Q4 2023 Patrick Industries Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to Patrick Industries' fourth quarter 2023 earnings conference. My name is Paul, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to Patrick Industries' fourth quarter 2020 earnings Conference call.

Paul: My name is Paul My name is Paul and I'll be your operator for today's call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Mr. Steve O'Hara, Vice President of Investor Relations. Mr. O'Hara, you may begin.

Paul: That anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note that this conference is being recorded.

Paul: Now I'll turn the call over to Mr. Steve O'hara, Vice President of Investor Relations. Mr. O'hara, you may begin.

Steve O'hara: Good morning everyone and welcome to our call this morning. I am joined on the call today by Andy Nemeth, CEO, Jeff Rodino, President RV, and Matt Feiler, Interim CFO, as well as Kip Ellis, Patrick's President, Power Sports and Housing, who is available for Q&A and is joining us remotely. Certain statements made in today's conference call regarding Patrick Industries and its operations may be considered forward-looking statements under the securities laws. However, there are a number of factors, many of which are beyond the company's control, which could cause the actual results and events to differ materially from those described in the forward-looking statement. These factors are identified in our press releases, our Form 10-K for the year-ended 2022, and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update these statements to reflect circumstances or events that occur after the date on which the forward-looking statements are made. I would now like to turn the call over to Andy Nieman. Thank you, Steve.

Steve O'hara: Good morning, everyone and welcome to our call. This morning, I am joined on the call today by Andy Nemeth CEO, Jeff for Daniel President, RB and Matt father, interim CFO as well as Kipp Palace Patrick's President power Sports and housing was available for Q&A and is joining us remotely certain statements made in today's conference call.

Steve O'hara: Guarding Patrick industries and its operations may be considered forward looking statements under the securities laws. There are a number of factors, which many of which are beyond the company's control, which could cause the actual results and events to differ materially from those described in the forward looking statements. These factors are identified in our press releases our Form 10-K for the year ended 2022.

Steve O'hara: And our other filings with the Securities and Exchange Commission.

We undertake no obligation to update these statements to reflect circumstances or events that occur. After the date. The forward looking statements are made I would now like to turn the call over to Andy Nemeth.

Andy Nemeth: Steve as we look back on fiscal 'twenty twenty-three I'm incredibly proud of the efforts. Our team has shown as they continued to deliver solid and resilient performance and results in a challenging environment.

Andy Nemeth: As we look back on fiscal 2023, I'm incredibly proud of the efforts our team has shown as they continue to deliver solid and resilient performance and results in a challenging environment. Despite sharply lower shipments across our end markets, as we faced macro and industry headwinds attributable to high inflation and interest rates, our business generated strong revenue, margins, profits, and cash flow, particularly when compared to the pre-COVID time period when our business was less diversified. For the full year, we achieved record gross margin, delivering on our operating margin target, and generated record key free cash. To highlight the evolution of our business and the benefits of the strategic diversification and investments we've made, we'll compare the full year's 2023 results with the full year 2019. This year, RV wholesale unit shipments declined 37% and were 23% lower than last year.

Andy Nemeth: Despite sharply lower shipments across our end markets as we face macro and industry headwinds attributable to high inflation and interest rates, our business generated strong revenue margins profits and cash flow, particularly when compared to the pre COVID-19 time period, when our business was less diversified for.

Andy Nemeth: For the full year, we achieved record gross margin delivering on our operating margin target and generated record free cash flow.

Andy Nemeth: To highlight the evolution of our business and the benefits of the strategic diversification investments. We've made will compare the full years 2023 results with full year 2019.

Andy Nemeth: This year RV wholesale unit shipments declined 37% and were 23% lower than 2019.

Andy Nemeth: Despite the materially lower unit volumes and less favorable environment, total revenue in 2023 was 48% higher than 2019. Gross margin was 450 basis points higher, and operating margin was 90 basis points. EPS was 69% higher, and free cash flow was more than twice what we produced in 2019 on a significantly higher industry. We expect to continue to drive our growth trajectory with the execution of our strategic plan, and our team's hard work and determination has continued to position us to actively pivot where necessary to stay nimble and flexible. Our foundation is solid as we spent the year streamlining our model and placing our company in a great position, not just to weather the uncertain macro environment but to proactively grow our company through our successful diversification and automation strategy, among other strategic and capital initiatives.

Andy Nemeth: Despite the materially lower unit volumes and less favorable environment total revenue in 2023 was 48% higher than 2019 gross margin was 450 basis points higher in operating margin was 90 basis points higher.

Andy Nemeth: EPS was 69% higher and free cash flow was more than twice what we produced in 2019 on significantly higher interest rates.

Andy Nemeth: We expect to continue to drive our growth trajectory with the execution of our strategic plan.

Andy Nemeth: And our teams hard work and determination has continued to position us to actively pivot where necessary to stay nimble and flexible.

Andy Nemeth: Foundation is solid as we spent the year streamlining our model and placing our company in a great position not just to weather the uncertain macro environment, but to proactively grow our company through our successful diversification and automation strategy among other strategic and capital initiatives.

Andy Nemeth: We optimized our cost structure based on current run rates in our markets, paid down debt, actively managed and reduced our inventory, and improved our operating efficiency. We invested in our financial and operational infrastructure through software and IT, automation, and new product innovation. In 2023, we allocated capital to ensure our company is ready for future and market improvement while preparing us financially and structurally to make bolt-on and more significant acquisitions that align with our future growth objectives. In 2023, we acquired Patrick Marine Transport, a leader in marine transportation that complements our existing RV transportation business. In early January 2024, we acquired Sportec, our largest acquisition to date, which adds significant scale in power sports, increasing our total addressable market, enhancing our business's runway for growth, and improving the diversity of our revenue, profit, and cash flow.

Andy Nemeth: We optimized our cost structure based on current run rates in our markets paid down debt actively managed and reduced our inventory and improved our operating efficiencies we.

Andy Nemeth: We invested in our financial and operational infrastructure through software and I T automation and new product innovations in 2023 we allocated capital to ensure our company is ready for future end market improvement, while preparing us financially and structurally to make bolt on and more significant acquisitions that align with our future growth objectives.

Andy Nemeth: In 2023, we acquired Patrick Marine Transport, a leader in Marine transportation that complements our existing RV transportation businesses in early January.

Andy Nemeth: <unk> 'twenty 'twenty four we acquired sport Tac, our largest acquisition to date, which adds significant scale and power sports increasing our total addressable market enhancing our businesses run way for growth and improving the diversity of our revenue profit and cash flow.

Andy Nemeth: On the human capital side, we continue to support our people in 2020, as we quietly and thoughtfully invested in leadership development training while also continuing to meaningfully give back to our communities through our philanthropic efforts and team member engagement. As an organization, we have elevated the way we think about our RV, Marine, and Power Sports End markets to the outdoor enthusiast space. At Patrick, we are enthusiasts. We are active in the outdoors.

Andy Nemeth: On the human capital side, we continue to support our people in 2023, as we quietly and thoughtfully invested in leadership development training, while also continuing to meaningfully get back to our communities through our philanthropic efforts and team member engagement.

Andy Nemeth: As an organization we have elevated the way, we think about our RV marine and power sports and markets to the outdoor enthusiast space it.

Andy Nemeth: Patrick we are enthusiasts, we are active in the outdoors enjoy camping are being boating fishing motorcycling off roading and other recreational and leisure lifestyle activities.

Andy Nemeth: Enjoy camping, RVing, boating, fishing, motorcycling, off-roading, and other recreational and leisure lifestyle activities. Our team's passion is evident in what they love to do, the solutions they provide, and the care shown while building them. Our team members are proud to represent their brands and their commitment to our customers. Whether on the road, off the road, on the water, or at home, we believe in empowering people to live their passions to the fullest, which drives our goal to be the supplier of choice to the outdoor enthusiast. Financially, we have maintained a strong balance sheet and generated significant free cash flow through focused investments and prudently managing working capital. We have no major debt for the charities until 2027.

Andy Nemeth: Our team's passion is evident in what they love to do the solutions, they provide and the care shown while building them.

Andy Nemeth: Our team members are proud to represent their brands and their commitment to our customers whether on the road off the road on the water or at home. We believe in empowering people to live their passions to the fullest, which drives our goal to be the supplier of choice to the outdoor enthusiast space.

Andy Nemeth: Financially, we have maintained a strong balance sheet and generated significant free cash flow through focused investments and prudently managing working capital.

Andy Nemeth: We have no major debt maturities until 2027, we ended 2023 with approximately $780 million of total liquidity and we remain flexible and ready to pivot in response to market conditions and customer needs.

Andy Nemeth: We ended 2023 with approximately $780 million in total liquidity, and we remain flexible and ready to pivot in response to market conditions and customer needs. We continue to be optimistic about Patrick's future and ability to generate free cash flow, which was reflected in our Board of Directors' decision to raise our fourth-quarter dividend by 22% to 55 cents per share. We returned $61 million to shareholders during the year in the form of stock repurchases and dividends and had $77.6 million left authorized under our current repurchase plan at the end of the fourth quarter.

Andy Nemeth: We continue to be optimistic about patrick's future and ability to generate free cash flow, which was reflected in our board of directors decision to raise our fourth quarter dividend by 22% to 55 per share.

Andy Nemeth: We returned $61 million to shareholders during the year in the form of stock repurchases and dividends and had $77 6 million left authorized under our current repurchase plan at the end of the fourth quarter.

Andy Nemeth: Looking forward to 2024, we are confident in our team's ability to navigate short-term headwinds and capitalize on opportunities to continue to profitably grow our company. We believe the first half of 2024 will look similar to the last few months of 2023 in respect to industry and macro trends, with some promising upside potential in the second half of 2024, especially if there is interest rate relief for both retail and floor plan finance. We will continue to utilize the appropriate levers to optimize our operations and maintain our strong financial position, including maintaining a disciplined leverage position and prioritizing paying down debt after the Sport Tech Act, while still having the opportunity and ability to grow the company through targeted acquisitions and capital investment.

Andy Nemeth: Looking forward to 2024, we are confident in our team's ability to navigate short term headwinds and capitalize on opportunities to continue to profitably grow our company.

Andy Nemeth: We believe the first half of 'twenty 'twenty four will look similar to the last few months of 2023 in respect to industry and macro trends with some promising upside potential in the second half of 2024, especially if there is interest rate relief for both retail and floor plan financing.

Andy Nemeth: We will continue to utilize the appropriate levers to optimize our operations and maintain our strong financials, including maintaining a disciplined leverage position and prioritizing paying down debt. After the sports tech acquisitions, while still having the opportunity and ability to grow the company through targeted acquisitions and capital investment.

Andy Nemeth: As we think about strategic growth opportunities for 2024 and beyond, we continue to see appeal in the premium segment of the outdoor enthusiast space. And with our acquisition of Sportec, we have solidified our presence as a leading component solutions provider to the power sports market. We expect to continue to strategically and organically expand our presence in RV, marine, and power sports in conjunction with our strategic focus on the broader outdoor enthusiast space and the aftermarket.

Andy Nemeth: As we think about strategic growth opportunities for 'twenty 'twenty four and beyond we continue to see the appeal in the premium segment of the outdoor enthusiast space and with our acquisition of Spartech, we have solidified our presence as a leading component solutions provider the power sports market.

Andy Nemeth: We expect to continue to strategically and organically expand our presence in RV Marine and power sports in conjunction with our strategic focus on the broader outdoor enthusiast space and the aftermarket.

Andy Nemeth: The end result.

Andy Nemeth: We are positioned well as we start 2024 with ample liquidity and a solid capital structure and are poised and ready to accelerate our company's growth. Highlighting our financials, our fourth-quarter revenues were $781 million, and net income was $31 million, or $1.41 per diluted share. For full year 2023, we generated revenue of $3.5 billion, leading to net income of $143 million, or $6.50 per diluted share. As we noted in the press release this morning, the quarter's results included approximately eight cents of one-time, non-recurring charges related to severance, facility consolidations, and significant tornado damage to two of our facilities in the Nashville, Tennessee area in December. Net of favorable fair value measurement adjustments. For the full year, we estimate these non-recurring items will tally approximately $0.21 per share.

Andy Nemeth: We are positioned well as we start 2024 with ample liquidity and a solid capital structure and are poised and ready to accelerate our company's growth.

Andy Nemeth: Highlighting our financials, our fourth quarter revenues were 781 million and net income was $31 million or $1 41 per diluted share for.

Andy Nemeth: For full year 2023 we generated revenue of $3 5 billion, leading to net income of $143 million or $6 50 per diluted share.

Andy Nemeth: As we noted in the press release. This morning. The quarter's results included approximately eight sets of one time nonrecurring charges related to severance and facility consolidations and significant torque tornado damage to two of our facilities in the Nashville, Tennessee area in December net of favorable fair value measurement adjustment.

Andy Nemeth: For the full year, we estimate these nonrecurring items tolerated approximately 21 per share.

Andy Nemeth: And finally, highlighting our increased focus on driving our business and business performance in alignment with our Better Together culture, we have implemented several exciting changes and enhancements to our organizational structure, reflecting the strength of our bench and elevating the responsibilities of several of our team members. Jeff Rodino has been named President of RV, in addition to his current responsibilities. Kip Ellis has been named President of Power Sports and Housing.

Andy Nemeth: And finally, highlighting our increased focus on driving our business and business performance in alignment with our better together culture, we have implemented several exciting changes and enhancements to our organizational structure, reflecting the strength of our bench and elevating the responsibilities of several of our team members Jeffrey.

Andy Nemeth: Jeopardy now has been named President of RV. In addition to his current responsibilities kept palace has been named President of power Sports and housing Rick Ranger has been named President of Marine Hugo Gonzales has been named Executive Vice President and Chief Operating Officer, and Charlie radar has been named Executive Vice President of sales for the organization.

Andy Nemeth: Rick Ranger has been named President of Marine. Hugo Gonzalez has been named Executive Vice President and Chief Operating Officer. And Charlie Rader has been named Executive Vice President of Sales for the organization. I'm extremely energized and excited about the incredible talent in our organization and congratulate our senior team on their new roles. I'll now turn the call over to Jeff, who will highlight the quarter and provide detail on our end market. Thanks, Andy. And good morning, everyone.

Andy Nemeth: I am extremely energized and excited about the incredible talent in our organization and congratulate our senior team on their new roles I will now turn the call over to Jeff who will highlight the quarter and provide detail into our end markets.

Jeff Daniel: Thanks, Andy and good morning, everyone.

Jeff Rodino: If there were two key themes that defined our markets in 2023, they were inflation and interest rates, which negatively impacted end consumers' desire to finance their purchases of RVs, boats, and houses, while also increasing floor plan lending rates and limiting dealers' willingness to hold excess inventory across our market. We believe the RV market bottomed in 2023, and our analysis suggests inventories are lean in the field. We're optimistic about the potential trajectory of the RV market with the peak selling season just around the corner in the spring. Our teams, along with the OEMs across the market, are poised and ready to meet demand with many exciting innovations coming to the market for model year 2025 introductions later this year. For 2024, generally, we believe our end markets are operating at below normalized levels, and there has been real growth over the past several years in consumers' affinity for the outdoor enthusiast space. Post-pandemic, an increasing number of consumers see the benefits of enjoying the outdoors with family and friends, including 25 million new camping households from 2020 to 2022, according to KOA, which would positively impact normalized demand for years to come.

Jeff Daniel: If there are two key themes that define our markets in 2023, they were inflation and interest rates, which negatively impacted and consumers' desire to finance their purchases of rvs boats and houses while also increasing increasing floor plan lending rates and limiting dealers' willingness to hold excess inventory across our markets.

Jeff Daniel: We believe the RV market bottomed in 2023.

Andy Nemeth: And our analysis suggest inventories are lean in the field.

Andy Nemeth: We are optimistic about potential trajectory of the RV market with the peak selling season, just around the corner in the spring.

Andy Nemeth: Our teams along with the Oems across the market are poised and ready to meet demand with many exciting innovations coming to the market for model year 2025 introductions later this year.

Andy Nemeth: For 2024 generally we believe our end markets are operating at below normalized levels and there has been real growth over the past several years and consumers' affinity for the outdoor enthusiast space.

Andy Nemeth: Post pandemic and increasing number of consumers see the benefits of a joined the outdoors with family and friends, including 25 million new camping households from 2020 to 2022, according to K away, which should positively impact normalized demand for years to come.

Jeff Rodino: Looking at the RV industry, RV OEMs have continued to show incredible operating discipline to keep inventories lean while preparing for future growth. Our strategy in the RV space has continued to be centered around our goal of providing best-in-class customer service and a growing portfolio to OEMs through our full solutions model, therefore helping them innovate and build quality units across the spectrum of features and price. Our fourth-quarter RV revenues decreased 14% to $353 million, representing 45% of consolidated sales.

Andy Nemeth: Looking at the RV industry RV Oems have continued to show incredible operating discipline to keep inventories lean while preparing for future growth.

Andy Nemeth: Our strategy in the RV space continue to be centered around our goal of providing best in class customer service and a growing portfolio to Oems through our full solutions model, therefore, helping them innovate and build quality units across the spectrum of feature and price.

Andy Nemeth: Our fourth quarter, RV revenues decreased 14% to $353 million, representing 45% consolidated sales are via wholesale unit shipments of approximately 75000 in the quarter decreased 3% as Oems continue to maintain tight control on their output as a strictly manage dealer inventories.

Jeff Rodino: Our wholesale unit shipments of approximately 75,000 in the quarter decreased 3% as OEMs continue to maintain tight control on their output as they strictly manage dealer inventories. RV retail registrations declined an estimated 10% in the quarter to approximately 62,600 units, implying a restock of about 12,000 units into dealer inventory during the period. From a seasonal standpoint, the fourth quarter is a typical restock period. For the full year, Industry D-Stock approximated 66,000 units, by our estimate.

Andy Nemeth: RV retail registrations declined an estimated 10% in the quarter to approximately 62600 units, implying a restock of about 12000 units to dealer inventory during the period.

Andy Nemeth: From a seasonal standpoint, the fourth quarter as a typical restock period for.

Andy Nemeth: For the full year industry Destock approximated 66000 units by our estimate.

Jeff Rodino: We estimate overall RV dealers' inventories are 15-18 weeks on hand, up from third quarter levels but well below historical pre-pandemic averages of 26-30 weeks. Our RV content per unit decreased 9% on a full year basis to $4,800 per unit due to our team having passed along pricing where appropriate and a higher ratio of entry-level units being produced. Throughout my career in the RV industry, I've witnessed a number of cycles, and from my perspective, consumer demand for smaller, more affordable units tends to lead the broader industry's recovery. On the marine side of our business, the industry continues to see softer demand as end consumers face higher monthly payments given the current rate environment. Unlike the RV market, where our end markets revenue tends to be highly correlated to the overall shipment mix, our marine revenue is slightly more concentrated towards higher dollar values, particularly the fiberglass and ski and wake segment, which began to see more pronounced softness from the production perspective in the back half of the year compared to the broader marine market.

Andy Nemeth: We estimate overall RV dealers inventories are 15 to 18 weeks on hand up from third quarter levels are well below historical pre pandemic averages 26 to 30 weeks.

Andy Nemeth: Our RV content per unit decreased 9% on a full year basis to $4800 per unit due to our team having passed along pricing where appropriate and a higher ratio of entry level units being produced.

Andy Nemeth: Throughout my career in the RV industry I've witnessed a number of cycles and from my perspective consumer demand for smaller more affordable units tends to lead the broader industry's recovery.

Andy Nemeth: On the marine side of our business. The industry continues to see softer demand as end consumer space higher monthly payments given the current rate environment.

Andy Nemeth: Unlike the RV market, where our end markets revenue tends to be highly correlated to the overall shipment mix. Our marine revenue was slightly more concentrated toward higher towards higher dollar, particularly the fiberglass and ski and wake segments.

Andy Nemeth: Which began began to see more pronounced softness from the production perspective in the back half of the year compared to the broader marine market.

Jeff Rodino: We expect to continue to feel the effects of the mix through the first half of 2024, but we also expect to weather this softness due to the diversified portfolio within the marine and RV space and help offset the impact. Despite short-term challenges, we believe the long-term durability of trends within the high-value, premium segment of the marine industry that we serve. Our marine revenues decreased 32% to $174 million and represented 22% of our fourth quarter consolidated sales.

Andy Nemeth: We expect to continue to feel the effects of the mix through the first half of 2024, but we also expect to weather this softness due to the diversified portfolio within the marine and RV space and help offset the impact.

Andy Nemeth: Despite short term challenges, we believe the long term durability of trends within the high value premium segment of the marine industry that we serve.

Andy Nemeth: Our marine revenues decreased 32% to $174 million and represented 22% of our fourth quarter consolidated sales the decrease.

Jeff Rodino: The decrease was driven by reduced wholesale shipments, particularly in the ski and wake sectors, which were down almost 40% in the quarter. We believe the delta between wholesale and retail can be explained by the OEM's and dealer's reluctance to carry excess inventory given high floor plan costs and limited visibility into consumer demand. Until a clear improvement in consumer sentiment emerges, we expect dealers to remain cautious on increasing their inventory weeks on hand, and they will get a better sense of the trajectory of the year during the upcoming boat shows. We estimate overall marine dealer inventories are 27 to 29 weeks on hand, slightly up from the third quarter, but below historical pre-pandemic averages of 36 to 40 weeks. Our estimated marine content per wholesale unit decreased 5% on a full year basis to $4,803 per unit, primarily due to our mixed, towards the premium end of the segment, particularly ski and wake and fiberglass being down greater than the industry aggregate.

Andy Nemeth: It was driven by reduced wholesale shipments, particularly in the ski and wake which was down.

Andy Nemeth: Almost almost 40% in the quarter.

Andy Nemeth: We estimate total industry wholesale unit shipments decreased 24%, while retail unit shipments declined an estimated 4% to 6%.

Andy Nemeth: We believe the delta between the wholesale and retail can be explained by the Oems and dealers reluctance to carry excess inventory given high floor plan cost and limited visibility into consumer demand.

Andy Nemeth: Until a clear improvement in consumer sentiment emerges, we expect dealers to remain cautious on increasing their inventory weeks on hand will get a better sense of the trajectory of the year during the upcoming boat shows.

Andy Nemeth: We estimate overall marine dealer inventories are 27 to 29 weeks on hand slightly up from the third quarter, but below historical pre pandemic averages of 36% to 40 weeks.

Andy Nemeth: Our estimated marine content per wholesale unit decreased 5% on a full year basis to $4803 per unit, primarily due to our mix.

Andy Nemeth: Towards the premium end of the segment, particularly ski and wake in fiberglass being down greater than the interest industry aggregate.

Jeff Rodino: In the housing market, our team has continued to perform well, given their ability to scale to customer demand. Our housing businesses are a reliable revenue platform, and we believe both manufactured housing and site-built housing have long-term growth potential, as we support OEMs and builders alike, offering numerous products to meet their evolving needs. We continue to expand our extensive offering with products like energy efficient water heaters, furnaces, and sealed HVAC duct systems for OEMs, seeking to exceed government sustainability guidelines on manufactured homes. Looking at residential housing, will multifamily experience softness in the second half of 2023, with some projects pushed out a quarter or two? Single-family housing saw more positive trends and was up in both the third and fourth quarters.

Andy Nemeth: And the housing market. Our team has continued to perform well given their ability to scale to customer demand. Our housing businesses are reliable revenue platform and we believe both manufactured housing and site built housing have a long term growth potential.

Andy Nemeth: As we support Oems and builders alike, offering numerous products to meet their evolving needs. We continue to expand our extensive offering with products like energy efficient water heaters furnaces and steel the HVAC duct systems for Oems seeking to exceed government sustainability guidelines on manufactured homes.

Andy Nemeth: Looking at residential housing while multifamily experienced softness in the second half of 2023 with some projects pushed out a quarter or two.

Andy Nemeth: Single family housing saw more positive trends and was up in both third and fourth quarters.

Jeff Rodino: Looking ahead to 2024, we see potential for the industry to continue to grow should economic pressures recede. However, revenues in our housing market, primarily tied to MH and single-family and multifamily residential housing, decreased 11% to $254 million, representing 33% of consolidated sales in the fourth quarter. Our revenues in single-family and multifamily markets tend to trail starts by six to nine months, given our product timing for installs on new units. MH wholesale unit shipments decreased 2%, and our full year content for MH units increased 2% to $6,372 per unit. Total residential housing starts for the fourth quarter increased 2%, with single-family starts up approximately 22%, and multifamily starts down approximately 27%.

Andy Nemeth: Looking ahead to 2024, we see potential for the industry to continue to grow should economic pressures receipt.

Andy Nemeth: Revenues in our housing market, primarily tied to MH and single family and multifamily residential housing decreased 11% to $254 million, representing 33% of consolidated sales in the fourth quarter.

Andy Nemeth: Our revenues in single family and multifamily markets tend to trail starts by six to nine months, given our product timing two installs on new units.

Andy Nemeth: MH wholesale unit shipments decreased 2% and our full year content per MH unit increased 2% to $6372 per unit.

Andy Nemeth: Total residential housing starts for the fourth fourth quarter increased 2% and single family starts up approximately 22% and multifamily starts down approximately 27%.

Jeff Rodino: Interest rates and inflation continue to impact housing across our sector, although we won't be reporting on Power Sports and market revenue until next quarter. I want to touch briefly on the industry as we head into 2024, especially given our recent acquisition of Sportec. Similar to our outdoor enthusiasts and markets, dealers appear to be facing inventory challenges due to softening demand and higher interest rates, on base level units in particular. That said, our growing power sports portfolio is skewed towards the premium utility segment, which, as noted by recent earnings reports from industry OEMs, appears to be less impacted currently. We see promising potential given its durability coupled with the increased demand for additional creature comforts like HVAC, which can be added once Sportec's cabin enclosures are installed.

Andy Nemeth: Interest rates and inflation continued to impact housing across our sectors.

Andy Nemeth: Although we won't be reporting on power sports end market revenue until next quarter.

Andy Nemeth: I wanted to touch briefly on the industry as we head into 2024, especially given our recent acquisition of Spartech.

Andy Nemeth: Similar to our outdoor enthusiast end markets dealers appear to be facing inventory challenges due to softening demand.

Andy Nemeth: And higher interest rates.

Andy Nemeth: On base level units in particular that said our growing power sports portfolio is skewed towards the premium utility segment, which as noted by recent earnings reports promote industry Oems appears to be less impacted currently.

Andy Nemeth: We see promising potential given its durability, coupled with the increased demand for additional creature comforts like HVAC, which can be added once <unk> cabinet enclosures are installed.

Jeff Rodino: We remain encouraged as we enter into 2024 and begin to report on our power sports progress. We have had a vested interest in the power sports industry for several years, kicked off by our acquisition of the Progressive Group in 2016. We bolstered our power sports presence with our acquisition of Rockford, Fosgate, and Wetsounds and remain excited about the long-term prospects for our power sports platform solidified by our acquisition of Sports. Before turning the call over to Matt, I wanted to highlight the evolution of our team's work on innovation and higher-engineered products. In 2020, we took a deliberate step to enhance the strength of our acquisition by placing additional focus on expanding the breadth of innovative products and solutions we provide across our market, prioritizing collaboration with our customers to solve their problems and participate more deeply in their design processes.

Andy Nemeth: We remain encouraged as we enter into 2024 and begin to report on our power sports progress.

Andy Nemeth: We have a vested interest in the power sports industry for several years kicked off by our acquisition of the Progressive group in 2016.

Andy Nemeth: We bolstered our power sports presence with our acquisition of Rockford phosphate and wet sounds and remain excited about the long term prospects for our power sports prep platform solidified by our acquisition of Spartech.

Speaker Change: Before turning the call over to Matt I wanted to highlight the evolution of our teams work on innovation and higher engineered product.

Speaker Change: In 2020, we took a deliberate step to enhance the strength of our acquisition by placing additional focus on expanding the breadth of innovative products and solutions, we provide across our markets prioritizing.

Prioritizing collaboration with our customers to solve their problems and participate more deeply in their design processes.

Jeff Rodino: A recent example of a data-driven, advanced product development strategy is the expansion of our aftermarket offerings by CDEC, a leader in marine non-skid flooring. Through customer-facing market research and testing, we identified a strategy to present our CDEC technology to the RV space and offer a superior alternative to traditional step-tread coverage. Our C-DEC treads are constructed from a durable, UV-resistant, closed-celled EVA foam that does not absorb water and is weather-resistant and shock- and sound-dampering, and are fully customizable with names and logos.

Speaker Change: A recent example of a data driven advanced product development strategy is the expansion of our aftermarket offerings by <unk> a leader in marine Nonskid flooring.

Jeff Rodino: Through customer facing market research and testing, we identified a strategy to present, our <unk> technology to the RV space and offer a superior alternative to traditional step tread covers.

Jeff Rodino: Our CLEC treads are constructed from a durable UV resistant closed sells Eva foam that does not absorb water and as weather resistant and shock and sound dampening and are fully customizable with names and logos.

Jeff Rodino: CDEC recently obtained license rights from the NCAA to offer personalized step treads and other related products customized with your favorite team's logo. In addition to the investments we are making in our advanced product evolution group, which we discussed on our last call, to truly lock arms with our OEM partners and drive solution-based innovation for the foreseeable future, we're going to significantly increase our focus on the overall customer experience in 2024 and beyond. We believe synergies and harmonies that we can develop with our customers in alignment with our customer-focused philosophy can truly drive positive, innovative experiences for our end users of our products and embed our brands as leaders in introducing and providing innovative solutions for our customers. An exciting initiative our marine businesses have been working on is expanding the proprietary technology solution that we discussed early in 2022. We have driven volatile organic compounds, or VOC, reduction, and we are in the process of expanding this solution to two of our most prominent businesses in the marine industry, with implementations expected to be completed in the first half of 2024.

Jeff Rodino: <unk> recently obtained license rights from the <unk> to offer personalized step treads and other related products customized with your favorite team's logo.

Speaker Change: In addition to the investments we are making in our advanced product evolution group, which we discussed on our last call to truly lock arms with our OEM partners and drive solution based innovation for the foreseeable future.

Speaker Change: Going to significantly increase our focus on the overall customer experience in 2024 and beyond.

Speaker Change: We believe synergies and harmonies that we can develop with our customers in alignment with our customer focused philosophy can truly drive positive innovative experience for our end users of our products and embed our brands as leaders in introducing and providing innovative solutions for our customers.

Jeff Rodino: An exciting initiative, our marine businesses had been working on is expanding the proprietary technology solution that we discussed early in 2022.

Speaker Change: We have driven volatile organic compounds or dose reduction and we are in the process of expanding the solution to two of our most prominent businesses in our marine in the marine industry with implementation is expected to be completed in the first half of 2024.

Jeff Rodino: This will allow us to share our value analysis value engineering with our OEM customers, further reducing VOC emissions and improving raw material utilization while increasing the quality of our process. Finally, as Andy mentioned, I'm excited about my new role in addition to my current responsibilities and the tremendous focus we are placing on driving our organization's strategic objectives and growth plans. Our team is phenomenal, a pleasure to work with, and totally aligned with our unyielding dedication to serve our customers, communities, and team members. I'll now turn the call over to Matt, who will provide additional comments on our financial performance. Thanks, Jeff, and good morning everyone. Our consolidated net sales for the fourth quarter decreased 18% to $781 million, driven by a decrease in wholesale shipments across our RV, Marine, and MHN markets. For the full year, net sales decreased 29% to $3.5 billion.

Speaker Change: This will allow us to share our value analysis value engineering with our OEM customers further reducing <unk> emissions and improving the raw material utilization, while increasing the quality of our processes.

Matt: Finally, as Andy mentioned I'm excited about my new role. In addition to my current responsibilities and a tremendous focus we are placing on driving our organizations strategic objectives and growth plan are.

Matt: Our team is phenomenal a pleasure to work with and totally aligned with our unyielding dedication to serve our customers communities and team members.

Speaker Change: Now I'll turn the call over to Matt who will provide additional comments on our financial performance.

Matt: Thanks, Jeff and good morning, everyone.

Matt: Our consolidated net sales for the fourth quarter decreased 18% to $781 million driven by a decrease in wholesale shipments across our RV marine and MH and markets.

Matt: For the full year net sales decreased 29% to $3 5 billion.

Matt Feiler: The decline in sales was driven by continued discipline among RVOEMs as they maintained low production levels, along with Marine OEMs aggressively cutting production in the second half of the year to ensure inventory balance in the field. We note that, on a full year basis, 2022 is the toughest comparison in the history of our company, representing records for both sales and earnings per share. Full year marine revenue decreased 11% to $924 million, while RV revenue decreased 42% to $1.5 billion.

Matt: The decline in sales was driven by continued discipline among RV Oems as they maintained low production levels.

Matt Feiler: Along with Marine Oems aggressively cutting production in the second half of the year to ensure inventory balance in the field.

Matt Feiler: We note that on a full year basis 2022 is the toughest comparison in the history of our company representing records for both sales and earnings per share.

Matt Feiler: Full year Marine revenue decreased 11% to $924 million, while RV revenue decreased 42% to $1 5 billion.

Matt Feiler: Within our housing business, which is comprised of our MH and industrial end markets, our revenue decreased 17% to $1 billion for the year. Gross margin was 22.9% in the fourth quarter and increased 180 basis points from the prior year as a result of prudent labor and material management, our diversified business model, and our continued investment in higher engineered, higher margin products. For the full year, gross margin increased by 90 basis points to 22.6%. Warehouse and delivery expenses declined 9% in the fourth quarter and 12% for the full year versus the respective periods last year.

Matt Feiler: Within our housing business, which is comprised of our MH and industrial end markets, our revenue decreased 17% to $1 billion for the year.

Speaker Change: Gross margin was 22, 9% in the fourth quarter and increased 180 basis points from the prior year as a result of prudent labor and material management or.

Matt Feiler: Our diversified business model and our continued investment in higher engineered higher margin products.

Matt Feiler: For the full year gross margin increased by 90 basis points to 22, 6%.

Matt Feiler: Warehouse and delivery expenses declined 9% in the fourth quarter and 12% for the full year versus the respective periods last year.

Matt Feiler: For the fourth quarter and full year, respectively, SG&A expenses declined 12% to $68 million and 9% to $299 million. As a percentage of sales, SG&A and warehouse and delivery expenses increased due to lower sales and the difference in the operating expense profile of our marine businesses due to the nature of their higher engineered products. Operating income for the fourth quarter declined 15% to $57 million and declined 48% to $260 million for the full year; the decrease is primarily attributable to the previously described effect.

Matt Feiler: For the fourth quarter, and full year, respectively, SG&A expenses declined 12% to $68 million and 9% to $299 million.

Matt Feiler: As a percentage of sales SG&A in warehouse and delivery expenses increased due to lower sales and the difference in the operating expense profile of our marine businesses due to the nature of their higher engineered products.

Matt Feiler: Operating income for the fourth quarter declined 15% to $57 million and declined 48% to $260 million for the full year.

Matt Feiler: Decrease is primarily attributable to the previously described factors.

Matt Feiler: We continue to manage our cost structure prudently while investing in innovation and growth opportunities. Operating margin was 7.3% in the fourth quarter, a 20 basis point improvement from the prior period. Full-year operating margin was 7.5%, down from our record level in 2022 but in line with our previously articulated outlook. Net income in the fourth quarter was $31 million, or $1.41 per diluted share, compared to $1.68 per diluted share last year. 2023 diluted EPS was $6.50, a decrease of 52% versus 2022. As Andy noted, after accounting for a favorable one-time fair value measurement adjustment, our fourth quarter results included approximately $0.08 per share of one-time non-recurring items related to severance, facility consolidation, and costs related to a tornado that hit two of our Tennessee facilities in December. For the full year, the impact of one-time non-recurring items totaled approximately 21 cents per share. Our overall effective tax rate was 26.6% for the fourth quarter and 25.3% for the full year.

Matt Feiler: We continue to manage our cost structure prudently, while investing in innovation and growth opportunities.

Matt Feiler: Operating margin was seven 3% in the fourth quarter, a 20 basis point improvement from the prior period.

Matt Feiler: Full year operating margin was seven 5%.

Matt Feiler: Down from a record level in 2022, but in line with our previously articulated outlook.

Matt Feiler: Net income in the fourth quarter was $31 million or $1 41 per diluted share compared to $1 68 per diluted share last year.

Matt Feiler: 2023 diluted EPS was $6 50 <unk>.

Matt Feiler: A decrease of 52% versus 2022.

Matt Feiler: As Andy noted after accounting for a favorable one time fair value measurement adjustment our fourth quarter results included approximately <unk> <unk> per share of one time nonrecurring items related to severance facility consolidation and costs related to a tornado, which at two of our Tennessee facilities in December.

Matt Feiler: <unk>.

Matt Feiler: For the full year the impact of onetime nonrecurring items totaled approximately 21 per share.

Matt Feiler: Our overall effective tax rate was 26, 6% for the fourth quarter and 25, 3% for the full year, we expect our overall effective tax rate for 2024 to be approximately 25% to 26%.

Matt Feiler: We expect our overall effective tax rate for 2024 to be approximately 25 to 26%. Operating cash flow was $115 million in the fourth quarter. Despite the decline in full-year net income, operating cash flow for fiscal 2023 was virtually comparable to fiscal 2022, finishing at $409 million. And, as Andy noted, our prudent financial management and stellar team helped generate free cash flow of $350 million despite the various headwinds we faced in the year. We remain committed to our disciplined capital allocation strategy. At the end of the fourth quarter, after paying down $87 million on our debt, including $85 million on our revolving credit facility, we had approximately $780 million of total net liquidity, including $768 million of unused credit capacity. Total net leverage was slightly under 2.4 times. Purchases of property, plant, and equipment were $12 million for the quarter and $59 million for the year.

Matt Feiler: Operating cash flow was $115 million in the fourth quarter. Despite the decline in full year net income operating cash flow for fiscal 2023 was virtually comparable to fiscal 2022, finishing at $409 million.

Matt Feiler: As Andy noted, our prudent financial management and stellar team helped to generate free cash flow of $350 million. Despite the various headwinds we faced in the year.

Matt Feiler: We remain committed to our disciplined capital allocation strategy at the end of the fourth quarter after paying down $87 million on our debt, including $85 million on our revolving credit facility, we had approximately $780 million of total net liquidity, including $768 million of unused credit capacity.

Speaker Change: <unk> <unk>.

Matt Feiler: Total net leverage was slightly under two four times.

Matt Feiler: Purchases of property plant and equipment were $12 million for the quarter and $59 million for the year.

Matt Feiler: We continue to prioritize growth opportunities while investing in automation and operational efficiencies, which place us in an advantageous position as we navigate 2024 and beyond. For 2024, we will continue to reinvest in the business and drive long-term value for shareholders. We currently estimate our 2024 capital expenditures to be between $70 and $80 million.

Matt Feiler: We continue to prioritize growth opportunities, while investing in automation and operational efficiencies, which place us in an advantageous position as we navigate 2024 and beyond.

Matt Feiler: For 2024, we will continue to reinvest in the business and drive long term value for shareholders.

Matt Feiler: We currently estimate 2020 for capital expenditures to be between 70 and $80 million.

Matt Feiler: Including our second quarter acquisition of Patrick Marine Transport, we invested 26 million dollars in acquisitions in 2023. As discussed on our recent Sportec acquisition call, we continue to be active in M&A and remain focused on seeking attractive, entrepreneurial, culturally aligned acquisition targets. During the quarter, we repurchased approximately $7 million, or 90,800 shares, and returned $12 million to shareholders in the form of dividends.

Matt Feiler: Including our second quarter acquisition of Patrick Marine Transport, we invested $26 million in.

Matt Feiler: <unk> in 2023.

Matt Feiler: As discussed on our recent support Tech acquisition call. We continue to be active in M&A and remain focused on seeking attractive entrepreneurial culturally aligned acquisition targets.

Matt Feiler: During the quarter, we repurchased approximately $7 million or 90800 shares and returned $12 million to shareholders in the form of dividends for the full year, we repurchased $19 million in stock and paid dividends of $42 million, resulting in $61 million in total cash returned to our shareholders.

Matt Feiler: For the full year, we repurchased $19 million in stock and paid dividends of $42 million, resulting in $61 million in total cash returned to our shareholders. As Andy mentioned, our Board of Directors voted in November to increase our quarterly dividend to $0.55 per share, reflecting continued confidence in our ability to generate cash flow and continue to profitably grow our business. We still continue to execute our balanced capital allocation strategy and remain opportunistic in our share repurchases, while maintaining strong financials and reinvesting in the company. In 2023, we performed well despite a tough macroeconomic and industry backdrop. We remain diligent in managing our company's financial health by prioritizing a strong balance sheet and generating solid cash flow, empowering us to deploy capital when opportunities arise.

Matt Feiler: <unk>.

Matt Feiler: As Andy mentioned, our board of directors voted in November to increase our quarterly dividend to <unk> 55 per share reflecting continued confidence in our ability to generate cash flow and continue to profitably grow our business.

Matt Feiler: We still continue to execute our balanced capital allocation strategy and remain opportunistic in our share repurchases, while maintaining strong financials and reinvesting in the company.

Matt Feiler: In 2023, we performed well despite a tough macroeconomic and industry backdrop, we remain diligent in managing our company's financial health by prioritizing a strong balance sheet and generating solid cash flow empowering us to deploy capital when opportunities arise.

Matt Feiler: We will continue our pursuit of operational excellence, striving to serve our valued customers at the highest level. For our RV market, we estimate 2024 wholesale unit shipments to range between 330,000 and 350,000 units. We expect dealers to remain cautious on ordering until better visibility into demand emerges or interest rates decline or a combination of the two. We currently expect full-year retail shipments to be down approximately 5 to 10 percent, implying approximately 350,000 units.

Matt Feiler: We will continue our pursuit of operational excellence striving to serve our valued customers at the highest level.

Matt Feiler: In our RV market, we estimate 2024 wholesale unit shipments to range between 330, and 350000 units, we expect dealers to remain cautious on ordering until better visibility into demand emerges or interest rates decline or a combination of the two we currently expect.

Matt Feiler: Full year retail shipments to be down approximately 5% to 10%, implying approximately 350000 units.

Matt Feiler: In our marine market, we estimate 2024 retail to be flat to down mid-single digits and wholesale units for our overall product mix to be down 5 to 10 percent, representing a one-for-one model. While we believe marine dealer inventories are below historical norms, we expect marine dealers to remain cautious in the face of inflation and high interest rates and will likely attempt to carry less inventory than they might historically. On the housing side of the business, we estimate MH Wholesale shipments to be flat for 2024, with retail sales absorbing available wholesale production on a real-time basis. In our residential housing end market, we estimate 2024 new housing starts to be flat versus 2025.

Matt Feiler: In our marine market, we estimate 2020 for retail to be flat to down mid single digits and wholesale units for our overall product mix to be down 5% to 10% representing a one for one model currently.

Matt Feiler: While we believe marine dealer inventories are below historical norms, we expect dealers to remain cautious in the face of inflation and high interest rates and will likely attempt to carry less inventory than they might historically.

Matt Feiler: The housing side of the business, we estimate MH wholesale shipments to be flat for 2024 with retail sales absorbing available wholesale production on a real time basis.

Matt Feiler: In our residential housing end market, we estimate 2024, new housing starts to be flat versus 2023.

Matt Feiler: Given the current and market outlook we've outlined, we estimate our 2024 operating margin will improve by 30 to 50 basis points versus 2023. We currently expect operating cash flow of 390 to 400 million dollars, resulting in free cash flow of approximately 310 million or more and implying a very attractive free cash flow yield. Should our end market dynamics deviate materially from our forecast, we will react accordingly, as we did last year, and this could cause our results to differ from our current expectations. On January 24th, we announced the closing of our $315 million acquisition of Sportec, which was funded through cash on hand and our existing credit facility.

Matt Feiler: Given the current end market outlook, we've outlined we estimate our 2024 operating margin will improve by 30 to 50 basis points versus 2023.

Matt Feiler: We currently expect operating cash flow of $390 million to $400 million.

Matt Feiler: Resulting in free cash flow of approximately $310 million or more and implying a very attractive free cash flow yield.

Matt Feiler: Should our end market dynamics deviate materially from our forecast we will react accordingly, as we did last year and this could cause our results to differ from our current expectations.

Matt Feiler: On January 24th we announced the closing of our $315 million acquisition of support Tech, which was funded through cash on hand, and our existing credit facility at.

Matt Feiler: At closing, our total net leverage ratio was approximately 2.9 times, and we expect to reduce this ratio down to our target range of 2.25 to 2.5 times within the next two to three quarters. As noted in the press release for the closing, we expect to incur acquisition-related, one-time pre-tax costs of approximately seven million dollars, which we plan to exclude from our adjusted EPS when we report our first quarter 2024 results. That concludes my remarks. We are now ready for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press star 2 if you'd like to remove your question from the queue.

Matt Feiler: At closing our total net leverage ratio was approximately two nine times and we expect to reduce this ratio down to our target range of $2 two 5% to two five times within the next two to three quarters.

Matt Feiler: As noted in our press release for the closing we expect to incur acquisition related.

Matt Feiler: One time pre tax cost of approximately $7 million, which we plan to exclude from our adjusted EPS. When we report our first quarter 2024 results.

Matt Feiler: That completes my remarks, we are now ready for questions.

Matt Feiler: Okay.

Speaker Change: Thank you we will now be conducting a question and answer session. Thank.

Matt Feiler: If you would like to ask a question. Please press star one on your telephone keypad.

Matt Feiler: A confirmation tone will indicate your line is in the question queue.

Matt Feiler: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Mike Schwartz with True Security. Please proceed with your question. Hey, guys. Good morning.

Michael Arlington Swartz: One moment, please while we poll for questions.

Operator: Okay.

Michael Arlington Swartz: Our first question is from Mike Swartz with current Securities. Please proceed with your question.

Michael Arlington Swartz: Hey, guys good morning.

Michael Arlington Swartz: Maybe just to start off with the EBIT margin target that you outlined for 24. Maybe just give us a sense of some of the puts and takes there. I'm assuming mix will be slightly negative, but I assume that also includes the Sportec acquisition. I guess that should be additive.

Michael Arlington Swartz: Maybe just to start off with the EBIT margin target that you outlined four for 24, maybe just give us a sense of some of the puts and takes there I'm assuming mix will be slightly negative, but I assume that.

Michael Arlington Swartz: That includes that also includes the sport Tech acquisition, I guess that should be additive but.

Michael Arlington Swartz: But what are you anticipating for, you know, amortization as well from that business? Maybe give us just the moving pieces there. Sure, Mike. This is Andy.

Michael Arlington Swartz: What are you anticipating for amortization as well from that business, maybe give us just the moving pieces there.

Michael Arlington Swartz: Sure. Mike This is Andy so when you think about the puts and takes and where we sit looking as we're looking into 2024 right. Now I think we feel good about first of all where we put the company as it relates to the structure. We've leaned the operations out spent the fourth quarter kind of really making sure that we were lined up for the current run rates as they exist in our.

Andy Nemeth: So, when you think about the puts and takes and where we sit looking into 2024 right now, I think we feel good about, first of all, where we've put the company as it relates to the structure. We've leanened the operations out, and spent the fourth quarter kind of really making sure that we were lined up for the current run rates as they exist in our markets today. And as we're looking forward, you know, we've made a little bit of movement on our forecast as it relates to RV shipments with some potential marine improvement from where we were before and the mix that we're seeing.

Andy Nemeth: Markets today, and as we're looking forward, we've made a little bit of movement on our forecast as it relates to RV shipments.

Andy Nemeth: Some some potential marine improvement that from where we were at before and the mix that we're seeing and saw all the puts and takes kind of net to what I would say opportunity for us to be able to leverage, especially as we look out further into the back half of next year and so we're positioned to operate at the current run rates.

Andy Nemeth: And so, all the puts and takes kind of net a kind of opportunity for us to be able to leverage, especially as we look out further into the back half of next year. And so, we're positioned to operate at the current run rates with our margin profile and expect to pick up, as we noted, 30 to 50 basis points. I think when we look out and see the opportunities for some up-contenting, when we see the opportunity for some increased shipments due to the potential retail environment improving in the back half of the year, we feel good about the ability to leverage this model and drive incremental margins. So, there's a lot of puts and takes, you know, when you think about just sitting where we are today and looking out, but they net to what I would say is us being very well positioned to operate at current run rates.

Andy Nemeth: With our margin profile and expect to pick up as we noted 30 to 50 basis points I think when we look out and see the opportunities for some up content thing when we see the opportunity for some increased shipments due to the potential retail environment improving in the back half of the year, we feel good about the ability to leverage this model and drive incremental margins.

Andy Nemeth: So there's a lot of puts and takes when you think about just sitting where we're at today looking out but they net to what I would say is us being very well positioned to operate at current run rates. We can certainly make adjustments that we need to do on the downside, but we feel like things have bottomed out and we will be able to leverage that on a go forward basis is it.

Andy Nemeth: We can certainly make adjustments if we need to on the downside, but we feel like things have bottomed out, and we will be able to leverage that on a go-forward basis as conditions improve. And just to clarify, Andy, that that outlook for 30 to 50 basis points of growth does include Sportec. And I guess, what is the assumption for amortization since you don't back that out when it comes to EPS? Yeah, Mike. This is Matt Filer.

Matt Filer: Conditions improve.

Matt Filer: And just clarification, Andy that that outlook for 30% to 50 basis points in growth does include sport Tac.

Matt Filer: And I guess what is the what is the assumption for amortization since you don't.

Matt Filer: Back that out when it comes to Etfs.

Matt Filer: Yes, Mike this is Matt.

Matt Feiler: We're looking at about $15 million for amortization on the Sportec acquisition annually. Okay, okay, great. And then just a second question, as it pertains to the quarter, the 18% decline in revenue, could you, as we typically do, could you give us the kind of moving pieces there between M&A and prices? Sure, Mike.

Matt Filer: We're looking at about $15 million for amortization on the <unk> acquisition.

Matt Feiler: Annually.

Speaker Change: Okay, Okay great.

Speaker Change: And then just the second question as it pertains to the quarter the 18% decline in revenue could you.

Matt Feiler: We typically do could you give us some kind of the moving pieces there between M&A and pricing.

Speaker Change: Sure Mike.

Matt Feiler: So the 18% revenue decrease for the quarter, if you look at that, it's about 11% below industry. And then from an organic standpoint, we're down 8%, and acquisitions had a positive 1% impact. And when we break out that organic impact, pricing is down 9%, and we have a share increase of 1%. Perfect.

Speaker Change: So the 18% revenue decrease for the quarter.

Matt Feiler: If you look at that it's about 11% down on industry.

Matt Feiler: And then from an organic standpoint were down 8%.

Matt Feiler: And acquisitions had a positive 1% impact and.

Matt Feiler: And when we break out that organic impact pricing is down 9% and we have a share increase of 1%.

Michael Arlington Swartz: Thank you. Our next question is from Craig Kennison with Baird. Please proceed with your question.

Speaker Change: Perfect. Thank you.

Michael Arlington Swartz: Our next question is from Craig Kennison with Baird. Please proceed with your question.

Craig R. Kennison: Hey, good morning, and thank you for taking my question. It's been a very helpful call for us, but I wanted to pursue this power sport channel if we could. I mean, if there's a channel that feels most at risk.

Craig R. Kennison: Hey, good morning, and thank you for taking my question into doing a very helpful call of course, but.

Craig R. Kennison: I wanted to pursue this power sport.

Craig R. Kennison: Panel, if we could I mean, if there is a channel that deals are most at risk.

Craig R. Kennison: It's power sports in terms of, you know, how much inventory is out there and maybe, you know, trends in some of these end markets. I know you have some confidence based on just your mix of higher-end consumers where the affluent Tim was doing better, I guess, but. You know, how much have you stress-tested?

Craig R. Kennison: Power sports in terms of how much inventory is out there and maybe trends in some of these end markets. I know you have some confidence based on just your mix of higher end consumers, where the affluent consumer is doing better I guess, but.

Craig R. Kennison: How much have you stress tested.

Craig R. Kennison: your acquisition for just potential weakness and potential destocking. We frankly have seen destocking risk hit a lot of different acquisitions and categories and wanna make sure we're stress tested on that one. Sure, Craig. This is Andy.

Craig R. Kennison: Your acquisition for just potential weakness in potential Destocking, we frankly have seen.

Andy Nemeth: Destocking risk hit a lot of different acquisitions and categories and want to make sure we're stress testing it on that one.

Craig R. Kennison: Sure Craig This is Andy I'll kick it off and then I'll turn it over to Kipp as well for some additional color, but as we looked at certainly the sport tack modeling and what got us confident in the ability to be resilient, especially during a time like this was certainly the up content on sport tack the utility concentration that spartech has in the <unk>.

Andy Nemeth: I'll kick it off, and then I'll turn it over to Kip as well for some additional color. But what got us confident in the ability to be resilient, especially during a time like this, was certainly the up content on Sportec, the utility concentration that Sportec has, and the premiumization of the units that we see. And so we've definitely seen, in all of our markets, the price-sensitive consumer has been impacted. And that's where, again, across markets, we're seeing more, let's just call it volatility or softness. And so on the upside, though, with the utility vehicle segment, and we looked at the backlog that Sportec has in their portfolio today, especially with new product introductions and some of the upfitting that was supposed to take place in 22 and 23 that didn't get through the system. We got ourselves confident with some of the volatility that could be there as it relates to, you know, some potential softness and feel pretty good about the model that we've So, you know, again, we stress tested that model.

Kip: Amortization of the units that we see and so we've definitely seen you know in all of our markets. The price sensitive consumer has been impacted and that's where again across markets. We're seeing you know more let's just call it volatility or softness and so on the upside, though with the utility vehicle segment and we looked at the backlog.

Andy Nemeth: That spartech has in their portfolio today, especially with new product introductions and some of the up fitting that was supposed to take place in 'twenty, two and 'twenty three and it didn't get through the system. We've got ourselves confident with some of the volatility that could be there as it relates to some potential softness and feel pretty good about them.

Andy Nemeth: Model that we've put together so again, we stress tested that model. We liked we like the business. The team is extremely talented well connected with the customer base, but we got comfortable with their mix and their backlog and opportunity with the outfit models and so Kip if you have anything else to add certainly feel free to chime in.

Andy Nemeth: We liked the business. The team is extremely talented, well connected with the customer base, but we got comfortable with their mix and their backlog and opportunity with the upfit models. And so, Kip, if you have anything else to add, you know, certainly feel free to chime in. Yeah, thanks, Andy. And good morning, Craig.

Kip: Yes, Thanks, Andy and good morning, Craig.

Kip: I think it's.

Kip Ellis: I think it's been one is that we've got to know the Sport Tech team better and appreciate how they look at the market. You know, it's very much an innovative, innovation-driven company, and the take rate on the price you're bringing to market, the cabin closure concept is something that we're seeing expand beyond some of the players that get covered in the market, the bigger players, to a broader segment or broader spectrum of the manufacturers. So, we see some growth potential there with their new products. But to reiterate what Andy said, they do a nice job of taking a look at the data they've got available to them to get a sense of what they see from a mix of the OEs and how these premium pit stops play into that. And we do see resilience in the backlogs.

Kip: It's been one did we got to know the spartech team better and appreciate how they look at the market. It's very much an innovative innovation driven company and the take rate on.

Kip Ellis: The products are bringing to market.

Kip Ellis: Evan closure concept is something that we're seeing and expand beyond.

Kip Ellis: Some of the players that are covered in the market the bigger players too.

Kip Ellis: Broader a broader segment of a broader spectrum of the manufacturers. So we see some growth potential there with their new products, but to reiterate what Andy said.

Kip Ellis: They do a nice job of taking a look at the data that they've got available to them to get a sense of what they see from a mix from the Oes and how these premium pet ups play into that and we do see resilience in the backlogs.

Kip Ellis: And so we're very much aware of what's been reported from an inventory standpoint for side by side, and the recreational sports side of the business, the baseline pieces in the market, and the impact of finance rates and what have you on consumer attitudes toward that. There's certainly been some incentives that have been extended by the OEs to assist with that, but continued strength and recognition for the runway that this sport tech sees from an order backlog standpoint. So, I feel like we've got a grasp on that. Is there potential for a cycle, you know, down the road?

Kip Ellis: And so we're very much aware of.

Kip Ellis: What's been reported from an inventory standpoint for side by sides in the recreational sports side of the business the baseline pieces in the market.

Kip Ellis: Pact of finance rates and what have you on consumer attitudes towards that Theres.

Kip Ellis: Good some incentives have been extended by the Oes to assist with that but continued strength in recognition for the runway.

Kip Ellis: As for taxes from order backlog standpoint, so I can get a good grasp of that is there potential for a cycle.

Kip Ellis: You know, certainly possible, but the trajectory they've got from an innovation standpoint and the improving share and take rates that they see platform to platform is something that gives us further encouragement. Yeah, thank you for that. And just as a follow-up, is this a category where you might be able to convey your share gains through a content per unit metric, or is the unit side of that equation just too hard to pinpoint? We're working on just that, something we take pride in across our. Our leisure lifestyle will determine how well outdoor enthusiasts markets now, RV and marine in particular, obviously. There's less visibility of wholesale data within this particular space, and because it's such a fast-growing and evolving platform space, the differentiation at the time of the registration for retail is sometimes difficult to pinpoint, but Sportec does have the ability to see line rates and see mix, and certain historical bases look at it as well.

Kip Ellis: On the road.

Kip Ellis: Certainly possible, but the trajectory that you got from an innovation standpoint, and the improving share in take rate to take the platform. The platform something that gives us further further encouragement.

Speaker Change: Yes, thank you for that and just as a follow up.

Kip Ellis: Is this a category where you might be able to convey your share gains through our content per unit metric or is that the unit side of that equation, just too hard to pinpoint.

Kip Ellis: We're working on just that it's something we take pride in across our.

Kip Ellis: Our leisure lifestyle determined leisure lifestyle perform outdoor enthusiast markets now RV and marine in particular.

Kip Ellis: <unk>.

Kip Ellis: Theres less visibility of wholesale data within this particular space and because it's such a fast growing and evolving platform space differentiation at the time of registration for retail, sometimes it's difficult to pinpoint but.

Kip Ellis: <unk> does have the ability to see line rates and fleet mix and certainly on a historical basis look at it as well so as we prepare to.

Kip Ellis: So, as we prepare to report out on a quarterly basis what's going on in our power sports segment, we will be assembling a look at that and continuing to refine it to get a better understanding. But the data is a little more difficult, without question, to come by, but we feel like because they serve essentially the full spectrum of players in the space, they've got good visibility of what's going on from platform to platform. Great Hey, thank you.

Kip Ellis: To report out.

Kip Ellis: On a quarterly basis, what's going on in our power Sports segment, we will be we will be.

Kip Ellis: Assembling a look at that and continue to refine and to get a better appreciation, but the data is a little more difficult without question to come across but we feel like because they serve essentially the full spectrum of players in the space. We've got good visibility what's going on from platform a platform.

Kip Ellis: Great Hey, thank you.

Kip Ellis: Okay.

Craig R. Kennison: Our next question is from Daniel Moore with CJS Securities. Please proceed with your question. Thank you. Good morning.

Kip Ellis: Our next question is from Daniel Moore with CJS Securities. Please proceed with your question.

Daniel Moore: Thanks for taking the questions. Maybe just talk, start off with kind of the near-term outlook. You mentioned H1 could look a lot like, you know, H1 of 24 looks a lot like H2 of 23.

Daniel Moore: Thank you good morning, thanks for taking the questions.

Daniel Moore: Maybe just talk to start off with kind of the near term outlook. You mentioned each one could look a lot like <unk> hundred 24 look a lot like age to 23.

Daniel Moore: If we take Sportec out for the moment, how would you describe your expectations for Q1 in terms of new revenue, margins, and earnings relative to the Q4 results you just reported? Sure, Dan. This is Vandy.

Daniel Moore: If we take sport tech out for the moment.

Daniel Moore: How would you describe your expectations for Q1 in terms of revenue margins earnings relative to the Q4 results you just reported.

Daniel Moore: Sure Dan This is Andy I think as we look at.

Andy Nemeth: I think as we look at where we're running today, continuing to run rates consistent with what we saw in Q4 and Q3, we're really kind of projecting that through the first quarter. We do expect incremental margin improvement quarter over quarter, first quarter to first quarter, second quarter to second quarter. And so we're kind of looking at our model today.

Vandy: Where we're running today.

Andy Nemeth: Continuing run rates consistent with what we saw in Q4, and Q3 were really kind of projecting that through the first quarter. We do expect incremental margin improvement quarter over quarter first quarter to first quarter second quarter to second quarter.

Andy Nemeth: And so we're kind of looking at our model today like I said, we're positioned very well to operate at these levels. We've leaned the organization to be streamlined to operate at these levels with opportunity for incremental uptick if we do see that take place in the wholesale shipments, but we're being cautious in our modeling right now as we look at the business, but we've sized it appropriately.

Andy Nemeth: Like I said, we're positioned very well to operate at these levels. We've streamlined the organization to operate at these levels with opportunity for an incremental uptick if we do see that take place in wholesale shipments. But we're being cautious in our modeling right now as we look at the business, but we've sized it appropriately. And again, like I said, we'll be able to flex that up very, very quickly.

Andy Nemeth: And again like I said, we will be able to flex that up very very quickly and we're positioned well from a liquidity perspective.

Daniel Moore: And we're positioned well from a liquidity perspective. We're ready to take care of our customers in the event that we do see some volatility. Very helpful. And in terms of Sportec, excluding, appreciate the color around the charges, excluding those kind of one-time things, do you expect it to be accretive right away in Q1? And how do we think about the kind of impact on the full year? Absolutely, we expect it to be accretive, none of the one-time charges, and again, we feel like where we are today and what we're seeing in the order book, we fully expect to be on plan at this point. I got it.

Daniel Moore: We're ready to take care of our customers in the event that they do so we do see some flex up.

Daniel Moore: Very helpful in terms of spartech, excluding I appreciate the color around the charges, excluding those kind of one time. So you expect it to be accretive.

Daniel Moore: All right away in Q1, and how do we think about the kind of impacted the full year.

Daniel Moore: Absolutely, we expect it to be accretive net of the onetime charges.

Daniel Moore: And again, we feel like where we're at today and what we're seeing in the order book, we fully expect to be on plan at this point.

Daniel Moore: Um, maybe just kind of longer term, you know, when you put ads for tech in layered in and along with the automation and cost reduction initiatives you've made. When you think about, you know, gross margin and operating margin over the next three to five years, once your kind of primary, core, end markets have recovered to more normal demand and shipment levels, where do you see those, where do you see kind of the opportunity or, you know, where we are with those gross and operating margins? Level off over a long period of time. Thank you. Sure, Dan.

Daniel Moore: Got it maybe just kind of longer term.

Daniel Moore: When you put ads for tech Les.

Daniel Moore: Layered in and along with the automation and cost reduction initiatives you've made.

Daniel Moore: When you think about gross margin operating margin over the next three to five years once you're kind of primary core end markets have recovered to more of a normal demand and shipment levels, where do you see those where do you see the kind of the opportunity are.

Daniel Moore: Where we are.

Daniel Moore: <unk>.

Daniel Moore: Gross and operating margins level off over a long term perspective I appreciate it.

Dan: Sure Dan.

Andy Nemeth: I think that's one of the things that we're most excited about the position of the organization today, the infrastructure that's been put in place, the caliber of the team, and then the automation and operational efficiencies that we've been able to deliver and drive and invest in over the last couple of years have really positioned us to be able to flex up very quickly and leverage the infrastructure that we've got in place without adding a lot of And so, we see incremental opportunity both at the gross and at the margin level, especially with the run rates that we're running at today, which we do not believe are normalized run rates on a longer-term go-forward basis. So, I think that one of the things that gets us most excited is the opportunity to leverage this and the earnings power of the organization based on the investments that we have made in this business over the last couple of years. And we're going to continue to invest in automation, as we noted with our CapEx plans for 2024.

Dan: I think that's one of the things that we're most excited about is the position of the organization today the infrastructure that's been put in place.

Andy Nemeth: The caliber of the team and then the automation and operational efficiencies that we've been able to to deliver and drive and invest in over the last couple of years have really positioned us to be able to flex.

Andy Nemeth: Up very quickly and leverage the infrastructure that we've got in place without adding a lot of incremental overhead and.

Andy Nemeth: And cost to support that and so we see incremental opportunity both at the gross and op margin or op margin level, especially with the run rates that we're running at today, which we do not believe our normalized run rates on a on a longer term Gulf forward basis. So I think thats one of the things that gets US. Most excited is the opportunity to leverage this and the earnings power of the organization.

Andy Nemeth: Just on the.

Andy Nemeth: The investments that we made in this business over the last couple of years and we're going to continue to invest in automation as we as we noted with our Capex plans for 2024, we're going to stay focused on continuing to drive those efficiencies and be able to improve our throughput our quality.

Andy Nemeth: We're going to stay focused on continuing to drive those efficiencies and be able to improve our throughput, our quality, and be able to continue to take care of our customers as they flex up. And so, again, I think we feel good about incremental margin growth at both the gross and margin levels for the foreseeable future. Appreciate it. Don't take any other follow-ups offline.

Andy Nemeth: And be able to continue to take care of our customers as they flex up and so again I think we feel good about incremental margin growth at both the gross and op margin level for the foreseeable future.

Speaker Change: I appreciate it I'll take any others follow ups offline. Thank you.

Tristan M. Thomas: Thank you. Our next question is from Tristan Thomas-Martin with BMO Capital Markets. Please proceed with your question. Good morning.

Tristan M. Thomas: Our next question is from Tristan Thomas Martin with BMO Capital markets. Please proceed with your question.

Tristan M. Thomas: Two questions. So OEMs took a lot of price cuts on model year 24 relative to 23s. Do you think they need to take a higher price on 25s, or do you think they're in a decent place there? And then, second question, was there any delta in between industry shipments versus industry production, i.e. Where are there a lot of open areas that were shipped out before maybe they were built in earlier quarters? Thank you. Yeah, Tristan. This is Jeff.

Tristan M. Thomas: Good morning.

Tristan M. Thomas: Good morning questions.

Tristan M. Thomas: <unk> took a lot of price some model year 'twenty four relative to 'twenty do you think they need to take more price on 25 or do you think.

Tristan M. Thomas: Decent place there and then the second question was there any delta in between industry shipments versus industry production, where there are lot of opens that were shipped up <unk>, maybe that were built in earlier quarters. Thank you.

Tristan M. Thomas: Yes, Tristan this is Jeff just to answer your first question.

Jeff Rodino: Just answer your first question. I don't think that there were a lot of open positions out there. I mean, they really started to manage their inventory way earlier in the year. Tight to what was being ordered was really what was being shipped or what was being run with what was being shipped. We see that a lot in our

Jeff Rodino: I don't think that there is a there was a lot of openings out there I mean, they really started to manage their inventory way earlier in the year.

Jeff Rodino: Tight to what was.

Jeff Rodino: What was being ordered was really what was being shipped or what was being run was what was being shipped we see that a lot in our transportation.

Jeff Rodino: Transportation business, so we got a good eye on that. So I think that there's not a lot of extra there. Definitely not a lot of open spots being run by the.

Jeff Rodino: <unk> business. So we got a good eye on that so I think that.

Jeff Rodino: Theres not a lot of extra there.

Jeff Rodino: Not a lot of openings being run by the Oems have been very disciplined in that manner as far as pricing.

Jeff Rodino: We've been very disciplined in that manner. As far as pricing is concerned, it's a little interesting out there because. I think you've heard a little bit about decontent or smaller units and different mixes out there.

Jeff Rodino: It's a little interesting out there because I think <unk> heard a little bit about D content ing or smaller units and different mix out there are prices definitely have come down from the 23% to 20 fours.

Jeff Rodino: Uh, prices definitely have come down from the 23 to the 24. I believe there was some decontent in a few units, but ultimately, I think the consumer is looking for the contented unit. So I think the prices will remain pretty stable or even maybe go up a little bit with some additional content in 2025, where I believe that brands are trying to differentiate themselves in the market. Uh, with a higher-end product and something that's more valuable than the retail customer. We got it.

Jeff Rodino: Believe there was some <unk> and a few units but ultimately.

Jeff Rodino: I think the consumer is looking for the content add unit so.

Jeff Rodino: The prices will remain pretty stable or even maybe go up a little bit with some additional content and that 2025, where we're I believe that brands are trying to differentiate themselves in the market.

Jeff Rodino: With a higher end product and something Thats more valley.

Jeff Rodino: Valuable that retail customer.

Tristan M. Thomas: Thank you. Our next question is from Noah Zaskin with KeyBank Capital Markets. Please proceed with your question.

Speaker Change: Got it thank you.

Noah Zaskin: Our next question is from Noah <unk> with Keybanc capital markets. Please proceed with your question.

Noah Zaskin: Hi, thanks for taking my question. I'm just hoping you could maybe provide some color in terms of how you're thinking about CPU opportunity across the different end markets and any puts and takes we should keep in mind. Thanks. Yeah, this is Andy.

Noah Zaskin: Hi, Thanks for taking my question, just hoping you could maybe provide any color in terms of how youre thinking about.

Noah Zaskin: CPU opportunity across the different end markets and any puts and takes we should keep in mind. Thanks.

Noah Zaskin: Yes. This is Andy I think again, when we said we were positioned today, we feel like we've bottomed as it relates to kind of industry.

Andy Nemeth: I think, again, we said we're positioned today. We feel like we've bottomed as it relates to industry production. We think wholesale retail is at a one-for-one.

Andy Nemeth: Production, we think wholesale retail and a one for one.

Andy Nemeth: And from a content perspective, we also think we bottomed in Q4 and believe that there's upside, and we expect upside as we go into 2024 as it relates to our content per unit. We're still carrying some of the pricing that we gave, you know, in the first half of the year on a TTM basis through kind of Q4 when you compare it to prior year Q4. And so, again, as we look at, you know, kind of 2024, we feel like our CPU has upside potential and is expecting upside potential. We're picking up business. We have not lost any business.

Andy Nemeth: And from a content perspective, we also think we bottomed in Q4 and believe that there is upside and we expect upside as we go into 2024 as it relates to our content per unit, we're still carrying some of the pricing that we gave you know in the first half of the year on a TTM basis through kind of Q4, when you compare to prior year Q4, and so again as we look at it.

Andy Nemeth: Kind of 2024, we feel like our CPU has upside potential and are expecting upside potential we're picking up business. We have not lost any business or the only shift really in the content have been related to pricing and mix as it relates to production in the field and so we feel good about our content perspective, we think that's bottomed out.

Andy Nemeth: The only shifts, really, in content have been related to pricing and mix as it relates to production, you know, in the field. And so we feel good about our content perspective. We think that's bottomed out and look for the upside potential. And we've picked up a lot of new business as well to support that. So on the CPU side, we feel good about where we're at. Thank you. Our next question is from Brandon Roll with D. A. Davidson. Please proceed with your question.

Brandon Roll: Look for the upside potential and we picked up a lot of new business as well to support that so on the CPU side, we feel good about where we're at.

Brandon Roll: Thank you.

Andy Nemeth: Okay.

Brandon Roll: Our next question is from Brandon Rolle with D. A Davidson. Please proceed with your question.

Brandon Roll: Thank you for taking my question. Just briefly on your outlook for the RV industry, it seems like you have a little more caution than some of the other industry participants. Could you talk about what happened during RV show season and, you know, did anything come out of the month of January that influenced maybe a more cautious outlook on the RV industry? Thank you. Yeah, Brandon, this is Jeff.

Brandon Roll: Thank you for taking my question just briefly on your outlook for the RV industry. It seems like you have a little more cautious outlook than some of the other industry participants could you talk about.

Jeff Rodino: What happened during the RV show season, and did anything come out of the month of January that influence, maybe a more cautious outlook on the RV industry. Thank you.

Brandon Roll: Yes, Brandon this is Jeff.

Jeff Rodino: You know, I would tell you so far this year, shows have been mixed. We're really, really just a month into it. Our OEM touches, you know, have varied from weekend to weekend about what's going on at the shows and on that front. I think we're just trying to give a range kind of similarly to what we've seen in the industry and where we are. I think we still feel like we're optimistic that there's some upside to what's going on, but certainly, what we see in retail probably over the next month at the shows is really going to help us hone in a little bit closer to where we think things will be. You know, as we're talking to the OEMs, that's really what they're communicating to us is that these next month, month and a half of shows will show us where retail ends up.

Jeff Rodino: I would tell you so far this year shows have been mixed.

Jeff Rodino: Really really just a month into it.

Jeff Rodino: Our OEM touches.

Jeff Rodino: <unk> from weekend to weekend about what's going on in the on the shows and on that front I think we're just trying to give a range kind of similarly to what we've seen in the industry and where we're at I think we still feel like we're we're optimistic that there is some upside to what's going on but certainly what we see in retail probably over the next month in the shows.

Jeff Rodino: We're really going to help us hone in a little bit closer to where we think things will be at.

Jeff Rodino: As we're talking to the Oems, that's really what they're.

Jeff Rodino: Communicating to US is that these next next month month and a half of shows will show us where the retail ends up and we believe it's still going to be one for one and so that's kind of where we were we came up with that range.

Jeff Rodino: And, you know, we believe it's still going to be one for one. And so that's kind of where we came up with that range. Okay, great. And then, obviously, with pricing being a big focus right now for the customer, can you talk about the, you know, competition going on amongst suppliers for business with those OEM partners as they work to get prices lower? Yeah, this is Jeff again.

Jeff Rodino: Okay, Great and then just on a from a competition perspective, obviously with pricing being a big focus right now for the customer because you talked about the competition going on amongst suppliers for business with those OEM partners as they work to get prices lower thank you.

Jeff Rodino: Yeah. This is Jeff again, we have competitors in every one of our markets that we serve.

Jeff Rodino: You know, we have competitors in every one of our markets that we serve. We have, we pride ourselves on our customer service, our ability to scale our size, and have to be able to provide the customer not only with the best product in the market but the most economical product in the market. You know, in all of our product lines, we provide good, better, and best across the board. And that gives us a lot of flexibility to work with customers to design our products, to make them work for them, along with getting them into the price point they need for the price point they're trying to hit in the market. So, we feel very comfortable where we are in the market.

Jeff Rodino: We have.

Jeff Rodino: We pride ourselves on our customer service, our ability to scale, our size and has to be able to provide the customer not only with the best product in the market, but the most economical product in the park in the market.

Jeff Rodino: And all of our product lines, we provide good better and best across the board and that gives us a lot of flexibility to work with customers to design our products to make them work for them along with getting into the price point they need for the price point Theyre trying to hit in the market. So we feel very comfortable where we're at in the market certainly there is competition and there are always really.

Jeff Rodino: Certainly, there's competition, and there always, really always has been for us with all of our product lines. So, you know, as we move forward, I think the one thing that we're most proud of is our ability of our teams to be able to flex with the customers to meet their needs and give them what they want, and then really, you know, kind of hone in on that price point at the same time. Great, thank you.

Jeff Rodino: It always has been for us with our with all of our product lines. So as we move forward I think the one thing that we're most proud of is our ability of our teams to be able to flex with the customers for their needs and give them what they want and then really kind of hone in on that price point at the same time.

Speaker Change: Great. Thank you.

Jeff Rodino: Thank you. Our next question is from Raf Jadrosich with Bank of America. Hi, good morning.

Speaker Change: Thank you. Our next question is from rock characteristics with Bank of America. Please proceed with your question.

Rafe Jason Jadrosich: Hi, good morning, Thanks for taking my question.

Rafe Jason Jadrosich: Thanks for taking my question. I just wanted to follow up on the outlook for 30 to 50 basis points of margin expansion in 2024. Can you just give a little bit more color on SG&A versus gross margin and then some of the expectations in terms of mix price cost? And can you just talk a little bit about the sales assumption that's behind that? I know you talked about by end market, but just what is the rough sort of outlook for production? Sure, Rafe.

Rafe Jason Jadrosich: I just wanted to follow up on the outlook for 30 to 50 basis points of margin expansion in 2024.

Rafe Jason Jadrosich: Can you just give a little bit more color of SG&A versus gross margin and then some of the expectations in terms of mix.

Rafe Jason Jadrosich: Price cost and.

Rafe Jason Jadrosich: Can you just talk a little bit about the sales assumption. That's that's behind that I know you talked about by end market just what is the rough sort of.

Rafe Jason Jadrosich: Outlook for production.

Rafe: Sure ill handle I'll handle that I think when you look at the cost structure of our business RV business is an extremely variable and highly scalable when you look at our marine and power sports businesses. There is little there is a higher engineered component to that that high is a higher fixed cost structure and especially when you look at where we're operating today.

Andy Nemeth: I'll handle that. I think when you look at the cost structure of our business, our RV business is extremely variable and highly scalable. When you look at our marine and power sports businesses, there's a higher engineered component to that that has a higher fixed cost structure. And especially when you look at where we're operating today in the marine business, we're certainly losing some absorption, but that's being offset by the flexibility that we see in the RV business from a diversification perspective. So again, we're operating and assuming our model based on run rates that we're seeing today. And that gives us confidence as it relates to our ability to drive incremental margins as we start to see production improve across these markets.

Andy Nemeth: With the marine business.

Andy Nemeth: <unk>.

Andy Nemeth: We are certainly losing some absorption, but that's being offset by the flexibility that we see in the RV business from a diversification perspective. So again, we're running today at we're operating and assuming our model based on run rates that we're seeing today, and that's where we get confidence as it relates to our ability to drive incremental margins.

Andy Nemeth: As we start to see production improve across these markets. So.

Andy Nemeth: So again, from an SG&A perspective, we would expect a higher SG&A concentration or percent of the mix, but we also expect a higher gross margin component to that with our RV, or I'm sorry, with our marine and our power sports businesses due to the higher engineered nature of those two businesses. So that's as it relates to our OPEX and OP Margin Improvement with the opportunity for incremental margins over and above kind of what we've set. I think from an overall mixed perspective in the marketplace today, again, we think we've kind of bottomed. We think that, you know, the opportunity for up-contenting in the RV market exists, especially with the mix that we're seeing today. As Jeff mentioned in his prepared remarks, you know, it's usually the start of the next run when we start to see the RV industry start to improve, and we start to see some up-contenting trends. And I think marine content really hasn't changed much.

Andy Nemeth: Again.

Andy Nemeth: From an SG&A perspective, we would expect a higher SG&A concentration or a percent of the mix, but we also expect a higher gross margin component to that with our RV or I'm, sorry, with our marine and our.

Andy Nemeth: Power sports businesses due to the higher engineered nature of those two businesses. So.

Andy Nemeth: As it relates to our Opex in op margin improvement with the opportunity for incremental margins over and above kind of what we've set I think from an overall mix perspective in the marketplace. Today again, we think we've kind of bottomed. We think that you know the opportunity for up content ing in the RV market exists, especially.

Andy Nemeth: With the mix that we're seeing today.

Andy Nemeth: As Jeff mentioned in his prepared remarks, it's usually that's usually the start of the next run when we start to see the RV industry start to improve as we start to see some are patenting trends and I think marine content really hasnt changed a lot the marine Oems continue to automate innovate.

Andy Nemeth: The marine OEMs continue to automate, innovate, add content to units, and the consumer wants that higher-contented unit is, I think, the feel that we see out in the marketplace today. So when you look at the mix that we're running at, you know, we feel like it's... Let's just call it abnormally low as it relates to the lower end with opportunity for upside with higher-contented units on a go forward So bottomed out as it relates to mix and then upside potential is how we, that's really helpful. And then my second question, just in terms of the longer-term M&A strategy, you've done a really good job of broadening your end market exposure and diversifying away from RVs. How do we think about that mix in the longer term?

Andy Nemeth: AD content to units and the consumer wants that up content that unit is I think the field that we see out in the marketplace. Today. So when you look at the mix that we're running at.

Andy Nemeth: Feel like it's.

Andy Nemeth: Let's just call it abnormally low as it relates to lower end with opportunity for upside with up contented units on a go forward basis, So bottomed out as it relates to mix and then upside potential is how we look at it.

Speaker Change: That's really helpful.

Andy Nemeth: And then.

Speaker Change: My second question just.

Andy Nemeth: In terms of the longer term M&A strategy, you have you've got a really good job of broadening your end market exposure.

Andy Nemeth: We're diversifying away from from Rovs, how do we think about that mix longer term.

Andy Nemeth: Do you expect to go more into power sports housing, marine, are there any end markets that you're like focused on from here? So we love the outdoor enthusiast space and definitely are focused on that, especially with regard to the runway that exists and the opportunity for not only margin-accretive businesses but opportunities to continue to provide innovative solutions across our product spectrum with new businesses that we can partner with in those spaces. So, we have cross-market opportunities, and certainly today, we're working across markets with our businesses in the outdoor enthusiast space. So, the ability to leverage that and provide a solution for our customer with additional runway is very compelling as we look at the M&A going forward. And so, we would tell you RV, marine, and power sports are kind of in the lane, and the total addressable market, certainly with the recent acquisition of Sportec, has absolutely expanded for us to have a lot of options as it relates to M&A on a go forward basis. And again, I look at where our liquidity position is today, the strength of our capital structure, the opportunity to be opportunistic in the space, and continue to look at deals. Even today, we are continuing to maintain an active pipeline and want to continue to pursue M&A in that outdoor enthusiast space to continue to drive the business forward.

Andy Nemeth: Do you expect to go more into power sports.

Andy Nemeth: Housing Marine are there any end markets that you're focused.

Andy Nemeth: <unk> focus on from here.

Andy Nemeth: So we love the outdoor enthusiast space and definitely are focused on that especially with regards to the runway that exists and the opportunity for not only margin accretive businesses, but opportunities to continue to provide innovative solutions across our product spectrum with new businesses that we can partner within those spaces. So.

Andy Nemeth: We have cross cross market.

Andy Nemeth: Opportunities and certainly today, we're working across markets with our businesses in the outdoor enthusiast space. So the ability to leverage that and provide a solution for our customer with additional runway is very compelling as we look at the M&A going forward and so we would tell you RV marine and power sports are kind of.

Andy Nemeth: Lane and the total addressable market certainly with the recent acquisition of Spartech has is absolutely expanded for us to have a lot of options as it relates to M&A on a go forward basis, and again I look at where our liquidity positions at today, the strength of our capital structure and the opportunity to be opportunistic in this space and continue to look at deals.

Andy Nemeth: Even today we.

Andy Nemeth: We are continuing to maintain an active pipeline and want to continue to pursue M&A and that outdoor enthusiasts space to continue to drive the business forward.

Andy Nemeth: Thank you; very helpful. Thank you. Ladies and gentlemen, I will turn it over to Andy for his closing remarks. Thank you. As we wrap up 2023, we must extend our sincere gratitude to the backbone of our success, our team members, whose unwavering commitment has been instrumental in navigating the uncertainties that characterize the macroeconomic and industrial landscape this year. We performed impressively versus a record-breaking 2022 and feel confident, bolstered by our organizational structure, that we'll continue to grow stronger as a company. Our team's collective efforts this year have not only solidified our foundation but have set the stage for a future with continued strategic advancements and long-term growth. Thank you for your continued support. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Andy Nemeth: Thank you very helpful.

Speaker Change: Thank you.

Andy Nemeth: Okay.

Andy Nemeth: Thank you, ladies and gentlemen, I will turn it over to Andy for closing remarks.

Andy Nemeth: Thank you as we wrap up 2023 must extend our sincere gratitude to the backbone of our success. Our team members, whose unwavering commitment has been instrumental in navigating the uncertainties that characterize the macroeconomic and industrial landscape. This year, we performed impressively versus a record breaking 2020.

Andy Nemeth: Two and feel confident bolstered by our organizational structure that will continue to grow stronger as a company our team's collective efforts. This year not only solidified our foundation, but have set the stage for our future with continued strategic advancements and long term growth. Thank you for your continued support.

Andy Nemeth: Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.