hey, good morning, guys.
I want to focus on on the on the new RV RF facility in the incremental production, you're adding there and then understanding the near term there's a bunch of inefficiencies as you ramp that up but maybe as we look out a year from now and just from a longer term perspective.
What what will that facility add in terms of annual operating costs is that something that you've done a lot of work on it yet.
We have done a lot of work on.
I would think of it along the line, though more from the standpoint of.
We take on that facility, we've hired the people we have all the infrastructure that we're adding to tune it and.
We're going to go through a ramp up this year next year, you know I expect this year over last year will double volume and will do at least that going into the following year. So it's there's going to be a heavy push there to expand that.
Okay and then the.
I think you called out some dealer additions.
In the Mastercraft business in your in your prepared remarks, what was the timing of those additions were those.
Replacements for existing dealers that left the network or those truly additions to your geographic footprint. We were only talking about areas, where we have made incremental additions. So we may have had a dealerships in the area, but where we added additional locations were made changes that's what we were referring to.
And those.
Those have been taking place over the past few months there.
They are fully in place.
And we're very very excited about it because we really havent seen the retail impact of them yet that's all to be seen.
During the latter part of this year.
It should have a very very significant impact on market share.
Okay, great. Thank you.
Thank you and our next question comes from Brett Hendrickson with Keybanc capital markets. Your line is now open.
Hey, good morning, So just a housekeeping for our models.
How should we think about the progression of not just our sales for the remainder of the here I mean could you see unit increases next quarter or is that something that.
Happens later in the fiscal year and then also when does that that SP next.
Mix benefit.
Got to hit.
I think you're going to see I am really across all of our brands were continuing to ramp up throughout the year. So.
We're going to see.
Increases in net sales price.
Probably each quarter throughout the year.
As far as the as far as the Sps, we're going to we're going to build what the market is asking for and so I don't have a forecast of of how the asps are going to change other than to say there is a modest improvement over the prior year.
Adopting star.
Okay.
And then just on on the 200 basis points of margin expansion.
In the in the quarter anyway to quantify how much of the 200 was lower dealer incentives and then also could you put a number around the percent of your pipeline that's retail sold.
Yeah, I don't have the exact this is George Brett.
We as we commented we saw very benign promotional activity. So that was a big contributor to that we expect that to change we've already started to see some large competitors and in the ski wake segment start to get promotional so.
So we do anticipate especially in a world where there is no physical boat shows competitors may go to price to try to use that to drive.
To drive market share so we don't expect to see.
As big a factor on that going forward.
And then in terms of the percentage.
We havent publicly disclose that but it's at record level. So.
Certainly for this time of year.
The percentage of retail customer names in our order book is.
It's just at all time highs across the brands.
And Brett in addition to the less incentives the other the other.
Component was less financing assistance as it relates to fore plan cost is it viewers turns have gone faster means there is less money that we spend and helping those guys with their financing costs.
All right helpful. Thank you.
Thank you. Our next question comes from Garrett Johnson with BMO capital markets. Your line is now.
Hey, good morning, guys.
This call. It occurred two weeks ago with your guidance have been the same or has it been adjusted for the results of the election, and then related to that I know, it's only we but.
What have your dealers been saying to you about their outlook for business now that we are having a change in the white house. Thank you.
Mhm.
With regard to the political environment.
We're focused on running our business and all the data that I've been able to get my hands on suggests that there really is no impact.
Of political party on the near term outlook for our business.
Whether or not that's case longer term remains to be seen but certainly all the data suggested over the near term it doesn't.
Both parties are looking into the trend.
Give some alignment and get an incentive package passed and so I think and it's a stimulus package is on the horizon, that's going to be a positive overall.
Longer run who knows with regard to tax rates in some of the other potential changes, but in the foreseeable future.
And again with mixed houses.
In a Democratic Republic.
I see businesses can our fundamentals are so strong.
I have a.
A very hard time, believing that.
Those will be dissipated, yes, and Gary This is George I mean, we've been on the road a lot of talking to dealers and I got to tell you that the political environment is is not on the conversation it.
They are focused on how well they're doing at retail that increased demand that they're seeing in their products and our products and they are focused on getting products. So they can meet that demand. That's that's what their number one focus is I got to tell you. We just have not had a lot of political conversations with dealers over the last up even the last quarter forget not even the last couple of weeks.
And the increase in our guidance had nothing to do with the election results.
Two weeks ago, it would have been saying so.
The thing that includes our guidance is continuing retail demand.
Continuing success in our ramp up.
Okay, great. Thank you guys appreciate it.
Q.
Thank you and I'm showing no further questions in the queue at this time, ladies and gentlemen, Thank you for your participation on today's conference that does conclude your program you may now disconnect.
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