Q4 2021 LCI Industries Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the fourth quarter 2021 LCI Industries Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. And if you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your speaker today, Mr. Brian Hall. Please go ahead.

Good day, and thank you for standing by welcome to the fourth quarter 2021 LCI industries earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your tell us.

And if you require any further assistance. Please press star zero. Thank you I would now like to hand, the conference over to your Speaker today, Mr. Brian Hall. Please go ahead.

Good morning, everyone and welcome to the LCI Industries fourth quarter 2021 conference call I am joined on the call today by Jason Lippert, President CEO and a director we will discuss the results of the quarter in just a moment, but first I would like to inform you that certain statements made in today's conference call regarding LCI industries and its operations may be.

Speaker 2: Good morning everyone and welcome to the LCI Industries fourth quarter 2021 conference call. I am joined on the call today by Jason Lippert, President, CEO and the Director. We will discuss the results of the quarter in just a moment. But first I would like to inform you that certain statements made in today's conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involving number of risks and uncertainties.

Considered forward looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward looking statements.

Speaker 2: As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking state.

These factors are discussed in our earnings release and in our Form 10-K , and other filings with the SEC.

Speaker 2: These factors are discussed in our earnings release and in our Form 10-K and other filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

The company disclaims any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur. After the date. The forward looking statements are made except as required by law.

Speaker 2: With that, I would like to turn the call over to Jason Lippard. Jason?

With that I would like to turn the call over to Jason Lippert Jason.

Speaker 2: Good morning everyone and welcome to LCI's fourth quarter in full year 2021 earnings call. 2021 was a year of incredible progress and highlights for LCI as the larger outdoor recreation industry continued to grow at a very fast pace. Highlighted by a record 600,000 RV shift during 2021, we broke records of our own, delivering all-time high revenues along with record content and profitability, all while facing some incredible headwinds on labor, inflation and supply chain.

Good morning, everyone and welcome to <unk> fourth quarter and full year 2021 earnings call 2021 was a year of incredible progress and highlights for LCI as the larger outdoor recreation industry continued to grow at a very fast pace highlighted by a record 600000 RV shipped during 2021, we broke records of our own delivering all time high revenues along with <unk>.

<unk> content and profitability, all while facing some incredible headwinds on labor inflation and supply chain fronts I'm continually impressed and proud of our team's ability to achieve such amazing results. In this challenging operating environment. We believe that our cultural strength has been the cornerstone of this continued success supported by an experienced leadership team.

Speaker 2: I'm continually impressed and proud of our team's ability to achieve such amazing results in this challenging operating environment. We believe that our cultural strength has been the cornerstone of this continued success, supported by an experienced leadership team that's kept Lippert on track in executing on our culture, values and strategic priorities.

Lippard on track and executing on our culture values and strategic priorities.

We ended 2021 with a $4 5 billion in revenues up 60% year over year, largely driven by strong demand across all our markets. Our growth is also supported by six acquisitions, adding approximately $270 million in net sales. These acquisitions have helped us further expand our wide portfolio of innovative products, while providing entry into new and meaningful mark.

Speaker 2: We ended 2021 with a $4.5 billion in revenues, up 60% year over year, largely driven by strong demand across all our markets. Our growth is also supported by six acquisitions, adding approximately $270 million in net sales. These acquisitions have helped us further expand our wide portfolio of innovative products while providing entry into new and meaningful markets, further establishing LCI as a global leader in the recreation space.

<unk> further establishing LCI as a global leader in recreation space.

Speaker 2: RV OEM sales increased 73% during the year compared to 2020, reaching nearly $2.6 billion, primarily driven by heightened demand for RVs throughout the year. Families are recognizing that the outdoor lifestyle is a far more attractive alternative to the hassle of airline travel and hotel lodging, as well as more affordable, considering their levels of recent inflation. With the freedom and convenience that come with RVs, it's no wonder families across the globe are turning to RVs as the go-to choice for a positive vacation experience.

OEM sales increased 73% during the year compared to 2020, reaching nearly $2 6 billion, primarily driven by heightened demand for rvs throughout the year families are recognizing that the outdoor lifestyle is a far more attractive alternative to the hassle of airline travel and hotel lodging as well as more affordable considering their levels of recent inflation.

With a freedom and convenience that come with our views. It's no wonder families across the globe are turning to <unk> as the go to choice for a positive vacation experience the increasing popularity of peer to peer Reynolds has also contributed to the accessibility of our being opening the door to many new customers looking to try the experience before they buy.

Speaker 2: The increasing popularity of peer-to-peer rentals has also contributed to the accessibility of RVing opening the door to many new customers looking to try the experience before they buy.

Speaker 2: Our growth in our VOEM segment was also supported by incredible operational execution on the part of our teams and minimizing many of the supply chain challenges that have impacted the industry. As we've explored new supply channels and have worked to source materials in the U.S. and elsewhere when possible to avoid issues associated with international freight, we see fewer component issues compared to that of our peers, which has enabled our continued outperform.

Our growth in RV OEM segment was also supported by incredible operational execution on the part of our teams and minimizing many of the supply chain challenges that have impacted the industry as we've explored new supply channels and have worked to source materials in the U S and elsewhere when possible to avoid issues associated with international freight we see fewer component issues <unk>.

<unk> to that of our peers, which has enabled our continued outperformance.

Speaker 2: With a focus on scalable growth, we are targeting 15 automation projects costing up to $40 million planned for 2022 and early 2023. We expect these operational improvement projects to support our long-term margin expansion and help offset the impact of inflationary pressures while improving quality and helping us to mitigate labor constraints to maintain stable production and meet the new heightened consumer growth.

With a focus on scalable growth, we are targeting 15 automation projects costing up to 40 million plan for 2022 in early 2023, we expect these operational improvement projects to support our long term margin expansion and help offset the impact of inflationary pressures, while improving quality and helping us to mitigate labor constraints to maintain stable production.

And meet the new heightened consumer demand.

Speaker 2: We delivered substantial content increases for the year in both towable units and motorhomes driven by strong organic growth. Content for towable RV for the full year 2021 increased 24% from the prior year to $4,198, while content for motorhome RV for the full year 2021 increased 15% from the prior year to $2,856 supported by several market share.

We delivered substantial content increases for the year in both total units and motor homes, driven by strong organic growth content per towable RV for the full year 2021 increased 24% from the prior year to $4198, while content for motor home RV for the full year 2021 increased 15% from the prior year to two.

$856 supported by several market share gains.

Speaker 2: As we head further into 2022, we expect the current strong pace of wholesale shipments to continue in the coming months as we execute during a dealer restocking period. That said, visibility toward the full year demand is limited due to uncertainties about the longer-term impact of inflation on consumer spending. We'll have a better view of how demand is shaping up once the spring retail season ramps up.

We had further into 2022, we expect the current strong pace of wholesale shipments to continue in the coming months as we execute during a dealer restocking period that said visibility toward the full year demand is limited due to uncertainties about the longer term impact of inflation on consumer spending.

We'll have a better view of how demand is shaping up once the spring retail season ramps up.

Our revenues in the aftermarket segment grew year over year up 32% compared to 2020 supported by organic and inorganic growth drivers. The integration of Purion is progressing smoothly and we expect this business to contribute substantially to our aftermarket sales going forward as we leverage its robust catalog of innovative appliances and electronics to tap.

Speaker 2: Our revenues in the aftermarket segment grew year over year, up 32% compared to 2020, supported by organic and inorganic growth drivers. The integration of Furrion is progressing smoothly and we expect this business to contribute substantially to our aftermarket sales going forward as we leverage its robust catalog of innovative appliances and electronics to tap into a 1.5 billion addressable market in North America alone.

Into a $1 5 billion addressable market in North America alone.

As I've said throughout the past year with a record number of rvs on the road and over $1 million coming into the repair and replacement cycle. Every two years, we expect a long runway for growth of our aftermarket business as we meet significant demand for repair replacement and upgrade components.

Speaker 2: As I've said throughout the past year, with the record number of RVs on the road and over a million coming into the repair and replacement cycle every two years, we expect a long runway for growth for our aftermarket business as we meet significant demand for repair, replacement, and upgrade components.

Speaker 2: As our aftermarket business has grown, we focused our attention and resources on enhancing the retail customer experience. The Lippert Scouts program, which is more than quadrupled in membership in the past year, serves to provide valuable insights on products and services, how customers use them, and most importantly, how we can drive improvement.

As our aftermarket business has grown we focused our attention and resources on enhancing the retail customer experience deliberate scouts program, which has more than quadrupled in membership in the past year serves to provide valuable insights on products and services, how customers use them and most importantly, how we can drive improvements other experiments like product giveaways and the <unk>.

Speaker 2: Other experiments like product giveaways and the campground project have helped us meet, survey and collect candid feedback from thousands of real campers and RVers nationwide. All this work culminated in the resounding success of our first Lippert Getaway RV rally in Pigeon Forge, Tennessee attended by over 200 families, where we were able to meet face to face with customers and talk about RVing. The engagement we drove through this event far exceeded expectations and we are already hearing buzz amongst our viewers for our 2022 Getaway.

Ground projects that help us meet survey and collect candid feedback from thousands of real campers and Harvey years nationwide.

All of this work culminated in the resounding success of our first liberate getaway RV rally in Pigeon Forge, Tennessee attended by over 200 families, where we're able to meet face to face with customers and talk about our being the engagement. We drove through this event far exceeded expectations and we are already hearing buzz amongst our viewers for our 2020 to get away.

Speaker 2: The more we can creatively and effectively engage consumers, the better we can help them stay in the lifestyle over the long term and keep them connected to our team, our customers, and our product.

The more we can creatively and effectively engage consumers the better we can help them stay in the lifestyle over the long term and keep them connected to our team our customers and our product we.

Speaker 2: We believe that establishing Lippert as a leading name in customer service will be yet another competitive differentiator to drive growth and strengthen our overall business for many years.

We believe that establishing liberate as a leading name and customer service will be at another competitive differentiator to drive growth and strengthen our overall business for many years to come.

Speaker 2: As popularity for the outdoor lifestyle grows, our ability to innovate has proven to be critical in meeting consumer demand. Our tire pressure management systems, our continued development of one control and independent suspension systems, and the newly introduced safety suite of products have solidified our reputation as a company operating on the cutting edge of RV technology. Now that Furrion has been brought into the fold, we have even more innovative projects slated for launch that we're excited to announce later in the year.

As popularity for the outdoor lifestyle grows our ability to innovate has proven to be critical in meeting consumer demand our tire link tire pressure management systems. Our continued development of one control independent independent suspension systems and the newly introduced safety suite of products have solidified our reputation as a company operating on the cutting edge of RV.

Technology now that Purion has been brought into the fold we have even more innovative projects slated for launch that we're excited to announce later in the year we.

Speaker 2: We've also recently announced the launch of many new suspension products including ABS brakes for axle systems and independent suspension systems for the growing Gen Z and Overland As many comments as we get from everyone say welcome to Bootuseum.

We've also recently announced the launch of many new suspension products, including ABS brakes for axle systems and independent suspension system for the growing Gen Z and overland consumers.

Speaker 2: The global shift toward electric vehicles represents a monumental and innovative opportunity for Lippert. And we are already preparing for what the future of RVs might look like. Only a few weeks ago in January , we unveiled our prototype EV towable RV chassis that we have been developing at our Advanced R&D Center in Northern Indiana. This concept vehicle consists of an array of lithium batteries specially housed in our chassis. The battery system is intended to power all the RV's electrical system for multiple days of...

The global shift towards electric vehicles represents a monumental innovative opportunity for liver and we are already preparing for what the future of rvs might look like only a few weeks ago in January we unveiled our prototype EV total RV chassis, we have been developing at our advanced R&D Center in Northern Indiana.

This concept vehicle consists of an array of lithium battery, especially housed in our chassis. The battery system is intended to power all of the <unk> electrical system for multiple days of burn deck. We also displayed a new aluminum chassis design, along with regenerative braking and drive axles paired with remote control capabilities.

Speaker 2: We also displayed a new aluminum chassis design along with regenerative braking and drive axles paired with remote control capability.

Speaker 2: While we plan to continue refining our concept prototype, we expect to begin rolling out parts of this technology in 2023. We believe this project will be a huge stride in reducing the environmental impact of RVs The result is the first showcase of theaved-in That creature, a roon did ignore when it saw thent

While we plan to continue refining our concept prototype we expect to begin rolling out parts of this technology in 2023.

We believe this project will be a huge stride in reducing the environmental impact of our views on the environment.

Speaker 2: We are also very excited for the continued progress of our suite of Class B products. With retail sales for Class B van RVs having doubled in the last several years, we have been working hard to develop a full line of products for these vehicles, including our pop tops. This option, which allows OEMs to install a bed on the roof of a B van, is being increasingly adopted by...

We are also very excited for the continued progress of our suite of class B products with retail sales for class B van Rvs, having doubled in the last several years, we've been working hard to develop a full line of products for these vehicles, including our pop tops. This option, which allows Oems to install a bet on the roof of the B, then isn't being increasingly adopted by consumers.

Turning to the adjacent markets full year 2021 revenues rose, 58% again, driven by heightened retail demand for marine and other related markets. Additionally, our market shares in housing and cargo trailers, both increased dramatically in 2021.

Speaker 2: Turning to the adjacent markets, full year 2021 revenues rose 58%, again driven by heightened retail demand for marine and other related markets. Additionally, our market shares in housing and cargo trailers both increased dramatically in 2020.

Speaker 2: Content per unit and marine has increased over two times what we delivered in 2019. Whereas RV inventories are starting to build back, marine inventories remain very low, and accordingly we anticipate a longer runway for growth in this business over the next two years.

Content per unit in Marine has increased over two times, what we delivered in 2019, whereas RV inventories are starting to build back marine inventories remained very low and accordingly, we anticipate a longer runway for growth in this business over the next two years.

Our international businesses grew 58% for the year compared to 2020 supported by our introduction of innovative products into the European markets demand across Europe remains high supported by the same secular drivers supporting heightened demand domestically 2021 retail caravan registrations in Europe increased 8% with the largest market Germany up.

Speaker 2: Our international businesses grew 58% for the year compared to 2020, supported by our introduction of innovative products into the European Union.

Speaker 2: Demand across Europe remains high, supported by the same secular drivers supporting heightened demand and...

Speaker 2: 2021 retail caravan registrations in Europe increased 8% with the largest market Germany up over 4%.

Over 4%.

However, because Europe is largely motor homes that chip shortages are impacting industry production, a little more than what we've seen in the U S that said, our European RV and marine divisions are continuing to provide solid innovations for use with customers domestically.

Speaker 2: However, because Europe is largely motor homes, the chip shortages are impacting industry production a little more than what we've seen in the U.S. That said, our European RV and Marine divisions are continuing to provide solid innovations for use with the U.S.

Speaker 2: We continue to see our Lippert Europe products being adopted by US OEMs, further supporting our...

We continue to see our liberate Europe products being adopted by U S. Oems further supporting our content gains looking ahead, we remain optimistic about our company's ability to drive growth in our international markets, while also realizing synergies and products to bring to our north American customers.

Speaker 2: Looking ahead, we remain optimistic about our company's ability to drive growth in our international markets. While also realizing synergies in products.

Speaker 2: Moving on to capital allocation, we are maintaining our focus on integrating our recent acquisitions and paying down debt. At the same time, we are continuing to invest more heavily in innovation and optimizing our manufacturing footprint to ensure we have capacity to meet heightened consumer demand while identifying cost efficiencies where possible. In 2021, we allocated over $40 million to growth and automation capex, and we anticipate allocating even more to these important projects in 2022.

Moving on to capital allocation, we are maintaining our focus on integrating our recent acquisitions and paying down debt at the same time, we are continuing to invest more heavily in innovation and optimizing our manufacturing footprint to ensure we have capacity to meet heightened consumer demand, while identifying cost efficiencies where possible in 2021, we allocated over 40 million.

As to growth off an automation capex and we anticipate allocating even more to these important projects in 2022.

Speaker 2: I'll now move on to some cultural highlights for the year. Here at Lippert, we work hard to maintain a culture that values all team members and enables each team member to see how his or her individual contributions help us meet our greater goals. Our culture focuses not only on how we can impact our team members, but also how we impact the world around us, starting with our communities that we work and live in.

I'll now move on to some cultural highlights for the year here at <unk>, we work hard to maintain a culture that values all team members and enables each team member to see how his or her individual contributions help us meet our greater goals. Our culture focuses not only on how we can impact our team members, but also how we impact the world around us starting with our communities that we work and live in.

Speaker 2: We started our cultural journey 10 years ago, and we know it's having real impact. Not only are we hearing incredibly positive feedback from our team members, but our retention is also significantly higher than in past years, even in the face of some of the headwinds impacting the labor market.

We started our cultural journey 10 years ago, and we know it's having real impact not only are we're hearing incredibly positive feedback from our team members, but our retention is also significantly higher than in past years, even in the face of some of the headwinds impacting the labor markets today.

Speaker 2: In alignment with our core values, we recently published our inaugural corporate sustainability report covering our progress across a wide range of ESG-related topics. This report includes initiatives such as our mission to replace conventional energy with solar power at seven facilities, our identification of a board committee focused on ESG, and our focus on reducing team member attrition rates by way of elevating a healthy and safe company called ESG.

In alignment with our core values. We recently published our inaugural corporate sustainability report covering our progress across a wide range of ESG related topics. This report includes initiatives such as our mission to replace conventional energy with solar power at seven facilities. Our identification of a board committee focused on ESG and our focus on reducing team member attrition rates by way of <unk>.

Elevating our healthy and safe company culture.

Speaker 2: We believe our growth and recent innovations along with our increasing focus on ESG will mean our Lippert team members, their families and our customers will be able to better enjoy the communities where we live, work, play long into the future.

We believe our growth in recent innovations along with our increasing focus on ESG will mean, our lipper team members their families and our customers will be able to better enjoy the communities, where we live work play long into the future.

I would also like to mention the amazing strides our teams made in keeping up with our commitment to serving and supporting local communities over 2021 Lipper team members performed over 100000 hours of community service through serving in various charitable organizations around the country over the last five years our team members have collectively serve 500.

Speaker 2: I would also like to mention the amazing strides our teams made in keeping up with our commitment to serving and supporting local communities.

Speaker 2: Over 2021, Lippert team members performed over 100,000 hours of community service through serving at various charitable organizations around the country. Over the last five years, our team members have collectively served 550,000 hours of community service.

Third 50000 hours of community service.

Speaker 2: We could not be prouder of this accomplishment and our team's efforts to give back to those in need and look forward to our culture initiatives having even more impact in 2022.

We could not be prouder of this accomplishment and our team's efforts to give back to those in need and look forward to our culture and initiatives Havent, even more impact in 2022 and.

Speaker 2: In closing, I'd like to thank all of our team members, not only for their tremendous work and commitment to delivering quality products to our customers, but also for staying aligned to our culture that has made Lippert so successful. We could not have achieved such amazing results without this incredible dedication and record amounts of team members staying with the business over the longer term, coupled with the strength and guidance of our leadership.

In closing I'd like to thank all of our team members not only for their tremendous work and commitment to delivering quality products to our customers, but also for staying aligned to our culture that has made <unk> successful we could not have achieved such amazing results without this incredible dedication and record amounts of team members staying with the business over the longer term, coupled with the strength and guidance of our leadership teams.

Speaker 2: We look forward to continuing this tremendous progress in 2022 as we keep creating value for the team members, customers, and shareholders. I will now turn to Brian Hall, our CFO , to discuss in more detail our fourth quarter and full year financial...

We look forward to continuing this tremendous progress in 2022, as we keep creating value for the team members customers and shareholders I will now turn to Brian Hall, our CFO to discuss in more detail, our fourth quarter and full year financial results.

Thank you Jason our consolidated net sales for the fourth quarter increased 55% to $1 2 billion compared to the prior year driven by continued strength in market performance, coupled with a strong execution against strategic initiatives.

Speaker 3: Thank you, Jason. Our consolidated net sales for the fourth quarter increased 55 percent to $1.2 billion compared to the prior year, driven by continued strength in market performance, coupled with a strong execution against strategic initiatives.

Speaker 3: Acquisitions contributed 97 million or 12 percent growth to our quarterly results, with organic growth contributing the balance or 43 percent of the improved growth.

Acquisitions contributed $97 million or 12% growth to our quarterly results with organic growth contributing the balance or 43% of the improvement.

Speaker 3: As Jason mentioned, January sales were up 71% from January 2021 to $526 million, a strong indication of the expected growth rate for Q1.

As Jason mentioned January sales were up 71% from January 2000, $21 million to $526 million, a strong indication of the expected growth rate for Q1.

Speaker 3: Q4 2021 sales to RV OEMs increased 67% compared to the prior year due to the heightened wholesale and retail demand.

Q4, 2021 sales to RV Oems increased 67% compared to the prior year due to the heightened wholesale and retail demand current north American RV industry production rates also remain high and we closed the year with a record 600240 wholesale unit shipments.

Speaker 3: Current North American RV industry production rates also remain high, and we close the year with a record 600,240 wholesale unit shipments.

We drove further content expansion for <unk> and motor homes during the quarter content per towable, RV increased 24% to $4198 and content per motorized unit increased 15% to $2856 compared to the prior year the.

Speaker 3: We drove further content expansion for towables and motor homes during the quarter. Content per towable RV increased 24% to $4,198 and content per motorized unit increased 15% to $2,856 compared to the prior year.

Speaker 3: The content growth can be attributed to organic growth in addition to the impact to price increases enacted during the quarter.

The content growth can be attributed to organic growth. In addition to the impact of price increases enacted during the quarter.

Speaker 3: Acquired revenues contributed 5% and 6% of the year-over-year growth in towable and motorhome content per unit respectively.

Wired revenues contributed 5% and 6% of the year over year growth in total in motor home content per unit respectively.

Speaker 3: We continue to see robust performance in the marine market, driven by the same demand driving growth for the RV OEM segment.

We continue to see robust performance in the marine market driven by the same demand driving growth for the RV OEM segment.

North American Marine sales increased 113% in the quarter as production continues to ramp up to meet the heightened demand.

Speaker 3: North American marine sales increased 113% in the quarter as production continues to ramp up to meet the heightened demand.

Speaker 3: Acquisitions contributed $19 million in revenues, or 38% of this growth for the quarter. Sales to adjacent industries grew...

Acquisitions contributed $19 million in revenues or 38% of this growth for the quarter.

Sales to adjacent industries grew 52%.

Speaker 3: Aftermarket segment sales increased 25% and international sales increased 28% as the recreation space continues to attract new customers.

Aftermarket segment sales increased 25% and international sales increased 28% as the recreation space continues to attract new customers.

Gross margins were 24, 1% compared to 25, 2% in the prior year quarter pressured by near term headwinds, including elevated freight material and labor costs on a sequential basis gross margins improved by approximately 350 basis points supported by the price increases we enacted in the second.

Speaker 3: Growth margins were 24.1% compared to 25.2% in the prior year quarter, pressured by near-term headwinds including elevated freight, material, and labor costs. On a sequential basis, gross margins improved by approximately 350 basis points, supported by the price increases we enacted in the second half of 2021 and solid operating leverage.

Half of 2021 and solid operating leverage we.

Speaker 3: We anticipate some margin contraction mid-year as supply chain pressures begin to ease and we begin to contractually ease pricing with our customers with our traditional quarterly lag. We are expecting margins to improve approximately 150 to 200 basis points from Q4 2021 to Q1 2022 considering materials and pricing alone.

We anticipate some margin contraction mid year as supply chain pressures begin to ease and we begin to contractually ease pricing with our customers with our traditional quarterly lag.

We are expecting margins to improve approximately 150 to 200 basis points from Q4, 2021 to Q1, 2022, considering materials and pricing alone.

Speaker 3: SDNA costs as a percentage of sales decrease from the fourth quarter of 2020, as well as sequentially due to fixed costs spread over higher sales base, offsetting increases in freight and transportation costs.

SG&A costs as a percentage of sales decreased from the fourth quarter of 2020, as well as sequentially due to fixed cost spread over higher sales base offsetting increases in freight and transportation costs.

Speaker 3: Operating margins increased roughly 375 basis points compared to the prior year, driven by the successful implementation of our efforts to continuously improve our manufacturing process by increasing automation.

Operating margins increased roughly 375 basis points compared to the prior year drew.

<unk> driven by the successful implementation of our efforts to continuously improve our manufacturing process by increasing automation.

Speaker 3: Gap net income in Q4 2021 was $82.3 million or $3.22 per diluted share, compared to $48.7 million or $1.92 per diluted share in Q4 2020.

GAAP net income in Q4, 2021 was $82 3 million or $3 22 per diluted share compared to $48 7 million or $1 92 per diluted share in Q4 2020.

Speaker 3: increasing due to increased demand accompanied by effective cost management.

Increasing due to increased demand accompanied by effective cost management.

Speaker 3: Adjusted EBITDA increased 66% to 146.3 million for the fourth quarter compared to the prior year.

Adjusted EBITDA increased 66% to $146 3 million for the fourth quarter compared to the prior year.

Moving on to full year 2021 results sales to RV Oems increased 68% driven by heightened retail demand throughout the year. We drove further content expansion for <unk> and motor homes during the quarter as I previously mentioned.

Speaker 3: Moving on to full year 2021 results. Sales to RV OEMs increased 68% driven by heightened retail demand throughout the year. We drove further content expansion for towables and motorhomes during the quarter, as I previously mentioned.

Speaker 3: Sales to adjacent markets increased 58% to $1.1 billion in 2021, and our aftermarket segment increased its total sales by 32% to $829.1 million, while international sales increased 58% to $374.4 million compared to the prior year. Acquired revenues were approximately $270 million for the full year of 2021.

Sales to adjacent markets increased 58% to $1 1 billion in 2021, and our aftermarket segment increased its total sales by 32% to $829 1 million, while international sales increased 58% to $374 4 million compared to the prior year acquired revenues were approximately.

<unk> $270 million for the full year 2021.

Speaker 3: Non-cash depreciation and amortization was $112.3 million for the 12 months ended December 31, 2021, while non-cash stock-based compensation expense was $27.2 million for the same period. We anticipate depreciation and amortization in the range of $140 to $150 million during the full year 2022, primarily due to increases in capital investment to enhance production capacity and enable further manufacturing efficiency.

Noncash depreciation and amortization was $112 3 million for the 12 months ended December 31, 2021, while noncash stock based compensation expense was $27 2 million for the same period, we anticipate depreciation and amortization in the range of $140 million to $150 million during the full year of 2022.

Primarily due to increases in capital investment to enhance production capacity and enable further manufacturing efficiencies.

For the 12 months ended December 31, 2021, $194 million was used for business acquisitions $99 million for capital expenditures and $87 million was returned to our shareholders in the form of dividends.

Speaker 3: For the 12 months ended December 31st, 2021, $194 million was used for business acquisitions, $99 million for capital expenditures, and $87 million was returned to our shareholders in the form of dividends.

Speaker 3: Operating cash flows were negatively impacted by the intentional increase in inventory to support heightened demand and minimize supply disruption, in addition to rising prices of steel and aluminum based products.

Operating cash flows were negatively impacted by the intentional increase in inventory to support heightened demand and minimize supply disruption. In addition to rising prices of steel and aluminum based products.

Speaker 3: At the end of the fourth quarter, we had an outstanding net debt position of $1.2 billion, or 1.8 times pro forma EBITDA adjusted to include the LTM EBITDA of acquired business.

At the end of the fourth quarter, we had an outstanding net debt position of $1 2 billion or one eight times pro forma EBITDA adjusted to include the LTM EBITDA of acquired businesses.

With the constantly evolving operating environment, we are focused on maintaining a strong balance sheet and continue to target a long term leverage of one five times net debt to EBITDA.

Speaker 3: With the constantly evolving operating environment, we are focused on maintaining a strong balance sheet and continue to target a long-term leverage of 1.5 times net debt to EVA.

In the near term, we are working to integrate recently completed acquisitions, which we expect to positively impact our operating cash flows in the coming quarters for.

Speaker 3: In the near term, we are working to integrate recently completed acquisitions, which we expect to positively impact our operating cash flows in the coming quarter.

Speaker 3: For the full year 2022, capital expenditures are anticipated in the range of $130 to $150 million.

For the full year 2022 capital expenditures are anticipated in the range of $130 million to $150 million.

Speaker 3: Looking ahead, we are confident in our ability to continue this momentum throughout 2022 and remain dedicated to further executing our growth strategy to drive long-term value creation for share.

Looking ahead, we are confident in our ability to continue this momentum throughout 2022 and remain dedicated to further executing our growth strategy to drive long term value creation for shareholders that is the end of our prepared remarks, operator, we're ready to take questions. Thank you.

Speaker 3: That is the end of our prepared remarks. Operator, we're ready to take questions. Thank you.

Thank you at this time I would like to remind everyone that in order to ask a question you May Press Star then the number one on your telephone keypad. Once again, you May press star one to ask a question.

Speaker 1: Thank you. At this time, I would like to remind everyone that in order to ask a question, you may press star, then the number one on your telephone keypad. Once again, you may press star one to ask a question.

Speaker 1: Your first question is from the line of Fred Reitman from World Research. Your line is open.

Your first question is from the line of Brad Reichman from Wolfe Research. Your line is open hey.

Speaker 4: Hey, guys, good morning. I was hoping you could just give a little bit more detail on that January number. It looks like it picked up on a two year basis and just hoping you could sort of put that into context with the inventory situation across the channel. I mean, if we look at slide four, it looks like we've built a fair amount of inventory already, but if you could just put those sort of two data points together, that'd be great.

Guys. Good morning, I was hoping you could just give a little bit more detail on that January number it looks like it picked up on a two year basis, and just hoping you could sort of put that into context with.

The inventory situation across the channel I mean, if we look at slide four it looks like we've built a fair amount of inventory already but if you could just put those sort of two data points together that'd be great.

Yes.

Yes, So hey, Fred.

Speaker 3: You know, from you got two things that I would say really driving the increase.

From a you got two things that I would say really driving the increase.

The Oems did pick up production rates starting in the first week of January so.

Speaker 3: The OEMs did pick up production rates starting the first week of January . So

Speaker 3: from what we were running in the fourth quarter. There was a little bit of a lull with a couple weeks around the holidays, but then...

From what we were running in the fourth quarter, there was a little bit of a lull what a couple of weeks around the holidays, but then.

Speaker 3: But then their volumes and outputs have picked up during the month. So I think that while inventories do, as you would know, start to seasonally improve.

But then their volumes and outputs have picked up during during the months. So I think that while inventories do as you would know start to seasonally improve during this time of year as wholesale would normally outpace retail I think at this point, it's a little too early to expect the Oems.

Speaker 3: during this time of year as wholesale would normally outpace retail. I think at this point it's a little too early to expect the OEMs to adjust their production rates.

Adjusted their production rates.

Speaker 3: uh... met their all being quite a bit of success with the the early dealer shows them uh... you know down south so

They're all seeing quite a bit of success with the early dealer shows.

Down south so I think that.

Speaker 3: I wouldn't expect those rates to change much in the near term. And then the second part would then be our price increases, as we've been discussing. As you know, they're on a two-quarter lag. So we had some in the fourth quarter, and then additionally had.

Wouldn't expect those rates to change much in the in the near term and then the second part would be our price increases as we've been discussing as you know they are on a two quarter lag. So we had some in the fourth quarter and then additionally had.

Speaker 3: more index adjustments that went into place during January , effective January 1.

More index adjustments that went into place during January effective January one.

Speaker 3: That at this point puts us pretty well on par with where a lot of the current input costs are. So a lot of that lag, we've made some catch up on that here these last two quarters. And I just add that all the suppliers had a good solid two weeks to set the table for January .

But at this point puts us pretty well on par with where a lot of the current input costs are.

So a lot of that lag.

We've made some catch up on that here. These last two quarters and I would just add that you know all.

All of the suppliers had a good solid two weeks to set the table for January and May.

Speaker 2: you know, make preparations and clean up some of the supply chain messes that were out there. So when the OEM set the ground running the first week of January .

Preparations and clean up some of the supply chain message that were out there. So.

The Oems at the ground running the first week of January .

Speaker 2: Most of the suppliers were all caught up and had the OEMs stocked full of supply, so the OEMs were able to run pretty clean and change.

Most of the suppliers, we're all caught up and how the Oems stocked full of supply. So the Oems were able to run pretty clean in January .

That makes sense and then Brian I think you made a comment that the January number is a good run rate or at least a good indication for the quarter, but if we just go back and look at what you guys reported for January year to date last year, and then where <unk> came in it would seem to imply that sales accelerated in February and March and so I'm wondering if you're sort of plan.

Speaker 4: that make sense and then Brian i think you made a comment that the January number is uh... a good run rate early secret indication for the quarter but if we just go back and look at what you guys were reported for January here today class here and then where one q came in

Speaker 2: It would seem to imply that sales accelerated in February and March, and so I'm wondering if you're sort of planning for that again here this year or if there's something different if we're just looking back. Well, we certainly have visibility on February orders and some of March orders. So the run rate, if you just look at the run rates that the OEMs are moving at right now, it's kind of on pace with what...

<unk> for that.

Ken here this year or if theres something different.

If we're just looking back but certainly yes, we certainly have visibility on February orders and some are March orders. So the run rate. If you just look at the run rates that the Oems are moving at right now it's kind of an on pace with what RBI RBI has put out there in terms of an annual outlook of 600.

Speaker 2: RVIA is put out there in terms of an annual outlook of 610,000 or 15,000 units.

10, or 15000 units.

Speaker 2: That's kind of where they're running right now. March they're looking at more of a 640, 650 run rate. So it does look like it's going to pick up. The question is will supply chain and some of the other headwinds allow us to hit those numbers.

Kind of where they are running right now March they're looking at more of a $646 50 run rate. So it does look like it's going to pick up the question is well supplied.

Supply chain and some of the other headwinds allow us to hit those numbers.

Speaker 3: I, and Fred, one other thing I'd add, I believe last year in January , the shutdowns by the OEMs straddled year-end, so you had some closures in December and January , and this year, most of the OEMs were all shut down during December and then hit the ground running at full pace in January . So that's a little bit of a dip, I think, in the prior year that we saw in January .

And Fred one other thing I'd add I believe last year in January the shutdowns by the Oems.

Straddled year end. So you had some some closures in December and January and this year most of the Oems were all shut down during December and then hit the ground running a full pace in January so that's a little bit of the dip I think in the prior year that we saw in January .

Perfect. Thanks, guys.

Speaker 1: Your next question is from Mike Schwartz of Plurisp. Your line is open.

Your next question is from Mike Swartz of truly.

Your line is open.

Speaker 5: Hey, hey guys, good morning. Just wanted to touch on the towable content numbers in the quarter. There was a big jump sequentially and obviously year over year, but maybe give us a little context to how much of that increase is being driven by, you know, pricing relative to maybe, you know, core market share gains.

Hey, guys good morning.

Just wanted.

I wanted to touch on the total content numbers in the quarter. There was a big jump sequentially, and obviously year over year, but maybe give us a little context of how much of that increase is being driven by pricing relative to maybe.

Core market share gains.

Yeah, So I'd, probably break it down into three buckets first our organic gains new new business, new market share and we've talked about that is we've layered in new business over the last 12 months.

Speaker 3: Yeah, I'd probably break it down into three buckets. First, our organic gains, new business, new market share. We've talked about that as we've layered in new business over the last 12 months.

Speaker 3: um... you know that certainly is has been has been running in a range pretty consistent with our historical trends will somewhere around five percent or so uh... you know it's usually three to five percent but we've been a little more on the high side of that uh... acquisitions there are some acquired revenues than there and i i believe uh... that's right around five five percent

That certainly has been has been running in a range pretty consistent with our historical trends, so somewhere around 5% or so.

It's usually 3% to 5% and I think we've been a little more on the high side of that.

Acquisitions, there are some acquired revenues in there and I believe it's right around five 5% on the towable side of things and then the remainder you would see a lot of that is being driven by price adjustments as that's caught up to.

Speaker 3: on the tollable side of things. And then the remainder, you would see a lot of that being driven by price adjustments as that's caught up to keep pace with our input costs today.

To keep pace with our input cost today.

Speaker 5: Okay, okay, that's helpful. And then I think, Jason, you'd mentioned, you know, there's more automation projects on tap for this year, and I guess early next year, I think you said, in upwards of $40 million in investment. Just remind us of, you know, what the return on that spend typically looks like and how quickly, you know, we'll see some benefits from those investments.

Okay. Okay. That's helpful. And then I think Jason you had mentioned there's more automation projects on tap for this year I think it's certainly early next year I think you said it.

In the upwards of $40 million of investment just to remind us of what the return on that spend typically looks like and how quickly we will see some benefits from those investments yes. So.

Speaker 2: Yeah, so you know, we're, you know, five or so years into our automation journey. And, you know, we started with a couple of really small projects and moved to some, some bigger projects and we kind of settled in, you know.

Five or so years into our automation journey, we started with a couple of really small projects and moved to some some bigger projects and we've kind of settled in.

One $4 million projects kind of being our sweet spot, where we can we can remove.

Speaker 2: one to four million dollar projects kind of being our sweet spot where we can you know we can remove you know tend to

<unk>.

Speaker 2: 50 people out of maybe a work cell or series of work cells. That payback usually generally is from a year to three years.

50 people out of maybe a work seller or series of work cells and that payback usually generally is from you know.

Our year to three years.

Speaker 2: on average. So, they're pretty good paybacks, but it allows us to take the labor out of those work areas and redistribute them.

On average so they're pretty good payback, but it allows us to take the labor out of those work areas and redistribute them to other work areas that we need labor and because you know labor is certainly a problem. So it's really been a huge advantage for us as we continue to do more automation projects and we've gotten we've gotten a lot better every year and picking the right projects and.

Speaker 2: to other work areas that we need labor in because labor is certainly a problem. So it's really been a huge advantage for us as we continue to do more automation projects and we've gotten a lot better every year picking the right projects and getting better returns.

Getting better returns so.

Okay, great. Thank you.

Yes.

Your next question is from Craig Kennison of.

Speaker 1: Your next question is from Craig Canestron of Baird. Your line is open.

Baird Your line is open.

Speaker 6: Hey, good morning. Thanks for taking my questions. Jason, I just wanted to call out all the cultural progress that you've made. I do remember back in the day, you had a lot higher turnover than you do today. And, you know, it doesn't get called out on these quarterly calls. Thank you. That's awesome. Appreciate your knowledge.

Hey, good morning, Thanks for taking my questions. Jason I, just wanted to call out all of the cultural progress that you've made I do remember back in the day, you had a lot higher turnover than you do today and.

It doesn't get.

I called out on these quarterly calls Nike, that's pretty thinking that's an awesome I appreciate you acknowledging that.

Speaker 6: So Brian , on the margin front, could you just reiterate what you said about your outlook for Q1 and how you think the cadence will flow through the balance of the year?

So Brian on the margin front could you just reiterate what you said about your outlook for Q1, and how you think the cadence will flow through the balance of the year.

Speaker 3: Yeah, certainly. You know, first you'd have to acknowledge how volatile the markets are. We've seen, you know, steel, aluminum, freight, quite a bit of volatility there moving up and down. So it's hard to predict too far out. Although, you know, for the most part, you can look at what steel is doing currently and use that as an estimate for two quarters out because those index adjustments are contractual and automatic. So, we'll see.

Yes, certainly.

First you'd have to acknowledge how volatile the markets are we've seen steel aluminum freight.

Quite a bit of volatility there moving up and down so it's hard to predict too far out although for the most part you can look at what steel is doing currently and use that as an estimate for two quarters out because those index adjustments are contractual and automatic.

So.

Speaker 3: As it relates to the current quarter, as I mentioned earlier, just getting our sales prices in line with our current input costs, which has been a journey over the last 12 to 18 months.

As it relates to the current quarter.

As I mentioned earlier, just getting our our cell sales prices in line with our current input costs, which has been a journey over the last 12 months to 18 months.

Speaker 3: is expected to give us another 150 to 200 basis point improvement in margin going from fourth quarter to first quarter.

<unk> is expected to give us another 150 to 200 basis point improvement in margin going from fourth quarter to first quarter.

Speaker 3: And then on top of that, I would look at our normal incremental margin improvement, you know, call it 20 to 25 percent on the added volume as our fixed costs are essentially pretty consistent moving from Q4 to Q1.

And then on top of that I would look at our normal incremental margin improvement call. It 20% to 25% on the added volume as our fixed costs are are essentially.

Pretty consistent moving from Q4 to Q1, so so again I would look incrementally normal range of 20% to 25% and then on top of that we finally get our pricing where it needs to be and so it gets you would get another 150 to 200 basis point margin improvement from that so a bulk of which obviously that piece is 100% in cost.

Speaker 3: So again, I would look incrementally, normal range of 20 to 25 percent, and then on top of that, we finally get our pricing where it needs to be, and so I'd get, you'd get another 150 to 200 basis point margin improvement from that. So a bulk of which, you know, obviously that piece is 100 percent in cost of goods sold impacting gross margins, and then the incremental margin would be spread over.

The goods sold and impacting gross margins and then the incremental margin would be spread over both our manufacturing overheads as well as SG&A. So you get pick up some in both sections of the P&L, there and just to tie that back to your.

Speaker 3: both are manufacturing overheads as well as sGNA, so you get pickups and...

Speaker 2: both sections of the P&L there. And just to tie that back to your.

Speaker 2: your intro there on culture. I mean, without the solid culture and the things that we're doing there, we wouldn't be able to attain those types of incremental margins and we wouldn't be able to grow, you know, 1.7 billion in a year. We wouldn't be able to, you know, onboard 3,500 people if we didn't have a strong culture. So really, you know, the culture is foundational to, you know, how we succeed in all these areas. So, I appreciate you acknowledging that.

Your intro there on culture, I mean, without a solid culture and the things that we're doing there we wouldn't be able to attain those types of incremental margins and we wouldn't be able to grow.

$1 7 billion a year, we wouldn't be able to.

<unk>.

Onboard 3500 people if we didn't have a strong culture. So really the culture is the foundational to.

How we succeed in all these areas. So I appreciate you acknowledging that.

Speaker 6: Yeah, thank you. And then following up on the on the capital allocation, you've got a lot of opportunity, obviously, internally, which you mentioned with response in response to Mike's question, but

Yes. Thank you and then following up on the capital allocation.

Got it.

A lot of opportunity, obviously internally, which you mentioned with response in response to Mike's question, but.

Speaker 6: What does the deal pipeline look like? What is your appetite for your own stock at its current multiple? How do you weigh all of those opportunities?

What does the deal pipeline look like what is your appetite for your own stock at its current multiple how do you weigh all of those opportunities.

Seem to be plentiful today.

Yes, I mean, certainly there is we're always looking for to allocate capital to the highest the highest returns and take advantage of opportunities as we see fit.

Speaker 3: Yeah, I mean certainly there's, you know, we're always looking for the allocate capital, the highest returns and take advantage of opportunities as we see fit. You know, the M&A pipeline, I would say, is as consistent as it has been. You know, nothing significantly changing there. So as we evaluate, you know, where to deploy our dollars, certainly today we have, you know, as we've been talking for the past, you know, maybe two quarters.

The M&A pipeline pipeline I would say is consistent as it has been.

Nothing significantly changing there so as we evaluate.

Where to deploy our dollars certainly today we have.

As we've been talking for the past maybe two quarters.

Speaker 3: Um, you know, we've strategically built up our inventories to assist in.

We've strategically built up our inventories to assist in our ability to mitigate any supply chain disruptions.

Speaker 3: our ability to mitigate any supply chain disruptions.

Speaker 3: and keep pace with the record volumes that we're running at today. We've certainly been very mindful of that and deployed a lot of capital there. And then otherwise, we've really kind of prioritized a lot of these automation projects.

And keep pace with the record volumes that we're running at today. So we've certainly been very mindful of that and deployed a lot of capital there.

And then otherwise.

Kind of prioritized a lot of these automation projects is.

Speaker 3: As Jason mentioned, with the labor benefits that that provides us so that we can deploy people where we need them to continue to keep pace with these kind of record volumes.

As Jason mentioned with the labor benefits that that provides us so that we can deploy people, where we need them to.

To continue to keep pace with these kinds of record volume so it's.

Speaker 2: So I think I'd say that's, at least from my perspective, how we're evaluating it. And we've been pretty consistent with, you know, over the years, just, you know, between dividends and just organic CapEx and, you know, CapEx back into the business and acquisitions. And, you know, it feels like maybe over the last few years, you know, acquisitions have taken quite a bit of CapEx and, you know, the CapEx back into the business and, you know, automation and things like that have been a close second. But it feels like there's a, you know, an ability to put more CapEx into the business and focus on some of the organic growth we've attained over the last year. You know, we've not grown.

So I think I'd say, that's at least from my perspective, how we're evaluating and we've been pretty consistent with over the years.

Dividends and just organic capex.

Capex back into the business and acquisitions and.

It feels like maybe over the last few years acquisitions have taken quite a bit of Capex and.

The capex back into the business and automation and things like that have been a close second but it feels like there is a.

An ability to put more capex into the business and focus on some of the organic growth we've obtained over the last year you know we've not grown.

Speaker 2: you know eight hundred million in the year let alone you know a billion seven and you know this year will certainly be solid so you know i can see us putting a lot of money back into the business and not that acquisitions will take a backseat but maybe take a second seat.

<unk> $800 million in a year, let alone a $1 seven and this year will certainly be solid so I can see us putting a lot of money back into the business and not the acquisitions will take a back seat, but maybe take a second seat.

Great. Thank you.

Your next question is from Daniel Moore of CJS Securities.

Speaker 1: Your next question is from Daniel Moore of CJS Securities. Your line is open.

Securities Your line is open.

Thank you and thanks for all the color, Jason and Brian .

Speaker 2: Thank you and thanks for all the color, Jason and Brian . Maybe talk a little bit, focus on the aftermarket side of the business and obviously you mentioned a million RVs coming in every two years, just what your outlook for growth in 2022 looks like as well as the M&A pipeline. Yeah, I think as the last few years we've been discussing aftermarket heavy, this is growing toward a billion dollars of our total business.

Maybe talk a little bit focus on the aftermarket side of the business and obviously you mentioned 1 million Rvs coming in every two years, just just what your outlook.

For for growth in 2022 looks like as well as the M&A pipeline.

I think you know.

As the last.

A few years, we've been discussing aftermarket heavy as its growing toward $1 billion of our total business.

Speaker 2: I don't think people realize how much opportunity there really is in the aftermarket with repair and replacement and upgrade parts with all these RVs coming in. I mean it's not only half a million coming in every year. I mean those RVs are staying and needing more work.

I don't think I don't think people realize how how much opportunity there really isn't the aftermarket with repair and replacement and upgrade parts with all these rvs coming in I mean, it's not only.

Half a million dollars coming in every year I mean, those those rvs are staying and needing more work.

Speaker 2: As you know and have talked around the business, there's not as much effort and emphasis on service and service parts as fast as the industry is growing. So we're filling a lot of that need and happy to do it. On top of that, the RVs of today have probably doubled the content.

As you know and <unk> talked around the business. There is there's not as much effort and emphasis on service and service parts as as fast as the industry is growing so we're feeling a lot of that need and happy to do it in on top of that the rvs are today have probably double the content.

Speaker 2: that they had 10 years ago because there's just more, you know, bells and whistles and features that frankly we've added and you know, the customers want and have asked for. So, you know, we've just got tremendous opportunity. I don't think that people understand how much opportunity is really there, but we're going to fill a lot of that need and you know, we're preparing our infrastructure between, you know, customer experience and our care center that's got, you know, well over 120 people.

They had 10 years ago, because there's just more bells and whistles and features that frankly, we've added in.

The customers want in Nevada, four so we've just got tremendous opportunity and I don't I don't think that people understand how much opportunity is really there, but we're going to fill a lot of that need and we're preparing our infrastructure between customer experience and our our care Center that Scott you know well over 120 people on the call center side, taking <unk>.

Speaker 2: On the call center side, taking 75,000 communications a month and growing. All those communications are sales and repair and replacement and upgrades.

<unk> 5000 communications, a month and growing.

I mean, all of those communications are sales in repair and replacement and upgrades.

And it seems like in your prepared remarks, you're moving towards more of a branded strategy on that side of the business obviously Oems.

Speaker 3: And it seems like in your prepared remarks, you're moving toward more of a branded strategy on that side of the business. Obviously OEMs know your LCI and your brands extremely well, but maybe just elaborate on that and how much of it you see could ultimately be a pull by the customer versus a push from you through Camping World and all the other dealers. Thanks. Yeah, yeah. So, you know, in this day and age, I don't think there's enough people that can handle the customers to help make them happier and solve a lot of the problems, especially as

No LCI and your brand is extremely well, but.

Maybe just elaborate on that and how much of it you see could ultimately be a pulled by the customer versus a push for view through camping world and all the other dealers. Thanks, Yeah. Yeah. So you know in this day and age I don't think there is enough people that can can handle the customers to help them.

Make them happier.

And solve a lot of the problems, especially as the as I said earlier the industry units coming into service are far greater than what we have.

Speaker 2: As I said earlier, the industry units coming into service are far greater than what we have service and parts personnel for. So everybody that gets into the mix there to help the customer out, I think helps keep the customers in the lifestyle and in our industry ultimately longer. So I think that's helpful that we're spending as much time and resources as we are. Yeah, I think the-

What we have service and parts personnel for so everybody that gets into the mix there to help the customer out I think helps keep the customers in the in the lifestyle and in our industry ultimately longer.

I think that's helpful. But we're spending much as much time in resources as we are in.

All the time.

Speaker 2: time and energy we've spent toward the retail customer and consumer with our customer experience department initiatives and all the people that we've on-boarded there to you know go out and shake hands and get face to face with the consumers that are using our V's and ultimately our products. We just want to know you know what they like and what they don't like and how we can improve and what other ideas they have for products that don't exist today and you know we get a lot of amazing feedback from all this all this

Time, and energy, we spent towards the retail customer and consumer.

With our customer experience department initiatives and all the people that we've on boarded there to.

Go out and shake hands and get face to face with the consumers that are using rvs and ultimately our products. We just want to know what they like and what they don't like and how we can improve and what other ideas. They have for products that don't exist today, and we get a lot of amazing feedback from all of this all of this.

Speaker 2: of info that we get back directly from the consumer. It's not some kind of survey or, you know, we're out there talking to real people that have real problems and issues. And I think that they're really happy to know that there's, you know.

Info that we get back directly from the consumer it's not some kind of surveyor, we're out there talking to real people that have real problems and issues and and I think that they are really happy to know that there's you know organizations.

Organizations and industry businesses like us.

Speaker 2: organizations and industry businesses like us, you know, tending to those questions and helping get them some answers and make them feel heard. So I think that's really good. But I think I don't, the short answer to your question is I don't think enough people can get in the game to help the consumer out so that we keep people in this lifestyle, especially as many new buyers are coming to the lifestyle.

Turning to those questions in and helping get them some answers and make them feel heard so I think that's really good.

But I think the short answer to your question is I don't think enough people can get in the game to help the consumer out so that we keep people in the lifestyle, especially as many new buyers are coming to the to the lifestyle.

Speaker 3: Okay, last one for me and I'll jump out. You highlighted the Class B growth and...

Last one for me and I'll jump jump out, but you highlighted the class b growth.

And you.

Speaker 3: your content. That's something that doesn't get a lot of color. What does your content look like on Class Bs today? You know, was it a TAM and what do you think it could be?

Your content, that's something that doesn't get a lot of color. What what is your content look like on class B today.

Tam and what do you think it could be yes. So right now there is the 60 $65 million in total potential parts for our product lines, which is about $5200 per class B and we've got about 830 of that today.

Speaker 2: Yeah, so right now there's a $65 million in total potential parts for our product line, which is about $5,200 per Class B.

Speaker 2: And we've got about 830 of that today.

Speaker 2: But we're currently launching several new products in the way of awning steps and some furniture and pop tops. We've noted that a few times, the bed that's on top of the...

But we're currently launching several new products in the way of awning steps in.

Some furniture and pop types, we've noted that a few times the bed that's on top of the.

Speaker 2: you know that they cut a hole in the roof of the van and put a pop-top that has a sleeping surface in it.

They cut of the rough with the van and put a pop type that has a sleep sleeping surplus Senate.

Which is like a 3000 dollar items. So we can we can boost our content pretty quick in that category as we as we launched the rest of these products, but where we are on top of it for sure.

Speaker 2: $3,000 item. So we can we can boost our content pretty quick in that category as we as we launch the rest of these products but we're we're on top of it for sure. All right very helpful thanks again.

Alright very helpful. Thanks again.

<unk>.

Speaker 1: Your next question is from Scott Spember of CLKing. Your line is open.

Your next question is from Scott <unk> of CL King Your line is open.

Good morning, guys.

Scott.

Outside of Marine can you talk about some of the trends that youre seeing in the adjacent segment whether it's.

I guess.

Speed rail.

Speaker 7: European RV, just maybe just give us an indication how that's going? Yeah, sure. Well…

European RV, just maybe just give us an indication of how that skol, yeah sure well I know you said outside of marine but Marines Marine is doing really really well right now and they have a much longer runway I think than RV in terms of the amount of inventory that's out there, it's very very low and it would just be.

Speaker 2: I know you said outside of Marines, but Marines, you know, Marines doing really, really well right now. And they have a much longer runway, I think, than RV in terms of, you know, the amount of inventory that's out there. It's very, very low. And it just feels like, you know, we've got another 18 months or so of...

<unk> like we've got another 18 months or so of.

Speaker 2: filling that pipeline so that dealers have enough inventory. So, and our content's doubled, like Brian said earlier, from 2019.

Filling that pipeline so the dealers have enough inventory so in our contents doubled like Brian said earlier from 2019.

Speaker 2: So, but outside of Marine, you know, we feel Europe's going to be a little sluggish with a chip shortage for motorhomes. You know, 60% of their total vehicles sold over there are motorhomes. If they can't get the motorhome chassis from Fiat and...

But outside of marine.

We feel europe's going to be a little sluggish with the chip shortage for motor homes, 60% of their total vehicles sold over there our motor homes and if they can't get the motor home chassis from B I D.

Speaker 2: All the other ones over there, it's really hard for them to build the unit. So some of that production capacity is switched to towable units.

All the other ones over there, it's really hard for them to build the units. So some of that production capacity have switched or total units.

Speaker 2: and we supply some total content over there.

And we supply some total content over there.

Speaker 2: So I think it will just be a little sluggish. We'll see if they can figure out how to, you know, write the supply chain issues they've got with chips over there. And rail is such a small part of our business. I mean, really where we're picking up rail business is in the U.S. where the, some of the new rail manufacturers are putting new facilities, and we've got some of those contracts over the next several years.

So I think it will just be a little sluggish, we'll see if they can figure out how to.

All right the supply chain issues, they've got with chips over there.

And rail is such a small part of our business I mean, really where we're picking up rail businesses in the U S where the some of the new rail manufacturers are putting new facilities and we've got some of those contracts over the next several years.

Speaker 2: We'll be talking more about that in the next couple of years as we onboard some of those contracts. You know, the specialty vehicle and bus market is pretty flat right now, but we're gaining content and share there, so that's helpful. But all in all, it's a smaller piece of the total business.

We'll be talking more about that.

In the next couple of years as we on board some of those contracts.

Specialty vehicle and bus market is pretty pretty flat right now, but we're gaining content and share there and so that's helpful. But all in all it's a smaller piece of the total total business.

Got it and just lastly on the Purion.

Speaker 7: Now that's back into the fold this time around. You've got the aftermarket angle, which wasn't there before. Can you talk about...

Now this back into the fold this time around you've got the aftermarket angle, which wasn't there before can you talk about.

How that will maybe.

Speaker 7: how that will maybe, just from a sales perspective going forward, how that should drive the business and maybe the margin profile for the...

And just from a sales perspective going forward.

How that should drive the business and maybe the margin profile for the.

Speaker 2: a fury on aftermarket versus your traditional aftermarket. Yeah, yeah, so I mean their aftermarket was humming when we bought them. I mean it was nearly 40% of their total business, but they weren't nearly in the amount of...

Purion aftermarket versus your traditional aftermarket.

Yes, so I mean thereafter market was humming when we bought them. It was nearly 40% of their total business, but but they didn't have they werent nearly in the amount of.

Distributors and dealerships that were and so we are in process now all the all the aftermarket wholesale distribution shows are happening January to March into April so.

Speaker 2: distributors and dealerships that we're in. So we're in process now, all the aftermarket wholesale distribution shows are happening January to March into April . So we're slowly moving more of their products into our traditional channels and that'll happen over the course of this year. And part of it for us is having to ramp the supply chain up. So we are going to onboard a lot of new OEM business as well.

We're slowly moving more of their products into our traditional channels and that all that will happen over the course of this year and you know part of it for US is having the ramp the supply chain up. So we are going to onboard a lot of new OEM business as well.

Speaker 2: But it's taken time to get the supply chain ramped up to be able to do that.

But it's taken time to get the supply chain ramped up to be able to do that so.

Speaker 2: We look forward to talking more about the market share gains with Furan this year, both on the OEM and aftermarket side. But all in all, the integration's gone fine so far. They've got some great products. As we noted earlier, we're going to launch some really innovative products later this year that are Furan branded.

We look forward to talking more about the market share gains with Purion. This year, both on the OEM and aftermarket side, but all in all the integration has gone fine so far and they've got some great products.

As we noted earlier, we're going to we're going to launch them really.

<unk> innovative products later this year that our purion branded so.

Yes.

Speaker 3: Yes, from a margin. Got it, that's all I have. Thank you. Hey, Scott. Oh, sorry, go ahead. Just to wrap that up a little bit, from an aftermarket margin perspective, I would say it would be pretty comparable to what the rest of our aftermarket business does. OEM, as you know, when we were the distributor, margins were on the, say, the lighter side. But with us and our footprint and essentially taking the middle.

All I have thank you Hey, Scott I'm, sorry got it just to wrap that up a little bit from an aftermarket margin perspective, I would say it would be pretty comparable to what.

The rest of our aftermarket business does.

As you know when we were the distributor.

Margins were on the let's say the lighter side.

But with us and our footprint and and essentially taken the middle Middle man out of that.

Speaker 3: man out of that, we're able to show quite a bit more margin opportunity there. So probably more in line with the rest of our OEM business, maybe on the light side to start, but we would hope that we would be able to.

We're able to show quite a bit more margin opportunity. There. So so probably more in line with the rest of our OEM business, maybe on the light side to start, but we would hope that we would be able to.

Speaker 3: show some additional margin improvement as we integrate them.

Show some additional margin improvement as we as we integrate them.

Got it thanks again.

Your next question is from Kathryn Thompson of Thompson Research Group. Your line is open.

Speaker 1: Your next question is from Kathleen Thompson of Thompson Research Group. Your line is open.

Speaker 8: Hi, thank you for taking my questions today. I want just more of a clarification on the inflation side and looking at your content per unit having a nice increase as you've always been steadily moving up with that metric. How much of this in the quarter, or maybe you can look over the past 12 months, has been related to inflation versus your ongoing initiative to increase content per unit? Thanks. Hi, Catherine.

Okay. Thank you for taking my questions today.

One more.

I have a clarification on the inflation side and looking at your content per unit, having a nice increase as you've always been steadily moving up with that metric.

How much of this in the quarter or maybe you can look at this past trailing 12 months has been related to inflation.

Is your ongoing initiatives to increase content per unit.

Hi, Catherine.

Yeah I mean.

Speaker 4: Like I was talking a little bit earlier, from a normal content growth, it's pretty consistent with what we've shown in the past, you know, 3 to 5% type growth.

Like I was talking a little bit earlier the.

From a normal content growth.

Pretty consistent with what we've shown in the past three years to 5% type growth Mac.

Speaker 2: Acquisitions on the towable side impacted it by another five percentage points. Motorhomes was a little bit higher, I think around six percent.

Acquisitions on the <unk> side, the impact of that by another five percentage points motor homes was a little bit higher I think around 6%.

Speaker 3: And so the remainder of that would be priced.

And so the remainder of that would be price impact.

Speaker 3: impact and you know I think another way to look at it as everybody's been looking at you know inflation across the board and the impact on the the in selling price of the unit you know you have anywhere from 25 to 30 percent type increases in prices overall and I would tell you that we're we're pretty consistent in that

I think another way to look at it as everybody has been looking at inflation across the board and the impact on the in selling price of the unit.

Have anywhere from 25% to 30% type increases in prices overall and I would tell you that we're we're pretty consistent.

In that that percentage increase that inflation that we've seen as well. So you would expect that as we go quarter after quarter end bleed those increases into our trailing 12 month number.

Speaker 3: that percentage increase that inflation that we've seen as well. So you would expect that as we go quarter after quarter and bleed those increases into our trailing 12 month number, you'd see.

You'd see.

An impact of inflation, that's pretty consistent with what I think the end product has inflated for the end consumer as well if that helps to give you a little bit of color of where I would expect it to go for when it is ultimately 12 months baked in.

Speaker 3: has inflated for the end consumer as well. If that helps to give you a little bit of color where I would expect it to go for when it's ultimately.

Speaker 2: 12 months baked in of price increase. And because there were so many supply chain problems with, you know, competitors last year, I mean, we, I can't remember a year where we took more meaningful market share in several categories like awnings and doors and axles and chassis. So we had some pretty significant categories. We took some pretty meaningful market share and that'll show up through the course of 2022 as well.

<unk>.

Because there were so many supply chain problems with.

Competitors last year, I mean, we I can't remember.

Remember a year, where we took more meaningful market share in several categories like earnings in doors, and actuals and chassis. So some pretty significant categories. We took some pretty meaningful market share and that will show up through the course of 2022 as well.

Speaker 8: Yeah, and that kind of opens the door, Jason, to my next question. I was going to ask about, we've seen in a variety of industries over the past 18 to 24 months,

Yeah, and that kind of opens the door adjacent to my next question.

Asked about.

We've seen and.

Variety of industries.

Over the past 18 to 24 months.

Speaker 8: have and have nots in terms of market share gains. And clearly you have gained market share in a variety of categories. I guess a couple of different things related to that subject. One, based on your past experience.

Pat and have nots in terms of market share gains and clearly you have gained market share.

A variety of categories I guess, a couple of different things related to that subject one based on your past experience how much of those market share gains do you think are sticky civil will stay going forward.

Speaker 8: How much of those market share gains do you think are sticky so will stay going forward? And then along that line, who are you taking market share from and what are, if you could focus on, say the top three to five categories where you are taking market share that you think are gonna be stickier going forward?

And then along that line, where you're taking market share from them. What are if you could focus on say the top three to five categories, where you are taking market share that you think are going to be stickier going forward.

Speaker 2: Yeah, sure. So I think the most important point is that, you know, we last year, I think, you know, being good partners of the OEMs, we bailed

Yeah sure so.

I think the most important point is that we.

Last year, I think you know being good partners with the Oems we bailed.

Speaker 2: a lot of situations out and put the OEMs in a position where they could shift units, where they were looking at not being able to shift units. It cost us a ton of overtime to onboard a lot of these.

A lot of situations out and put the Oems in a position where they could ship units, where they were looking at not being able to ship units it cost us a ton of over time to onboard a lot of these.

Speaker 2: you know customers but again back to them credit card earlier you know because we have a solid culture because we have people staying here we don't have the the kind of turnover that the rest the industry have we can you know take on some of those things so you know we're really successful there and uh... you know the the the top products that you know we spent the most time on boarding with with mark new market share word would be you know awnings entry doors axle

Customers, but again back to when Craig called earlier, because we have a solid culture them because we have people staying here and we don't have the kind of turnover that the rest of the industry have we can take.

Take on some of those things so we're really successful there.

The top products that we spent the most time on boarding with.

New market share would be earnings.

Entry doors axles.

Speaker 2: And then and then chassis and chassis is obviously the you know the largest you know business that we have so

And then and then chassis and chassis is obviously the.

Largest business that we have so.

Speaker 2: I don't know if I answered all of your questions, but I think what I would add to that is a lot of those came with long-term multi-year commitments.

If I answered all of your question, but yes, I think what I would add to that is a lot of those came with long term multi year commitments.

Speaker 3: Catherine, you know, as it was, you know, it was a very disruptive time and

Kathryn as it was it was a very disruptive time and.

Speaker 2: As Jason mentioned, we had to work a lot of overtime, so certainly our ask in those situations were for longer term commitments. I'd say they're pretty sticky. Yeah, that's part of the question I was missing. I think the stickiness is better than ever because...

As Jason mentioned, we had to work a lot of overtime and so certainly are asking those situations where for longer term commitments, let's say they are pretty sticky.

That's a part of the question I was missing, yes, I think the stickiness is better than better than ever because we.

We did we did bail them out they are going to remember that.

Speaker 2: We did bail them out. They are going to remember that. We did put some longer term.

We did put some longer term con.

Speaker 2: contracts if we were going to take some of that business on because of how much stress it was going to put on in the business. And I don't think our relationships with our customers have ever...

Contracts that we were going to take some of that that business on because of how much stress. It was going to put put on in the business. So.

And I don't think our relationships with our customers who've ever been better.

Speaker 2: been better. You know, I can tell you from all the major OEMs, I mean, they've told us and all the brands, they've told us numerous times over the last six months that, you know, out of all the suppliers in the business, you know, we responded as good as anybody and have taken care of them through, you know, all the headwinds that we've had from labor to COVID supply chain issues. So I feel really good about the stickiness now. You know, we still need to be competitive and, you know, we've got to

I can tell you from all the major Oems they've told us in all the brands they've told US numerous times over the last six months that out of all the suppliers in the business we responded.

As good as anybody.

Taking care of them through all of the headwinds that we've had from labour to Covid supply chain issues. So.

I feel really good about the stickiness now we still need to be competitive and we've got a.

Speaker 2: you know twenty seven year history since i've been here uh... you know of of being competitive where and when they need it and being a good partner so as long as we stay focused on that we're in good shape

<unk> 27 year history since I've been here.

Of being competitive where and when they need us and being a good partner. So I think as long as we stay focused on that our we're in good shape.

Okay great.

Speaker 8: Okay, great. And then just final question. We were in Florida for the Super Show. We have several big retail shows coming up.

And then just final question we were in.

Florida for the Super show.

Several big retail shows coming up.

What's your outlook, you've got great backlog.

Speaker 8: What's your outlook? You've got great backlogs, and that's gonna keep you busy for quite some time, but from a consumer standpoint, what trends are you seeing now that you'd like to share that would impact the mix of the type of business you do going forward? Yeah, so...

It's going to keep you.

Busy for quite some time, but from a <unk>.

Consumer standpoint, what trends are you seeing now that she you'd like to share that.

Would impact the mix of the type of business going forward.

Yeah, So I mean, it feels like.

Speaker 2: You know, certainly there's going to be a longer, I mean, we talked about the Marine side, there's going to be, you know, a long runway there on motorhomes. There's...

Certainly theres going to be the longer I mean are we talking about the marine side theres going to be.

Long runway there on motor homes.

Speaker 2: There's certainly more backed up than any other product category on the RV side. So, and we do have a meaningful amount of content, you know, in motor homes, so that's going to be...

There is.

Certainly more backed up then than any other product category on the RV side, So and we do have a meaningful amount of content and motor homes. So that's going to be a significant <unk>. We just talked about that's going to continue to I don't know if its going to continue to grow 25% to 50% every year, but it sure looks like it's going to.

Speaker 2: significant. You know the B-van we just talked about? I mean that's going to continue. I don't know if it's going to continue to grow 25 to 50 percent every year but it sure looks like it's going to.

Speaker 2: That's a big trend in Europe and most of the vehicles in Europe are B vans for motor homes.

That's a big trend in Europe , and most of the vehicles in Europe or are B vans for for motor homes. So.

Speaker 2: You know, a lot of smaller units and I think we can continue to develop great content for small and larger RVs alike. So you know, we're going to continue to...

You know a lot of small lots of smaller units and.

I think we can continue to develop great content for small and larger RV.

These are like so we're going to continue to do.

Speaker 2: to keep our innovation machine moving and launch a lot of new products and stay attuned to what the customers need because they are telling us today. I mean two years ago we had no mechanism in our company.

Keep our innovation machine, moving and launch a lot of new products and.

Stay attuned to what the customers need because they are they are telling us the day I mean, two years ago, we had no no.

Mechanism in our company to figure out what the customers.

Speaker 2: you know one of the top of the you know what service-related phone caller partially phone call for now are out there actually you know i'm just asking what it is that they need and going back to our only on top of the thing you look at enough nothing out here for this this uh... you know change in the product or this new product and you know they're listening

I wanted to tell us other than a service related phone call or a parts related phone call. So now we're out there actually.

I'm, just asking what it is that they need and going back to our OEM customers and saying, Hey look there's enough enough need out here for this.

<unk>.

No change in the product or this new product and they are listening.

Speaker 8: Okay, perfect. Thanks for answering my questions today.

Okay perfect.

Thanks for answering my questions today.

Sure.

Speaker 1: Your next question is from Brett Jordan of Jefferies. Your line is open.

Your next question is from Bret Jordan of Jefferies. Your line is open Hey, good morning, guys. Good morning. Good morning could you give us a little bit more color on Europe , I think you sort of called it it's sluggish given the lack of chassis, but could you talk I guess about the consumer cadence.

Speaker 9: Hey, good morning, guys. Morning. Could you give us a little bit more color on Europe ? I think you sort of called it it's sluggish given the lack of chassis. But could you talk, I guess, about the consumer cadence demand?

Demand.

Speaker 9: Are they wanting product and putting deposits down and just can't get it because of the supply chain? And was there as much of a surge in sort of new buyer interest in Europe in the last 18 months as there was in the U.S.? Is it sort of a new user base over there like we have here?

Are they watching product and putting deposits down I, just can't get it because of the supply chain and whether there is much of a surge in sort of new buyer interest in Europe in the last 18 months as there was in the U S is it sort of a new user base over there like we have here.

Speaker 2: Yeah, we've seen the same trends in new buyers over there. And there is a significant demand and consumers want product and can't get it much more so than over here. At least it's available. And the lead times are shorter because inventories are starting to build up. But over there, they're gonna you know, they're gonna probably struggle for a little bit.

Yes, we've seen the same trends in new buyers over there.

And there is a there is a significant demand and you know consumers want product and can't get it much more so than over here at least that's available available and the lead times are shorter because inventories are starting to build up but over there they're going to they're going to probably struggled for a little bit.

Speaker 2: I think towables are pretty available over there, but you know motor homes are the bigger piece of the market and and like here they're For some of the same reasons their inventories are very depleted over there on the motorhome

I think <unk> are pretty available over there, but you know motor homes are the bigger piece of the market and in like here or there.

For some of the same reasons inventories are very depleted over there on the motor home side.

Speaker 2: uh... you know the other the other different that you know we've got you know the consumers in the u s there's you know said to be you know a couple trillion and people's you know bank accounts and investment accounts more and twenty nineteen so you know you got a couple trillion sitting and you know and people's investment account the bank accounts here were over there i don't think they've got the same so you might have a little bit more of an effect over here comes with the man because you know people have have more access to cash but

And the other the other differences you know we've got the consumers in the U S. There is said to be.

Couple of trillion dollars in People's Bank accounts and investment accounts more than 2019, so you've got a couple of trillion sitting in.

And People's investment accounts and bank accounts here, where over there I don't think they've got the same so you might have a little bit more of an effect over here in terms of demand because people have have more access to cash but.

Those would be the.

Key thing okay.

Speaker 9: And I guess your comment on inflation, you were looking for something in the 20 to 30 percent price increase, I guess, as a result of what we've seen in the last 12 months. How much of that is in the sticker already versus how much is to come if ultimately an R&D is going to go up by 30 percent in the span of this COVID disruption?

And I guess your comment on inflation you were looking for something in the 20% to 30% price increase I guess as a result of what we've seen in the last 12 months how much of that is in the sticker already versus how much is the column. If ultimately on R&D is going to go up by 30% in the span of this COVID-19 disruption.

Speaker 2: Yeah, I feel like, you know, increases the amount of increases that the supply chain has passed on to the OEMs.

Like you know increases the amount of increases as the supply chain has passed on to the Oems is pretty well pretty well.

Speaker 2: is pretty well baked into the price of their units for this quarter. I mean, there's going to be probably some increases, some smaller increases coming, but there's also going to be decreases in other commodities to offset. So it just feels like going forward from Q1 that they're going to be pretty, it's going to be pretty baked in. And ultimately you're going to see dealers probably start to cut margins.

<unk> into the price of their units for this quarter.

I mean, there's going to be probably some increases some smaller increases coming but theres also gonna be decreases and other commodities to offset so it just feels like going forward from Q1 that theyre going to be pretty it's going to be pretty baked in and you know ultimately youre going to see dealers probably start to you know.

Cut margins.

Speaker 2: and cut their price to keep sales going and stay competitive. So we'll see what happens over the next few quarters there, but it certainly feels like that's going to happen. I know a couple of dealers already started doing that. And it's time, because in the beginning, they're selling above MSRP, and now they're back to looking at, OK, how do we keep the price going?

And cut their price to keep sales going and stay competitive. So we will see what happens over the next few quarters, there, but it certainly feels like that's going to happen I know a couple of dealers already started doing that and its time because in the beginning they didnt. They didnt they are selling above MSRP. Another now they are back to looking at okay. How do we keep the keep everything going.

Speaker 9: keep everything going. Okay, and I guess one final question, talk a lot about the aftermarket and this big service demand that exists out there. And there's obviously not much, you know, integrated service or chains of service providers in the RV space. Is that something that you could ever sort of vertically integrate into your model that you could actually physically service units? Or are you mostly going to supply the part and consultation?

Okay, and I guess, one final question talk a lot about the aftermarket in this big service demand that exists out there and there's obviously not much.

Integrated service or chains of service providers in the RV space is that something that you could ever sort of vertically integrate into your model that you could actually physically service units or are you, mostly going to supply the part in consultation.

Speaker 2: It's a really good question where we have some service bays around the country right now where we do do some service work on our parts. The question is do we be full service and do service for other components and things like that that we could certainly train our techs and do some of those things. So we're exploring everything.

Well, it's a really good question were you know we have some service bays around the country right now where we do do some service work on our parts of the question is do we do we be full service and do service for other components and things like that that we could certainly train our tax in and do some of those things. So we're exploring everything is just.

Speaker 2: We're in a position now where we're just trying to get at what's coming our way, and it's incredibly difficult to find good techs in this business because there's probably a shortage of close to 2,000 already. So an RVIA has got a program, training techs and recruiting techs, so I think that whole part of the business is going to change significantly over the next few years, but we're certainly going to play a part in it.

We're in a position now where we're just trying to get at what what's coming our way and it's incredibly difficult to find good tax on this business because theres, probably a shortage of close to 2000.

Already so in RBI has got a program training tax and recruiting tax so.

I think that whole part of the business is going to change significantly over you know over the next few years, but we're certainly going to play a part in it and.

Speaker 2: and help a consumer when they've got, you know.

You know help help a consumer when they've got when they've got you now.

Related issues.

Great. Thank you.

Yes.

Your last question is from the line of Craig Kennison of Baird. Your line is open.

Speaker 1: Your last question is from the line of Craig Canison of Beard. Your line is open.

Yes, thanks for letting me back in the queue.

Speaker 6: Yeah, thanks for letting me back in the queue. So Brian , I just want to clarify something you said about margin. I think you said that you see some margin contraction mid year due to supply chain issues. Is that a year over year comment or a sequential?

So Bryan I just wanted to clarify something you said about margin I think you said that you.

You see some margin contraction midyear due to supply chain issues is that a year over year comment or a sequential comment.

Speaker 2: I mean, primarily what I'm addressing there is that, you know, as I know you watch the commodity markets and what steel and aluminum has done and has been doing, certainly aluminum started to come down and then it went back up. But steel has continued to trend downward. So just like on the front side of this, as our margins lag by two quarters, or our price increases lag by two quarters.

I mean, primarily what I'm addressing there is that.

I know you watch the commodity markets and what steel and aluminum has done and has been doing certainly aluminum started to come down and then it went back up but.

Steel has continued to trend downward so just like on the front side of this as our margins lagged by two quarters.

Our price increases lagged by two quarters.

Speaker 3: compared to what we're actually consuming from a cost perspective, we will see that once again as we go the other way. So that's where as steel has come down to 60 cents a pound or so, I think is where it's currently at. That gets looked at every quarter and then two quarters later you'll start to see our automatic index. And we'll see what we can do for in terms of price rise Jana how about

When compared to what we're actually consuming from a cost perspective, we will see that once again as we go the other way so that's where as steel has come down to 60.

<unk>. So I think that's where it is currently at that gets looked at every quarter and then two quarters later youll start to see our automatic indexing adjustments take place. So certainly as those price reductions go into play you would see some some margin headwind as that takes place.

Speaker 9: adjustments take place. So certainly as those price reductions go into play, you would see some margin headwind as that takes place.

Just two but just to ask I mean are you seeing year over year declines.

Speaker 6: Just to ask, are you saying year over year decline?

Speaker 3: in margin or sequential? More sequentially. So as we've caught up now, then you would start to see as we reduce prices, we will hang on for the two quarter lag and get the benefit of that. And then ultimately you would see the reduction.

And margin or I'm, sorry, more sequentially. So as we've caught up now then you would start to see as we reduced prices we will hang on.

For the two quarter lag and get the benefit of that and then ultimately you would see the reductions.

Speaker 3: Which, given where prices are today, it's obviously a fall of a market and could go anywhere, but as those steel costs have come down, those would be things that our index adjustments will be providing our customers with price reductions, which would be two quarters out.

Given where prices are today, it's obviously, a volatile market and could go anywhere but.

As those steel costs have come down those would be things that are index adjustments will be providing our customers with price reductions.

Would be two quarters out.

That's very helpful. And then Jason you've got this new capability really to tap into the RV consumer.

Speaker 6: That's very helpful. And then, Jason, you know, you've got this new capability really to tap into the RV consumer in a different way. There's a lot of curiosity about, you know, that first time buyer and what their experience has been over the last couple of years and whether they will stay in this industry. What kind of insights have you gleaned from your work as to what that first time consumer plans to do and whether they're going to stick or, you know, exit the market?

In a different way, there's a lot of curiosity about that first time buyer and what their experience has been over the last couple of years and whether they will stay in this industry what kind of.

Insights have you gleaned from your work as to what that first time consumer plans to do and whether they're going to stick or eggs.

Exit the market.

Yes, so I think the factor.

Speaker 2: Yeah, so I think, you know, probably the biggest thing we've learned is that, you know, they want somebody, you know, and I'm talking specifically, you know, the new buyers here probably applies to some of the second and...

The biggest thing we've learned is that you know.

They want somebody.

And I'm talking specifically, the new buyers here, probably applies to some of the secondhand.

Speaker 2: you know, people that have bought units before, but mainly for first-time buyers, they want somebody to help them through the process. And you know, they get some help from the dealer and ultimately they get some help from the OEM, but you know, to have somebody that's just a trusted source.

People that have bought units before but mainly for first time buyers. They want somebody to help them through the process and they get some help from the dealer and ultimately to get somehow from the OEM, but.

Have somebody that just as a trusted source.

Speaker 2: uh... that's available uh... you know and we're trying to you know we're trying to give twenty four seven service which i don't think it's been done very many places in the industry

That's available.

And we're trying to you know we're trying to give $24 seven service, which I don't think has been done very many places in the industry.

Speaker 2: I'm not trying, we are doing it. We're trying to help with other problems and if we can't solve the problem, if we're the only person they can get connected to, then we're trying to get the answers for them either through supplier peers or through the OEMs.

Not trying we are doing it.

We're trying to help with other problems and if we can't solve the problem. If it's we're the only person they can get connected to them. We're trying to get the answers forum either through supplier peers or through the Oems and just help keep the.

Speaker 2: the new buyers connected and feeling comfortable. Because I think that's their biggest fear is they just don't know how to do certain things and then they can't get a hold of anybody, then they get frustrated and lose the lifestyle. And we're trying to make sure that that doesn't happen. So I think, you know, just providing them an outlet where they're confident they can get a hold of somebody and get answers relatively fast. Part of it, you know, is providing all the video content out there. That's been huge for these new buyers. And then just, you know, kind of having that, you know.

The new buyers connected and feeling comfortable because I think that's the biggest spirits. They just don't know how to do certain things and then they can't get a hold of anybody then they get frustrated and leave the lifestyle and we're trying to make sure that that doesn't happen. So I think just providing them an outlet where they're confident they can get a hold of somebody and get answers relatively fast part of it.

Is providing all of the the video content out there that's been huge for these new buyers.

And then just kind of having that social place to go to where they meet people and no people face to face and they feel like they've got family in the business versus just some.

Speaker 2: social place to go to where you know they meet people and know people face to face and they feel like they've got you know family in the business versus just some you know phone number that they call when they they need some service on something. So I think they enjoy the camaraderie we've offered and you know we haven't just

Phone number that they call when they need some service on something so.

I think they enjoy the camaraderie, we've offered and we Havent just.

Speaker 2: you know, put a hotline up and, you know, answer the phone. I mean, we've got, you know, almost 20 people dedicated to customer experience now, and it's a separate business from.

Put a hotline up and answer the phone I mean, we've got almost 20 people dedicated to customer experience now and it's a separate business from customer service and I think that it pays off because customers want to talk to us more than when they just have problems, which is what customer service and customer care is normally it's we're there when they have a problem with it.

Speaker 2: customer service and I think that it pays off because customers want to talk to us more than when they just have problems which is what customer service and customer care is normally. We're there when they have a problem where they can call and get a hold of somebody to fix an issue. But when you've got a customer experience department, we're going out and meeting them where they're at whether that's the campgrounds or rallies or shows.

Can call and get a hold of somebody to fix fix an issue, but when you've got a customer experienced department, we're going out and meeting them, where they are at whether that's the campgrounds are at rallies, where it shows.

Speaker 2: And it's been meaningful because we've had you know tens of thousands of contacts with families that are you know new into the business Getting really good feedback Super

And it's been meaningful because we've had tens of thousands of contacts with families that are new into the business getting really good feedback.

Great Hey, Thanks again.

Sure. Thanks.

Presenters I'm not seeing any other questions at this time I would like to hand, the conference back to Mr. Jason Lippert for closing remarks.

Speaker 1: Presenters, I'm not seeing any other questions at this time. I would like to hand the conference back to Mr. Jason Lippert for closing remarks. I just want to say before I close that

Wanted to say before I close that you know we did have a strong year to grow.

Speaker 2: You know, we did have a strong year to grow 1.7 billion is no small feat. And, you know, I just want to shout out to our, all of our team members, all 15,000 across the globe that have participated there. If we didn't have a good culture and good teammates that were committed to coming back and dedicating passion and energy into our business every day, there is no way we could attain some of the things we accomplished in 2021. So we're really looking forward to 2022. We've got a lot of momentum. And we'll talk to you about that next quarter. Thanks.

$1 7 billion is no small feat and I just want to shout out to our all of our team members all 15000 across the globe.

Participated there.

If we didn't have a good culture and good teammates that we're committed to coming back and dedicating passion and energy into our business. Every day. There is no way we could obtain some of the things we accomplished in 2021. So we're really looking forward to 2022, we've got a lot of momentum and we'll we'll talk to you about that next corner.

Okay.

Thank you so much ladies and gentlemen. This concludes today's conference call you may now disconnect.

Speaker 1: Thank you so much. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Speaker 10: ["Pomp and Circumstance"] ["Pomp and Circumstance"] ["Pomp and Circumstance"]

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