Q4 2023 LCI Industries Earnings Call

Emily: Hello everyone, and welcome to the LCI Q4 2023 earnings call. My name is Emily, and I'll be coordinating your call today.

Hello, everyone and welcome to the LTI Q4, 2023 earnings call. My name is Emily and I'll be coordinating Yoko today.

Emily: After the presentation, there will be the opportunity for any questions, which you can ask by pressing start followed by the number one on your telephone keypad. I'll now turn the call over to our host, Lillian Etscorn. Please go ahead.

After the presentation, there will be opportunity for any questions, which you can ask by pressing star followed by the number one on just how to think he patch I'll now turn the call over to our hoist Lillian Etzkorn. Please go ahead.

Lillian Etscorn: Good morning, everyone, and welcome to the LCI Industries fourth quarter and full year 2023 conference call. I am joined on the call today by Jason Lippert, President and CEO, and Kip Emmenheiser, VP of Finance and Treasurer. We will discuss the results for the quarter in just a moment. But first, I would like to inform you that certain statements made in today's conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statement.

Lillian Etzkorn: Good morning, everyone and welcome to the LCI industries fourth quarter and full year 2023 conference call I'm joined on the call today, Jason Lippert, President and CEO and Kevin I'm, a nicer VP of finance and Treasurer, we will discuss the results for the quarter in just a moment, but first I would like.

Lillian Etzkorn: To inform you that certain statements made in today's conference call regarding LCI industries and its operations maybe considered forward looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors many of which are beyond the company's control which could.

Lillian Etzkorn: Cause actual results and events to differ materially from those described in the forward looking statements.

Lillian Etscorn: These factors are discussed in our earnings release and in our Form 10-K and other filings with the FCC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statement, except as required by law. So, with that, I would like to turn the call over to Jason. Thanks, Lillian, and good morning, everybody.

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

Lillian Etzkorn: The company disclaims any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur. After the date of the forward looking statements, except as required by law, so with that I would like to turn the call over to Jason.

Jason D. Lippert: Hello, and good morning, everybody and welcome to our fourth quarter and full year 2023 earnings call last year proved to be an eventful year for Liberty as we work to extend our position as an industry leader, while navigating a challenging environment or on the RV and marine businesses.

Jason D. Lippert: Welcome to our fourth quarter and full year 2023 earnings. Last year proved to be an eventful year for Lippert as we worked to extend our position as an industry leader while navigating a challenging environment around the RV and marine business. Despite continued softness in the RV industry throughout 2023, along with a slowdown in the marine industry in the second half, our consistent execution on diversification priorities and steadfast commitment to operational discipline helped to lift our performance. As we face these headwinds, our teams took action by leveraging our operational expertise, deep customer relationships, and robust culture of innovation to drive the business forward. Looking at the full year, we closed 2023 with $3.8 billion in revenues, declining year over year from last year's $5.2 billion in revenues due largely to lower RV OEM and marine industry production levels as dealers work to right-size inventories in both markets. That said, it is important to emphasize the durability of our business. As many of you know, we have significantly diversified Lippert beyond recreational vehicles into transportation vehicles, marine, automotive, residential, and the related aftermarkets, as well as into Europe. And that effort is now paying dividends.

Jason D. Lippert: Despite continued softness in the RV industry throughout 2023, along with a slowdown in the marine industry in the second half our consistent execution on diversification priorities steadfast commitment to operational discipline helped to lift our performance as we face. These headwinds our teams took action by leveraging our operational expertise deep customer.

Jason D. Lippert: These shifts in robust culture of innovation to drive the business forward.

Jason D. Lippert: Looking at the full year, we close 2023 with $3 8 billion in revenues declining year over year from last year's $5 2 billion in revenues due largely to lower RV OEM and marine industry production levels.

Jason D. Lippert: <unk> worked to right size inventories in both markets that said it is important to emphasize the durability of our business as many of you know we have significantly diversified lipper beyond recreational vehicle and the transportation vehicles Marine Automotives residential and the related aftermarket as well as into Europe and that effort is now paying dividends.

Jason D. Lippert: In fact, over the past five years, we have successfully executed our strategic playbook by growing revenues in new markets by nearly 60%, which has bolstered our diversification. And this quarter, that growth was underscored by the strength of our growing aftermarket business. To be clear, these results would not have been possible if we had focused our attention on the RFP space alone.

Jason D. Lippert: In fact over the past five years, we have successfully executed our strategic playbook by growing revenues and new markets by nearly 60%, which has bolstered our diversification.

Jason D. Lippert: And this quarter that growth was underscored by the strength of our growing aftermarket businesses.

Jason D. Lippert: To be clear these results would not have been possible. If we focused our attention on the ERP space alone.

Jason D. Lippert: Instead, by applying our core manufacturing competencies to gain a foothold in adjacent markets, we have created a range of what we believe are counter-cyclical revenue streams with a combined $11 billion plus in total addressable growth opportunity. We're working hard to continue to grow these opportunities both organically and through acquisitions, and sales from acquisitions completed in 2022 and 2023, the majority of which are focused outside of North American RV, contributed approximately $74 million in revenue in 2023. Looking ahead, customer demand for high-quality, innovative content has resulted in new business commitments for 2024 of approximately $200 million, out of any business loss. Moving forward, we continue to prioritize making improvements to our operations and optimizing our cost structure to support the long-term profitability of our business. We believe we have invested more capital into automation than any other player, totaling over $100 million over the last few years. With the added benefit of 20,000 continuous improvement projects completed in 2023, we have improved our flexible and efficient manufacturing footprint, through which we can quickly adjust production in line with constantly shifting demand levels in the cyclical market. Additionally, we have worked through the last few quarters to consolidate certain facilities and decrease fixed costs.

Jason D. Lippert: By applying our core manufacturing competencies to gain a foothold in adjacent markets. We have created a range of what we believe are counter cyclical revenue streams with a combined $11 billion plus in total addressable growth opportunity.

We're working hard to continue to grow these opportunities both organically and through acquisitions net sales from acquisitions completed in 2022 and 2023. The majority of which are focused outside of North American RV contributed approximately $74 million of revenue in 2023.

Jason D. Lippert: Looking ahead customer demand for high quality innovative content as a result of new business commitments for 2024 of approximately $200 million net of any business losses.

Jason D. Lippert: Moving forward, we continue to prioritize making improvements to our operations and optimizing our cost structure to support the long term profitability of our business. We believe we have invested more capital in to automation than any other player in the space totaling over $100 million over the last few years.

Jason D. Lippert: Added benefit of 20000 continuous improvement projects completed in 2023, we have improved our flexible and efficient manufacturing footprint through which we can quickly adjust production in line with constantly shifting demand levels in the cyclical market.

Jason D. Lippert: Additionally, we worked through the last few quarters to consolidate certain facilities and decreased fixed cost.

Jason D. Lippert: We believe that our advanced manufacturing capabilities serve as a major competitive moat for our business that would take decades for any competitor to replicate, while also positioning us to drive possible growth as RV and marina OEM production begins to normalize in the coming quarter. Despite our great progress in reducing operating costs, we are constantly exploring opportunities to drive growth. We also have been focused on strengthening our balance sheet, reducing inventories by $261 million this year and delivering $527 million in cash flows from operations in 2023. This disciplined approach has further solidified our financial profile and balance sheet during a very challenging period, establishing a stable foundation that should allow us to weather any near-term challenges and capitalize on growth opportunities that lay ahead. During the fourth quarter, content for total RV decreased from the prior year to $5,058, while content for motorhome RV for the quarter was $3,506.

Jason D. Lippert: We believe that our advanced manufacturing capabilities serve as a major competitive moat for our business that would take decades for any competitor to replicate while also positioning us to drive profitable growth as RV and marine OEM production began to normalize in the coming quarters.

Jason D. Lippert: Despite our great progress in reducing operating costs, we are constantly exploring opportunities to drive margin improvement.

Jason D. Lippert: We also have been focused on strengthening our balance sheet, reducing inventories by $261 million this year and delivering $527 million in cash flows from operations in 2023.

Jason D. Lippert: Disciplined approach has further solidified our financial profile and balance sheet during a very challenging period, establishing a stable foundation and should allow us to weather any near term challenges and capitalize on growth opportunities that lay ahead.

Jason D. Lippert: During the fourth quarter content for total RV decrease from the prior year to $5058, while content promoter home RV for the quarter was 3500 $6.

Jason D. Lippert: Similar to the prior quarter, these content declines can largely be attributed to index pricing reductions versus actual reductions in any of our, including the impact from index pricing. We saw market share content gains of 8.5%, largely driven by our consistent focus on new products and market share wins. Looking at 2024, we anticipate that $130 million of the $200 million in new business I mentioned earlier will be RV's new market share in cotton. While RV unit selling prices have declined, I want to again emphasize that we do not anticipate much of any impact of decontenting trends as our stickiness is driven by several factors. From axles, chassis, windows, furniture, slides, leveling, and beyond, we have built our reputation on creating essential and innovative products for our bees that cannot easily be removed or replaced by another supplier.

Jason D. Lippert: Similar to the prior quarter. These content clients can largely be attributed index pricing reduction versus actual reduction of any of our content.

Excluding the impact from index pricing, we saw market share content gains of eight 5% largely driven by our consistent focus on new products and market share wins.

Jason D. Lippert: Looking at 2024, we anticipate that a $130 million of the $200 million in new business as I mentioned earlier will be RV, new market share and content gains.

Jason D. Lippert: While RV unit selling prices the decline I want to again emphasize that we do not anticipate much of the impact of the content trends as our stickiness is driven by several factors. Some actual chassis windows furniture slides leveling and beyond we have built a reputation not creating essential and innovative products for our beef that cannot easily be removed.

Jason D. Lippert: Luke are replaced by another supplier.

Jason D. Lippert: We believe that our domestic manufacturing footprint also has significant value for OEMs and sets us apart from other suppliers, domestic and international. Domestic factories typically require just a weekly time in order to supply products to our customers in our market. For many customers, we often build products on demand for emergency situations, which products can be completed in a day or two. We're easily able to provide inventory to OEMs on a just-in-time basis, where if they were to order the same parts from overseas suppliers, our customers would need to plan out much further than they do now, as well as carry much more inventory, which often leads to oscillation. Additionally, we have a team of highly trained technicians that travel across the nation to help our dealers with service and training on all of our products, a unique capability not many other suppliers have.

Jason D. Lippert: We believe that our domestic manufacturing footprint also adds significant value for Oems and sets us apart from other suppliers domestic and international or domestic factories typically require just a week lead time in order to supply product to our customers and our markets for many.

Jason D. Lippert: We often build product on demand for emergency needs, which products can be completed in a day or two.

Jason D. Lippert: We're easily able to provide inventory to Oems on a just in time basis, where if they were to order the same parts from overseas suppliers, our customers would need to play out much further than they do now as well as carry much more inventory, which often leads to obsolescence.

Jason D. Lippert: Additionally, we have a team of highly trained technicians that travel across the nation to help our dealers with service and train on all of our products are unique capability that many of the suppliers have we have found that dealers value. This servicing capability to the point that they will push Oems to use lipid content versus our competitors that cannot provide the same support.

Jason D. Lippert: We have found that dealers value this servicing capability to the point that they will push OEMs to use Lippert content versus our competitors that cannot provide the same support. This fact is even more relevant for some of our more complex products we build. There's been a lot of talk about competition lately, as well as customer verticals, and our response to that is simply this: in the last 30 years, I've had the privilege of helping lead this business. We've developed a great strategy with amazing teams, and we have a great track record of winning business. Competition isn't new to us.

Jason D. Lippert: This fact is even more relevant on some of our more complex products we build.

Jason D. Lippert: Theres been a lot of talk about competition lately as well as customer vertical and our response to that is simply that in the last 30 years I've had the privilege to help lead this business. We've developed a great strategy with amazing teams and we have a great track record of winning business competition isn't new for us.

Jason D. Lippert: We feel we are greater beating competitors as our market share in history proves that we win more battles in the Midlands and while we can't predict the future. We do know that our strategy and teams have a successful recipe to win competitive battles.

Jason D. Lippert: We're also confident in our ability to continue growing our market share both in RV and across their adjacent markets are deep rooted and industry relationships broad portfolio of innovative products and reputation for best in class quality of service that helps us create value in a way we believe cannot be replicated despite lingering chatter around heightened competition and new entrants. These.

Jason D. Lippert: We feel we are great at beating competitors as our market share and history prove that we win more battles than. And while we can't predict the future, we do know that our strategy and teams have a successful recipe to win competitive battles. We're also confident in our ability to continue growing our market share, both in our RV and across our JSOC. Our deep-rooted industry relationships, broad portfolio of innovative products, and reputation for best-in-class quality and service have helped us create value in a way we believe cannot be replicated. Despite lingering chatter around heightened competition and new entrants, these differentiators have and should continue to keep us in a position as an industry leader while driving long-term market share. Now, I'd like to highlight some of our recent announcements. First, we established Amerimax for Mobility, a new joint venture with Euromax for Mobility, Europe's leading supplier of aluminum products for our vehicles.

Jason D. Lippert: <unk> has and should continue to keep us positioned as an industry leader, while driving long term market share expansion.

Jason D. Lippert: Now I'd like to highlight some of our recent announcements first we establish a miramax for mobility, a new joint venture with <unk> for mobility, Europe's leading supplier of aluminum products for our bes.

Jason D. Lippert: This partnership combines our well established north American RV connections with your Amasses Bath manufacturing knowledge to provide one of the most diverse product catalogs with industry, leading customer service to a broader range of recreational and transportation vehicle customers.

Jason D. Lippert: We will soon be announcing some exciting new products at this joint venture will launch for RV Oems in an effort to change the game for metal siding on Rfps.

Jason D. Lippert: Secondly, we teamed up with Keystone Cougar, the best selling fifth wheel in the country to showcase our ABF brake technology on Cougar Rfps at the Tampa RV Super show last month.

Jason D. Lippert: Hosted on our race track in Tampa, We gave a live demonstration to RV ambassadors on Keystone, Our view leadership on how much of a difference evs can make for safely coin or travel trailers and fifth wheels and adverse road conditions.

Jason D. Lippert: We're excited to continue finding new ways like the partner and collaborate with well known brands and bring even more innovative content to the outdoor recreation markets.

Jason D. Lippert: Now onto aftermarket our aftermarket net sales were $881 million for the year down 1% compared to 2022.

Jason D. Lippert: Yet up 10% in the fourth quarter as we continued to expand market share. We're proud to have achieved 370 basis point increase in operating margins for the full year due to improved mix along with <unk> from continued operational efficiencies.

Jason D. Lippert: This partnership combines our well-established North American RV connections with Euromax's vast manufacturing knowledge to provide one of the most diverse product catalogs with industry-leading customer service to a broader range of recreational and transportation vehicle customers. We will soon be announcing some exciting new products that this joint venture will launch for RV OEMs in an effort to change the game for metal siding on RVs. Secondly, we teamed up with Keystone Cougar, the best-selling fifth wheel in the country, to showcase our ABS brake technology on Cougar RVs at the Tampa RV Super Show last year. Posted on a racetrack in Tampa, we gave a live demonstration to RV ambassadors and Keystone RV leadership about how much of a difference ABS can make for safely towing both travel trailers and fifth wheels in adverse road conditions.

Jason D. Lippert: With millions of vehicles entering the repair and replacement cycle in the coming years, our aftermarket last one amazing opportunities as the OEM market share has increased substantially over the last 10 years and all of our core product offerings. It stands to reason that more and more aging unit and then repair and replacement cycle in the near term they will ultimately require a more deliberate replace.

Jason D. Lippert: Parts of the aftermarket Lipper, Kurt Ranch hands. The lira Purion are just a few of our popular brands that are playing critical roles in fueling this bottom line strength in topline growth.

Jason D. Lippert: Our automotive aftermarket brand Kurt Weill, just shy of 1 million hitches during the year, a 6% increase over 2022 and continues to account for just over half of our total aftermarket sales.

Jason D. Lippert: Appliances remain a massive opportunity in products like Purion water heater refrigerators and air conditioners has seen double digit market share gains in the last 12 months looking ahead, we expect to see gains in mattresses furniture and on in the consumer replenish used RV.

Jason D. Lippert: We're excited to continue finding new ways like these to partner and collaborate with well-known brands and bring even more innovative content to the outdoor recreation market. Now on to aftermarket. Our aftermarket net sales were $881 million for the year, down 1% compared to 2022, yet up 10% in the fourth quarter as we continue to expand the market. With millions of vehicles entering the repair and replacement cycle in the coming years, our aftermarket will have some amazing opportunities. Looking ahead, we expect to see gains in mattresses, furniture, and awnings as consumers refurbish used RVs. Most people don't realize that the used RV market sells on average over 600 to 700,000 units per year, which represents a huge opportunity for aftermarket products and services.

Jason D. Lippert: Most people don't realize that the used RV market sales are on average over 600 to 700000 units per year, which represents a huge opportunity for our aftermarket products and services.

Jason D. Lippert: Our steadfast focus on service has also continued to fuel our growth. In addition to providing support through our large dedicated service center, we're always looking for ways to engage customers and dealers gathering feedback to improve our products. We've had amazing success with using the Lipper Technical Institute to host maintenance training for technicians and RV owners.

Like helping people to learn how to extend the life of their vehicle and fix issues. So they can spend more time on the road and help others along the way.

Jason D. Lippert: During the quarter. We also returned to the Stuttgart retail show connecting with European consumers do unveil some recent purion appliance and other innovation.

Jason D. Lippert: Events like this along with our other initiatives like the Scouts campground project deliberate ambassadors they help us to build our relationships with the well connected outdoor community driving trust and long term loyalty to deliberate brand.

Jason D. Lippert: Turning to the North American adjacent market 2023 revenues were down only 8% compared to the prior year. This decline was primarily due to softness in the marine retail environment, particularly impacting pontoon sales, where we sell the majority of our marine content.

Jason D. Lippert: Our steadfast focus on service has also continued to fuel our growth. In addition to providing support through our large dedicated service center, we're always looking for ways to engage customers and dealers, gathering feedback to improve our products. We've had amazing success with using the Lippert Technical Institute to host maintenance training for technicians and RV owners alike, helping people to learn how to extend the life of their vehicle and fix issues so they can spend more time on the road and help others along the way.

Jason D. Lippert: Marine production dropped sharply in the fourth quarter as Oems began working to right size inventory channels.

Jason D. Lippert: We're expecting the softness to continue into the next two quarters of 2024 with marine sales likely to decline for the year.

Jason D. Lippert: That said, we do expect a shorter downturn in marine versus what we've seen in RV and we will focus resources. This year to continue to develop new marine products as well as efficiencies and processes.

Jason D. Lippert: This year alone, we expanded our marine product catalog with products like our shallow water anchor systems glass system thrusters, new seating and electric remedies for many classes of boats. We plan to continue these types of innovations in 2024 to bolster ongoing organic content growth.

Jason D. Lippert: We're seeing strength in our other adjacent markets, like transportation, supported by acquisitions like Besser and MTP. Outside of these acquisitions, we continue to successfully expand into other adjacent areas by leveraging our existing manufacturing competencies from our other core businesses. Our residential windows, as well as our axle products, continue to gain share, and the recent launch of our first transit bus seating products and bus chassis stretching is off to a great start. We're also making solid traction through our partnership with ATW, which is on the path of contributing $1 billion annually. We've also nearly completed construction and the rollout of equipment for our world-class glass and acrylic process. With approximately 65 million in automated equipment and building space under one roof, we will soon be able to process hundreds of thousands of pieces of glass per month for the housing, RV, marine, power sports, and commercial glass industry.

Jason D. Lippert: We're seeing strength in our other adjacent markets like transportation supported by acquisitions like best MTP.

Jason D. Lippert: Outside of these acquisitions, we continued to successfully expand into other adjacent areas by leveraging our existing manufacturing competencies from our other core businesses.

Jason D. Lippert: Our residential windows as well as our actual products continue to gain share and the recent launch of our first transit bus seating products and bus chassis stretching is off to a great start.

Jason D. Lippert: We're also making solid traction through our partnership with <unk>, which is on the path of contributing $1 billion annually.

Jason D. Lippert: We are also nearly completed construction and rollout of equipment of our world class glass and acrylic processing center.

Jason D. Lippert: With approximately $65 million in automated equipment and building space under one roof. We soon will be able to process hundreds of thousands of pieces of glass per month for the housing RV Marine power sports and commercial glass industry.

Jason D. Lippert: This fully automated facility is the future of our window and glass processing and should give us a significant moat relative to any other competitor out there. This project is one of many that demonstrates our ability and willingness to invest in the future of quality manufacturing. Products like our pop-top acrylic windows, bedlifts, doors, electronics, and skylights continue to highlight how our international footprint works as an incubator for innovation across our brand.

Jason D. Lippert: Fully automated facility is the future of our window and glass processing and should give us significant moat relative to any other competitor out. There. This project is one of many of the demonstrates our ability and willingness to invest in the future of quality manufacturing.

Jason D. Lippert: Moving outside of North America, our international business grew 4% as supply chain headwinds decreased abroad, driving increased shipments to meet pent up demand.

Jason D. Lippert: Products like our pop top acrylic windows <unk> doors electronically skylights continue to highlight how our international footprint works as an incubator for innovation across our brands. These products have the potential to bolster our competitive advantage in the U S is a continued popularity with U S. Oems.

Jason D. Lippert: Elevating four-season leaders with extensive backgrounds in the East Recreation markets who will strive to take our international presence to the same leading position we have in North America. As you all know, innovation acts as one of the primary drivers of our content. We have invested in our R&D capabilities at what we consider to be an unparalleled rate that we believe will continue to help us develop world-class products and keep us competitive. More importantly, we are also focused on making improvements to existing products, adding more content at a higher rate. This gives us a massive long-term opportunity to drive content growth as there are numerous products in our portfolio that we're able to improve upon. Furthermore, these are typically unique products that are both integral to vehicles and cannot be commoditized, helping us avoid decontenting by OEMs.

Jason D. Lippert: We also initiated a new leadership structure in the Europe business.

Jason D. Lippert: Elevating for seasoned leaders with extensive backgrounds in east recreation markets, who will strive to take our international presence to the same leading position we have in North America.

Jason D. Lippert: As you all know innovation acts as one of the primary drivers of our content expansion, we have invested in our R&D capabilities at what we considered to be an unparalleled rate that we believe will continue to help us develop world class products and keep our competitive edge.

Jason D. Lippert: Importantly, we are also focused on making improvements to existing products, adding more content at a higher price point.

Jason D. Lippert: It gives us a massive long term opportunity to drive content growth as there are numerous products in our portfolio that we're able to improve upon further. These are typically unique products that are both integral to vehicles and cannot be commoditize, helping us avoid the content by Oems.

Jason D. Lippert: A prime example of our innovative capabilities driving our market share expansion can be seen in our transformational ABS system I mentioned earlier. ABS brakes were not readily available or affordable in the US for RV production until we brought them to market. Since launching, we now have about 10 high-profile RV brands using ABS, with Moore in the process of committing to it, growing our market share into the double digits with a total addressable market of $150 million to $200 million. We are finding that RVers vastly prefer having ABS on their vehicles due to the added level of safety and peace of mind it provides, helping us gain traction with the OEM.

Jason D. Lippert: A prime example of our innovative capabilities driving our market share expansion can be seen in our transformational ABS system I mentioned earlier ABS brakes were not readily available or affordable in the U S. RV production until we brought them to market since launching we now have about 10 high profile RV brands using ABS with more in process of committing to it growing our market.

Jason D. Lippert: Share into the double digits with a total addressable market of $150 million to $200 million, we're finding that our viewers vastly prefer having ABS on their vehicles due to the added level of safety and peace of mind that provides helping us gain traction with the Oems.

Jason D. Lippert: In addition to ABS, we launched several products in 2023 that have great momentum heading into 2024. Some of the more notable developments were our 4K window series with integrated shades, a new high capacity, quiet AC; we call this Chill Pill, new leveling, bus seating, furnaces, a new line of electric Biminis, and so much more. In 2024, one of our largest innovation announcements is that we are launching a brand new line of slide outs for OEMs. As we expand our portfolio, we plan to continue introducing innovative products to cater to a wide range of customer needs, which should drive long-term content growth while expanding our presence and impact across the recreational market. We believe that our enduring success all stems from our strong culture.

Jason D. Lippert: In addition to ABF, we launched several products in 2023 that have great momentum heading into 2024.

Jason D. Lippert: Some of the more notable developments, where our four K window series with integrated shape, a new high capacity quiet AC we called Shoko, New leveling bus seating furnaces, a new line of electric remedies and so much more.

Jason D. Lippert: In 2020 for one of our largest innovation announcements is that we are launching a brand new line of slide outs for Oems as we expand our portfolio. We plan to continue introducing innovative products that cater to a wide range of customer needs, which should drive long term content growth, while expanding our presence and impact across the recreational markets.

Jason D. Lippert: We believe that our enduring success all stems from our strong culture. This chart to the top where we have skilled empathetic leaders dedicated to fostering team members' professional and personal growth.

Jason D. Lippert: This starts at the top, where we have skilled, empathetic leaders dedicated to fostering team members' professional and personal growth. We've implemented several programs to foster development, leading to one of the highest retention rates. Over the years, we have found that higher retention has a direct and meaningful impact on quality, safety, efficiency, and innovation, all things we believe are very critical for any good business. Externally, we are actively engaged in supporting the communities where we work. In 2023, our team members contributed over 125,000 hours of community service worldwide, involving numerous charitable organizations.

Jason D. Lippert: Implemented several programs sponsored development, leading to one of the highest retention rates in the industry over the years, we have found that higher retention has a direct and meaningful impact on quality safety efficiency and innovation all things that we believe are very critical for any good business.

Jason D. Lippert: Externally, we are actively engaged supporting the communities, where we work and live in 2023. Our team members contributed over 125000 hours of community service worldwide involving numerous charitable organizations. We're proud to note that around 75% of our 12000 strong workforce participated in at least one of these service events throughout the year.

Jason D. Lippert: We are proud to note that around 75% of our 12,000-strong workforce participated in at least one of these service events throughout the year. As we aim to enhance our collective impact, we hope to inspire other organizations to contribute similarly to their communities. We delivered what we consider to be an amazing cash generation of $527 million in operating cash flow in 2023, considering the challenging conditions we have been working under, and we expect to keep up this progress in 2024. In turn, we have strengthened our balance sheet, maintained ample liquidity while paying down $277 million in debt. While we've cut down capital expenditures, we are continuing to prioritize spend on R&D, automation, operational excellence, M&A, and other high-return investments to support profitable growth for our business. In closing, I would like to thank all of our team members across the globe for their dedication to overcoming significant challenges and moving our business forward over the last year and a half. Any good business that experiences extreme cyclicality can't make it through without great teams, and I believe we have the best.

Jason D. Lippert: As we aim to enhance our collective impact we hope to inspire other organizations to contribute similarly to their communities.

We delivered what we consider to be an amazing cash generation of $527 million in operating cash flow in 2023, considering the challenging conditions, we have been working through and we expect to keep up this progress in 2024 and turn we have strengthened our balance sheet maintained ample liquidity, while paying down $277 million.

Jason D. Lippert: And that.

Jason D. Lippert: While we have cut down capital expenditures, we are continuing to prioritize spend in R&D automation operational excellence M&A and other high return investments to support profitable growth for our business.

Speaker Change: In closing I would like to thank all of our team members across the globe for their dedication to overcoming significant challenges and moving our business forward over the last year and a half any good business that experienced extreme cyclicality can't make it through without great teams and I believe we have the best I'm incredibly encouraged by the development I've witnessed in our teams over the past year.

Lillian Hipscorn: I'm incredibly encouraged by the development I've witnessed in our teams over the past year, both personally and professionally, as we work together to serve customers and deliver value to all of our stakeholders. We look forward to continuing this progress as we position Lippert for growth in 2024. I will now turn to Lillian Hipscorn, our CFO, to give more detail on our financial results.

Speaker Change: Personally professionally as we work together to serve customers and deliver value to all of our stakeholders. We look forward to continuing this progress as we position <unk> for growth in 2024, I will now turn to <unk>, our CFO to give more detail on our financial results Lillian.

Lillian Hipscorn: Thank you, Jason. Our consolidated net sales for the fourth quarter decreased 6% to $838 million compared to the prior year period, primarily impacted by a reduction in North American RV and marine production, as well as decreased selling prices, which are indexed to select commodities, partially offset by acquisitions. Our operational improvements and diversification strategies have partially mitigated the impact seen from lower wholesale shipments in the quarter; sales to North American RV OEMs declined 11%. Excluding both North American RV OEMs and Marine OEMs, our business increased 8% compared to the prior year period. Our diversification strategy and continued pursuit of operational improvements have not only provided near-term support but a strong platform to drive long-term growth. The decline in Q4 2023 sales in North American RV OEMs was again driven by a decrease in wholesale shipments, which was influenced by current dealer inventory levels, inflation, and rising interest rates. Content per total RV unit decreased 17% to $5,058, while content per motorized unit decreased 14% to $3,506 compared to the prior year period.

Lillian Etzkorn: Thank you Jason.

Lillian Etzkorn: Our consolidated net sales for the fourth quarter decreased 6% to $838 million compared to the prior year period.

Lillian Etzkorn: Primarily impacted by a reduction in North American RV and marine production as well as decreased selling prices, which are indexed to select commodities, partially offset by acquisitions.

Lillian Etzkorn: Our operational improvements and diversification strategy has partially mitigated the impact from lower wholesale shipments in the quarter.

Lillian Etzkorn: Sales to North American RV Oems declined 11% exclude.

Lillian Etzkorn: Excluding both North American RV OEM in Marine OEM business increased 8% compared to the prior year period.

Lillian Etzkorn: Our diversification strategy and continued pursuit of operational improvements have not only provided near term support but a strong platform to drive long term growth.

Lillian Etzkorn: The decline in Q4 2023 sales in North American RV Oems was again driven by a decrease in wholesale shipments.

Lillian Etzkorn: Which was influenced by current dealer inventory levels inflation and rising interest rates.

Lillian Etzkorn: Content per towable, RV unit decreased 17% to $5058.

Lillian Etzkorn: Content per motorized unit decreased 14% to $3506 compared to the prior year period.

Lillian Hipscorn: Again, these content declines are largely attributed to index pricing pass-throughs versus elimination of Lippert content. We have continued to increase our organic content and market share through our focus on innovation. In Q4 2023, our organic growth contributed approximately 5.4% of year-over-year LTM content per unit. However, sales to adjacent industries declined 9% versus the prior year, driven by a 41% decrease in marine sales. Marine content per powerboat decreased 27% to $1,244, primarily due to price decreases associated with year-over-year declining input costs and changes in product mix.

Lillian Etzkorn: Again these content declines are largely attributed to and Thats pricing pass throughs versus elimination.

Lillian Etzkorn: Content.

Lillian Etzkorn: We have continued to increase our organic content and market share through our focus on innovation in Q4 2023, our organic growth contributed approximately five 4% year over year LTM content per unit.

Lillian Etzkorn: Sales to adjacent industries declined 9% versus the prior year driven by the 41% decrease in marine sales.

Lillian Etzkorn: Marine content per power about decreased 27% to $1244, primarily due to price decreases associated with year over year declining input cost and changes in product mix.

Lillian Hipscorn: However, sales were positively impacted by acquisitions and pricing adjustments for our transportation products. Q4 2023 sales to the aftermarket increased 10% compared to the prior year period, driven by increased repairs and replacements and continued growth in automotive products, helping to illustrate the counter-cyclical nature of the business. International sales increased 4% year-over-year as supply chain headwinds decreased abroad, driving increased shipments to meet pent-up demand.

However, sales were positively impacted by acquisitions and pricing adjustments for our transportation products.

Lillian Etzkorn: Q4, 2023 sales to the aftermarket increased 10% compared to the prior year period, driven by increased repairs and replacements and continued growth in automotive products, helping to illustrate the counter cyclical nature of the business.

Lillian Etzkorn: International sales increased 4% year over year as supply chain headwinds decreased to Brian driving increased shipments to meet pent up demand.

Lillian Hipscorn: This increase was also driven by an estimated 2% positive impact from exchange rates in the quarter. Growth margins were 19.2% compared to 16.4% in the prior year period, primarily due to positive mixed shifts on lower sales volume, partially offset by the timing of sales price reductions contractually tied to commodity prices. Operating margins increased compared to the prior year period driven by decreased material commodity costs and effective fixed cost leverage. The aftermarket business delivered solid operating profits in the quarter at 8%, which is an 860 basis point improvement over the prior year. Gap's net loss in Q4 of 2023 was $2.4 million, or $0.09 loss per diluted share.

Lillian Etzkorn: Increase was also driven by an estimated 2% positive impact from exchange rates in the quarter.

Lillian Etzkorn: Gross margins were 19, 2% compared to 16, 4% in the prior year period, primarily due to positive mix shift and lower sales volume, partially offset by the timing of sales price reductions contractually tied to commodity prices.

Operating margin increased compared to the prior year period, driven by decreased material commodity cost and effect of fixed cost leverage.

Lillian Etzkorn: Aftermarket business delivered solid operating profits in the quarter at 8%.

Lillian Etzkorn: Which is an 860 basis point improvement over the prior year.

Lillian Etzkorn: GAAP net loss in Q4 of 2023 with $2 4 million or <unk> <unk>.

Lillian Etzkorn: Loss per diluted share this is compared to a net loss of $17 1 million or <unk> 68 loss per diluted share in Q4 of 2020 to.

Lillian Hipscorn: This is compared to a net loss of $17.1 million, or $0.68 loss per diluted share, in Q4 of 2022. EBITDA increased 248% to $35.6 million for the fourth quarter compared to the prior year period. Moving on to full year 2023 results, sales to North American RV OEMs decreased 47% to $1.5 billion, driven by decreased wholesale shipments. Sales to North American adjacent markets decreased 8% to $1.1 billion in 2023, driven by softened marine production. North American aftermarket decreased its total sales by 1% to $814 million, while international sales increased 4% to $414 million compared to the prior year period. Acquired revenues were approximately $73.6 million for the full year of 2023. Non-cash depreciation and amortization was $131.8 million for the year ended December 31, 2023, while non-cash stock-based compensation expense was $18.2 million for the same period.

Lillian Etzkorn: EBITDA increased 248% to 35 6 million for the fourth quarter compared to the prior year period.

Lillian Etzkorn: Moving on to full year 2023 result.

Sales to North American RV Oems decreased 47% to $1 5 billion driven by decreased wholesale shipments sales.

Lillian Etzkorn: Sales to North American adjacent markets decreased 8% to $1 1 billion in 2023, driven by softens Marine production.

North American aftermarket decreased its total sales by 1% to $814 million, while international sales increased 4% to $414 million compared to the prior year period.

Lillian Etzkorn: Acquired revenues were approximately $73 $6 million for the full year of 2023 non.

Lillian Etzkorn: Noncash depreciation and amortization was $131 8 million for the year ended December 31, 2023, while noncash stock based compensation expense was $18 2 million for the same period, we anticipate depreciation and amortization in the range of 130 to 140 million.

Lillian Hipscorn: We anticipate depreciation and amortization in the range of $130 to $140 million during the full year of 2024. For the 12 months ended December 31, 2023, cash generated from operating activities was $527 million, with $62 million used for capital expenditures, $26 million used for business acquisitions, and $106 million returned to shareholders in the form of dividends. We have had a strong focus on generating cash and continuing to improve working capital, with an emphasis on decreasing inventory. This has resulted in a decrease in inventory of $261 million in 2023. We made net repayments on our long-term debt of $277 million in 2023, including prepayments of $37.5 million on our term loan principal.

Lillian Etzkorn: During the full year 2024.

Lillian Etzkorn: For the 12 months ended December 31, 2023 cash generated from operating activities was $527 million with 62 million used for capital expenditures $26 million used for business acquisition and $106 million returned to shareholders in the form of dividend.

Lillian Etzkorn: We have had a strong focus on generating cash and continuing to improve working capital with an emphasis on decreasing inventory. This has resulted in a decrease in inventories of $261 million in 2023.

Lillian Etzkorn: We made net repayments on our long term debt of $277 million in 2023, including prepayments of $37 5 million under term loan principal.

Lillian Hipscorn: These term loan prepayments were applied to pay in full the scheduled principal amortization payments through Q1 of 2025 and are projected to save us approximately $1.9 million in annual interest expense, based on the rates in effect at the end of 2023. At the end of the fourth quarter, we had an outstanding net debt position of $781 million, which is 2.7 times pro forma EBITDA, adjusted to include LTM EBITDA of acquired businesses and the impact of non-cash and other items as defined in our credit agreement. Overall, we are seeing positive signs in total revenue, both sequentially and year over year. For the month of January, sales were up 13% to $308 million versus January of 2023, primarily due to more RV production days in 2024 compared to the prior year. This was partially offset by a significant decline in marine sales during the month compared to 2023.

Lillian Etzkorn: These term loan prepayments were applied to pay in full the scheduled principal amortization payments through Q1 of 2025 and.

Lillian Etzkorn: And are projected to save us approximately $1 9 million in annual interest expense based.

Lillian Etzkorn: Based on the rates in effect at the end of 2023.

Lillian Etzkorn: At the end of the fourth quarter, we had an outstanding net debt position of $781 million, which is two seven times pro forma EBIT.

Lillian Etzkorn: Adjusted to include LTM EBITDA of acquired businesses and the impact of noncash and other items as defined in our credit agreement.

Lillian Etzkorn: Overall, we are seeing positive signs in total revenue both sequentially and year over year for.

Lillian Etzkorn: For the month of January sales were up 13% to $308 million versus January of 'twenty, three primarily due to more R&D production days in 2024 compared to the prior year.

Lillian Etzkorn: This was partially offset by a significant decline in marine sales in the month compared to 2023.

Lillian Hipscorn: We are expecting marine softness to continue into the next two quarters of 2024, with marine sales likely to decline for the year. We are pleased to see February RV orders increase and anticipate that these positive trends will continue throughout 2024. During the year, we will also continue to grow the aftermarket and adjacent businesses through both organic and inorganic methods, while the RV industry regains its footing. Regarding RV wholesale shipments, we estimate a full-year range of 325 to 350,000 units. As we look forward, we are focused on maintaining a strong balance sheet and targeting a long-term leverage of one and a half times net debt to EBITDA. For the full year 2024, capital expenditures are expected to be in the range of $55 to $75 million.

Lillian Etzkorn: We are expecting marine softness to continue into the next two quarters of 2024 with marine sales likely to decline for the year.

Lillian Etzkorn: We are pleased to see February RV orders increase and anticipate that these positive trends will continue throughout 2024.

During the year, we will also continue to grow the aftermarket and adjacent businesses.

Lillian Etzkorn: Ganic inorganic method lumpy RV industry regains its footing.

Lillian Etzkorn: Regarding RV wholesale shipments we estimate our full year range of 325 to 350000 units.

Lillian Etzkorn: As we look forward, we are focused on maintaining a strong balance sheet and targeting a long term leverage of one five times net debt to EBITDA.

For the full year 2024 capital expenditures are expected to be in the range of $55 million to $75 million.

Lillian Hipscorn: We are confident in Lippert's ability to deliver long-term profitability and value for all of our stakeholders. Our strategic approach, coupled with investments in innovation, facilities, and our team, will further drive our success and enable us to achieve long-term, sustainable, profitable growth. That is the end of our prepared remarks. Operator, we're ready to take questions. Thank you. Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, please press star and then two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.

Lillian Etzkorn: We are confident in <unk> ability to deliver long term profitability and value for all of our stakeholders, our strategic approach coupled with investments in innovation facilities and her team will further drive our success and enable us to achieve long term sustainable profitable growth.

That is the end of our prepared remarks, operator, we're ready to take questions. Thank you.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind I would like to be removed from the key. Please press star and then K when preparing to ask a question. Please ensure that your device and youll microphone on mute.

Speaker Change: Clay.

Operator: Our first question today comes from Scott Stember with Ross MKM. Scott, please go ahead. Good morning, guys. Can you remind us about how the indexing, the timing, all the mechanics work? You know. How often do you go back to the OEMs to talk price? What's the story here?

Speaker Change: Our first question today comes from the line of Scott <unk> with Roth and Cam Scott. Please go ahead.

Scott: Good morning, guys and thanks for taking my questions.

Good morning.

Scott: Yes.

Scott: Could you remind us about how the indexing the timing all the mechanics work.

Yes.

How often do you go back to your the Oems.

Scott: Talk price and.

Scott: Whats the tail here.

Jason D. Lippert: How far into 2024 should we expect to see headwinds as you return price? Yeah, yeah, good question. We're, you know, we're indexed on steel and aluminum, as you know, so those just, you know, happen without any conversations, and we just follow the indexes on those two commodities. So steel, you know, we've seen a trending down in price last quarter and this quarter, and what we're giving back to our customers. We'll see that increase again, where they'll actually get some increases on steel in Q2, as steel went, you know, down to the low 30s, and now it's back up into the mid 50s. So, and then aluminum stayed pretty consistent.

How far into 2024 should we expect to see headwinds as you return price.

Speaker Change: Yes, yes, good question.

Speaker Change: Our index on steel and aluminum as you know so those just happen without any conversations and we just follow the the indexes on those two commodities.

Speaker Change: So steel we've seen are trending down and price last quarter and this quarter and what we're giving back to our customers will see that increase again, where they'll actually get some increases on steel and Q2.

Speaker Change: As steel one down to low <unk> and now it's back up into the mid fifties. So and then alumina stayed pretty consistent so there hasnt been a whole lot of movement on aluminum and.

Jason D. Lippert: So there hasn't been a whole lot of movement on aluminum, and we might maybe index higher than other businesses out there. So, you know, the good thing is we just don't have to go and have those conversations with our customers on a regular basis with respect to steel commodity-related products. The rest of us just kind of, you know, as we see commodities moving up to need, price, or to give price back, then we have those conversations with our customers, but steel and aluminum, they're fixed on the index. Scott is willing to add a little color also from the content.

Speaker Change: We might maybe index more than other other businesses out there so.

Speaker Change: The good of it is is we just don't have to go and have those conversations with our customers on a regular basis with respect to the steel commodity related products.

Speaker Change: The rest of it is just kind of as we see commodities move enough to need.

Speaker Change: Price or to give price back then we have those conversations with our customers but.

Speaker Change: Steel and aluminum there they are fixed on the indexes.

Speaker Change: Alright.

Speaker Change: To add a little color also from that.

Speaker Change: On the content.

Lillian Hipscorn: As we've talked about in the past couple of quarters, index pricing is still materially impacting that change in content per unit on a trailing 12-month basis. The fourth quarter, kind of consistent with what we talked about in the last call, was also mid-teens in terms of the percent give-back impact on the content number.

Speaker Change: As we've talked in the past couple of quarters. The index pricing is still materially impacting that change in content per unit on a trailing 12 month basis.

Speaker Change: Quarter kind of consistent with what we have talked about in the last the last call was also mid teens in terms of the percent gets back.

Speaker Change: <unk> impact on the content number.

Speaker Change: Okay.

Lillian Hipscorn: And then my next question, and I'll go back into the queue, is about the first quarter, just trying to make sense of some of the puts and takes, as far as sales are concerned, and will we be profitable in the first quarter? So, in terms of, yes. That's the expectation here.

Speaker Change: Got it and then my next question and I'll go back into the queue is on the first quarter, just trying to make sense of.

Speaker Change: Some of the puts and takes as.

As far as sales and we'd be profitable in the first quarter.

Speaker Change: So in terms of.

Speaker Change: Yes definitely.

Speaker Change: Expectation here.

Lillian Hipscorn: In terms of expectations from a sales perspective, so as we're starting the year, you know, RV is coming back, as we indicated, January, we returned, we had good production up versus last year. Expect January, excuse me, expect RV to continue to trend well as we move through the quarter. That said, Marine is definitely a significant headwind.

Speaker Change: In terms of expectations from a sales perspective, so as we're starting the year.

Speaker Change: RV is coming back as we indicated in January.

Speaker Change: We returned back we had good production up versus last year expect Gen X excuse me expect R&D to continue to trend well as we move through the quarter.

Speaker Change: Marine is definitely a significant headwind we had very strong first quarter in 2023.

Lillian Hipscorn: We had, you know, a very strong first quarter in 2023. We are materially off that in January and expect that to continue. You know, we're down anywhere from 40 to 50% in Marine when we compare it to last year. So from a net net perspective, I would expect the revenue bottom line to be up sequentially from the fourth quarter, but we will be down versus 2023 because of that Marine softness. And Scott, we've got January results.

Speaker Change: We are materially offset in January and expect that to continue we are down anywhere from 40% to 50% and marine when we compare it to last year. So from a net net perspective I would expect revenue bottom line to be up sequentially from fourth quarter. So we will be down versus 2020.

Speaker Change: Three because of that marine softness and Scott. We've had we've had January results and so we were profitable in January we know January February revenues look very similar to January at this point in time at least from an <unk> perspective.

Jason D. Lippert: And so we were profitable in January. We know January, February, you know, revenues look very similar to January at this point in time, at least from an RV perspective. And if you look at March, and we've got certainly visibility into March, we're seeing RV OEMs increase some days of production, which, you know, in some cases will be 20% for some of those and others that are flat and others that are just adding, you know, a few units a week to their production schedule.

Speaker Change: If you look at March and we've got certainly have visibility into March we're seeing RV Oems increased some days production, which in some cases it'll be 20% for some of those and others that are others that are flat and others that are just adding a few units.

Speaker Change: To their production schedule so.

Jason D. Lippert: So, you know, January and February look pretty consistent with one another. March looks like it'll be up a little bit. So, you know, like we've said all along, we know that what goes down must come up, and it feels like we're starting to come off the bottom, at least in March. We'll certainly see a little bit more, more volume in RV. Is that helpful? No, not really.

Speaker Change: Genuine February look pretty.

Speaker Change: Consistent with one another.

Speaker Change: It looks like it will be up a little bit. So it looks like you know like we've said all along.

Speaker Change: We know that what goes down must come up and it feels like we're coming starting to come off the bottom at least in March we'll certainly see a little bit more more volume in our beef that helpful.

Speaker Change: No very helpful. So just to be clear profitability would be lower than last year's first quarter.

Lillian Hipscorn: So just to be clear, profitability would be lower than last year's first quarter. We're not through the quarter yet. Yeah, but I'd say from a margin. Yeah, so what I was saying from a revenue perspective, Scott, I would expect revenue to be lower overall because of the marine softness, you know, offsetting some of the... Say flat to lower. Yeah, flat to lower.

Speaker Change: For the.

Speaker Change: For the quarter yet.

Speaker Change: Yes, yes.

Turning to margin.

Speaker Change: Yes.

Speaker Change: I was saying from a revenue.

Speaker Change: With respect to Scott I would expect revenue to be lower overall because of the marine softness.

Speaker Change: Offsetting some of the say flat to lower flat to lower.

Lillian Hipscorn: And then from a margin perspective, I would expect us to be a little bit better than where we were last year in the first quarter. Oh, OK. Perfect. Thanks so much, guys.

And then from a margin perspective.

Speaker Change: Just to be a little bit better than where we were last year in the first quarter.

Speaker Change: Okay perfect.

Speaker Change: Thanks, so much guys.

Speaker Change: Yep Yep.

Scott L. Stember: Yep. Yep. The next question comes from Fred Wightman with Wolf Research. Please go ahead. Hey guys, good morning.

Speaker Change: The next question comes from Fred Wightman with Wolfe Research. Please go ahead.

Fred Wightman: Hey, guys. Good morning, I just wanted to.

Jason D. Lippert: I just wanted to maybe clarify something on the shipment outlook for 24. I believe it's unchanged versus what you guys talked about last quarter. But Jason, you've also talked about some of the disconnect between what the RBIA reports in terms of shipments versus what's actually produced. So can you just sort of level the playing field if we think about the 313 that the RBIA reported for 23, what you think the actual production number was, and maybe how to evaluate that against your 325 to 350 outlook for 24? Yeah, and that's good. I'm glad you're bringing that up because we wanted to make the point anyway.

Fred Wightman: Maybe clarify something on the shipment outlook for 'twenty four I believe it's unchanged versus what you guys have talked about.

Fred Wightman: Last quarter, but Jason you've also talked about some of the disconnect between what the RV IAA reports in terms of shipments versus what's actually produced so can you just sort of level set if we think about the $33 13 that <unk> reported for 23 of what you think the actual production number was and maybe how to evaluate that against your $325 to $3 50 outlook for.

<unk> 2004.

Jason D. Lippert: Yes, and Thats good I'm glad you bring that up because we wanted to make to make the point anyway.

Jason D. Lippert: It's just important, like you said, to consider wholesale production versus wholesale sales. So they reported last year the 313 or whatever the number ended up being. We feel the number in terms of units produced because they sold a bunch of units in 23 that were actually built in 22 that we would have built components for in 22. So we feel that Delta was a production number of maybe 280, 275, somewhere in there. It's clear enough to put it in a short range.

Jason D. Lippert: Important like you said to consider wholesale production versus wholesale sales so.

Jason D. Lippert: The reported last year, the $3 13, or whatever the number ended up to be.

Jason D. Lippert: We feel the number in terms of units produce because they sold a bunch of units in 2003 that were actually built in 'twenty. Two that we would have built components for in 'twenty two.

Jason D. Lippert: So we feel that Delta was.

Jason D. Lippert: Production number of maybe $282 75 somewhere in there.

Jason D. Lippert: Clear enough to put it in a short range. So we feel that even if the even if on the low end youre at the low end of our $3 25 to $3 50 on RV, we could see another 35% to 45000 units of what we will produce this year from a wholesale perspective different than last year. So.

Jason D. Lippert: So we feel that even if, on the low end, you're at the low end of our 325 to 350 on RV, we could see another 35,000 to 45,000 units of what we will produce this year from a wholesale perspective, different than last year. So I think that those are the puts and takes. We're not seeing it this January.

Jason D. Lippert: I think that that's those are the puts and takes we're not seeing at this January.

Jason D. Lippert: January was up a little bit. But from a seasonality perspective, I think that, like I said, March, April, May, June, these dealers are going to need product, and that's where we're going to see more of the bump to get us closer to that 325 and north number, whatever number you're picking. But yeah, from a production perspective, it feels like at the low end of our scale, we're at 35,000 to 45,000 more units that we'll produce components for this year than last year, which is significant. Okay, that's helpful. And just thinking about it makes me feel, yeah, no, that's great.

Jason D. Lippert: January was up a little bit but.

Jason D. Lippert: From.

Jason D. Lippert: On a seasonality perspective, I think that like I said March April May June these dealers are going to need product and that's what we're going to see more of the bump to get us closer to that $3 25 in north number whatever number you are picking but from a production perspective, it feels like at the low end of our our scale or <unk>.

Jason D. Lippert: 35% to 45000 units more more units that will produce components for this year than last year, which is significant.

Speaker Change: Okay. That's helpful.

Speaker Change: And then just thinking about the yes, no that's great just thinking about the January and February commentary I mean, basically every other consumer company has talked about some impact of weather in January is there anything that you would call out there that we should keep in mind either days. They got cut that are reflected in that January number.

Jason D. Lippert: Just thinking about the January and February commentary, I mean, basically every other consumer company has talked about some impact of weather in January. Is there anything that you would call out there that we should keep in mind, either days that got cut that are reflected in that January number, incremental days in February, anything that stood out from a weather impact perspective? There was in there was weather impact, for sure, there were a few days of shutdown.

Speaker Change: Rental days in February anything that stood out from a weather impact perspective.

Speaker Change: There was there was weather impact for sure. There was a few days of shutdown, but the Oems made some of that back and then some of it they didn't.

Jason D. Lippert: But you know, the OEMs made some of that back, and then some of it they didn't. Some of those days fell on inventory days. So, you know, there might have been a little bit of an impact there. But you know, I would say that, year over year, we're always seeing weather-related impacts for a day or two here or there. And it's usually in January or February. Fair enough. Thanks a lot.

Speaker Change: Some of those days and inventory days so.

Speaker Change: There might have been a little bit of impact there, but I would say that year over year, we're always seeing weather related.

Speaker Change: It impacts a day or two here or there and it's usually in January or February so.

Speaker Change: Fair enough. Thanks, a lot.

Speaker Change: Yes.

Speaker Change: Okay.

Jason D. Lippert: The next question comes from Daniel Moore with CGS Security. Please go ahead. Perfect. Thanks, Jason. Thanks, Lillian, for taking questions. First, on the marine side, that down 40 to 50% that you described, is that all production? Are your customers managing down their inventories? Or is it, do you sell to them more just in time, similar to RV? Yeah, we're for sure just in time.

Speaker Change: The next question comes from Daniel Moore with CJS Securities. Please go ahead Daniel.

Daniel Moore: Perfect. Thanks, Jason Thanks for.

Daniel Moore: For taking the questions first on marine side.

Daniel Moore: That down 40% to 50% that you described.

Daniel Moore: Is that all production or your customers managing down their inventories or is it do you sell to them more just in time similar to RV.

Speaker Change: Yes, we are for sure just in time, but I think that the.

Jason D. Lippert: But I think that the, you know, the downside that we're seeing there is partially similar to what we saw with RVs where inventories are starting to be adjusted at the dealer level, and OEMs just aren't building them. So, you know, you'll probably see a little bit more sell through on the whole on the retail side, which will impact, you know, both OEMs and our production on marine. Okay. That's helpful.

Speaker Change: The down side that we're seeing there is partially.

Speaker Change: Similar to what we saw with <unk>, where inventories are starting to be adjusted at the dealer level.

Speaker Change: Oems are building so.

Speaker Change: Probably see a little bit more sell through on the on the on the retail.

Speaker Change: Hill side, which.

Speaker Change: We will impact both the Oems and our production on marine so.

Speaker Change: Understood that's helpful.

Jason D. Lippert: And then maybe just talked about it in roundabout terms, but just your expectations for content growth in RV as well as marine, kind of H1 versus the full year 24. Do you expect positive growth, you know, for the full year? And is pricing more likely to be a headwind, at least for the first half? Yeah, we maintain that, you know, if you eliminate the index, indexing puts and takes out whatever the content number is that, you know, our ability to continually organically grow content is, you know, three to five to 6%, somewhere in there, it just depends on what we're launching and how the OEMs adapt and bring in our new products. So we feel like we can positively grow organic content on a consistent basis.

Speaker Change: And then maybe just.

Speaker Change: You talked about it in round about terms, but just.

Speaker Change: Your expectations for content growth in RV as well as marine kind.

Speaker Change: H one versus the full year 2004.

Speaker Change: We expect positive growth for the full year and as pricing more likely to be a headwind at least in the first half.

Speaker Change: We maintain that.

Speaker Change: You eliminate the index indexing puts and takes out of whatever the content number is that our ability to.

Speaker Change: Continually organically grow content as you know.

Speaker Change: Three to 5% to 6% somewhere in there it just depends on what we're launching and how the Oems adapt and bring in our new products. So we feel like we can possibly grow organic content on a consistent basis and we've demonstrated that over the.

Jason D. Lippert: And we've demonstrated that over the, you know, history. Okay, one more, a little in the weeds, but the glass and acrylic factory, can you maybe talk a little bit about some of the newer end markets you're targeting with that capacity and capabilities, and what does the total TAM look like relative to the revenue you're currently generating out of there? Thank you.

Speaker Change: Over our history.

Speaker Change: Okay, one more little in the weeds, but the glass and acrylic factory can you maybe talk a little bit about some of the newer end markets, you're targeting with that capacity and capabilities and.

Speaker Change: And what is the total Tam look like relative to the revenue you're currently generating out of there. Thank you.

Jason D. Lippert: Yeah, we don't have a TAM on there yet because we're in the early stages, but you know, we've got probably three-fourths of the factory running, so we've been kind of installing it in pieces, and it's pretty impressive. If you come out next time, we'd love to take you through and see everything, but you know, we're doing housing glass for both manufactured housing and residential housing. We're certainly doing RV glass, and now our RV door glass.

Speaker Change: Yes, we don't have a.

Speaker Change: Just given the last piece first we don't have a tam on there yet because we're in early stages, but we know we've got probably three fourths of the factory running so we've been kind of installing it in pieces and it's pretty impressive. If you come out next time, we'd love to take you through it.

Speaker Change: See everything but.

Speaker Change: We were doing.

Speaker Change: Housing glass for both manufactured housing and residential housing, we're doing certainly RMB glass and now RV door glass, if you've been around arby's lately, we're putting glass on the front doors of the units to make it look nicer and adding some content there.

Jason D. Lippert: If you've been around RVs lately, we're putting glass on the front doors of the units to make them look nicer and add some content there, but if you look at some of the commercial markets we're building for there, you know, you look at, you know, solar glass, refrigerator glass, and, you know, in grocery stores, we're doing some of that. A lot of garage door glass. If you look at garage doors these days, both commercial and residential, you see a lot of glass in the garage doors versus just, you know, an older type door that you'd normally expect.

Speaker Change: If you look at some of the commercial markets. We are building for there you.

Speaker Change: You look at solar glass.

Speaker Change: Refrigerator glass.

And grocery stores, we're doing some of that a lot of garage door glass. So if you look at Grand stores. These days, both commercial and residential Youll see a lot of a lot of glass in the garage doors versus just.

Speaker Change: And older type door that you would normally expect so.

Jason D. Lippert: So, and then we get to acrylic. They can do some thermoforming there, and, you know, we expect acrylic to be big in RVs. I mean, we're going to certainly offer that as part of our mod on windows, which is, you know, the second or third largest component in the RV business for our core products. So, we'll have acrylic for windows, which nobody else has here, and then we also will do acrylic skylights and things like that. You're seeing a trend with our RV OEMs to continue to put more glass and acrylic around the units to just let more natural light in the units.

And then we'll get to acrylic.

Speaker Change: They can do some thermal forming there.

Speaker Change: We expect.

Speaker Change: <unk> to be big on Rvs, I mean, we're going to certainly offer that as part of our our mode on Windows, which is second.

Speaker Change: Second or third largest component in the RV business for our core products.

Speaker Change: So we will have a code for windows, which nobody else has here and then we also will do acrylic skylights and things like that you are seeing a trend with our RV Oems continue to put more.

Speaker Change: No more glass and acrylic around the units to just a lot more natural light and the units. It sells unit. So that's.

Jason D. Lippert: It sells units. So that's where we're at today. More of an update next quarter.

Speaker Change: And that's where we're at today.

More of an update next quarter.

Jason D. Lippert: Very good. Okay, I'll jump back over to any follow-up. Thank you. Sure. Thanks, Dan. Our next question comes from Mike Schwartz with Truist Securities. Mike, please go ahead. Hey, good morning.

Speaker Change: Very good Okay, I will jump back over the next follow ups. Thank you.

Speaker Change: Sure. Thanks, Dan.

Speaker Change: Yes.

Speaker Change: Our next question comes from Mike Swartz with curious securities.

Michael Swartz: Please go ahead.

Hey, good morning.

Jason D. Lippert: Just first, first question, maybe Lillian, on the total content, down 17 in the quarter, I think you provided some of the moving pieces there. But can we just go through how much of that was M&A versus pricing versus organic growth? Yeah, I'd say the key elements to break out there. Mike mentioned that in terms of the index pricing, the give back was in the mid-teens as a percentage basis, and organic growth was at about 5.4%.

Michael Swartz: Just first first question maybe on the.

Michael Swartz: The tunable content down 17 in the quarter I think you provided some of the moving pieces there, but can we just go through how much of that was M&A versus pricing versus <unk>.

Michael Swartz: Organic growth.

Speaker Change: Yes, I'd say the key elements to break out there Mike.

Speaker Change: You mentioned that in terms of the index pricing the give back that was in the mid teens as a percentage basis.

Speaker Change: The organic growth was at about five 4%.

Lillian Hipscorn: And then if you looked, and I think Jason cited this in his commentary, the overall growth, which would have included acquisitions as well, was sitting at about 8.5%. So really, the biggest headwind that we've been experiencing, and this has been consistent as we've moved through the quarters in 2023, has been the index pricing give back. You know, that'll, that'll begin to mitigate as we move through 2024. We'll still have a little bit of a headwind in Q1. But as we move through the quarters, you know, consistent with what we've talked about before, we expect that to mitigate, and you'll really see more of the full impact of the organic benefit of our growth, you know, that three to 5% that Jason was just citing. Gotcha. That's helpful.

Speaker Change: And then if you look to and I think Jason site at this in his in his commentary the overall growth, which would have included acquisitions that well as well with sitting at about eight 5%.

Speaker Change: So really the biggest headwind that we've been experiencing and this has been consistent as we move through the quarters. In 2023 has been the index pricing get back.

Jason D. Lippert: Yes, that'll that'll begin to mitigate as we move through 2024, we'll still have a little bit of a headwind in Q1.

Jason D. Lippert: As we move through the quarter is still consistent with what we've talked about before we expect that to mitigate and youll really see more of the full impact of the organic benefit FERC royalty on that 3% to 5% that Jason let's just citing.

Speaker Change: Got you that's helpful. Thank you and then just on the gross margin in the fourth quarter.

Lillian Hipscorn: And then just on the gross margin in the fourth quarter. Maybe if we compare it to the third quarter, I guess what were the puts and takes there? It was down about 300 basis points. I would assume that the mix towards the aftermarket was a positive, but what are some of the negatives that you encountered in the quarter? Yeah, I'd say the biggest impact, frankly, was the volume.

Speaker Change: Maybe if we compare it to the third quarter I guess what were the what were the puts and takes there was down about 300 basis points, but assume that mix towards aftermarket was a positive but what are some of the negatives that you encountered in the quarter.

Speaker Change: Yes, I'd say, it's the biggest.

Speaker Change: <unk> frankly is the volume.

Lillian Hipscorn: And the headwind that that had on the mix was a little bit, but by far, it was just decreasing the sales volume. Okay, perfect. And then, in the past, you've kind of provided us with some guide rails around EBIT margin, and I think you said in the first quarter that on a year-over-year basis, it should be a little better. But I guess any way to think about that on a full-year basis for 2024 and maybe, you know, how that plays out as the year progresses?

Speaker Change: And the headwind that that had on us.

Speaker Change: With a little bit but by far it was just a decrease in sales volume.

Speaker Change: Okay, perfect and then I know in the past you've kind of provided us Some guide rails around EBIT margin I think you said in the first quarter on a year over year basis, it should be a little better but.

Speaker Change: Any way to think about that on a full year basis for 2024, and maybe how that plays out as the year progresses.

Lillian Hipscorn: Yeah, so you know, we've talked before that we'd expect the margins to be kind of in the call it the mid single digits. And really, that's where we probably are going to see ourselves this year as we progress through 2024 with the quarters. There'll be some, you know, slightly higher quarters, depending on the volume that's flowing through and slightly lower quarters, depending on seasonality, but net net, kind of that mid single-digit for this year is probably a reasonable assumption. And Mike, going back to the other question, too, you know, we did call out warranty as well.

Speaker Change: Yeah. So we've talked before that we would expect the margins to be kind of in the call. It the mid single digits.

Speaker Change: And really that's where we probably are going to see ourselves. This year as we progress through 2024 with the quarters there'll be some.

Speaker Change: Yes, a little bit higher quarters, depending on the volume that's flowing through in a little bit lower quarters, depending on seasonality, but net net kind of that mid single digit for this year is probably a reasonable assumption.

Speaker Change: And Mike going back to your other question too we didn't we didn't call out warranty as well.

Speaker Change: If you look at sales like aliens said.

Jason D. Lippert: If you look at sales, like Lillian said, significantly underpressed compared to the last couple of years. And we had a significant amount of units built over COVID, just the volume of it, you know, and that starts to show up a couple of years after these units start getting sold. So that'll eventually retract.

Speaker Change: Significantly depressed compared.

Speaker Change: The last couple of years, and we had a significant amount of units built over COVID-19 just the volume of it.

Speaker Change: And that starts to show up a couple of years. After after these units start getting sold so.

Speaker Change: That'll that'll eventually retract.

Jason D. Lippert: Okay, great. Thank you. Thank you. The next question comes from Craig Kennison with Baird. Please go ahead.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Speaker Change: The next question comes from Craig Kennison with Baird. Please go ahead.

Craig R. Kennison: Yeah, thank you for taking my questions. Jason, I just wonder if you would characterize PetScape today versus, you know, your long history with a company. There's just a tremendous amount of investor concern about your, you know, share loss. And yet, you talk about organic growth when you unpack some of your content per unit metric. So, you know, honestly, just trying to reconcile a lot of different information, some different sources there, and wonder how you would characterize the competitive landscape and whether there are categories where you're losing share. My favorite topic, Craig.

Craig R. Kennison: Yes, thank you for.

Craig R. Kennison: For taking my questions, Jason I, just wonder if you would characterize the competitive landscape today versus.

Craig R. Kennison: Your long history with the company.

Craig R. Kennison: Just a tremendous amount of.

Craig R. Kennison: Investor concern about your share loss and yet you talk about organic growth when you unpack some of your content per unit metrics. So.

Craig R. Kennison: Honestly I'm just trying to reconcile a lot of different information from different sources, there and wonder how you would characterize.

Craig R. Kennison: The competitive landscape and whether there are categories, where you're losing share.

Craig R. Kennison: Okay.

Speaker Change: It's my favorite topic Craig.

Speaker Change: Okay.

Jason D. Lippert: So, yeah, I'll categorize it. I mean, look, like I said, I've been in this business since we started our first RV product, so 30 years. I've watched a lot of competitors come and go. You know, I put them into a couple different categories.

Speaker Change: So yes.

Speaker Change: Categorize that and we look at like I said I've been in this business. Since we started our first RV products. So 30 years I've watched a lot of competitors come and go.

Speaker Change: I would put them into a couple different categories time, we'd beat in there they are gone.

Jason D. Lippert: Some we've beat, and they're gone. Some we've acquired, and they're part of our business now, and others are still around, and we compete with them on a regular basis. And we have, you know, I'd say over the 30 years, what's been consistent is not only that but the fact that, you know, we just compete as part of what we do. It's part of the business. It's part of any business.

Speaker Change: Some we've acquired.

And they are part of our business now and others are still around and we're competing with them on a regular basis and we have I'd say over the 30 years, but it's been consistent is not only that but the fact that.

Speaker Change: We just competition is part of what we do as part of the business as part of any business.

Jason D. Lippert: And you look at the new entrants now, if you're looking at, you know, the Axle thing that people keep bringing up, the AirXL thing, people keep bringing up, you know, we've had new competitors, you know, I would say almost every year in the last 30 years. So I just keep pointing people to our track record and say, look at our track record. You know, we won more battles than we lost.

Speaker Change: And you look at the new entrants now if you're looking at the actual thing that people keep bringing up.

Speaker Change: <unk> people keep bringing up.

Speaker Change: We've had new competitors.

I would say almost every year in the last 30 years. So I just I just keep pointing people to our track record and say look at our track record we won more battles than we've lost.

Jason D. Lippert: We continue to use innovation to beat our competitors. We use our bundling and just our massive range of products there to beat our competitors. And then now we've got, you know, a diversification strategy that allows us to do some things that we couldn't do, you know, five to 10 years ago. So I pointed those things out and looked at, if you're pointing specifically to AirXL, I'd say, hey, look, we're taking double-digit margin increases in market share against that business the last two years. You look at this Axel thing that's popped up.

Speaker Change: We continue to use innovation.

Speaker Change: To beat our competitors, we use our bundling in our just our massive motive products there to beat competitors.

Speaker Change: And now we've got diversification strategy, which allows us to do some things that we couldnt do.

Speaker Change: Five years to 10 years ago, So I'd point to those things and look at if youre, pointing specifically to Eric Sal I'd say, Hey, look we're taking double digit margin.

Speaker Change: Increases in market share.

That business the last two years.

Speaker Change: Look at this axle thing Thats popped up yes, we've lost a little bit of axles.

Jason D. Lippert: Yeah, we've lost a little bit of Axels on the Forest River side of our business, but Axels in general are a small part of our business. And to boot, we've won a million Axels this year. So Axels was like one of the biggest gainers in 2023, where we were almost flat year over year in our Axel business. We don't typically get that granular, but to kind of defend the whole competitive landscape thing, I have to point it out. And just to say, look, where we were down 50% in other RV products, we were flat in Axels, even though we lost a little bit of market share. So I just say, we're going to continue to compete. We'll have new competitors next year, and it won't bother us. Yeah, thanks for that, Jason.

Speaker Change: On the Forest service side of our business, but axles in general is a small part of our business.

Speaker Change: And to boot, we've had one 1 million axles. This year. So axels was like one of the.

Speaker Change: The biggest gainers in 2023, where we were almost flat year over year International business, we don't typically get that granular, but to kind of defend the whole competitive landscape thing I have pointed out and just to say look where we were down 50% and other RV products. We were flat in axles, even though we lost a little bit of market share. So I would just say we're going to.

To compete we'll find we'll have new competitors next year and it doesn't bother us.

Speaker Change: Yes, thanks for that Jason and then I just wonder if there's a way.

Jason D. Lippert: And then I just wonder if there's a way to reconcile what you just talked about, with what Lillian talked about, which was mid single-digit margin. I know that's below your long-term target and maybe what you've delivered in the past, in terms of EBIT margin. So what is driving that margin pressure if the competitive landscape is within, you know, the realm of what you experienced in the past? Yeah. No, I would say a couple things.

Speaker Change: To reconcile what you just talked about.

Speaker Change: What Lillian talked about which was mid single digit margin I know that's below your long term target and maybe what you've delivered in the past.

Speaker Change: In terms of EBIT margin so.

Speaker Change: What is driving that margin pressure if the competitive landscape is within the realm of what you've experienced in the past yes.

Speaker Change: No.

Speaker Change: I would say a couple of things first you look at the last three years 20.

Jason D. Lippert: First, you look at the last three years, you know, 23, 22 and 21, our operating margin was just a little over 8% on 16 billion in total revenue. So you look at that and say, okay, over time, will they perform? I mean, yeah, we pick out one down cycle we've had, you know, I'd say two and a half over the last 15 years. We had 08, we had a little dip in 18, and then we had the latter part of 22 and 23.

Speaker Change: <unk> thousand 322% and 21 are.

Speaker Change: Our operating margin was just a little over 8%.

Speaker Change: $16 billion in total revenue. So when you look at that and say, okay over time will they perform I mean, yeah, we pick out one one down cycle we've had.

Speaker Change: I'd say, two and a half over the last 15 years.

Speaker Change: We had a little a little dip in 18, and then we had at <unk>.

Speaker Change: Part of 'twenty two 'twenty three so yes in those years were definitely going to see depression on margin I think maybe one difference from between now and our weight as we have all these indexes in place where when there is extreme volatility in steel and aluminum pricing.

Jason D. Lippert: So yeah, in those years, we're definitely going to see depression and margin. I think maybe one difference between now and 2008 is we have all these indexes in place where when there is extreme volatility in steel and aluminum prices, there's going to be some bigger swings in profitability, but it all evens out in the end because we're going to get the price sooner or later. It fell pretty significantly over the course of the last half of last year.

Speaker Change: Going to be some some bigger swings in profitability, but it all evens out in the end because we're going to get.

Speaker Change: We're going to get the price sooner or later.

It fell pretty significantly over the course of the last half of last year and Q4 and Q1 Q4 last year Q1. This year is when we kind of see some of that headwind we're out of it in Q2, because we've got some price increases coming on the steel side. So.

Jason D. Lippert: Q4 last year and Q1 this year is when we kind of see some of that headwind. We're out of it in Q2 because we've got some price increases coming on the steel side. But I would say over time, I would expect the same kind of margin performance and know that we're going to have a down cycle every once in a while. Maybe we've, you know, maybe on the steel side, we're giving, I'd like to think we're contributing to, you know, the lower ASPs right now because we're one of the ones through the steel industry has given some pretty significant increases. And we all know if the ASP is lower, then we're probably going to have a better chance of selling more RVs. So, you know.

Speaker Change: But I would say overtime I would expect we expect the same kind of margin performance.

And knowing that we're going to have a down cycle every once in a while.

Speaker Change: Maybe maybe.

Speaker Change: On the steel side, we're giving I'd like to think we're contributing to lower Asps right now because we're one of the ones through the steel and you've given us some pretty significant increases and we all know asps lower than we're going to probably have a better chance of selling more rovs. So.

Lillian Hipscorn: Craig, also, on that, building on what Jason was just saying, I mean, well, yes, we are seeing the RV industry recovering in 2024, but we're still not back at historic levels in terms of wholesale and production. This business, as we've stated before, this business really is and will be a double-digit margin business. I'd say once the overall industries and plural, not just the RV, but overall industries, return back to what is more normalized.

Speaker Change: Craig also on that building on what Jason was just saying I mean, well, yes, we are seeing the RV industry recovery in 2024, we're still not back to historic levels.

Speaker Change: In terms of wholesales in production.

Speaker Change: This business as we've stated before this business really is and will be a double digit.

Speaker Change: Margin business I'd say once once the overall industries and plural not just the RV, but overall industries return back to what is more normalized I think we've done the right actions in terms of flex.

Lillian Hipscorn: I think we've done the right actions in terms of flexing the business, streamlining where appropriate, and now it's a matter of capitalizing on the recovery of the various industries that we serve and getting back to those double-digit margins that we should be delivering, and we will be delivering. Great, thank you. You're welcome. Thanks. The next question comes from Bret Jordan with Jeff. Please go ahead. Hey, good morning, guys. This is Patrick Buckley on for Bret.

Speaker Change: <unk> the business.

Speaker Change: Streamlining where appropriate and now it's a matter as.

Speaker Change: Capitalizing on the recovery of the various industries that we perform and to get back to those those double digit margins that we should be delivering and we will be delivering.

Speaker Change: Okay.

Speaker Change: Great. Thank you helpful.

Speaker Change: Okay. Thanks.

Speaker Change: Okay.

Speaker Change: The next question comes from Bret Jordan with Jefferies. Please go ahead.

Hey, Good morning, guys. This is Patrick Buckley on for Brent Thanks for taking our questions.

Patrick Buckley: Thanks for taking our questions. Morning. Could you talk a little bit more about the international side of the RV business and how that's trending? How is that cycle over there compared to the U.S. as of late? Yeah, great. I, you know, we've been in the international side for about, you know, almost 10 years, almost a decade.

Patrick Buckley: Could you talk a little bit more on the international side of the RV business and how thats trending.

Patrick Buckley: As that cycle over there compared to the U S as of late.

Speaker Change: Yes, great.

Speaker Change: No.

Speaker Change: We've been in the international side for about.

Speaker Change: Almost 10 years, almost a decade and what we've learned is that it just moves slow whether it is going down or whether it's going up.

Jason D. Lippert: And, you know, what we've learned is that it just moves slowly, whether it's going down or whether it's going up. Um, there's just a little bit slower reaction time by the market, by the OEMs, the supply base. Everything moves a little bit slower. So I'd say that, you know, over time, you can plan on that, just on the RV piece of it being more consistent. Um, you know, it's never going to go up substantially in big ways or down substantially in big ways. So, you know, it's a more consistent part of our business. And right now, you know, it feels pretty flattish.

Speaker Change: There's just a little bit slower reaction time by the market by the Oems the supply base everything moves a little bit slower. So I would say over time you can plan on that just on the RV piece of it being more consistent.

Speaker Change: This is never going to go it never seems to go up.

Speaker Change: Substantially in big ways are down substantially in big ways. So it's a more consistent part of our business and right now it feels.

It feels pretty flattish and I know there was some talk that there.

Jason D. Lippert: I know there's some talk, you know, that there's some business downtick in some areas, but, you know, we're still seeing opportunities for content gain and market share gains over there. So we expect it to be pretty flat. Got it. That's helpful. And then on the marine side of things, how close is that to the bottom?

Speaker Change: There is some business.

Speaker Change: Business down tick in some areas but.

Speaker Change: We're still seeing opportunities with content gain in market share gains over there. So we expect it to be pretty flat.

Speaker Change: Got it that's helpful and then on the marine side of things how close is that to the bottom is it still et cetera, accelerating down here or is it going to start to flatten out soon.

Jason D. Lippert: Is it still accelerating down here, or is it going to start to flatten out? Yeah, I think you know, they've realized, and you look at some of the other public company releases, I think that, you know, they realized that, you know, they needed to really slow production. And they've done that, you know, started, you know, really, you know, tail end of last year or early part of last half of last year. So, you know, we'll see how quickly the dealers can get through product, but, you know, the products are never, have never looked better. And I think that's what helped sell boats.

Speaker Change: Yes, I think they realized and you look at some of the other public company releases I think that they are <unk>.

Speaker Change: Realize that they need to really slow production and they've done that.

Speaker Change: <unk> started.

Speaker Change: It really tail.

Speaker Change: Tail end of last.

Speaker Change: Early part of last half of last year.

Speaker Change: So we'll see how quickly the dealers can get through product, but the products that have never looked better and I think thats what.

Jason D. Lippert: Certainly, you know, there's product moving out there. It hasn't completely stopped on the retail side, but, you know, we're kind of playing that same game that the RV OEMs and dealers played last year. It's like, just wait for inventories to catch up and get to a reasonable level. And, you know, we'll get back to business, but it doesn't feel like it's going to be as extensive or as long as what we saw on the RV side. So, you know, we're hopeful that they can get that fixed this year.

So both certainly.

Speaker Change: There is product moving out there it hasn't completely stopped on the retail side, but we.

Speaker Change: We're kind of playing that same game at the RV Oems and dealers play last year is like just wafer inventories due to catch up and get to a reasonable level and we'll get we'll get back to business, but it doesn't feel like it's going to be.

Speaker Change: <unk> extensive or the or as long as what we saw on the R&D side. So we're hopeful that they can get that fixed this year.

Speaker Change: Got it very helpful. Thanks, guys.

Patrick Buckley: Very helpful. Thanks, guys. Yeah, thanks, Patrick. The next question comes from Brandon Rolay with D.A. Davidson. Please go ahead.

Speaker Change: Thanks, Patrick.

Speaker Change: The next question comes from Brandon <unk> with D. A Davidson. Please go ahead.

Brandon Roll: Good morning. Thank you for taking my questions. First, just on the competitive lands, you talked about, you know, organic market share gains, keeping your market share with increased competition; are those market share wins or your ability to protect the market share you have coming out of lower margins, maybe from people, more people bidding on products, or just an overall push in the market to get pricing lower and closer to the consumer? Yeah, I think in some cases, yes, in some cases, no, but I think that's always the case, Brandon. I think that, you know, you can always make the argument that if there's a lot of competition, a lot of pressure, that definitely forces margins down in some cases, but I'd also say, look, a lot of the stuff we're doing. Let me take our air conditioner we mentioned, for example You know, there's not another product out there like it.

Brandon: Good morning, Thank you for taking my questions.

Brandon: First just on the competitive landscape you had talked about.

Brandon: Organic market share gains keeping your market share.

Brandon: With increased competition or are those market share wins or your ability to protect the market share you have coming out of lower margin maybe from people more people bidding on products or just an overall portion of the market.

Brandon: Good pricing lower.

Brandon: To the consumer.

Speaker Change: Yes, I think in some cases, yes in some cases, no, but I think that's always the case, Brandon I think that.

Speaker Change: You can always make the argument that there is a lot of a lot of competition a lot of pressure that that definitely forces.

Speaker Change: Margins down in some cases, but I'd also say look a lot of the stuff we're doing.

Speaker Change: Let me take your air Conditioner, We mentioned for example.

Speaker Change: There is not another product out there like it so what we are competing in the air conditioning space, We've got a product that nobody else has its higher capacity it's quieter.

Jason D. Lippert: So while we're competing in the air conditioning space, you know, we've got a product that nobody else has. It's higher capacity, it's quieter, and we can, you know, retain margins on anything that's got IP or, you know, unique properties or, you know, unique features and benefits. So, you know, our ABS, certainly, there's just nothing else out there really that is giving us competition, so we can hold margins on things like that. New suspension systems, but on some commoditized products, for sure, you're going to experience margin pressure and things like that. But, you know, I don't think it's really any more than what we're typically used to, and that's probably the main story. You know, we're always competing and have been for the last, you know, 30 years; it's just a matter of, it just seems to be more on everybody's radar now.

Speaker Change: And we can we can retain margins on anything that Scott.

Speaker Change: Or unique properties or unique features and benefits so.

Speaker Change: Certainly, there's just nothing else out there really that.

That is giving our competition. So we can hold margins and things like that new suspension systems.

Speaker Change: Commoditize products for sure Youre going to Youre going to experience margin pressure and things like that but I don't think its really any more than what we're typically used to and that's probably the main stories.

Speaker Change: We're we're competing always in half for the last.

Speaker Change: 30 years, its just a matter of it just seems to be more on everybody's radar now.

Jason D. Lippert: Okay, thank you. And then just lastly, just going back to the fourth quarter, wholesale production was much stronger than I think you guys had forecasted for the quarter, yet earnings came in a little lighter than expected. What kind of gives you confidence in your ability to forecast margins moving forward given it seemed like throughout the second half of the year, maybe around the new model year, things got a little squirrely in terms of just accuracy with the forecast. Thank you. Yeah, so to that, I mean, a couple things to point out with the fourth quarter. So we were within that range.

Okay. Thank you and then just lastly.

Speaker Change: Just going back to the fourth quarter wholesale production was much stronger than I think you guys had forecasted for the quarter.

Speaker Change: Earnings came in a little lighter.

Speaker Change: Than expected what kind of gives you confidence in your ability to forecast margins moving forward given it seemed like throughout the second half of the year, maybe around the new model year things got a little squirrelly in terms of just accuracy what the forecast. Thank you.

Speaker Change: Yes, so to that I mean, a couple of things.

Speaker Change: You pointed out with the fourth quarter. So we were within that range. However, I'd say at the very low end on the R&D side.

Lillian Hipscorn: However, I'd say at the very low end on the RV side, you know, Brandon, the biggest driver there was the marine drop-off. I don't think that was anticipated or expected for the industry itself to drop off so dramatically. And look, when we're in a time of, you know, dramatic volatility in terms of industry expectations, production levels, you know, frankly, it's difficult to plan and it's difficult to forecast in that manner. You know, as we're looking forward to 2024, when I think of the various markets that we're in, I think we're anticipating a little bit more stability from the RV side of the business, which is obviously Marine Corps is going to be a challenge.

Speaker Change: Brandon the biggest driver there was the marine drop off I don't think that was anticipated or expected for the industry itself to drop off so dramatically.

Speaker Change: And look when we're in a time.

Speaker Change: Yes dramatic volatility in terms of industry expectations production levels, frankly, it's difficult to plan and it's difficult to forecast in that manner.

We're looking forward to 2024.

Speaker Change: When I think of the various markets that we're in I think we're anticipating a little bit more stability from the RV side of the business, which is.

Speaker Change: Obviously, a significant part of the business marine is going to be a challenge, we're expecting that to be down this year.

Lillian Hipscorn: We're expecting that to be down this year. Again, it's going to be driven by the industry. It's not us driving it.

Speaker Change: Again, it's going to be driven by the industry, it's not us driving it will need to flex and respond appropriately. So they are.

Lillian Hipscorn: We'll need to flex and respond appropriately. So, you know, taking into account the macros and what we're hearing from our customers and the dealers, we're confident in what we're putting forward. Again, the industry is always going to be a little bit of a wild card in terms of what actually pulls through for production. And just to add to that, Brandon, I just say, you know, you know, the puts were, you know, there was a little bit more warranty than normal, like I mentioned a little bit ago, that'll normalize here when we get some volume. Marine was the other big one that Lillian mentioned, but that's, you know, that's less than, a little less than 10% of our total business. So, that being off doesn't impact us as much as you might think.

Speaker Change: Taking into account the macros.

Speaker Change: And what we're hearing from our customers and the dealers.

Speaker Change: We're confident in what we're putting forward again, the industry is always going to be a little bit if youre a wildcard in terms of what actually pulls through.

Speaker Change: Production and just to add to that Brian and I would just say.

Speaker Change: The puts were.

Speaker Change: Little bit more warranty of the normal like I mentioned, a little bit ago.

Speaker Change: That'll that'll normalize here when we get when we get some volume marine was the other big one that Lillian mentioned, but that's that's less than a little bit less than 10% of our total business. So.

Speaker Change: That being off doesn't impact us as much as you might think and then RV unless you said, we'll we expect to continue to normalize and aftermarket has been very steady and as.

Jason D. Lippert: And then our RV business, like she said, we expect to continue to normalize, and the aftermarket's been very steady. And, you know, as we keep talking, we expect the service and repair part of our business to continue to grow double digits. You know, we're just doing more and more repair and service because we've got more and more OEM parts in the field as we've penetrated market share and OEM content over the last decade.

Speaker Change: We keep talking we expect the service and repair and part of our business to continue to grow.

Speaker Change: Double digits.

Speaker Change: We're just we're just doing more and more repair and service because we've got more and more OEM parts in the field as we've as we've penetrated market share in OEM content over the last decade. Those units are all starting to come back and need repair and parts like earnings and actuals and slide out and leveling systems and all the different things that we build so.

Brandon Roll: Those units are all starting to come back and need repair on parts like awnings and axles and slide outs and leveling systems and all the different things that we build. So, hopefully that's helpful.

Speaker Change: Hopefully thats helpful.

Speaker Change: It was thank you.

Jason D. Lippert: Thank you. Yep, thanks. Our final question. Martin with BMI.

Speaker Change: Yes. Thanks.

Speaker Change: Our final question comes from Christian Thomas Martin with BMI. Please go ahead.

Martin: Peace, guys. Hey, good morning. Hey, how are you doing? Jason, I'm good. How are you?

Speaker Change: Hey, good morning.

Speaker Change: Youre doing it Jason was there.

Speaker Change: I am good how are you.

Jason D. Lippert: Was there a significant delta between wholesale shipments and wholesale production in the fourth quarter? I know for the year there was I don't I don't think you know I'm not going to sit here and tell you what the number is because I don't know but you know it doesn't feel like there was it might have been a little more or a little less but I don't. For the year, we said like, you know, you can count on 35 to 45,000 units probably if you're expecting a difference this I got it. And then trying to kind of square your RV, you kind of industry productions in January relative to your sales guidance, I'm kind of getting content on the RV side is similar to what it was in 4Q. Is that the right base to kind of use moving forward?

Speaker Change: Yes.

Speaker Change: There are significant delta between wholesale shipments and wholesale production in fourth quarter.

Speaker Change: I know for the year, there was I don't I don't think.

Speaker Change: I'm not going to sit here and tell you what the number is because I don't know but.

Speaker Change: It doesn't feel like there was it might have been a little more a little less but I don't know I don't know for the year. We said like you can you can count on.

Speaker Change: 35.

Speaker Change: 45000 units, probably if you're expecting a difference this year.

Speaker Change: Last year to this year on on a wholesale number is 325 ish.

Speaker Change: Got it.

Speaker Change: And then trying to kind of square your.

The RV you're kind of in.

Speaker Change: Industry production in January relative to your sales guidance I'm kind of getting content on the RV side is similar to what it was in <unk> is the right base to kind of use moving forward.

Jason D. Lippert: Yeah, that should be pretty consistent. I'm just trying to think of it in a trailing 12 month manner. That should be pretty consistent overall. The only difference we noticed was a little bit of a mix shift and, you know, single axle trailers versus what's historical. And of course, you're out of the show. You see all this, all the entry-level stuff.

Speaker Change: Yes that should be pretty consistent I'm, just trying to think I'm thinking of it in a trailing 12 month manner.

Speaker Change: Yeah.

Speaker Change: That should be overall, it's pretty consistent.

Speaker Change: The only difference we noticed was a little bit of a mix shift in single actual trailers versus what is historical and of course youre out of the shows you feel this although entry level stuff, Bob with Bob Martin was on.

Jason D. Lippert: Bob Martin was on a podcast the other day and said something interesting that he noticed that it shows a lot of the entry-level stuff's moving. So we're seeing a little bit of that trend, but I think it's important to note the difference between, you know, mixed shift and decontenting. While on a mixed shift to lower units, we're going to have a little bit less content there, but we don't see the decontenting of our products on units that would make any impact on our content numbers. Okay. And then just squeeze in one more. You can go to market share content gains of eight and a half percent. How's that kind of calculated?

Speaker Change: Bob cast the other day and said something effect that ive noticed that it shows a lot of the entry level stuffs moving so we're seeing a little bit of that trend and but I think it's important to note the difference between.

Speaker Change: Mix shift an indie content ing.

Speaker Change: While on a mix shift to lower units, we're going to have a little bit less content, there, but we don't see the day counting de contenting of our products on on units that would make any impact on our content number.

Speaker Change: Okay got it and then just squeeze in one more maybe a little more market share content gains of eight and a half.

Speaker Change: Is that kind of calculated what's behind that.

Lillian Hipscorn: What's behind that? Can you say that again, Tristan? Did you call out market share content gains of 8.5%? I may have misheard you. I'm just curious about how you calculated that number.

Speaker Change: Yes.

Speaker Change: Can you say anything interesting.

Speaker Change: Did you call out market share content gains of eight 5% I may have misheard you I'm, just curious kind of how you calculated that number.

Lillian Hipscorn: Yeah, so the eight and a half that Jason quoted was the organic growth in our product on a trailing 12-month basis, plus the addition of acquisition content. So the index pricing, you know, puts it out there. Okay, okay. Got it.

Speaker Change: Yes, so what that was the eight and a half that Jason quoted it was the organic growth.

In our product on a trailing 12 month basis, plus. The addition of acquisition content. So had the index an index pricing.

Speaker Change: Puts out of there.

Speaker Change: Okay. Okay got it thank you.

Jason D. Lippert: Thank you. We have no further questions, so I'll turn the call back over to Jason. Thank you. Thank you, everybody, for joining us. We're really looking forward to next quarter. We'll see y'all then.

Speaker Change: We have no further questions I'll turn the call back over to Jason. Thank you.

Jason D. Lippert: Thanks, everybody for joining we are really looking forward to next quarter.

Jason D. Lippert: Thanks. Bye-bye. Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your line. Thank you.

Speaker Change: We will see all then thanks bye bye.

Speaker Change: Okay.

Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.