Q1 2024 LCI Industries Earnings Call

Emily: Hello everyone, and welcome to the LCI First Quarter Earnings Call. My name is Emily, and I'll be moderating your call today. After the presentation, there will be the opportunity for you to ask 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 Etzkorn, to begin. Please go to [inaudible]

Hello, everyone and welcome to the LCI first quarter earnings call. My name is Emily and I'll be moderating your Po today. After the presentation there will be the opportunity for you to ask any questions, which you can also by pressing star followed by the number one on your telephone keypad.

I'll now turn the call over to our highest level Lillian Etzkorn to begin. Please go ahead.

Lillian D. Etzkorn: Good morning, everyone, and welcome to the LCI Industries first quarter 2024 conference call. I am joined on the call today by Jason Lippert, President and CEO, along with Kev Emmenheiser, VP of Finance and Treasurer.

Lillian D. Etzkorn: Good morning, everyone and welcome to the LCI Industries first quarter 2024 conference call.

Lillian D. Etzkorn: I am joined on the call today, with Jason Lippert, President and CEO, along with Kevin and the Pfizer VP of finance and Treasurer, we will discuss the results for the quarter in just a moment.

Lillian D. Etzkorn: 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. In addition, they involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

Lillian D. Etzkorn: First I would like 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 security 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.

Lillian D. Etzkorn: Which could cause actual results and events to differ materially from those described in the forward looking statements.

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

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

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

Lillian D. Etzkorn: With that I would like to turn the call over to Jason Thanks, Julian and good morning, I'd like to welcome everyone to our first quarter 2024 earnings call.

Jason D. Lippert: Thanks, Lillian, and good morning. I'd like to welcome everyone to our first quarter 2024 earnings call. We've started off the year exceeding expectations with strong profits and margin expansion in the first quarter, driven almost entirely by the continued strength in our diversified businesses and our disciplined operational execution. It is important to emphasize that Lippert is fundamentally much more than just a supplier to RV OEMs, thanks to our strategic execution around diversification over the last decade.

Jason D. Lippert: The global expansion of the Lippert brand into growing markets like transportation, building products, automotive, marine, and RV aftermarkets, manufactured housing, Europe, and other adjacencies has been a key boost to performance in recent years, helping mitigate the cyclical impact that the RV industry can have. For Q1 2024, we delivered $968 million in revenue, up 16% sequentially.

Jason D. Lippert: <unk> off the year exceeding expectations with strong profits and margin expansion in the first quarter driven almost entirely by the continued strength in our diversified businesses and our disciplined operational execution.

Jason D. Lippert: It is important to emphasize that liberate is fundamentally much more than just the supplier to RV Oems thanks to our strategic execution around diversification over the last decade, the global expansion of deliberate brand into growing markets like transportation building products automotive marine and RV aftermarket manufactured housing Europe and other adjacencies.

Jason D. Lippert: There has been a key boosted performance in recent years, helping mitigate the cyclical impact of the RV industry can have.

Jason D. Lippert: For Q1, 2024, we delivered $968 million in revenue up 16% sequentially. Our aftermarket segment led the way with solid operating margins of 11, 8% along with other parts of our adjacent markets, while our RV OEM business is improving from prior quarters. Today, we are tracking to the $200 million of organic growth increase across our business.

Jason D. Lippert: Our aftermarket segment led the way with solid operating margins of 11.8%, along with other parts of our adjacent markets, while our RVOEM business is improving from prior quarters. Today, we are tracking to the $200 million of organic growth increase across our business that we announced last quarter. In the first quarter of 2024, 57% of our total sales were derived from our businesses outside of North American RV OEMs. Even with the significant growth we have already achieved in these markets, we still have an extensive runway with over $11 billion in combined total addressable growth opportunities ahead of us.

Jason D. Lippert: But we announced last quarter.

Jason D. Lippert: In the first quarter of 2024, 57% of our total sales were derived from our businesses outside of North American RV OEM.

Jason D. Lippert: Even with the significant growth we have already achieved in these markets. We still have an extensive runway with over 11 billion of combined total addressable growth opportunities ahead of us.

Jason D. Lippert: Of our addressable growth opportunities, we estimate over $5 billion of potential in the aftermarket and over $4 billion in combined international and adjacent markets. Given this runway, backed by a solid balance sheet, we plan to continue to seek out and invest in more organic growth, as well as strategic opportunities to further diversify our business. Additionally, we continue to execute on operational improvements in the quarter as part of our focus on streamlining production and reducing fixed costs while keeping capacity flexible. We have consolidated several facilities over the past year, effectively reducing almost 1.2 million square feet of production space while maintaining similar levels of production capacity.

Jason D. Lippert: Of our addressable growth opportunities, we estimate over $5 billion of potential in aftermarket and over $4 billion and combined international adjacent markets given us runway backed by a solid balance sheet. We plan to continue to seek out and invest in more organic growth as well as strategic opportunities to further diversify our business.

Jason D. Lippert: Additionally, we continued to execute on operational improvements in the quarter as part of our focus on streamlining production and reducing fixed costs, while keeping capacity flexible.

Jason D. Lippert: We have consolidated several facilities over the past year effectively reducing almost one 2 million square feet of production space, while maintaining similar levels of production capacity.

Jason D. Lippert: Our teams also achieved direct and indirect cost improvements ahead of schedule, driving down input costs and significantly improving margins in the quarter. We continue to invest in automation to drive efficiencies and have put more resources into automation within our footprint, which we believe significantly differentiates us in the outdoor recreation space. For example, as we finish building and equipping our $65 million glass and acrylic processing center, we can now process hundreds of thousands of pieces of glass on a monthly basis for use in a wide range of end markets, including housing, RV, marine, commercial glass, solar glass, and much more to efficiently meet demand across our diversified business.

Jason D. Lippert: Our teams also achieved direct and indirect cost improvements ahead of schedule driving down input costs and significantly improving margins in the quarter.

Jason D. Lippert: We continue to invest in automation to drive efficiencies and have put more resources in the automation within our footprint, which we believe significantly differentiates us in the outdoor recreation space. For example, as we finish building and equipping our $65 million glass and acrylic processing center. We can now process hundreds of thousands of pieces of the glass on a monthly basis.

Jason D. Lippert: For use in a wide range of end markets from housing RV Marine commercial glass solar glass and much more to efficiently meet demand across our diversified businesses.

Jason D. Lippert: We believe that this showpiece sets a new standard, giving us a competitive edge and showcasing our commitment to investing in quality manufacturing for the future. In addition, this automated facility has started building acrylic windows for RVs in the U.S., like the ones we sell in Europe. The importance of this can't be understated enough, as we believe we are the only supplier in North America building this product. As acrylic windows become more widely used in the market, it will help us widen our moat in this important category.

Jason D. Lippert: We believe that this show piece sets, a new standard, giving us a competitive edge and showcasing our commitment to investing in quality manufacturing for the future.

Jason D. Lippert: In addition, this automated facility also it started building at critical Windows for Rvs and the U S. Like the ones we sell in Europe.

Jason D. Lippert: <unk> of this can't be underscored enough as we believe we are the only supplier in North America building. This product as acrylic window has become more widely used in the market. It will help us widen our mode on this important category.

Jason D. Lippert: We remain hard at work to identify and capture strategic growth opportunities, such as our recently announced deal with Camping World, through which we purchased their furniture business. As many know, Camping World embarked on a multi-year journey of exploring vertical integration, and we believe that they felt that their financial and labor resources were much better spent in other strategic areas. One of those areas identified by Marcus on the CW team was that of revamping the retail store and online space with a new look and new partners.

Jason D. Lippert: We remain hard at work to identify and capture strategic growth opportunities such as our recently announced deal with camping world through which we purchased their furniture business unit as many know camping world embarked in a multi year journey of exploring vertical integration and we believe that they felt that their financial and labor resources. We are much better spent in other strategic areas.

Jason D. Lippert: One of those areas identified by markets on the CW team with that of revamping the retail store and online space with a new look and new partners part of the strategic move for both companies with the figure out how the Lipper brand can help bolster camping world online and in store sales.

Jason D. Lippert: Part of the strategic move for both companies was to figure out how the Lippert brand can help bolster camping roles online and in-store sales. Turning to RV, during the first quarter, content for total RV decreased from the prior year to $5,097, while content for motorhome RV for the quarter was $3,656.

Jason D. Lippert: Turning to RV during the first quarter content for total RV decreased from the prior year to $5097, while content promoter home RV for the quarter was $3656.

Jason D. Lippert: While content was down slightly in both areas year over year, driven largely by index pricing reductions, we saw sequential organic growth of 1% for total and 4% for motorhome content in Q4 of 2023. Because of the impact of our innovation, our content continues to grow. Since 2020, our content has grown over 50% on total RVs, demonstrating our ability over time to continue to innovate great content for OE. RVOEM dealers are continuing to closely manage inventory levels, with most of them bringing in just what they need for the spring season.

Jason D. Lippert: While content was down slightly in both areas year over year, driven largely by index pricing reductions, we saw sequential organic growth of 1% for total and 4% for motor home content over Q4 of 2023.

Jason D. Lippert: Because of the impact of our innovation our content continues to grow since 2020, our content has grown over 50% of total RV is demonstrating our ability over time to continue to innovate great content to Oems.

Jason D. Lippert: RV OEM dealers are continuing to closely manage inventory levels with most of them, bringing in just what they need for the spring season that said, we are seeing positive trends for spring as we grew north American RV OEM sales by 17% in the quarter over last year Q1.

Jason D. Lippert: That said, we are seeing positive trends for spring as we grew North American RV OEM sales by 17% in the quarter over last year's Q1. Motorhomes will likely be a drag on the industry wholesale for the next 12 months, and we also expect totals to soften after July with a possible pickup in production close to year-end. All in all, these factors put us close to our wholesale forecast from late last year of around 325 to 350,000 total. We do feel that 2025 will be slightly better than 2024, and as we have seen historically, we believe that we will likely have some sequential solid years of slow and steady growth post-now. Our reproduction for April was up slightly from March, and we expect May to be on par or just slightly ahead of April.

Jason D. Lippert: Motor homes will likely be a drag on the industry wholesale for the next 12 months and we also expect total to soften after July with a possible pickup in production closer to year end all in all these factors put us close to our wholesale forecast from late last year of around 325 to 350000 total units.

Jason D. Lippert: We do feel that 2025 will be slightly better than 2024, and as we have seen historically, we believe that we will likely have some sequential solid years of slow and steady growth post downturn.

Jason D. Lippert: Production for April was up slightly from March and we expect may to be on par or just slightly ahead of April we.

Jason D. Lippert: We are diligently monitoring these trends as we work to ramp up production and support spring selling. OEMs appear to be mixed on downtime for the July 4th holiday, with some taking one week and others taking two. We believe that a huge differentiator for Lippert is the short lead times we're able to offer RBOEMs on our products due to our footprint and business process. Our facilities can swiftly provide products with typically only a week of lead time with the ability to accommodate emergency demand as well.

Jason D. Lippert: We are diligently monitoring these trends as we work to ramp up production in support of the spring selling season Oems appear to be mixed on downtime for the July 4th holiday with some taking one week and others, taking too we believe that a huge differentiator proliferative. The short lead times, we're able to offer RV Oems on our products due to our footprint and business processes.

Jason D. Lippert: Our facilities can swiftly provide products with typically only a week of lead time with the ability of accommodating emergency demand as well this agility coupled with the fact that our facilities are generally close in proximity to our RV customers allows us to offer just in time inventory to Oems, eliminating the need for them to carry any more inventory than needed.

Jason D. Lippert: This agility, coupled with the fact that our facilities are generally close in proximity to our RV customers, allows us to offer just-in-time inventory to OEMs, eliminating the need for them to carry any more inventory, helping reduce their customers' costs. We believe that this is a big part of our moat when competitors try to supply the industry with competing products outside of Elkhart County or even outside the country. Industry partnerships are another key way we are strengthening our brand and advancing our leading position in outdoor recreation.

Jason D. Lippert: Helping reduce our customers' cost.

Jason D. Lippert: We believe that this is a big part of our Mo when competitors trying to supply the industry with competing products outside of Elkhart county, or even outside the country.

Jason D. Lippert: Industry partnerships are another key way, we are strengthening our brand and advancing our leading position in the outdoor recreation space recently, we held our annual op braking systems spring showcase where Bob Martin CEO of door industry, and many other industry leaders and RV enthusiasts.

Jason D. Lippert: Recently, we held our Analog Braking Systems Spring Showcase where Bob Martin, CEO of Door Industries, and many other industry leaders and RV enthusiasts drove our new ABS brakes on the Navistar track in northern Minnesota. Taking customers to the track and giving them real life experience has really helped in highlighting how much of a difference we believe ABS can make for safely towing both travel trailers and fifth wheels. Towing is one of the biggest hurdles for new buyers to get over, and we have found that dealers are having a much easier time getting new buyers peace of mind on units equipped with our ABS suspension system.

Bob Martin: Test drove our new ABS brakes on the Navistar track in Northern Indiana.

Bob Martin: <unk> customers to the track and giving them real life experience has really helped and highlighting how much of a difference. We believe ABS can make for safely towing both travel trailers and fifth wheels towing.

Bob Martin: <unk> is one of the biggest hurdles for new buyers to get over and we have found that dealers are having a much easier time getting new buyers peace of mind and units equipped with our ABS as mentioned systems, turning to aftermarket or aftermarket net sales were $210 million for the quarter down 3% for the same period in 2023.

Jason D. Lippert: Turning to the aftermarket, our aftermarket net sales were $210 million for the quarter, down 3% to the same period in 2020. While our automotive aftermarket was up double digits, our RV and marine businesses were nearly flat due to dealers being overly cautious about taking on more. Despite this small top-line decline, we still achieved a 200 basis point increase in operating margins due to improvements, along with tailwinds from continued operational efficiency. We are proud of our aftermarket teams for hitting an operating margin of double digits for the quarter, solidifying the importance of diversified.

Bob Martin: Our automotive aftermarket was up double digits, RV and marine businesses were nearly flat due to dealers being overly cautious about taking on more inventory.

Jason D. Lippert: Despite the small top line decline, we still achieved a 200 basis point increase in operating margins due to improvements along with tailwind from continued operational efficiencies.

Jason D. Lippert: We are proud of our aftermarket teams are hitting an operating margin of double digits for the quarter solidifying the importance of a diversified business.

Jason D. Lippert: As literally millions of vehicles approach the repair and replacement cycle in the coming years, we believe our aftermarket business is very prepared to capture demand for service support as well as replacement and upgrade. This should be one of the single largest impacts on our business over the coming years. It's hundreds of thousands of vehicles coming into service, eating our parts.

Jason D. Lippert: As literally millions of vehicles approach the repair and replacement cycle in the coming years, we believe our aftermarket business is very prepared to capture demand for service support as well as replacement and upgraded content.

Jason D. Lippert: This should be one of the single largest impact in our business over the coming years as hundreds of thousands of vehicles come into service eating our parents, we believe that the greater the content in the vehicles the greater our service parts business.

Jason D. Lippert: We believe that the greater the content of the vehicle, the greater our service part. Based on our content increases over the years, these vehicles will be entering service with the greatest amount of Lippert content we've ever had. Our automotive aftermarket brand, CURT, continues to thrive, representing over half of all Lippert aftermarkets. Last year alone, CURT sold just shy of 1 million hedges, and we are confident that this will continue in 2024

Jason D. Lippert: Based on our content increases over the years. These vehicles will be entering service, where the greatest amount of liberate content we've ever seen.

Jason D. Lippert: Our automotive aftermarket brand Kurt continues to thrive representing over half of all leopard aftermarket sales last year alone Crystal just shy of $1 million hedges and we are confident that this will continue in 2024.

Jason D. Lippert: Since our acquisition of the Curt family of products in late 2019, we have seen that business grow over 40% on top. The appliance market also offers substantial growth opportunity potential to our aftermarket, with Furian's Ovens, Hot Water Heaters, Refrigerators, and Air Conditioners driving market share and top line expansion. Our new supply agreement with Camping World should help increase our aftermarket top line for RV, not only due to the fact that Camping World has such a large footprint, but also because we believe Camping World will continue to execute on new store acquisitions and startup, taking our retail footprint with them as they continue their expansive growth towards their stated 320 stores by 2028.

Jason D. Lippert: Since our acquisition of the <unk> family of products in late 2019, we have seen that business grow over 40% on the top line.

Jason D. Lippert: Clients market also offer substantial growth opportunity potential to our aftermarket with Purion ovens hot water heaters, refrigerators, and air conditioners, driving market share and top line expansion.

Jason D. Lippert: Our new supply agreement with camping World should help increase our aftermarket topline for RV not only due to the fact that camping world has such a large footprint, but also because we believe camping world will continue to execute our new store acquisitions and startups, taking our retail footprint with them as they continue their expansive growth towards our stated 320 stores by 2028.

Jason D. Lippert: Alongside our expanding parts and service business, we are actively seeking ways to engage consumers and dealers to gather feedback to enhance our products. We believe that Lippert Technical Institute has been instrumental by hosting maintenance trainings for dealer technicians and RV owners, empowering them to help prolong the lifespans of the vehicles and resolve issues efficiently, all enabling more time on the road.

Jason D. Lippert: Alongside our expanding parts and service business, we are actively seeking ways to engage consumers and dealers together feedback to enhance our products. We believe that liberate technical Institute has been instrumental by hosting maintenance training for dealer technicians, and RV owners empowering them to help prolong lifespan of the vehicles and resolve issues.

Jason D. Lippert: <unk>, all enabling more time on the road.

Jason D. Lippert: We also believe that having what we consider to be the best customer service in the industry and striving to be among the easiest to do business with in over a million transactions annually with dealers and consumers are strong differentiators for those groups. We believe the main engine for our aftermarket business is the continuous improvement of our customer service and the experience of every single customer. During the quarter, we also hosted the annual Installer Council Summit in Eau Claire, Wisconsin, where we engaged with customers and gathered important feedback to leverage in our automotive aftermarket product development.

Jason D. Lippert: We also believe that having what we consider to be the best in industry customer service and striving to be among the easiest to do business with and over 1 billion transactions annually with dealers and consumers are strong differentiators for those groups.

Jason D. Lippert: We believe the main engine for our aftermarket business is the continuous improvement of our customer service and the experience of every single customer during the quarter. We also hosted the annual Installer Council summit in Eau, Claire, Wisconsin, where we engage with customers and gather important feedback to leverage in our automotive aftermarket product development.

Jason D. Lippert: Events like this, along with our other initiatives like Lippert Scouts, the Campground Project, Consumer Rallies, and Lippert Ambassadors, help us to build our relationship with a well-connected outdoor community, with a hope of driving trust and long-term loyalty to the Lippert brand. Turning to North American adjacent markets, first quarter revenues were now 17% compared to the prior year due to the ongoing softness in the marine retail environment. This softness is expected to continue throughout the year.

Jason D. Lippert: Hence like this along with our other initiatives like Lippert Scouts campground project consumer rallies and liberate ambassadors help us to build a relationship with a well connected outdoor community.

Jason D. Lippert: With the hope of driving trust and long term loyalty to deliberate brand.

Jason D. Lippert: Turning to North American adjacent markets first quarter revenues were down 17% compared to prior year due to the ongoing softness in the marine retail environment.

Jason D. Lippert: This softness is expected to continue throughout the year. However, we anticipate that marine wholesale will start improving towards year end we remain.

Jason D. Lippert: However, we anticipate that marine wholesale will start improving toward year-end. We remain focused on leveraging our innovation engine to drive new product introductions, while adding new efficiencies to support profitability in the current downturn. We also expect easier year-over-year comps in this area as we head into the second half of 2020.

Jason D. Lippert: Focus on leveraging our innovation engine to drive new product introductions, while adding new efficiencies to support profitability in the current down cycle. We also expect easier year over year comps in this area as we head into the second half of 2024.

Jason D. Lippert: We are showing solid results in the other adjacent markets, including manufactured housing, utility trailers, and commercial vehicles. These markets are continuing to grow, and we are also seeing our market shares increase for products like our residential windows and trailer axle and suspension products. As we have stated over the last couple of calls, our axle and suspension products business continues to grow, especially in the trailer space, where there are over 500,000 utility and cargo type trailers built annually. In this area, we have added almost $90 million in new business since 2022.

Jason D. Lippert: We are showing solid results in the other adjacent markets, including manufactured housing utility trailers and commercial vehicles. These markets are continuing to grow and we are also seeing our market share has increased for products like our residential windows and trailer axle and suspension products. As we have stated over the last couple of calls our axle and suspension products business continues to grow.

Jason D. Lippert: So, especially in the trailer space, where there are over 500000 utility and cargo type trailers built annually.

Jason D. Lippert: In this area, we have added almost $90 million in new business since 2022.

Jason D. Lippert: Also, in our adjacent markets, we saw a strong start for our newly launched bus chassis stretching and transit bus seating. This was a great organic startup that began in 2024, where we utilized buildings and team members that we already had in the business. Moving outside of North America, our international business grew 5% over the prior year as our international aftermarket business continued to grow and European RV dealers continued to take on more inventory. Since the time we started investing in Europe, we have noticed that their business cycles are much less cyclical than what we are accustomed to in North America, which helps smooth out our revenue.

Jason D. Lippert: Also in our adjacent markets, we saw a strong start for our newly launched bus chassis stretching and transit bus seating products. This was a great organic startup that began in 2024, where we utilized buildings and team members that we already had on the business.

Jason D. Lippert: Moving outside of North America, and international business grew 5% over the prior year as our international aftermarket business continues to grow and European RV dealers continue to take on more inventory.

Jason D. Lippert: Since the time, we started investing in Europe, we have noticed that their business cycles are much less cyclical than what we're accustomed to in North America, which helps smooth out our revenues.

Jason D. Lippert: We believe that our products, such as pop-tops, acrylic windows, bedlits, doors, and electronics, exemplify how our global presence fosters innovation across our brands. And we are continuing to see a warm reception for these European-developed products when we introduce them to our North American market. We expect Europe's growth and performance to continue as we keep looking for new products and strategic options for this important market. As many of you know, innovation serves as the fundamental piece of our growth.

Jason D. Lippert: We believe that our products such as pop tops acrylic windows, <unk> doors, and electronics exemplify how our global presence fosters innovation across our brands and we are continuing to see a warm reception of these European developed products when we introduce them to our North American market.

Jason D. Lippert: We expect Europe's growth in performance to continue as we keep looking for new products and strategic options for this important market.

Jason D. Lippert: As many of you know innovation serves the fundamental piece of our growth strategy, we made significant investments in our R&D capabilities and remain confident that our innovation will continue fueling the development of new products. The savvy consumers are looking for which helps bolster our competitive edge and increase revenues.

Jason D. Lippert: We have made significant investments in our R&D capabilities and remain confident that our innovation will continue fueling the development of new products that savvy consumers are looking for, which helps bolster our competitive edge and increase revenue. In addition to new product development, we are also focused on making improvements to existing products, adding additional content consumers deem of value at a more premium price point. Historically, this strategy has provided us with a significant opportunity for long-term content growth, as there are numerous products in our portfolio that we will try to continue to enhance and evolve.

Jason D. Lippert: In addition to the new product development. We are also focused on making improvements to existing products, adding additional content consumers deem a value at a more premium price point.

Jason D. Lippert: Historically this strategy has provided us with significant opportunity for long term content growth as there are numerous products in our portfolio that we will try to continue to enhance and evolve.

Jason D. Lippert: Additionally, these improvements and innovations are typically unique and essential to RVs, helping to make them resistant to commoditization and mitigate their risk of decontenting by OEMs. In most cases, by adding content like glass to entry doors, chassis modifications, or any like braking systems to axles, it helps to make us more competitive and less susceptible to intense competition. We believe the Anti-Lock Brakes have been a significant example of how we innovate for and anticipate customer needs. Anti-lock Brake systems were not readily available or affordable in the U.S. for RV production until we brought them to market last year.

Jason D. Lippert: Additionally, these improvements and innovations are typically unique and essential to rvs, helping to make them resistant to commoditization and mitigate the risk of the content by Oems in most cases by adding content like glass entry doors chassis modifications or any like braking systems to axles and helps to make us more competitive.

Jason D. Lippert: Unless susceptible to intense competition.

Jason D. Lippert: We believe the antilock brakes had been a significant example of how we innovate for and anticipate customer needs and.

Jason D. Lippert: Brake systems were not readily available or affordable in the U S for RV production until we brought them to market last year since launching we now have over 10 high profile total RV brands using ABS with more in process of committing an model change growing our market share into the double digits with a total addressable market of $150 million to 200 million.

Jason D. Lippert: Since launching, we now have over 10 high-profile towable RV brands using ABS, with more in the process of committing and modeling. We are growing our market share into the double digits with a total addressable market of $150 million to $200 million. In addition, we just launched coil spring independent suspension to lessen vibrations from the road to the trailer, which should significantly lessen the shakedown the trailers experience on the road, thus greatly improving quality issues for yield.

Jason D. Lippert: In addition, we just launched coil spring independent suspension to lessen vibration from the road to the trailer box.

Jason D. Lippert: Which should significantly lessened the shakedown the trailers experience on the road, thus greatly improving quality issues for the OEM and.

Jason D. Lippert: In addition to these new products, our 4K window series with integrated shade and unique square window design, new slide outs, new high-capacity quiet air conditioners, new leveling, bus seating, furnaces, a new line of electric Bimini's, and many more new products should gain momentum as we move through 2024. As we expand our portfolio, our focus remains on introducing innovative products that cater to a multitude of customer tastes and needs in the diversified markets we serve.

Jason D. Lippert: In addition to these new products are four K window series with integrated shade and unique square window design, new slide out new high capacity quiet air conditioners, new leveling, but seating furnaces, a new line of electric eliminated and many more new products should gain momentum as we move through 2024, as we expand our portfolio our focus.

Jason D. Lippert: Remains and introducing innovative products that cater to a multitude of customer tastes and needs in the diversified markets we serve.

Jason D. Lippert: As we have long stated, our culture starts with experienced and empathetic leaders at the top who are constantly growing and developing their own leadership. We believe that great leadership drives retention, and higher retention is directly linked to increases in innovation, safety, efficiency, and quality, all of which are key drivers of success in any business. Just a few weeks ago, during our Volunteer Week, we hosted our annual packout event where more than 1,200 Lippert team members showed up and packed over 144,000 items to be donated to the Boys and Girls Clubs of Elkhart and St. Joe Counties, as well as other organizations and local schools.

Jason D. Lippert: As we have long stated our culture starts with the experienced an empathetic leaders at the top who are constantly growing and developing their own leadership, we believe that great leadership drives retention and higher retention is directly linked and increases in innovation safety efficiency and quality all of which are key drivers of success in any business just a few.

Jason D. Lippert: X ago during their volunteer week, we hosted our annual pack out event, where more than 200 liberate team members showed up and pack over 144000 items to be donated to the boys <unk> girls clubs, the bulker and St. Joe counties as well as other organizations and local schools.

Jason D. Lippert: More than 2,200 team members participated and volunteered company-wide. It was yet another opportunity to demonstrate how business can be a force for good, utilizing our teams to make an impact in the communities where we live and work. The best thing about this is that we see more businesses attempting to follow our lead and set up their own larger-scale community impact efforts. Additionally, we held the Serve with a Purpose event at the Jayco Jubilee Rally, where attendees from all over the country gathered to pack boxes filled with essential items, including clothing, school supplies, and hygiene products, to be donated to local Boys and Girls Clubs.

Jason D. Lippert: More than 2200 team members participated and volunteer week company wide. It was yet another opportunity to demonstrate how our business can be a force for good utilizing our teams to make an impact in the communities, where we live and work. The best thing about this is that we see more business is attempting to follow our lead and set up their own larger scale community impact efforts.

Jason D. Lippert: Additionally, we held to serve with a purpose event, the Jacobs Jubilee rally where attendees from all over the country together to pack boxes, those essential items, including clothing school supplies and hygiene products to be donated to local boys and girls clubs.

Lillian D. Etzkorn: Thanks to our large scale and company-wide focus on some important communities around us, we were named as one of America's Most Responsive Companies of 2024 by News, an honor we are quite proud to have received. We remain focused on disciplined working capital management, including improving inventory terms, and have line of sight to additional inventory reductions this year to support cash generation. Just, only about a year ago, our inventory was nearly $1 billion, and it is now sitting at the end of March around $734 million.

Jason D. Lippert: Thanks to our large scale and companywide focus on supporting communities around US we were named as one of America's most responsible companies of 2024 by Newsweek and honor we are quite proud to have received well.

Jason D. Lippert: We remain focused on disciplined working capital management, including improving inventory turns and have line of sight to additional inventory reductions this year to support cash generation.

Jason D. Lippert: Only about a year ago, our inventory with nearly $1 billion and is now sitting at the end of March around $734 million.

Lillian D. Etzkorn: Our team is laser focused on cash management. We plan to continue to invest in R&D and innovation while pursuing strategic growth opportunities and returning capital to shareholders. At the present, we are holding more conversations around strategic acquisitions with some very intentional targets. It feels like we are getting back on track with our more normal historical cadence of acquisitive growth after taking a breather last year to conserve capital given the RV environment.

Jason D. Lippert: Our team is laser focused on cash management, we plan to continue to invest in R&D and innovation, while pursuing strategic growth opportunities and returning capital to shareholders.

Jason D. Lippert: At the present, we are holding more conversations around strategic acquisitions with some very intentional targets. It feels like we're getting back on track with our more normal historical cadence of acquisitive growth after taking a breather last year to conserve capital given the RV environment in closing I'd like to thank all of our global team members for their hard work and consistent.

Lillian D. Etzkorn: In closing, I'd like to thank all of our global team members for their hard work and consistent dedication in moving Lippert forward this past quarter. Every week, I visit at least one facility and meet with our frontline team members, leaders, and management. It's amazing to see what a talented group of people we have leading businesses all over the company. With the guidance of our experienced leaders, we plan to continue to execute on our strategic priorities, striving to provide best-in-class service to our customers while delivering profitable and diversified growth and long-term shareholder value. I will now turn to Lillian Etzkorn, our CFO, to give more detail on our financial results.

Jason D. Lippert: <unk> and moving it forward this past quarter.

Jason D. Lippert: Every week I visited at least one facility and meet with our frontline team members leaders and management and it's amazing to see what a talented group of people, we have leading businesses all over the company.

Jason D. Lippert: With the guidance of our experienced leaders we plan to continue to execute on our strategic priorities driving to provide best in class service to our customers, while delivering profitable and diversified growth and long term shareholder value.

Lillian D. Etzkorn: Our consolidated net sales for the first quarter were $968 million, a decrease of 1% from the first quarter of 2023. This was primarily driven by lower North American marine production levels and decreased selling prices, which are indexed to select commodities, mostly offset by increased North American RV wholesale shipments.

Jason D. Lippert: I will now turn the willingness garner CFO to give more detail on our financial results.

Jason D. Lippert: <unk>.

CFO: Thank you Jason.

CFO: Consolidated net sales for the first quarter were $968 million a decrease of 1% from the first quarter 2023. This was primarily driven by lower North American marine production levels and decreased selling prices, which are indexed to select commodities, mostly offset by increased North American RV.

CFO: Shipments on a sequential basis, we were up 16% from Q4 of 2023 delivering strong growth across most of our market.

Lillian D. Etzkorn: On a sequential basis, we were up 16% from Q4 of 2023, delivering strong growth across most of our markets. OEM net sales for the first quarter of 2024 were $758 million, roughly flat with the same period in 2023. RV OEM sales for the first quarter of 2024 were $460 million, up 15% compared to the prior year period, driven by a 9% increase in North American RV wholesale shipments, partially offset by decreased selling prices, which are indexed to select commodities. Content per towable RV unit was $5,097.00, while content per motorized unit was $3,656.00.

CFO: OEM net sales for the first quarter of 2024 758 million roughly flat with the same period of 2023.

CFO: R&D OEM sales.

CFO: First quarter of 2024 was $460 million up 15% compared to the prior year period.

CFO: Driven by a 9% increase in North American RV wholesale shipments.

CFO: Partially offset by decreased selling prices, which are indexed to select commodities.

CFO: Content per towable, RV unit with $5097.

CFO: <unk> $3656.

Lillian D. Etzkorn: Both were down compared to the prior year period, primarily due to the index pricing pass-throughs. We had sequential growth of $39 for towable and $150 for motorhome content in Q4 of 2023. We've continued to increase our organic content and market share through our focus on innovation. In Q1 of 2024, organic growth contributed approximately 1.6% year-over-year to LTM content per unit. Adjacent Industries OEM net sales for the first quarter of 2024 were $299 million, down 17% year over year, primarily due to lower sales to North American Marine OEMs.

CFO: Those were down compared to the prior year period, primarily attributed to the index pricing pass throughs.

CFO: We had sequential growth of $39 <unk> and $150 for motor home content over Q4 of 2023 with.

CFO: We've continued to increase our organic content and market share through our focus on innovation.

CFO: In Q1 of 2020.

CFO: Organic growth contributed approximately one 6% year over year and LTM content per unit.

CFO: Adjacent industries OEM net sales for the first quarter of 2024 were $299 million down 17% year over year, primarily due to lower sales to North American Marine OEM.

Lillian D. Etzkorn: North American Marine OEM net sales in the first quarter of 2024 were $65 million, down 45% year over year, driven by inflation and rising interest rates impacting retail consumers. As Jason mentioned, we anticipate the softness to continue throughout the year. However, we anticipate that pressure on marine sales will start decreasing towards the end of the year as we begin to cycle easier cops.

CFO: North American Marine OEM net sales in the first quarter of 2024 were.

CFO: $65 million.

CFO: Down 45% year over year, driven by inflation and rising interest rates impacting retail consumers.

CFO: As Jason mentioned, we anticipate the softness to continue throughout the year. However, we anticipate the pressure on marine sales lets start decreasing towards the end of the year as we begin to cycle easier comp.

Lillian D. Etzkorn: Q1 2024 sales in the aftermarket business decreased 3% compared to the prior year period, primarily driven by lower volumes within the lane markets and pressure on discretionary spending. This was partially offset by growth in the automotive aftermarket, where we have been realizing strong market share gains. International sales increased 5% year over year, and we have been pleased with the performance of the team and strong market reception for our innovative product.

CFO: Q1, 2024 sales in the aftermarket business decreased 3% compared to the prior year period, primarily driven by lower volumes within the marine markets and pressure on discretionary spending.

CFO: This was partially offset by growth in the automotive aftermarket, where we have been realizing strong market shrinking international sales increased 5% year over year and we have been pleased with the performance of the team and strong market reception to our innovative products.

Lillian D. Etzkorn: The strengths seen in our diversified businesses continue to support our profit and margin performance. Growth margins were 23.1% compared to 19.1% in the prior year period, primarily due to lower material and freight costs. Additionally, warranty costs decreased $8 million compared to the prior year.

CFO: The strength seen in our diversified businesses continue to support our profit and margin performance.

CFO: Gross margins were 23, 1% compared to 19, 1% in the prior year period, primarily due to lower material and freight costs.

CFO: Italy warranty costs decreased $8 million compared to prior year.

Lillian D. Etzkorn: I do want to comment that we achieved this margin expansion earlier in the year than originally anticipated. So, although we will deliver our highest margin in Q2 due to seasonality, the first quarter will be the high watermark for margin expansion through the balance of the year. Consolidated operating profit during the first quarter was $58 million, or 6%, which is an improvement of 390 basis points over the prior year. The aftermarket segment delivered strong operating profits in the quarter at 11.8 percent, which is a 220 basis point improvement over the prior year. Gap net income in Q1 of 2024 was $36.5 million, or $1.44 earnings per diluted share, compared to a net income of $7.3 million, or $0.29 earnings per diluted share, in Q1 of 2023.

CFO: I do want to comment that we achieved margin expansion earlier in the year than originally anticipated.

CFO: So, although we will deliver our highest margin in Q2 due to seasonality first quarter will be the high watermark for margin expansion through the balance of the year.

CFO: Consolidated operating profit trends first quarter was $58 million or 6%, which is an improvement of 390 basis points over prior year.

CFO: The aftermarket segment delivered strong operating profits in the quarter and 11, 8%, which is a 220 basis point improvement over prior year.

CFO: GAAP net income in Q1 of 2024 with $36 $5 million or $1 44 earnings per diluted share compared to a net income of $7 3 million or 29 earnings per diluted share in Q1 of 2023.

Lillian D. Etzkorn: EBITDA increased 72% to $90.3 million for the first quarter of 2024 compared to the prior year period. Non-cash depreciation and amortization was $32.7 million for the three months ended March 31, 2024, while non-cash stock-based compensation expense was $4.3 million for the same period. We anticipate depreciation and amortization to be in the range of $130 to $140 million during the full year 2024. For the three months ended March 31, 2024, cash used in operating activities was $8 million, with $9 million used for capital expenditures and $27 million returned to shareholders in the form of dividends.

CFO: EBITDA increased 72% to $93 million for the first quarter 2024 compared to the prior year period.

CFO: Noncash depreciation and amortization was $32 7 million for the three months ended March 31, 2024, while noncash stock based compensation expense was $4 3 million for the same period, we anticipate depreciation and amortization to be in the range of 100.

CFO: $30 million to $140 million during the full year 2024.

CFO: For the three months ended March 31, 2020 for cash used in operating activities was $8 million with 9 million used for capital expenditures and 27 million returned to shareholders in the form of dividends.

Lillian D. Etzkorn: These results are in line with our expectations as we typically have a relatively higher cash use at the beginning of the calendar year due to the seasonality of production and sales. At the end of the first quarter, we had an outstanding net debt position of $833 million, two and a half times pro forma EBITDA, which is adjusted to include LTM EBITDA of acquired businesses and the impact of non-cash and other items as defined in our credit agreement.

CFO: These results are in line with our expectations as we typically have relatively higher cash used at the beginning of the calendar year due to the seasonality of production and sales.

CFO: At the end of the first quarter, we had an outstanding net debt position of 833 million to five times pro forma EBITDA, which is adjusted to include LTM EBITDA of acquired businesses and the impact of noncash and other items as defined in our credit agreement.

Lillian D. Etzkorn: Overall, we are seeing positive signs in total revenue both sequentially and year over year. For the month of April, sales were up 12% to $378 million versus April of 2023. This is primarily due to three more RV production days in 2024 compared to the prior year period. This was partially offset by a significant decline in marine sales in the month compared to 2023.

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

CFO: For the month of April sales were up 12% to $378 million versus April of 2023. This is primarily due to three more RV production days in 2024 compared to the prior year period. This was partially offset by a significant decline in marine sales in the month compared to 2023.

Lillian D. Etzkorn: We do expect marine softness to continue, but we expect pressure to abate somewhat as we cycle easier comps in the second half of 2024. As Jason stated earlier, although we do not have a great amount of visibility into the full year, we are seeing continued positive production trends in the near term. Gradual improvements in the RV OEM market, coupled with continued performance in our diversified businesses, will continue to drive Lippert forward.

CFO: We do expect marine softness to continue but we expect pressure to abate somewhat as we cycle easier comps in the second half of 2024.

CFO: As Jason stated earlier, although we do not have a great amount of visibility into full year. We are seeing continued positive production trends in the near term.

CFO: Gradual improvements in the RV OEM market, coupled with continued performance in our diversified businesses will continue to drive electric Ferrari.

Lillian D. Etzkorn: 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 long-term leverage of one and a half times net debt to EBITDA. For the full year of 2024, capital expenditures are anticipated in the range of $55 to $75 million. We remain confident in Lippert's ability to achieve long-term profitability and value for all stakeholders.

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

CFO: 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.

CFO: For the full year of 2024 capital expenditures are anticipated in the range of $55 million to $75 million.

CFO: We remain confident in <unk> ability to achieve long term profitability and value for all stakeholders.

Lillian D. Etzkorn: Through our strategic initiatives and investments in innovation, facilities, and our team, we will continue along the path to delivering sustainable, long-term growth. That is the end of our prepared remarks. Operator, we are ready to take questions. Thank you.

CFO: Our strategic initiatives and investments in innovation facilities and our team we will continue along the path to delivering sustainable long term growth.

Speaker Change: That is the end of our prepared remarks, operator, we are ready to take questions. Thank you.

Operator: Thank you. As a reminder, 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. Our first question comes from the line of Dan Moore with CJS Securities.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad.

Speaker Change: Our first question comes from the line of Dan Moore with CJS Securities. Please go ahead.

Justin: Hi, this is Justin on behalf of Dan. Can you give us an update on what you're hearing from OEMs and dealers regarding retail demand? And then you made some comments about the spring selling season. So are you able to give us an indication of where that demand is trending on a year over year basis?

Speaker Change: Hi, This is Justin on for Dan.

Justin: Can you give us an update on what you're hearing from Oems and dealers regarding retail demand and then you.

Justin: You made some comments about the spring selling season, so are you able to.

Justin: Give us an indication on <unk>.

Justin: Where that demand is trending on a year over year basis.

Jason D. Lippert: Yeah, so obviously, with retail sales just coming out, Justin, we saw that those were down again for the month of March that was reported. But, you know, we still feel comfortable that, you know, the retail, and this kind of corresponds to what I think some of the other industry players have said recently, but $3.25 to $3.50 on retail as well. We don't see any reason that we're not going to get there.

Speaker Change: Yes, so obviously with retail sales just coming out Justin.

Justin: We saw that those were down again.

Justin: Here for the for the month of March It was reported but we still feel comfortable that the retail and it's kind of corresponds to what I think some of the other industry players have said recently, but $3 25 to $3 50 on retail as well.

Justin: We don't see any reason that we're not going to get there obviously if interest rates lower sooner I think we will get there quicker but.

Jason D. Lippert: Obviously, if interest rates lower sooner, I think we get there quicker. But I think we feel comfortable with the $3.25 to $3.50 number. And, you know, retail is happening out there, but there's probably some people sitting on the sidelines because they're just waiting for interest rates to drop.

Justin: I think I think we feel comfortable with the $3 25 to $3 50 number in retail is happening out there, but there is probably some people sitting on the sidelines because they're just waiting for interest interest rates have dropped.

Justin: Right.

Jason D. Lippert: Okay, that's helpful. And then on RV and marine, I know you mentioned some marine softness, and you expect that debate kind of in the back half of the year or get a little easier as the comps get easier. So beyond 2024, when do you think we can get back to your more typical three to 5% annual content growth?

Speaker Change: Okay. That's helpful and then on.

Justin: RV and Marine I know you mentioned, some marine toughness and you expect to.

Justin: That to abate kind of in the back half of the year or get a little easier as the comps get easier. So beyond 2024. When do you think we can get back to your more typical 3% to 5% annual content growth specifically.

Jason D. Lippert: Yeah, again, I think it depends on when retail starts kicking wholesale into gear again. And, you know, I talked to a couple of the key boat CEOs just yesterday, and dealer inventories are down pretty good compared to where they have been in the past. So, you know, I think it's just a matter of retail kicking up and pushing things forward. But like we said in our prepared comments, that, you know, sequentially, we start getting better in the back half of the year, or comps get you better in the back half of the year, starting in June, when things really started to fall off last year, you know, at the beginning of the summer. I appreciate you guys.

Speaker Change: Yes, again, I think it depends on when retail start kicking wholesale into gear again, and I talked to a couple of the key both Ceos just yesterday.

Justin: Dealer inventories are down.

Justin: Pretty good compared to where they had been in the past so.

Justin: It's just a matter of retail kicking up and pushing things forward, but like we said in our comments prepared comments that.

Justin: Sequentially, we start getting better in the back half of the year or Commscope, you would get better in the back half of the year starting in June when things really started to fall off last year.

Justin: The beginning of the summer.

Operator: I appreciate you guys taking the time to answer the questions. Thank you.

Speaker Change: Alright, I appreciate you guys, taking my questions. Thank you.

Speaker Change: Yes sure. Thanks.

Speaker Change: Okay.

Frederick Charles Wightman: The next question comes from Fred Wightman with Wolf Research. Please go ahead.

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

Jason D. Lippert: Hey guys, good morning. Jason, you gave some color on how you see towable shipment cadence in the back half of the year. I think you talked about a pickup in July and then maybe some moderation beyond that. I assume that's just the model year changeover, but can you give a little bit more detail on how you see that trend?

Frederick Charles Wightman: Hey, guys. Good morning, Jason you gave.

Frederick Charles Wightman: Some some color on how you see <unk> shipment cadence in the back half of the year I think you talked about a pickup in July and then maybe some moderation beyond that I assume that's just the model year changeover, but can you give a little bit more detail on how you see that trending.

Jason D. Lippert: Yeah, I mean, we're obviously seeing some wholesale pickup in the spring here. Dealers need inventory to sell through, but they just appear to be, you know, bringing on just what they need and don't see that picking up until, you know, their rate situation gets better and the rate situation gets better for the retail consumer. So, you know, again, we came out last quarter four and stated that in October we fell 325 to 350. That appears to, you know, continue to be, you know, right where things are headed. So, about what I can say on that.

Speaker Change: Yes, I mean, we're obviously, we're obviously seeing some wholesale pickup in the spring here dealers need inventory to sell through but they just appear to be bringing on just what they need and don't see that picking up until.

Speaker Change: They are the right situation gets better in the real situation gets better for the retail consumer so.

Speaker Change: Again, we feel we came out last.

Speaker Change: Quarter, four and stated that in October.

Frederick Charles Wightman: We felt $3 25 to $3 50 was the number in.

Frederick Charles Wightman: That appears to continue to be.

Speaker Change: Right, where things are headed so.

Speaker Change: Yes, but what I can say on that.

Jason D. Lippert: Okay, and you mentioned the March retail data that just came out. If we look at just reported results for the industry and then comp trends or unit trends for some dealers that are emphasizing lower cost value units, I mean, it seems to be a pretty big delta. So I'm wondering if you could just touch on how you guys think content per unit and sort of overall trends at Lippert will shake out if we do see a prolonged shift towards lower cost products. Yeah, I mean, I don't think that there are any

Frederick Charles Wightman: Okay.

Frederick Charles Wightman: Mentioned the March retail data that just came out if we look at just reported results for the industry and then comp trends or unit trends for some dealers that are emphasizing.

Frederick Charles Wightman: Lower cost value units I mean, it seems to be a pretty big Delta. So I'm wondering if you could just touch on how you guys think content per unit and sort of overall trends at Lindbergh.

Frederick Charles Wightman: Take out if we do see a prolonged shift towards lower cost.

Frederick Charles Wightman: Yeah.

Jason D. Lippert: Yeah, I mean, I don't think that there's a long-term shift toward lower cost. I think it's, you know, the time that we're in right now, and we've been seeing a steady, you know, steady movement toward, you know, a lot of these entry-level trailers. Camping World talks about the $11,999 trailer that they sell a lot. We've seen gravitation towards single axle trailers, these smaller, cheaper units over the last couple of years to the tune of, you know, it used to be closer to 15% of our chassis production. Now it's closer to 20%.

Speaker Change: Yes, I mean, I don't think that there is I don't think there is a long term shift toward lower cost I think it's the.

Frederick Charles Wightman: The time that we're in right now and we've been seeing a steady.

Frederick Charles Wightman: A steady movement toward a lot of these entry level trailers.

Frederick Charles Wightman: Camping World talks about the 11000 11999 trailers that they sell a lot of we've seen gravitation towards single axle trailers used to be smaller.

Frederick Charles Wightman: Cheaper units over the last couple of years to the tune of.

Frederick Charles Wightman: Used to be closer to 15% of our chassis production now it's closer to 20.

Jason D. Lippert: But the other thing that's ragged on content is just some of the bigger toy haulers. Those are way down, and those, you know, for us, content can get up to 15,000 a trailer. So, you know, the toy hauler space is kind of dead right now, and we're going to continue to innovate on content, as we've talked about. We're going to find ways to either bring new products to market, like we've talked about with, you know, the window products and our suspension products. But also, we're going to continue to evolve our existing content and add bells and whistles and features to drive content up there.

Frederick Charles Wightman: But the other thing Thats dragging content as you some of the bigger toy haulers.

Frederick Charles Wightman: Those those are way down and those for us content can get up to 15000 trailers. So Toyota space is kind of kind of dead right now.

Frederick Charles Wightman: And then we're going to continue to innovate on <unk>.

Frederick Charles Wightman: Content as we've talked about.

Frederick Charles Wightman: We're going to find ways to either bring new products to market like we've talked about.

Frederick Charles Wightman: The window products in our suspension products, but also.

Frederick Charles Wightman: We're going to continue to evolve our existing content and add bells, and whistles and features to drive content drive content up there.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks Brent.

Scott Lewis Stember: The next question comes from Scott Stember with Ross MKM. Please go ahead.

Speaker Change: The next question comes from Scott <unk> with Ross and Kam. Please go ahead.

Jason D. Lippert: Good morning and thanks for taking my questions. Lillian, maybe on the margin side, 23%, very impressive. You said that the second quarter would be sequentially higher. I'm just trying to get a sense of how much stickiness there is, given all the puts and takes, and particularly with content, and also on the operating margin line. Do you have any visibility of where you think the range could be for the full year?

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

Scott: Good morning.

Speaker Change: All right.

Speaker Change: Lillian maybe on the margin side, 23% very impressive.

Scott: You said that the second quarter would be sequentially higher.

Scott: I guess I'm, just trying to get a sense of how.

Scott: How much stickiness is here.

Scott: Given all the puts and takes and particularly with content and also on the operating margin line.

Scott: <unk>.

Scott: Some visibility of where you think the range could be for the full year.

Lillian D. Etzkorn: Yeah, hey, good morning, Scott. Thanks for the questions.

Speaker Change: Yes, Hey, good morning, Scott Thanks for the questions. So now very pleased with the performance this quarter as I mentioned, we achieved some of the margin expansion a little bit earlier in the year than we originally anticipated and that was due to the lower material and freight costs and also.

Scott: Some nice improvement on the warranty the warranty line as well so when I when I think through the cadence of the year in particular for second quarter that does tend to be our.

Lillian D. Etzkorn: So, no, very pleased with the performance this quarter. As I mentioned, we achieved some of the margin expansion a little bit earlier in the year than we originally anticipated, and that was due to lower material and freight costs and also some nice improvement on the warranty line as well. So, when I think through the cadence of the year, in particular for the second quarter, that does tend to be our seasonally high quarter, in large part because of our diversified businesses, specifically aftermarket, that tends to be the high quarter for aftermarket. Specifically, from a margin perspective, I would expect the margins to improve slightly if we move into the second quarter, just from a drop in volume. And just give a little bit more color on that.

Scott: Seasonally high quarter.

Scott: A large part because of our diversified businesses statistically aftermarket that tends to be the high quarter for aftermarket so.

Scott: Typically from a margin perspective, I would expect the margins to improve slightly as we move into the second quarter just from a drop through of <unk>.

Scott: Liam.

Lillian D. Etzkorn: From an overall revenue perspective, sequentially, I would see second quarter up about 10% in total, led by aftermarket at about a 20% sequential improvement. So where that would land us from a margin perspective in the quarter on the growth margin line is about 24% when I think through the drop through incrementals. We previously shared in our prior call for the full year overall operating income margins to be in the low single digits.

Liam: And just to get a little bit more color on that from an overall revenue perspective sequentially I would see second quarter up about 10% in total.

Scott: Led by aftermarket at about a 20% sequential improvement, so where that would land us from a margin perspective in the quarter on the gross margin line is about 24% when I think through the drop through Incrementals.

Scott: We previously shared in our prior call for the full year overall operating income margins to be in the low single digits. There is nothing that I'm seeing from our.

Lillian D. Etzkorn: There's nothing that I'm seeing from our estimates for the year to move from that. I still feel very comfortable with that from an overall full-year perspective, but just again trying to provide a little bit more color for the second quarter, if that's helpful.

Scott: Our estimates for the year to move from that I still feel very comfortable with with that from an overall full year perspective, but just again trying to provide a little bit more color for the second quarter. If that's helpful.

Jason D. Lippert: And too, Scott, with respect to diversification, I think that the quality of our margins and the diversified parts of our business have continued to evolve and get better and better every year. So, while we started diversification in the top line 11 or 12 years ago, the quality of our margins there has continued to get better and continue to lift up the rest of the business.

Scott: And to Scott with respect to diversification I think.

Scott: The quality of our our margins on the diversified parts of our business have continued to evolve and get better and better every year. So while we started diversification in the top line of 11 or 12 years ago.

Scott: The quality of our margins are continuing to get better and continue to lift up the rest of the business.

Scott Lewis Stember: Got it. And just shifting over to the aftermarket, could you just give us some, you know, reads of POS or at the DLO level, break, fix kind of demand, just trying to get a sense of what's to come from the repair cycle, which will likely start this year.

Speaker Change: Got it and just shifting over to the aftermarket.

Speaker Change: Could you just give us some.

Speaker Change: Pos or at the dealer level break fix kind of demand just trying to get a sense of.

Speaker Change: What's to come from.

Speaker Change: The repair cycle, which will likely start this year.

Jason D. Lippert: Yeah, yeah, so yeah, we've done a lot of talking about the repair cycle; the last several calls are all these units that were built and, you know, during COVID start to come into the repair and replacement cycle. So, that's going to be really healthy, and we anticipate a lot of good opportunities there. Again, part of the reason is because our content was bigger in those years than in prior years. So, you know, as our content continues to grow, as we mentioned, 50% since, you know, growth since 2020, we ought to see more and more content replacement in the repair and replacement cycles in these next couple of years. So, we're excited about that.

Speaker Change: Yeah, Yeah. So yes, we've done a lot of talking about the repair cycle. The last several calls.

Speaker Change: All of these these units that were built in <unk>.

Speaker Change: During COVID-19 start to come into the repair and replacement cycle. So that's going to be really healthy and we anticipate a lot of good opportunity. There again part of the reason is because our content.

Speaker Change: Was bigger in those years in prior years. So has our content continues to grow as we mentioned, 50% since growth since 2020, we ought to see more and more kind of tenant replacement and repair and replacement cycles. In these next couple of years. So we're excited about that I think at the dealer level right now youre seeing.

Jason D. Lippert: I think at the dealer level right now, you're seeing retailers and dealers be cautious about bringing in too many parts and pieces and upgrade content inventory, just like they are with the full RVs. And as you know, our aftermarket is kind of divided into the automotive aftermarket, the marine aftermarket, and the RV, and the automotive side is the side that's really doing well for us right now. Kurt's, you know, Kurt's expanded greatly since we bought them in late 2019, and I think we're up 40% there on the top line, and it was a, you know, it was a $300 million plus business when we bought it back then. So, that's helping lift the aftermarket pretty significantly.

Speaker Change: The retailers and dealers be cautious about bringing in too much parts and pieces and upgrade content inventory just like they are the.

Speaker Change: The full full rvs.

Speaker Change: And as you know are our aftermarket.

Speaker Change: Nevada, and automotive aftermarket and marine and RV and automotive as aside it's really doing well for US right now curt's Curt has expanded greatly since we bought them in late 2019, and I think we're up 40% there on the top line and it was.

Speaker Change: Is it $300 million plus business when we bought it back then so.

Speaker Change: That is helping lift the aftermarket pretty significantly.

Scott Lewis Stember: Got it. And just last question on the balance sheet, the $460 million will convert to in 2026. Just trying to get your sense of what your plans will be for that if you were looking at it that far. Yeah, I think it's still a little bit early, Scott, for us to...

Speaker Change: Got it and just last question on the balance sheet of 460 million convert to in 2006, just trying to get your sense of what your plans would be for that if you were looking at it that far out.

Lillian D. Etzkorn: Yeah, I think it's still a little bit early, Scott, for us to have to look to do anything. Obviously, we should continue to watch the market and look to see what opportunities there are. But I'd say we're still probably too early overall for refinancing of the elements on the balance sheet.

Speaker Change: Yes, I think it's still a little bit early start for us.

Speaker Change: <unk> look to do anything obviously continue to watch the market.

Speaker Change: And look to see what opportunities there are but I'd say, we're still publicly early overall for refinancing of the elements on the balance sheet.

Speaker Change: Got it.

Speaker Change: Thanks again.

Speaker Change: Thank you.

Michael Arlington Swartz: The next question comes from Mike Schwartz with Truist Securities. Please go ahead.

Speaker Change: The next question comes from Mike <unk> with <unk> Securities. Please go ahead.

Michael Arlington Swartz: Hey, good morning, guys. Maybe just to start off, Lillian, on the total content year-over-year, I think it was down about 13% in the quarter, and I think you said organic volume, if I heard you correctly, was up one and a half or so. Could you just give us the breakdown of price, M&A, and organic, as you usually do?

Mike: Hey, good morning, guys.

Mike: Maybe just to start off Lillian.

Mike: On the total content.

Mike: Year over year, I think it was down about 13% in the quarter. I think you said organic volume if I heard you correctly. It was up one five or so could you just give us the breakout of price in M&A and organic.

Lillian D. Etzkorn: As you usually do.

Lillian D. Etzkorn: Yeah, I'd say the biggest driver, again, as we've been talking about the past couple quarters, has been that index pricing adjustment. That was in the low double digits this quarter.

Lillian D. Etzkorn: Yes, I'd say the biggest driver again, we've been talk in the past couple of quarters has been that index pricing adjustment.

Lillian D. Etzkorn: That was in the low low double digits. This quarter again thats going to continue to abate. That's gradually has been coming down in the prior quarters. When we move into Q2 on a trailing 12 month basis that'll be down into the mid single digits at that point so.

Lillian D. Etzkorn: Again, that's going to continue to abate, you know, that's gradually been coming down in the prior quarters. When we move into Q2 on a trailing 12-month basis, that'll be down into the, call it, mid-single digits at that point. So, really, the two biggest drivers there are the index pricing pass-through of about, you know, call it 10-ish, 11%, and then we have the goodness of organic growth of 1.5, 1.6%.

Lillian D. Etzkorn: Really the two biggest drivers there it's the index pricing pass through of about call. It 10 ish, 11% and then we have the goodness on the organic growth of 151, 6% and that also as we continue to do through 2024 in the next few quarters Youll see that continue to increase.

Lillian D. Etzkorn: And that also, as we continue to go through 2024, in the next few quarters, you'll see that continue to increase. If you recall, overall, our expectation is typically 3-5% of organic growth in any given year, and obviously, that varies from year to year. But overall, that's kind of the expected organic growth that we would expect for the business over a year.

Lillian D. Etzkorn: If you recall overall, our expectation is typically 3% to 5% of our organic growth.

Lillian D. Etzkorn: In any given year and obviously that varies.

Lillian D. Etzkorn: In a year.

Lillian D. Etzkorn: But overall, that's kind of the expected organic growth that we would expect for the business in the year.

Michael Arlington Swartz: Okay, that's helpful. Thanks for that.

Speaker Change: Okay. That's helpful. Thanks for that and then Jason maybe just on the $200 million in.

Speaker Change: New business wins could you, maybe just break that down a little bit for us and I'm just trying to understand like how much of that is RV. How much of that is marine and others does that include the new camping World furniture business and then just any commentary around as far as the visibility you have right now model year 'twenty five.

Michael Arlington Swartz: And then, Jason, maybe just on the $200 million in new business wins, could you maybe just break that down a little bit for us? And I'm just trying to understand, like, how much of that is RV. How much of that is marine and others? Does that include the new Camping World furniture business? And then just any commentary around, as far as the visibility you have right now, model year 25 versus model year 24 in RV?

Speaker Change: Five versus model year 'twenty for NRG.

Jason D. Lippert: Yeah, sure. No problem.

Speaker Change: Yes, sure no problem so.

Speaker Change: Figure over half of its half of the numbers RV.

Speaker Change: It does not include the camping world as fresh as it is.

Jason D. Lippert: So, you know, we figure over half of it's half of the numbers are RVs. It does not include the camping world as fresh as that is. So, you know, there's a lot of innovation going on. We've got a lot of great products in the RV space. We've got, you know, customers like Brinkley who are, you know, relatively new to the scene that we continue to grow content with as they continue, you know, organic growth with as they continue to grow their business.

Speaker Change: So there's a lot of innovation going on.

Speaker Change: We've got a lot of great products around around the RV space, we've got customers like Brinkley, who.

Speaker Change: Who's relatively new to the scene that we continue to grow content, whether they continue in our organic growth with as they continue to.

Speaker Change: To grow their business.

Jason D. Lippert: And then, you know, I'd say one of the other areas is the axle axle products and suspension products. We've got a lot of innovation going on there. And again, all over our business, we're innovating in every piece of our business. So, you know, as far as other content goes, we've mentioned the bus products and things like that, where we've got, you know, we've got chassis stretching and bus seats that are brand new, organic growth pieces and new business coming in as we grow those new markets. So that'd be that would be some granularity about some of the things we're doing with respect to that $200 million.

Speaker Change: And then I'd say one of the other one of the other areas as.

Speaker Change: Because the actual actual products and suspension products, we've got a lot of innovation going on there.

Speaker Change: And again all of our business, where we're innovating in every piece of our business. So.

Speaker Change: <unk>.

Speaker Change: First of all as far as other content, we mentioned the bus products and things like that where we've got.

Speaker Change: We got a chassis stretching and buffet that are brand new organic growth pieces of new business coming in there as we grow those new markets.

Speaker Change: So that'd be some granularity.

Speaker Change: Some of the things, we're doing with respect to that $200 million.

Michael Arlington Swartz: Okay, that's helpful. And maybe just one follow-up question for Lillian. I think you just said, in terms of or in response to Scott's question about, I just want to make sure I heard it correctly, around full year EBIT margin, I think you said around low single digits. Is that what I heard? And I think you had said mid-single digits back in October, but just correct me if I'm wrong and what I'm thinking about that.

Speaker Change: Okay. That's helpful. And then maybe just one follow up for Lilly and I think you had just said in terms of or in response to Scott's question about I just want to make sure I heard it correctly around full year EBIT margin I think you said around low single digits does that is that what I heard.

Lilly: I think you had said mid single digits back in October, but just correct me if I'm wrong on how.

Lilly: How I'm thinking about that.

Lillian D. Etzkorn: Yeah, it should be mid-single-digit. Mike, so thank you for the clarifying question that that would be our expectation for the full year consistent with our prior messaging of the mid single digits for EBIT percent.

Lilly: Yes, it should be mid single digits.

Lilly: So thank you for the clarifying question that would be our expectation for the full year consistent with our prior messaging of the mid single digits for for EBIT percent.

Michael Arlington Swartz: Okay, perfect. Thank you so much.

Speaker Change: Okay perfect. Thank you so much.

Thomas Martin: The next question comes from Thomas Martin with BMO Capital Markets. Please go ahead.

Speaker Change: The next question comes from Thomas Martin with BMO Capital markets. Please go ahead.

Thomas Martin: Hey, good morning. I know in the past you've talked about how there are open units, right, that are available at the end of 20, that you're copying against. Can you quantify what that impact was relative to, like, R&A wholesale production?

Thomas Martin: Hi, good morning.

Thomas Martin: Could you I know in the past you've talked about how there is open units right.

Thomas Martin: <unk> 'twenty.

Thomas Martin: We're comping against can you quantify what that impact was relative to like the organic wholesale production.

Operator: to get questions. Do you wanna repeat that again, Tristan?

Speaker Change: Good question, but you want to repeat that interest them.

Thomas Martin: Yeah, I'm just asking for the benefit of comping against the open units that were shipped relative to the reported RBI numbers in the quarter.

Speaker Change: Yes, Im just asking the benefit from Comping against the open units that were shipped relative to the reported <unk> numbers in the quarter.

Lillian D. Etzkorn: Again, Tristan, just to make sure I understand the question. So in terms of the content per unit, when we're reporting that, it's on a trailing 12-month basis. So we actually, in that computation, it's still a headwind for us because of wholesale exceeding production in 2023 calendar year. As we progress through 2024 calendar year, our expectation is that wholesale and production will be more closely aligned, so it won't be, or I'm sorry, a headwind as we move through the year, but it is still, it still is a headwind this quarter of a few percent points.

Speaker Change: Again, just and just to make sure I'm understanding the question. So in terms of the content per unit. So when we're reporting Matt its on a trailing 12 month basis.

Speaker Change: So we actually in that computation, it's still a headwind for us because of the <unk>.

Speaker Change: Wholesale exceeding production in 2023 calendar year as we progressed through 2024 calendar year, our expectation our expectation is that wholesale and production will be more closely aligned so it won't be it won't be a tailwind or I'm, sorry, a headwind as we move through the year, but it is still.

Speaker Change: It still is a headwind this quarter of a few percent points.

Speaker Change: Does that makes sense I guess, what I was really asking is if you can quantify the number.

Thomas Martin: I guess what I was really asking is if you could quantify, you know, just the number as in... Wholesale production was 10,000 more due to open. We're trying to get a number to quantify. I apologize. I'm at an airport, so it might be hard to hear. No, that's okay.

Thomas Martin: Wholesale production was 10000 more due to open.

Thomas Martin: Yes.

Thomas Martin: Yeah.

Speaker Change: I'm, just trying to get a number yet.

Thomas Martin: Jasmine airports that might be out there.

Lillian D. Etzkorn: Now that's okay. That's okay, Tom. From a wholesale versus production standpoint in 2024 calendar year, we're seeing that much more closely aligned; we didn't have the same situation that we had in 2023 calendar year.

Speaker Change: Now that's okay. That's okay.

Thomas Martin: From a wholesale versus production in 2024 calendar year, we're seeing that much more closely aligned.

Thomas Martin: We didn't have the same situation that we had in 2023 calendar year.

Thomas Martin: Okay, got it. And then I just kind of have to ask this question. There's been a ton of chatter about some of these things like this, Jason wanted to know if you had any... fill out your opinions you want us to share.

Thomas Martin: Okay.

Speaker Change: Got it.

Speaker Change: Got it kind of have to ask the question there's been a ton of chatter about some of these growth things like this we will forget who wanted.

Speaker Change: I wanted to know of yet.

Speaker Change: Thoughts or opinions you wont know for sure.

Operator: I didn't hear the question, Tristan. What was the question?

Speaker Change: I didn't I didn't hear the question Tristan what was the question.

Thomas Martin: Let me hop back in queue and see if I can find a better spot.

Speaker Change: Let me, let me hop back in queue and sorry, if I can.

Speaker Change: A better spot.

Operator: That sounds a little bit better if you want to try again.

Speaker Change: That sounds a little bit better if you want to try again.

Speaker Change: Yes.

Thomas Martin: Okay. We've got to add a ton of chatter with some of these brainplugs headlines and issues. Okay. So we're going to get your opinion and your kind of comments on it.

Speaker Change: Okay.

Speaker Change: Without that ton of chatter that some of these very important headlines and issue.

Speaker Change: Your opinions on a common product.

Operator: Yeah, yeah, thanks. Okay, I've got you now.

Jason D. Lippert: Yeah, yeah, thanks. Okay, I've got you now. Yeah, I mean, contrary to the

Speaker Change: Yeah, Yeah. Thanks, Okay I got you now.

Speaker Change: Contrary to the Davidson note that came out I will tell you that we don't have widespread frame frame issues, we don't have widespread warranty issue. So.

Jason D. Lippert: Yeah, I mean, contrary to the Davidson note that came out, I'll tell you that we, you know, we don't have widespread frame, you know, frame issues. We don't have widespread warranty issues. So, you know, the long and short of it is that, you know, we design frames to flex, and over the years, we've seen, you know, a handful of units. But the numbers, as they come out from a unit standpoint, are insignificant. It's three hundredths of a percent of our total frame warranties. And in terms of dollars, it's less than 100%. So it's hardly worth mentioning.

Speaker Change: The long and short is we design frames to flex and over the over the years, we've seen a handful of units.

Speaker Change: <unk> as they come out too from a unit standpoint, its insignificant its three hundreds.

Speaker Change: The percent of our total framework to use in terms of dollars is less than 100%. So it's hardly worth mentioning.

Speaker Change: What I can say is that with.

Jason D. Lippert: You know, what I can say is that with the issues related to, you know, the chatter around grand design, they have issued a technical service bulletin to their dealers and the consumers. So, you know, as far as I know, they're fixing those. You know, everything that pops up, you know, with respect to a customer concern today, I'm 100% confident Grand Design is taking care of their customers. And again, we've seen, you know, we've seen these flex issues over the years.

Speaker Change: The issues related to the chatter around Grand design as they have issued a technical service bulletins to their dealers and the consumers.

Speaker Change: So as far as I know, they're fixing those.

Speaker Change: Everything that pops up with respect to our customer trends concerned today are 100% confident of grand designs, taking care of their customers.

Speaker Change: And again, we've seen we've seen these selection issues over the years, we've got you now.

Speaker Change: Especially on heavier units of 15000 to 21000 pounds you see there.

Jason D. Lippert: We've got, you know, especially on heavier units of 15,000 to 21,000 pounds. You see, these are just giant houses moving down the road. And sometimes, with overloading or road abuse or an excessive impact, you can see some, some walls break loose from the frames, and, you know, it happens from time to time.

Speaker Change: This giant houses moving down the road, and sometimes with overloading or erode abuse or.

Speaker Change: I think excessive impact you can see some some malls break loose from the frames.

Speaker Change: Happens from time to time, but.

Jason D. Lippert: But, you know, when they do happen, and there's an issue with a manufacturer, they're generally getting taken care of. So, you know, that's probably the short answer. You know, our frame warranties, you know, less than three quarters of a percent of everything that we build has been for the last 10 years. 2024 is tracking the same. So, hopefully, that debunks some of the chatter out there. There was some, you know, big time social media stuff months ago, but I think it's quieting down. And like I said, with the issue and so the technical service bulletin of the dealers, those issues are getting taken care of. Is that helpful? Any other questions there?

Speaker Change: And when they do happen and there is an issue with manufacturer Theyre generally getting taken care of so.

Speaker Change: Yes.

Speaker Change: But the short answer.

Speaker Change: Our framework Ts lesson.

Speaker Change: Three quarters of a percent of everything that we build has been for the last 10 years 'twenty 'twenty four is tracking the same so hopefully that debunk some of the chatter out there there was some.

Speaker Change: Big time, social media stuff months ago, but I think it's.

Speaker Change: Quieting down and like I said with the issuance of the technical service Bulletin and the dealers.

Speaker Change: Those issues are getting taken care of.

Speaker Change: That helpful.

Speaker Change: Questions there.

Speaker Change: Thank you.

Operator: The next question comes from Alice Wickenlit-Whitbeard. Please go ahead. Good morning, everyone. I'm on for Craig today.

Speaker Change: The next question comes from Alice we can lead with that please go ahead.

Alice: Good morning, everyone I'm on for Craig today, most of my questions have been answered, but maybe I just wanted to dig in on the M&A landscape. I mean, I think you said you are in more talks today than you were a year ago.

Alice: What areas are you focused on and what are you seeing out in the market today.

Alice Wickenlit-Whitbeard: Yeah, so I mean, we're focused just as much on adjacencies and aftermarket probably as we are RV. There's, there's, as we've acquired in the RV space, you know, over the last 20 years, there's, there's probably less to buy there. So, I would say most of our M&A is focusing on some of our adjacencies and aftermarket, but, you know, we feel like we can get a couple of these deals over the finish line in the next 12 months.

Alice: Yes, so I mean, we're focused just as much on adjacencies and aftermarket probably as we are in RV.

Alice: There is as we've acquired in the RV space over the last 20 years. There is there is probably less to buy there. So I would say most of our M&A is focusing on some of our adjacencies and aftermarket.

Alice: But we feel like we can get a couple of these deals over the finish line in the next 12 months I mean, we're making good progress and we are having we didn't have any are there any conversations last year, because we're just paying attention to.

Alice Wickenlit-Whitbeard: I mean, we're making good progress, and we're having, you know, hardly any conversations last year because we were just paying attention to our, our, our use of capital and our cash flow, given the environment. But, you know, things are obviously improving, and results are improving, and we feel pretty solid about where our adjacent, our adjacent markets, and our aftermarkets are sitting as well as our RV market and our performance there. So, I'd say we're making good progress with some targets today.

Alice: Our use of capital and our cash flow given the environment, but.

Alice: Things are obviously improving in results are improving and we feel pretty solid about where our adjacent adjacent markets in our aftermarkets are sitting as well as our RV market.

Alice: Our performance there so.

Alice: I'd say, we're making good progress with some some targets today.

Speaker Change: Great. Thanks, that's it for me.

Speaker Change: Thanks Alice.

Jason D. Lippert: The next question comes from Brandon Rowley with D.A. Davidson. Please go ahead.

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

Brandon Rowley: Good morning, and thank you for taking our questions and shouting out our notes. Good morning.

Brandon: Good morning, and thank you for taking our questions and shouting out or no. Good morning first one on the framework the framework.

Operator: First, on the FramePlex topic, we just talked with Winnebago on Monday, and they indicated they weren't the only OEM that was having FramePlex issues. So, I guess, you know, I think Grand Design's got a lot of publicity, obviously. You know, you guys had to quiet some of the influencers, but, you know, what other OEMs are seeing these FramePlex issues? You know, I know you said it's not widespread, but are there issues with each of the three main OEMs, or is it just concentrated on a couple?

Brandon: Topic, we just talked with Winnebago on Monday, and they indicated they werent. The only OEM that was having frame flex issue. So I guess I think Grand design has got a lot of publicity obviously.

Brandon: You guys had acquired some of the Influencers, but.

Brandon: What other Oems, we're seeing these frame flex issues and I know you said it is not widespread but.

Brandon: Are there issues with each of the three main Oems or is it just concentrated to a couple.

Brandon Rowley: Yeah, I mean, there's none that I'm aware of. I mean, again, FrameFlex, you know, I'd say every brand of fifth wheel because of some of the overloading and trauma that some of these units, these bigger units, see. Again, we're talking, you know, this is only happening typically on 15- to 21,000-pound units, which are largely luxury high-profile fifth wheels and heavy toy hauler fifth wheels. You don't see this issue on travel trailers and low-profile fifth wheels. You just don't see it that way.

Brandon: Yes.

Brandon: None that I'm aware of I mean, again flame frame flex.

Brandon: I would say every brand of fifth wheel because of some of the overloading and trauma. The some of these units. These bigger units see again, we're talking only.

Brandon: Only happening typically on 15 to 21000 pound units, which are largely the luxury luxury high profile fifth wheels, and heavy toy hauler fifth wheels, you don't see this issue on travel trailers and low profile fifth wheels, you just don't see it but.

Jason D. Lippert: But, you know, maybe every brand has had, since I've been in the business, three or four a year that just pop up. So, yeah, as Mike said, it's not a new issue, but it's certainly not widespread, and it's certainly not happening everywhere. I'd say, you know, put it in numbers: it's probably... five to 10 a year for each brand, but that's not new.

Brandon: Maybe.

Brandon: Maybe every brand has had since I've been in the business three or four a year, but just pop in so yes, as Mike said, it's not a it's not a new issue, but it's certainly not widespread and it's certainly not happening.

Brandon: Turning everywhere safe to put it.

Brandon: And numbers, it's probably.

Brandon: Five to 10, a year for each each brand, but thats not new Thats not news.

Brandon Rowley: Okay, great. And who would be on the hook for any of these issues that are going on, or you know, people having some warranty claims or whatever the case may be, are you guys just producing really good frames, and it's on the customer or the OEM? Or, you know, are you guys potentially liable for any of these issues?

Speaker Change: Okay, great and who would be on the hook.

Speaker Change: For any of these.

Speaker Change: Issues that are going on or people, having some warranty claims or whatever the case may be where you guys just producing really good frames and it's on the customer or the OEM or.

Speaker Change: Are you guys potentially liable for any of these issues.

Jason D. Lippert: Yeah, I'd say that the technical service bulletin calls out specifically to the dealers that they're just, you know, they're checking for some loose screws from the walls of the frames and things like that. So, you know, I, like I said, our warranty on this, you know, will be less than 300% of our business this year, our frame business. So, you know, Grand Design's handling this with their dealers, and they're taking care of every single one that pops up. And, you know, I don't really have any more I can comment on there, probably.

Speaker Change: Yes.

Speaker Change: It's a service bulletin calls out specifically to the dealers that they are just they are checking for some of those screws from the loss of the frames and things like that so.

Speaker Change: Like I said, our warranty on this.

Speaker Change: Will be less than 300% on on our business this year our frame business. So.

Speaker Change: <unk>.

Speaker Change: Grand designs handling this with their dealers theyre, taking care of every single one that pops up in.

Speaker Change: <unk>.

Speaker Change: I don't have really any more I can comment there probably.

Brandon Rowley: Okay, and then kind of circling back to Tristan's question earlier, in 1Q23 last year, production was less than shipments. Are you saying in the first quarter of this year, production and shipments were more or less aligned? I guess we're trying to just understand what the headwind was last year, so we can better understand, you know, where your content is shaking out. Thank you.

Speaker Change: Okay.

Speaker Change: And then kind of circling back to <unk> question earlier.

Speaker Change: <unk> 23 last year production was less than shipments are you, saying in the first quarter of this year production and shipments were more or less aligned I guess, we're trying to just trying to understand.

Speaker Change: What the headwind was last year, so we can better understand.

Speaker Change: Where your content is shaking out.

Jason D. Lippert: Yeah, sure. The headwind last year was largely around the fact that there just was no production in January. And there was, you know, not a whole lot in February either. But the OEMs were shipping, you know; all their yards were fairly full, and they were shipping units. So wholesale numbers were being, you know, wholesale numbers were happening to the dealers, and, you know, there just wasn't any production. And this year, you're seeing yards that are normalized and wholesale is happening, and production, you know, kind of equaling what we're wholesaling this year. We just had a big gap last year in January, part of it.

Speaker Change: Yes, sure that wind last year was largely around the fact that there just was no production in January and there was not a whole lot in February either.

Brandon Rowley: Okay. All right. Thank you so much.

Speaker Change: But the Oems were shipping.

Speaker Change: The yards were fairly full and they were shipping units so wholesale numbers were being permanent.

Speaker Change: Wholesale numbers were being.

Speaker Change: We are happening to the dealers and there just wasn't any production this year youre seeing.

Speaker Change: Youre seeing yards that are normalized in wholesale happening in production.

Speaker Change: Just kind of equal in what.

Speaker Change: What we're wholesaling this year.

Speaker Change: GAAP last year.

Speaker Change: Okay, alright, thank you so much.

Speaker Change: Thank you.

Operator: We have no further questions, so I'll hand the call over to Jason for his closing remarks.

Speaker Change: We have no further questions. So I'll hand, the call over to Jason for closing remarks.

Jason D. Lippert: Yeah, so, you know, we're really proud of our results this quarter, and things are looking a lot brighter than the last 20 months. So I'm really proud of the teams for making it through this last cycle and really happy with the diversified, you know, bottom line results we had from our diversification efforts this past quarter.

Jason D. Lippert: Yes, so we're really proud of our results this quarter and things are looking a lot brighter than the last 20 months, so really proud of the teams from.

Operator: I look forward to talking to you all next quarter. See ya. Bye bye.

Jason D. Lippert: We're making it through this last cycle and really happy with the diversified Bottomline results, we had from our diversification efforts this past quarter.

Speaker Change: The forward to talking to you all next quarter Goodbye.

Speaker Change: Yes.

Operator: Thank you everyone for joining us today. This concludes our call, and you may now disconnect your line.

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

Speaker Change: Yes.

Speaker Change: Okay.