Q3 2024 Winnebago Industries Inc Earnings Call
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Ray Posadas: Good day, and thank you for standing by. Welcome to the Q3 Fiscal, 2024, Winnebago Industries Inc. Financial Results Conference Call. At this time, all participants are in the listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Operator: Good day, and thank you for standing by. Welcome to the Winnebago Industries Financial Results Conference Call for Q3 Fiscal 2024. At this time, all participants are in a listen-only mode.
Speaker Change: Good day, and thank you for standing by and welcome to the Q3 fiscal 2024 Winnebago Industries financial results Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer.
Operator: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: Session to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your speaker today, right beside us Vice President Investor Relations and market intelligence.
Operator: To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Ray Posadas, Vice President, Investor Relations and Market Intelligence. Thank you, Josh. Good morning, everyone, and thank you for joining us to discuss our fiscal 2024 third quarter earnings. This call is being broadcast live on our website at investor.wgo.net, and the replay of the call will be available on our website later today.
Ray Posadas: I would now like to hand the conference over to your speaker today, Ray Posadas, Vice President, Investor Relations and Market Intelligence.
Ray Posadas: Thank you, Josh.
Operator: The news release with our third quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor relations section of our website under quarterly results. Turning to slide 2.
Thank you Josh good morning, everyone and thank you for joining us to discuss our fiscal 2024 third quarter earnings results. This call is being broadcast live on our website at Investor <unk> Dot net and a replay of the call will be available on our website later today.
Ray Posadas: Good morning, everyone, and thank you for joining us to discuss our fiscal 2024 third quarter earnings results. This call is broadcast live on our website at investor.wgeo.net, and the replay of the call will be available on our website later today. The news release with our third quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor.
Speaker Change: The news release with our third quarter results was issued and posted to our website earlier. This morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the Investor Relations section of our website under quarterly results.
Turning to slide two.
Ray Posadas: Let me remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain, and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which we encourage you to read.
Raymond Posadas: Let me remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities law. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain, and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which we encourage you to read. In addition, on today's call, management will refer to GAAP and non-GAAP financial measures, and the reconciliation of the non-GAAP measures to the comparable GAAP measures is available in our earnings press release; please turn the slide.
Speaker Change: Let me remind you that certain statements made during today's conference call regarding Winnebago industries and its operations may be considered forward looking statements under securities laws.
The company cautions you that forward looking statements involve a number of risks and are inherently uncertain and a number of factors many of which are beyond the company's control could cause actual results to differ materially from these statements. These.
Speaker Change: These factors are identified in our SEC filings, which we encourage you to read and.
Ray Posadas: In addition, on today's call, management will refer to gap and non-GAAP financial measures, and the reconciliation of the non-GAAP measures to the comparable gap measures is available in our earnings press release. Please turn to slide 3.
In addition on today's call management will refer to GAAP and non-GAAP financial measures and the reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release.
Speaker Change: Please turn to slide three joining.
Raymond Posadas: Joining me on today's call are Michael Happe, the President and Chief Executive Officer of Winnebago Industries, and Bryan Hughes, Senior Vice President and Chief Financial Officer. Mike will begin with an overview of our Q3 performance, and then Bryan will discuss our financial results at a strategic level. Mike will conclude our prepared remarks with the business outlook, and management will be happy to take your questions. With that, please turn to slide four as I hand the call over to Mike. Thanks, Ray. Good morning, everyone.
Ray Posadas: Joining me on today's call are Michael Happy, the President and Chief Executive Officer of Winnebago Industries, and Brian Hughes, Senior Vice President and Chief Financial Officer. Michael will begin with an overview of our Q3 performance, and then Brian will discuss our financial results at a strategic level. Michael will conclude our prepared remarks with the business outlook, and management will be happy to take your questions.
Speaker Change: Joining me on today's call are Michael Happy the President and Chief Executive Officer of Winnebago Industries, and Bryan Hughes, Senior Vice President and Chief Financial Officer.
Speaker Change: Nick will begin with an overview of our Q3 performance and then Brian will discuss our financial results at a strategic level.
Speaker Change: Mike will conclude our prepared remarks with the business outlook and management will be happy to take your questions.
Michael Happe: With that, please turn to slide 4 as I hand the call over to Mike.
Mike: Please turn to slide four as I hand, the call over to Mike.
Michael Happe: Thanks, Ray.
Michael J. Happe: And thanks for joining us to discuss our third quarter Fiscal 24 Financial Results. In the eight weeks since our Q2 earnings call, RV industry retail demand has remained both inconsistent and sluggish, with limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year. While this environment necessitates near-term caution and discipline, the secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business in the long term. With that in mind...
Greg: Thanks, Greg Good morning, everyone and thanks for joining us to discuss our third quarter fiscal 2000 <unk> financial results.
Michael Happe: Good morning, everyone, and thanks for joining us to discuss our third quarter fiscal 24 financial results. In the eight weeks since our Q2 earnings call, RV industry retail demand has remained both inconsistent and sluggish, with limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year. While this environment necessitates near-term caution and discipline, the secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business long term. With that in mind, I will emphasize three points to our investors early to frame this morning's discussion.
Mike: In the eight weeks since our Q2 earnings call RV industry retail demand has remained both inconsistent and sluggish.
Mike: With limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year.
Mike: While this environment necessitates near term caution and discipline.
Mike: The secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business long term.
Mike: With that in mind.
Michael J. Happe: I will emphasize three points to our investors early to frame this morning's discussion. First, over the long term. Challenging markets make strong companies even stronger. Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering. Our collaborative operating model across our brands and functional centers of excellence ensures the choices we make in the short term are in our best long-term interest.
Mike: I will emphasize three points to our investors early to frame this morning's discussion.
Michael Happe: First, over the long term, challenging markets make strong companies even stronger. Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering. Our collaborative operating model across our brands and functional centers of excellence ensures the choices we make in the short term are in our best long-term interests. Maintaining valued product differentiation, premium brand essence, total aftermarket support to our dealers and end customers, and relevant share all matter greatly. But must be balanced with a commitment to sustainable profitability. Second, while we expect industry softness to continue in fiscal Q4 on a year-over-year basis in our Motorhome, RV, and Marine segments, the gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond.
Mike: First over the long term.
Mike: <unk> markets make strong companies even stronger.
Mike: Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering.
Mike: Our collaborative operating model across our brands and functional centers of excellence.
Mike: Tours the choices, we make in the short term.
Mike: In our best long term interests.
Michael J. Happe: Maintaining valued product differentiation, premium brand essence, total aftermarket support to our dealers and end customers, and relevant share all matter greatly but must be balanced with a commitment to sustainable profitability. While we expect industry softness to continue in fiscal Q4 on a year-over-year basis in our motorhome RV and marine segments, the gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond.
Mike: Maintaining valued product differentiation premium brand essence, total aftermarket support to our dealers and end customers and relevant share all matter greatly.
Mike: But must be balanced with our commitment to sustainable profitability.
Mike: Second.
Mike: While we expect industry softness to continue in fiscal Q4 on a year over year basis in our motor home RV and marine segments.
Mike: The gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond.
Michael J. Happe: Third, our healthy balance sheet and strong cash flows enable us to execute on our select growth priorities while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchases. Our cultural, strategic, and financial strength have us poised to successfully pursue the mid-cycle targets communicated in a prior earnings call in the years ahead. Turning now to our results, in the third quarter, we continued to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation.
Michael Happe: Third, our healthy balance sheet and strong cash flows enable us to execute on our select growth priorities while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchases.
Mike: Third.
Mike: Our healthy balance sheet and strong cash flows enabled us to execute on our select growth priorities, while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchases.
Michael Happe: Our cultural, strategic, and financial strengths have us poised to successfully pursue the mid-cycle targets communicated in a prior earnings call in the years ahead.
Mike: Our cultural strategic and financial strength have us poised to successfully pursue the mid cycle targets communicated in a prior earnings call in the years ahead.
Michael Happe: Turning now to our results. In the third quarter, we continue to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation. Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity, output, and costs are aligned with retail and wholesale order patterns and inventory levels. Third quarter consolidated net revenue was $786 million, down 12.7% from the same period in 2023, but up 11.7% sequentially from Q2, supported by our towable RV and marine segments. Adjusted earnings per share for the quarter were $1.13, with adjusted EBITDA of $58 million.
Mike: Turning now to our results in the third quarter, we continued to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation.
Michael J. Happe: Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity, output, and costs are aligned with retail and wholesale order patterns and inventory levels. Third quarter consolidated net revenue was $786 million, down 12.7% from the same period in 2023 but up 11.7% sequentially from Q2, supported by our towable RV and marine segment. Adjusted earnings per share for the quarter were $1.13, with adjusted EBITDA of $58 million.
Mike: Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity output and costs are aligned with retail and wholesale order patterns and inventory levels.
Mike: Third quarter consolidated net revenue was $786 million.
Mike: 12, 7% from the same period in 2023.
Mike: But up 11, 7% sequentially from Q2 supported by our Towable RV and marine segments.
Mike: Adjusted earnings per share for the quarter were $1 13.
Mike: With adjusted EBITDA of $58 million.
Michael Happe: While not a financial contributor to our third quarter performance, we did officially announce the introduction of Grand Design's new Lineage Class C product, marking that brand's inaugural entrance into the motorized RV segment. Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its training 12-month share of US aluminum pontoons to 8.6% for the period ending in April. More importantly, trailing three and six month performance has Barletta running in the low double-digit percentage share zone, signaling increased momentum for that brand at retail. Turning to recent RV industry trends on slide five, as anticipated, dealers remain cautious with respect to orders in the third quarter, resulting in a higher level of promotional activity on some products compared to the same period last year.
Michael J. Happe: While not a financial contributor to our third quarter performance, we did officially announce the introduction of Grand Design's new Lineage Class C product, marking that brand's inaugural entrance into the motorized RV segment. Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its trailing 12-month share of U.S. aluminum pontoons to 8.6% for the period ending in April. More importantly, its trailing three and six month performance has Barletta running in the low double-digit percentage share zone, signaling increased momentum for that brand at retail.
Mike: While not a financial contributor to our third quarter performance. We did officially announced the introduction of Grand designs, New lineage class C product marketing that brands inaugural entrance into the motorized RV segment.
Mike: Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its trailing 12 months share of U S aluminum pontoons to eight 6% for the period ending in April.
Mike: More importantly, trailing three and six month performance Hasbro letter running in the low double digit percentage share zone signaling increased momentum for that brand at retail.
Michael J. Happe: Turning to recent RV industry trends, on slide five, as anticipated, dealers remain cautious with respect to orders in the third quarter, resulting in a higher level of promotional activity on some products compared to the same period last year. The recent RV Industry Association data supports our view that towable RV inventories have been largely right-sized from a quantity standpoint as we head into the summer selling season. We also believe that more time and work is needed, though, to further reduce prior model year inventory across the industry. April wholesale shipments of towable RVs were up 14.2% year-over-year and 15.4% year-to-date from the first four months of calendar 23.
Turning to recent RV industry trends on slide five.
Mike: As anticipated dealers remain cautious with respect to orders in the third quarter.
Mike: <unk> and a higher level of promotional activity on some products compared to the same period last year.
Michael Happe: The recent RV Industry Association data supports our view that total RV inventories have been largely right-sized from a quantity standpoint as we head into the summer selling season. We also believe that more time and work is needed, though, to further reduce prior model year inventory across the industry. April wholesale shipments in total RVs were up 14.2% year-over-year and 15.4% year-to-date from the first four months of calendar 23. By contrast, wholesale industry shipments in the Motorhome RV category were down 19.4% in April and 21.5% on a year-to-date basis from 2023. The motorhome portion of the RV industry still has a little work to do in terms of bringing down total industry inventory levels.
Mike: The recent RV industry Association data supports our view that total RV inventories have been largely right size from a quantity standpoint, as we head into the summer selling season.
Mike: We also believe that more time and work is needed though to further reduce prior model year inventory across the industry.
Mike: April wholesale shipments in total rvs were up 14, 2% year over year and 15, 4% year to date from the first four months of calendar 'twenty three.
Michael J. Happe: By contrast, wholesale industry shipments in the motorhome RV category were down 19.4% in April and 21.5% on a year-to-date basis from 2023. The motorhome portion of the RV industry still has a little work to do in terms of bringing down total industry inventory levels. 2024 RV shipments through April totaled more than 120,000 units, 9.4% ahead of last year's pace. But while the growth in shipments is encouraging, the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated.
Mike: By contrast, wholesale industry shipments in the motor home RV category were down 19, 4% in April and 21, 5% on a year to date basis from 2023.
Mike: The motor home portion of the RV industry still has a little work to do in terms of bringing down total industry inventory levels.
Michael Happe: 2024 RV shipments through April total more than 120,000 units, 9.4% ahead of last year's pace. But while the growth in shipments is encouraging, the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated. Based on industry results to date, ongoing economic softness, and reduced order backlogs across the industry, we expect additional destocking by dealers for the remainder of the calendar year. As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335,000 units, slightly below the midpoint of the RV Industry Association's most recent estimate.
Mike: 2024, RV shipments through April totaled more than 120000 units nine 4% ahead of last year's pace.
But while the growth in shipments is encouraging the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated.
Michael J. Happe: Based on industry results to date, ongoing economic softness, and reduced order backlogs across the industry, we expect additional destocking by dealers for the remainder of the calendar year. As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335,000 units, slightly below the midpoint of the RV Industry Association's most recent estimate. Our latest retail estimate for this same calendar 2024 period is around 340,000 units.
Mike: Based on industry results to date ongoing economic softness and reduced order backlogs across the industry. We expect additional destocking by dealers for the remainder of the calendar year.
Mike: As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335000 units.
Mike: Slightly below the midpoint of the RV industry associations, most recent estimate.
Michael Happe: Our latest retail estimate for this same calendar 2024 period is around 340,000 units. Moving to slide 6 and our recent RV market share performance for the training 12 months ended April 30, it totaled 11.2%, which is down 70 basis points from the same period in 2023. Well, not what we would ideally like to see. This share loss is due in part to our commitment to hold integrity in wholesale and retail pricing models that we see is important to healthy channel relationships in the future. While we have worked intently to increase the strength of our opening price point skews in our RV lineups, seen slight share loss in an environment where affordability is being so strongly emphasized, is not to be unexpected for a premium portfolio such as ours.
Mike: Our latest retail estimate for this same calendar 'twenty 'twenty four period is around 340000 units.
Michael J. Happe: Moving to slide six and our recent RV market share performance. For the trailing 12 months ended April 30th, it totaled 11.2 percent, which is down 70 basis points from the same period in 2023. Not what we would ideally like to see.
Mike: Moving to slide six and our recent RV market share performance.
Mike: For the trailing 12 months ended April 30, it totaled 11, 2%.
Which is down 70 basis points from the same period in 2023.
Michael J. Happe: This share loss is due in part to our commitment to hold integrity in wholesale and retail pricing models that we see as important to healthy channel relationships in the future. As a result, we have worked intently to increase the strength of our opening price point SKUs in our RV lineup. Seeing slight share losses in an environment where affordability is being so strongly emphasized is not to be unexpected for a premium portfolio such as ours.
Mike: While not what we would ideally like to see this share losses due in part to our commitment to hold integrity in wholesale and retail pricing models.
Mike: That we see is important to healthy channel relationships in the future.
Mike: While we have worked intently to increase the strength of our opening price point skus in our RV lineups.
<unk> slight share loss in an environment, where affordability is being so strongly emphasize is not to be unexpected for a premium portfolio such as ours.
Michael Happe: We are confident this trend will reverse in future years with new innovative products in our pipeline and an upward cyclical move to more stable market pricing.
Michael J. Happe: We are confident this trend will reverse in future years with new innovative products in our pipeline and an upward cyclical move to more stable market prices. Looking at the marine segment on slide 7, our Barletta products continue to deliver superior results for its dealer network and an exceptional experience for their customers. The Barletta team is passionately focused on serving our end customers, cultivating lasting relationships with our channel partners as well, and building the best premium pontoons in the market. The path to our 13% mid-cycle share target is about Barletta remaining innovative and focused on customer needs to reach a top two or three position over time. Turning to recent highlights, on slide eight.
Mike: We are confident this trend will reverse in future years with new innovative products in our pipeline and an upward cyclical move to more stable market pricing.
Michael Happe: Looking at the marine segment on Flight 7, our Barletta products continue to deliver superior results for its dealer network and an exceptional experience for their customers. The Barletta team is passionately focused on serving our end customers, cultivating lasting relationships with our channel partners as well, and building the best premium pontoons in the market. The path to our 13% mid-cycle share target is about our letter remaining innovative and focused on customer needs to reach a top two or three position over time.
Mike: Looking at the Marine segment on slide seven our Barletta products continue to deliver superior results for its dealer network.
Mike: And an exceptional experience for their customers.
Mike: The <unk> team is passionately focused on serving our end customers cultivating lasting relationships with our channel partners as well and building the best premium pontoons in the market.
The path to our 13% mid cycle share target is about our letter remaining innovative and focused on customer needs to reach a top two or three position over time.
Michael Happe: Turning to recent highlights on Flight 8, in April, Grand Design introduced its first motorized RV in its history, the Lineage Series M. The name reflects the brand quality and service excellence Grand Design has embodied since its inception in 2012. What is particularly exciting to us is the opportunity for Grand Design to partner with the leading dealers across the country to market this new classy product to a new customer base.
Mike: Turning to recent highlights on slide eight in April Grand design introduced its first motorized RV in its history. The lineage series M. The name reflects the brand quality and service excellence Grand design has embodied since its inception in 2012.
Michael J. Happe: In April, Grand Design introduced its first motorized RV in its history, the Lineage Series M. The name reflects the brand quality and service excellence Grand Design has embodied since its inception in 2012. What is particularly exciting to us is the opportunity for Grand Design to partner with the leading dealers across the country to market this new Class C product to a new customer base. To celebrate the launch of the Lineage, we are hosting an ultimate glamping pop-up this Saturday, the 22nd of June, in New York City's Bryant Park from 11.30 a.m. to 5 p.m. Eastern.
Mike: What is particularly exciting to us is the opportunity for Grand design to partner with the leading dealers across the country to market. This new class C product too.
Mike: To a new customer base to.
Michael Happe: To celebrate the launch of the Lineage, we are hosting an ultimate glamping pop-up this Saturday, the 22nd of June, in New York City's Bryant Park from 11:30 AM to 5:00 AM Eastern. The new Lineage will be on display at the event, and we invite those of you in the area to come down and see Grand Design's terrific new motorized RV in person. As I noted on our Q2 call, initial limited shipments of Lineage are on track to begin late this quarter. Most of the stocking deliveries for the Lineage product, however, will take place in the fiscal 2025 year.
Mike: To celebrate the launch of the lineage, we are hosting an ultimate glamping pop up this Saturday. The 20 <unk> of June in New York City's Bryant Park from 11, 30 am to five PM eastern.
Michael J. Happe: The new Lineage will be on display at the event, and we invite those of you in the area to come down and see Grand Design's terrific new motorized RV in person. As I noted on our Q2 call, initial limited shipments of the Lineage are on track to begin late this quarter. Most of the stocking deliveries for the Lineage product, however, will take place in the fiscal 2025 year before turning it over to Bryan for the financial review.
Mike: The new and Andrew will be on display at the event and we invite those of you in the area to come down and see Grand designs terrific, new motorized RV in person.
Speaker Change: As I noted on our Q2 call initial limited shipments of lineage are on track to begin late this quarter.
Speaker Change: Most of the stocking deliveries for the lineage product, however will take place in the fiscal 2025 year.
Michael Happe: Before turning it over to Brian for the financial review, I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large Solitude and Momentum fifth wheel products. In each reported case, the Grand Design team and/or its network of dealers have performed a thorough product review and are collaborating directly with impacted customers to resolve any concerns. The team has also been working directly with our frame supplier, a third-party structural engineering firm, and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Speaker Change: Before turning it over to Brian for the financial review.
Michael J. Happe: I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large Solitude of Momentum fifth wheel product. In each reported case, the Grand Design team and or its network of dealers have performed a thorough product review and are collaborating directly with impacted customers to resolve any concerns. The team has also been working directly with our frame supplier, a third-party structural engineering firm, and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Speaker Change: I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large solitude momentum fifth wheel products.
Speaker Change: In each reported case the Grand design team.
Speaker Change: <unk> network of dealers have performed a thorough product review and are collaborating directly with impacted customers.
Resolve any concerns there.
Speaker Change: The team has also been working directly with our frame supplier a third party structural engineering firm and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Michael Happe: Our commitment to customers is absolute, and we continue to stand behind every product we build. To reinforce that commitment, we recently extended our frame warranty to five years on all Grand Design products. Our one-year base warranty, three-year structural warranty, and new five-year frame warranty are also transferable to subsequent owners during the warranty period based on the original purchase date. These warranties will continue to be honored retroactively from the date of original purchase, beginning with Model Year 2020.
Michael J. Happe: Our commitment to customers is absolute, and we continue to stand behind every product we build. To reinforce that commitment, we recently extended our frame warranty to five years on all Grand Design products. Our one-year base warranty, three-year structural warranty, and new five-year frame warranty are also transferable to subsequent owners during the warranty period based on the original purchase date.
Speaker Change: Our commitment to customers is absolute and we continue to stand behind every product we build.
Speaker Change: To reinforce that commitment we recently extended our framework to five years on all Grand design products.
Speaker Change: Our one year base warranty three year structural warranty and new five year frame or NT are also transferrable to subsequent owners during the warranty period based on the original purchase date.
Michael J. Happe: These warranties will continue to be honored retroactively from the date of original purchase, beginning with model year 2020. Importantly, across Winnebago Industries, three core values guide how we operate every day: do the right thing, put people first, and Be The Best.
Speaker Change: These warranties will continue to be honored retroactively from the date of original purchase beginning with model year 2020.
Michael Happe: Importantly, across Winnebago Industries, three core values guide how we operate every day. Do the right thing, put people first, and be the best. These values support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders.
Speaker Change: Importantly across Winnebago industries, three core values guide, how we operate every day.
Speaker Change: Do the right thing.
Speaker Change: Put people first and.
Speaker Change: And be the best.
Bryan L. Hughes: These values support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders. With that, I'll now hand the call over to Bryan Hughes. Thanks, Mike, and good morning, everyone. As a reminder, in my prepared remarks, starting on slide 9, I will focus on the key drivers of our performance. Please refer to our earnings release and earnings supplement documents for a detailed overview of our key financial results. Winnebago Industries delivered a solid third quarter.
Speaker Change: These value support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders.
Bryan Hughes: With that, I'll now hand the call over to Bryan Hughes. Thanks, Mike, and good morning, everyone. As a reminder, in my prepared remarks starting on Friday 9, I will focus on the key drivers of our performance. Please refer to our earnings release and earning supplement documents for a detailed overview of our key financial results. Winnebago Industries delivered a solid third quarter. The U over-year decrease in consolidated net revenue reflected a shift in product mix with customers demonstrating a preference for lower priced units, primarily in the total RB segment. As well as lower unit volumes in our Motorhome RB and Marine segment as we continue to aggressively manage production amid challenging retail market conditions.
Speaker Change: With that I'll now hand, the call over to Bryan Hughes.
Bryan L. Hughes: The year-over-year decrease in consolidated net revenue reflected a shift in product mix with customers demonstrating a preference for lower-priced units, primarily in the towable RV sector, as well as lower unit volumes in our motorhome RV and marine segment as we continue to aggressively manage production amid challenging retail market conditions. Gross margin for the third quarter was 15%, primarily reflecting the deleveraging effect of lower sales and competitive marketplace pricing with elevated discounts, as well as the Operational Efficiency Challenge.
Bryan L. Hughes: Thanks, Mike and good morning, everyone.
Bryan L. Hughes: As a reminder, in my prepared remarks, starting on slide nine I will focus on the key drivers of our performance.
Bryan L. Hughes: Please refer to our earnings release and earnings supplement document for a detailed overview of our key financial results.
Speaker Change: Winnebago industries delivered a solid third quarter.
Speaker Change: The year over year decrease in consolidated net revenue reflected a shift in product mix with customers demonstrating a preference.
Speaker Change: For lower priced unit, primarily in the total RV segment.
Speaker Change: As well as lower unit volume in our motor home RV and Marine segment as we continued to aggressively manage production amid challenging retail market condition.
Bryan Hughes: Growth margin for the third quarter was 15%. Primarily reflecting the de-leveraging effect of lower sales and competitive marketplace pricing with elevated discounts, as well as operational efficiency challenges. We are addressing those challenges to a range of cost-containment initiatives, including flex production days, product line consolidation, and the deferral of certain CAPX projects. Warranty expense, although up year over year comparing against favorable expense in last year's third quarter, has returned to historical rates. Lastly, and while not shown on this slide, but worthy of a call out, we continue to generate robust free cash flow, which totaled 88.4 million in fiscal Q3.
Speaker Change: Gross margin for the third quarter with 15% <unk>.
Speaker Change: Primarily reflecting the deleveraging effect of lower sales and competitive marketplace pricing with elevated discount as well as operational efficiency challenges.
Bryan L. Hughes: We are addressing those challenges through a range of cost containment initiatives, including select production days, product line consolidation, and the deferral of certain CapEx projects. Warranty expense, although up year over year, compared against favorable expense in last year's third quarter, has returned to historical levels. Lastly, and while not shown on this slide, but worthy of a call-out, we continue to generate robust free cash flow, which totaled $88.4 million in fiscal Q3. During the quarter, we executed 20 million share repurchases, bringing the year-to-date total to 60 million.
Speaker Change: We are addressing those challenges through a range of cost containment initiatives.
Speaker Change: Including flex production days product line consolidation and the deferral of certain capex projects.
Speaker Change: Warranty expense, although up year over year comparing against the favorable expense in last year's third quarter.
Speaker Change: Has returned to historical rates.
Speaker Change: Lastly, and while not shown on this slide but worthy of a call out.
Speaker Change: We continued to generate robust free cash flow, which totaled $88 4 million in fiscal Q3.
Bryan Hughes: During the quarter, we executed 20 million of share repurchases, bringing the year-to-date total to 60 million. Turning to our performance by segment, starting with total RB on slide 10, revenues were up 35.7% from the second quarter of 2024, or sequentially. Revenue was up 0.6% from Q3 of last year, reflecting an increase in unit volume, partially offset by a reduction in average selling price per unit related to product mix. Segment adjusted EBITDA was down 22% versus the prior year, or 310 basis points of margin, partly reflecting operational efficiency challenges, as we worked through a plant consolidation in the Winnebeggle branded toable business, and production ramp up of new product.
Speaker Change: During the quarter, we executed $20 million of share repurchases, bringing the year to date total to $60 million.
Bryan L. Hughes: Turning to our performance by segment, starting with tollable RV on slide 10, revenues were up 35.7% from the second quarter of 2024 or sequentially. Revenue was up 0.6% from Q3 of last year, reflecting an increase in unit volume, partially offset by a reduction in average selling price per unit related to product merit. Segment adjusted EBITDA was down 22% versus the prior year, or 310 basis points of margin, partly reflecting operational efficiency challenges.
Speaker Change: Turning to our performance by segment, starting with <unk> on Slide 10 revs.
Speaker Change: Revenues were up 35, 7% from the second quarter of 2024 or sequentially.
Speaker Change: Revenue was up <unk>, 6% from Q3 of last year.
Speaker Change: <unk> an increase in unit volume.
Speaker Change: We offset by a reduction in average selling price per unit related to product mix.
Speaker Change: Segment, adjusted EBITDA was down 22% versus the prior year or 310 basis points of margin.
Speaker Change: Partly reflecting operational efficiency challenges.
Bryan L. Hughes: As we work through a plant consolidation in the Winnebago branded towable business and a Production Ramp-Up of New Products, and for the Tobol RV segment more broadly, there was a difficult comp with Q3 of last year benefiting from favorable warranty expense expressed as a percentage of sales. Fiscal 2024 third quarter warranty expense for this segment remains lower than average warranty rates prior to fiscal 2023. Additionally, we do not expect any warranty expense, including the expense associated with the excess frame flex issues and the warranty changes recently introduced by Grand Design.
Speaker Change: As we worked through a plant consolidation and the Winnebago branded <unk> business and production ramp up of new product.
Bryan Hughes: And for the total RB segment more broadly, there was a difficult comp with Q3 of last year, benefiting from favorable warranty expense expressed as a percentage of sales. Fiscal 2024, third quarter warranty expense for the segment remains lower than average warranty rates prior to fiscal 2023. Importantly, we do not expect our warranty expense, including the expense associated with the excess spring flux issues and the warranty changes recently introduced by Grand Design, to cost meaningfully elevated warranty expense as a percent of sales. While we had these headwinds to profitability broadly, we experienced a decrease or favorable impact to profitability in the level of discounts and allowances in the total RV segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023.
And for the total RMB segment more broadly there was a difficult comp with Q3 of last year benefiting from favorable warranty expense expressed as a percentage of sales.
Speaker Change: Fiscal 2024 third quarter warranty expense for this segment remains lower than average warranty rates prior to fiscal 2023.
Speaker Change: Importantly, we do not expect our warranty expense, including the expense associated with the excess spring issues and the warranty changes recently introduced by Grand design to cost meaningfully elevated warranty expense as a percent of sales.
Bryan L. Hughes: The cost meaningfully elevated warranty expense as a percent of sales. However, while we had these headwinds to profitability broadly, we experienced a decrease or favorable impact to profitability in the level of discounts and allowances in the TOEBL RV segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trough in retail demand. Total RV backlog was down 35.1% in dollars from the prior year, reflecting current industry and demand trends. Turning to slide 11.
Speaker Change: While we had these headwinds to profitability broadly.
Speaker Change: We experienced a decrease or favorable impact to profitability and the level of discounts and allowances in the total RV segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023.
Bryan Hughes: This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trust in retail demand. Total RV backlog was down 35.1% in dollars from the prior year, reflecting current industry and demand trends. Turning to slide 11, revenues for the Motorhome RV segment were down 20.1% from the prior year on lower unit volume and an increased level of discounts and allowances as we continue to work closely with our dealer partners to strengthen the health of their inventory. This was partially offset by price increases related to higher motorized chassis costs.
Speaker Change: This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trough in retail demand.
Total RV backlog was down 35, 1% in dollars from the prior year, reflecting current industry and demand trends.
Speaker Change: Turning to slide 11.
Bryan L. Hughes: Revenues for the motorhome RV segment were down 20.1% from the prior year on lower unit volume and an increased level of discounts and allowances as we continue to work closely with our dealer partners to strengthen the health of their inventory. This was partially offset by price increases related to higher motorized chassis. With strict credit standards and elevated interest rates affecting consumer lending, retail and wholesale shipments both remain stubbornly soft during the May and June selling seasons. Segment-adjusted EBITDA decreased 50.2% or 270 basis points of margin compared to Q3 last year.
Speaker Change: Revenues for the motor home RV segment were down 21% from the prior year on lower unit volume and an increased level of discounts and allowances as we continue to work closely with our dealer partners to strengthen the health of their inventory.
This was partially offset by price increases related to higher motorized chassis costs.
Bryan Hughes: With strict credit standards and elevated interest rates affecting consumer lending, retail and wholesale shipments both remain stubbornly soft during the May and June selling season. Segment adjusted EBITDA decreased 50.2% or 270 basis points of margin compared to Q3 last year. The variance reflected volume, delivery, and operational efficiency challenges, partially offset by cost containment efforts. Sequentially, motorhome margins were down 320 basis points due to delivery and higher discounts and allowances, as the anticipated strengthening of the retail market in April and May failed to materialize. Backlog and the motorized RV segment was down 55.7% in dollars from the prior year.
Speaker Change: With strict credit standards and elevated interest rates affecting consumer lending retail and wholesale shipments both remain stubbornly soft during the may and June selling season.
Speaker Change: Segment, adjusted EBITDA decreased 52% or 270 basis points of margin compared to Q3 last year.
Bryan L. Hughes: The variance reflected volume to leverage and operational efficiency challenges partially offset by cost containment efforts. Sequentially, motorhome margins were down 320 basis points. Due to deleverage and higher discounts and allowances, as the anticipated strengthening of the retail market in April and May failed to materialize. Backlog in the motorized RV segment was down 55.7% in dollars from the prior year.
Speaker Change: The variance reflected volume deleverage and operational efficiency challenges, partially offset by cost containment efforts.
Speaker Change: Sequentially Motor home margins were down 320 basis points due to deleverage and higher discounts and allowances as the anticipated strengthening of the retail market in April and May failed to materialize.
Speaker Change: Backlog in the motorized RV segment was down 55, 7% in dollars from the prior year.
Bryan Hughes: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter, considering dealer inventory levels and a tepid retail demand for this segment. Moving to our marine segment on slide 12, given current economic conditions, revenues in the third quarter were down 31.8% from the prior year. Inline with expectations driven by soft retail demand and a cautious dealer network. Inventory levels continued to be elevated relative to dealer preferences, considering higher interest rates and the cost of carrying inventory. These factors cost our shipments to be down in the quarter compared to the prior year. In addition, net revenue was impacted by a shift in product management.
Bryan L. Hughes: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter considering dealer inventory levels and the tepid retail demand for this segment. Moving to our marine segment, on slide 12, given current economic conditions, revenues in the third quarter were down 31.8% from the prior year, in line with expectations driven by soft retail demand and a cautious dealer network.
Speaker Change: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter, considering dealer inventory levels and a tepid retail demand for this segment.
Speaker Change: Moving to our Marine segment on slide 12.
Speaker Change: Given current economic conditions revenues in the third quarter were down 31, 8% from the prior year.
Speaker Change: In line with expectations, driven by soft retail demand and a cautious dealer network.
Bryan L. Hughes: Inventory levels continue to be elevated relative to dealer preferences, considering higher interest rates and the cost of carrying inventory. These factors caused our shipments to be down in the quarter compared to the prior year. In addition, net revenue was impacted by a shift in product mix toward lower-priced product offers, such as the introduction of Barletta's ARIA offering in the past year. The Marine segment adjusted EBITDA margin decreased 370 basis points versus the prior year. This was primarily due to volume de-leverage. Although partially offset by cost containment, backlog for the marine segment was down from the prior year period.
Speaker Change: Inventory levels continued to be elevated relative to dealer preferences, considering higher interest rates and the cost of carrying inventory.
Speaker Change: These factors caused our shipments to be down in the quarter compared to the prior year.
Speaker Change: In addition, net revenue was impacted by a shift in product mix towards lower priced product offering.
Bryan Hughes: towards lower price product offering. For example, the introduction of Barletta's ARIA offering in the past year. Marine segment adjusted EBITDA margin decreased 370 basis points versus the prior year. This was primarily due to volume D leverage, partially offset by cost containment efforts. Backlogged for the marine segment was down from the prior year period.
Speaker Change: For example, the introduction of our latest offering in the past year.
Speaker Change: Marine segment, adjusted EBITDA margin decreased 370 basis points versus the prior year.
Speaker Change: This was primarily due to volume deleverage, partially offset by cost containment efforts.
Speaker Change: Backlog for the Marine segment was down from the prior year period.
Bryan Hughes: Moving now to the balance sheet on slide 13, as of the end of the quarter, Winnebago Industries had a net debt to EBITDA ratio of approximately 1.7 times, which is slightly above our targeted range of 0.9 to 1.5 times. This month we will pay a quarterly cash dividend of 31 cents per share to common shareholders of record as of June 12th, marking the 40th consecutive quarter Winnebago Industries has paid a dividend. This record speaks to the board's sustained competence in our strategy, performance, and growth prospects. During the quarter, we repurchased approximately 318,000 shares of stock at a total cost of 20 million.
Bryan L. Hughes: Moving now to the balance sheet on slide 13, as of the end of the quarter, Winnebago Industries had a net debt-to-EBITDA ratio of approximately 1.7 times, slightly above our targeted range of 0.9 to 1.5. This month, we will pay a quarterly cash dividend of $0.31 per share to common shareholders of record as of June 12, marking the 40th consecutive quarter Winnebago Industries has paid a dividend. This record speaks to the board's sustained confidence in our strategy, performance, and growth process. During the quarter, we repurchased approximately 318,000 shares of stock at a total cost of $20 million.
Speaker Change: Moving now to the balance sheet on slide 13.
Speaker Change: As of the end of the quarter Winnebago industries had a net debt to EBITDA ratio of approximately one seven times, which is slightly above our targeted range of $3 nine to one five times.
Speaker Change: This month, we will pay a quarterly cash dividend of <unk> 31 per share to common shareholders of record as of June 12th marking the 14th consecutive quarter Winnebago industries has paid a dividend.
Speaker Change: This record speaks to the board sustained confidence in our strategy performance and growth prospects.
Speaker Change: During the quarter, we repurchased approximately 318000 shares of stock at a total cost of $20 million.
Bryan Hughes: At quarter end, we had 240 million remaining in our repurchased program. We have repurchased 60 million of stock in our fiscal year to date and have paid 28 million of dividends. Before turning the call back to Mike, let me provide some color on our near-term expectations. Based on the current business environment, we anticipate the retail market will remain sluggish through the end of our fiscal fourth quarter, reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season. Our commitment remains steadfast. We will use our capacity wisely, maintain our premium positioning, introduce exciting new products tailored to our customer bases, preferred price points, and prioritize long-term profitability across our brand.
Bryan L. Hughes: At quarter end, we had $240 million remaining in our repurchase program. We have repurchased $60 million of stock in our fiscal year to date, and we have paid $28 million in dividends. Before turning the call back to Mike, let me provide some color on our near-term expectations. Based on the current business environment, we anticipate the retail market will remain sluggish through the end of our fiscal fourth quarter. Reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season, our commitment remains steadfast.
Speaker Change: At quarter end, we had $240 million remaining in our repurchase program.
Speaker Change: We have repurchased $60 million of stock in our fiscal year to date and have paid $28 million of dividend.
Speaker Change: Before turning the call back to Mike, Let me provide some color on our near term expectations based on the current business environment. We anticipate the retail market will remain sluggish through the end through the end of our fiscal fourth quarter, reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season.
Speaker Change: Our commitment remains steadfast.
Bryan L. Hughes: We will use our capacity wisely, maintain our premium positioning, introduce exciting new products tailored to our customer base's preferred price points, and prioritize long-term profitability across our brand. This commitment will guide us as we navigate the current industry downturn and its short-term effect on market share. Now, Mike, I turn the call back to you. Mike, thanks, Bryan.
Speaker Change: We will use our capacity wisely, maintaining our premium positioning introduce exciting new products tailored to our customer basis preferred price point and prioritize long term profitability across our brand.
Bryan Hughes: This commitment will guide us as we navigate the current industry downturn and its short-term effect on market share.
Speaker Change: This commitment will guide us as we navigate the current industry downturn and its short term effect on market share.
Michael Happe: Now, let me turn the call back to Mike to provide some closing comments.
Speaker Change: Now, let me turn the call back to Mike to provide some closing comments Mike back to you.
Michael Happe: Mike, back to you. Thanks, Brian.
Michael J. Happe: As we think about the future of our business, we continue to believe that, over the long term, fortune will favor the companies with the best brands, who drive for mutual success with their dealer partners and a seamless, joyful, end-to-end experience with their customers. We have been making steady investments in engineering, data, digital asset development, and IT capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers. When I say the best brand,
Mike: Thanks, Brian turning to slide 14.
Michael Happe: Turning to Slide 14, as we think about the future of our business, we continue to believe that, over the long term, fortune will favor the companies with the best brands who drive for mutual success with their dealer partners and a seamless, joyful end experience with their customers. We have been making steady investments in engineering, data, digital asset development, and IT capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers. When I say the best brands, I'm not talking only about a multitude of floor plans and comfortable sofas within those brands.
Mike: As we think about the future of our business. We continue to believe that over the long term fortune will favor the companies with the best brands, who drive for mutual success with their dealer partners and.
Mike: And a seamless joyful end to end experience with their customers.
Mike: We have been making steady investments in engineering data digital asset development and capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers.
Mike: When I say the best brands.
Michael J. Happe: I'm not talking only about a multitude of floor plans and comfortable sofas within those brands. It's also about making sure that our owners get outstanding service and support, have great technology at their fingertips, and become customers for life. Some of that is certainly dependent on having great dealer relationships, and that is an area where Winnebago Industries continues to lean. As demand trends settle back into a more normalized pattern, dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy OEMs. We are seeing more dealers seeking preferred and even exclusive relationships with the Winnebago Industries family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles.
Mike: Not talking only about a multitude of floor plans and comfortable sofas within those brands.
Michael Happe: It's also about making sure that our owners get outstanding service and support, have great technology at their fingertips, and become customers for life. Some of that is certainly dependent on having great dealer relationships, and that is an area where Winnebago Industries continues to lean in. As the demand trends settle back into a more normalized pattern, dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy OEMs. We are seeing more dealers seeking preferred and even exclusive relationships with Winnebago Industries' family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles.
Mike: It's also about making sure that our owners get outstanding service and support have great technology at their fingertips and become customers for life.
Mike: Some of that is certainly dependent on having great dealer relationships and that is an area, where winnebago industries continues to lean in.
Mike: As demand trends settle back into a more normalized pattern.
Dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy Oems.
Mike: We are seeing more dealers seeking preferred and even exclusive relationships with Winnebago industries' family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles.
Michael Happe: The dealer partnerships we have built over time provide our end customers with real advantage over the life of their ownership.
Michael J. Happe: The dealer partnerships we have built over time provide our end customers with real advantages over the life of their ownership. To expand on Bryan's comments on Q4. We do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year. Consumer sentiment, impacted by delays in the lowering of interest rates and other difficult macroeconomic factors, will continue to weigh on dealer willingness to order and carry inventory.
Mike: The dealer partnerships, we have built over time provider and customers with real advantage over the life of their ownership.
Michael Happe: To expand on Bryan's comments on Q4, we do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year. Consumer sentiment impacted by delays to the lowering of interest rates and other difficult macroeconomic factors will continue to weigh on dealer willingness to order and carry inventory. With these factors in mind, we are anticipating Winnebago Industries Q4 to be flat to slightly down versus Q3 on a sequential basis on the top revenue line. We expect we will continue to face margin or yield challenges tied primarily to market pressures and pricing in the form of heightened discounts, and we are therefore anticipating profitability will be down sequentially as well.
Speaker Change: To expand on Brian's comments on Q4.
Speaker Change: We do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year.
Speaker Change: Consumer sentiment impacted by delays to the lowering of interest rates and other difficult macroeconomic factors.
Speaker Change: We'll continue to weigh on dealer willingness to order and carry inventory.
Michael J. Happe: With these factors in mind, we are anticipating Winnebago Industries' Q4 to be flat to slightly down versus Q3 on a sequential basis on the top revenue line. We expect we will continue to face margin or yield challenges tied primarily to market pressures and pricing in the form of heightened discounts. And we are therefore anticipating profitability will be down sequentially as well. These expectations are consistent with the prevailing retail trends in the industry and are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels.
Speaker Change: With these factors in mind, we are anticipating Winnebago industries Q4 to be.
Speaker Change: Lat to slightly down versus Q3 on a sequential basis on the top revenue line.
Speaker Change: We expect we will continue to face margin or yield challenges tied primarily to market pressures on pricing in the form of heightened discounts.
Speaker Change: And we are therefore, anticipating profitability will be down sequentially as well.
Michael Happe: These expectations are consistent with the prevailing retail trends in the industry and are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels. This guidance for our financial performance is also consistent with the full calendar year retail and hotel shipment expectations in our share; therefore, of that we mentioned earlier.
These expectations are consistent with the prevailing retail trends in the industry.
Speaker Change: And are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels.
Michael J. Happe: This guidance for our financial performance is also consistent with the full calendar year retail and wholetail shipment expectations we mentioned earlier. We will provide further updates on expectations for the remainder of calendar year 2024 and for calendar year 2025 during our fourth quarter earnings call in October. That said, the future of our business remains bright. Our most recent Winnebago Industries Spotlight Survey continues to show strong demand for outdoor recreation, with 86% of participants saying they plan to increase or maintain their current participation level in outdoor activities. Winnebago Industries is better positioned today than at any time in its storied history.
Speaker Change: This guidance for our financial performance is also consistent with the full calendar year retail and wholesale shipment expectations and our shared therefore of that we mentioned earlier.
Michael Happe: We will provide further updates on expectations for the remainder of calendar year 2024 and for calendar year 2025 during our fourth quarter earnings call in October.
We will provide further updates on expectations for the remainder of calendar year 2024.
And for calendar year 2025.
Speaker Change: During our fourth quarter earnings call in October.
Michael Happe: That said, the future of our business remains bright. Our most recent Winnebago Industries Spotlight Survey continues to show strong demand for outdoor recreation, with 86% of participants saying they plan to increase or maintain their current participation level in outdoor activities. Winnebago Industries is better positioned today than at any time in our story history. If you compare our position today to where we were in 2014, when RV industry retail performance was similar to what we were experiencing in 2024, we are in a much better position in terms of market share, breadth of portfolio and financial performance.
Speaker Change: That said the future of our business remains bright.
Speaker Change: Our most recent Winnebago industries Spotlight survey continues to show strong demand for outdoor recreation.
Speaker Change: With 86% of participants, saying they plan to increase or maintain their current participation level in outdoor activities.
Speaker Change: Winnebago industries is better positioned today than at any time in our storied history.
Michael J. Happe: If you compare our position today to where we were in 2014, when RV industry retail performance was similar to what we are experiencing in 2024, we are in a much better position in terms of market share, breadth of portfolio, and financial performance. Likewise, if you compare where our portfolio brands sit today compared to pre-pandemic 2019, we have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price.
Speaker Change: If you compare our position to date to where we were in 2014.
When RV industry retail performance was similar to what we are experiencing in 2024.
Speaker Change: We are in a much better position in terms of market share breadth of portfolio and financial performance.
Michael Happe: Likewise, if you compare where our portfolio brand sits today compared to pre-pandemic 2019, we have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price. All of this is translated to much stronger financial performance and a more robust balance sheet. We are extremely proud of the high level of trust and confidence customers have in our brands. Putting us in a great position as the market recovers and consumers regain their economic footing.
Speaker Change: Likewise, if you compare where our portfolio of brands sits today compared to pre pandemic 2000 22019.
Speaker Change: We have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price points.
Michael J. Happe: All of this translates to much stronger financial performance and a more robust balance. We are extremely proud of the high level of trust and confidence customers have in our brand, putting us in a great position as the market recovers and consumers regain their economic footing. In closing, let me acknowledge the work of almost 6,000 team members across Winnebago Industries. The Grand Design, Winnebago, Numar, Chris Graft, and Barletta nameplates carry a unique appeal to the customers of each of those premium brands, an attraction that signifies quality, safety, and reliability. Our new strategic technology vertical lithionics battery is also positively disrupting the mobile lithium battery space, winning new business in both the outdoor industry and across specialty vehicle applications.
Speaker Change: All of this has translated to much stronger financial performance and a more robust balance sheet.
Speaker Change: We are extremely proud of the high level of trust and confidence customers have in our brands, putting us in a great position as the market recovers and consumers regain their economic footing.
Michael Happe: In closing, let me acknowledge the work of almost 6,000 team members across Winnebago Industries. The Grand Design, Winnebago, Neumar, Chris Kraft, and Barletta name plates carry a unique appeal to the customers of each of those premium brands. An attraction that signifies quality, safety, and reliability. Our new strategic technology vertical Lithionics battery is also positively disrupting the mobile lithium battery space. And winning new business in both the outdoor industry and across specialty vehicle applications. The people who support, design, and build these brands are our strongest asset. And I am extremely proud of the value they deliver every day to enable our customers to be great outdoors.
Speaker Change: In closing.
Speaker Change: Let me acknowledge the work of almost 6000 team members across Winnebago industries the.
The Grand design, Winnebago, and Newmar, and Chris craft, and Barletta nameplates carry a unique appeal to the customers of each of those premium brands.
Speaker Change: <unk> that signifies quality safety and reliability.
Speaker Change: Our new strategic technology vertical lithium Onyx battery is also positively disrupting the mobile lithium battery space and winning new business in both the outdoor industry and across specialty vehicle applications.
Operator: The people who support, design, and build these brands are our strongest asset, and I am extremely proud of the value they deliver every day to enable our customers to Be Great Outdoors. With that, I will turn the call back over to the operator, who will open the line for your questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
Speaker Change: The people, who support design and build these brands are our strongest asset and I am extremely proud of the value. They deliver every day to enable our customers to be great outdoors.
Ray Posadas: With that, I will turn the call back over to the operator, who will open the line for your questions. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please limit yourself to one question and one related follow-up. One moment for questions.
Speaker Change: With that I will turn the call back over to the operator, who will open the line for your questions.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and one related follow up one moment for questions.
Operator: Please limit yourself to one question and one related follow-up. One moment for questions. Our first question comes from Tristan Thomas Martin with BMO Capital Markets. You may proceed. Hey, good morning.
Tristan Thomas: Our first question comes from Tristan Thomas Martin with BMO Capital Markets. You may proceed.
Our first question comes from Tristan Thomas Martin with BMO capital markets. You May proceed.
Michael Happe: Hey, good morning. Mike, the profitability headwind in the fourth quarter is that pie to clearing kind of the remaining carry-over inventory or just incentivizing dealers to order. And while you're at it, where do you think carry-over inventory is for you guys meant for the industry?
Speaker Change: Hey, good morning.
Speaker Change: Mike.
Speaker Change: <unk> ability headwinds in the fourth quarter is that tied to clear in kind of the remaining carryover inventory or just incentivizing dealers to order.
Speaker Change: And then while you're at it where do you think carryover inventory is for you guys for the industry.
Speaker Change: Yes.
Michael Happe: Yeah, good morning, Tristan. I'd like to start with the back after your question first in terms of carry-over inventory. We are generally pleased with the composition of the inventory given the type of market conditions, you know, we're facing. As we sit today, the total inventory levels, you know, for us in the table space seem very appropriate for where we're at. We prefer for aging inventory and in our toable field inventory base to be a little bit better. But, you know, we continue to work on that quite specifically. Our motorized RV inventory may be slightly higher in the field than our dealers might like, but not by very much.
Michael J. Happe: Mike, the possibility of headwinds in the fourth quarter, is that tied to clearing kind of the remaining carryover inventory or just incentivizing dealers to order? And then, while you're at it, where do you think the carryover inventory is for you guys and then for the industry? Yeah, good morning, Tristan.
Speaker Change: Yes, good morning Tristan.
Michael J. Happe: I'd like to start with the back half of your question first. In terms of carryover inventory, we are generally pleased with the composition of the inventory, given the type of market conditions we're facing as we sit today. The total inventory levels, you know, for us in the towable space, seem very appropriate for where we're at. We'd prefer for the aging inventory in our tolerable field inventory base to be a little bit better, but we continue to work on that quite specifically.
Speaker Change: I'd like to start with the back half of your question first in terms of carryover inventory.
Speaker Change: We are generally pleased with the.
Speaker Change: The composition of the inventory given the type of market conditions, we're facing.
Speaker Change: As we sit today.
Speaker Change: The total inventory levels.
Speaker Change: For us in the <unk> space seem very appropriate for where we're at.
Speaker Change: We would prefer for aging inventory in our <unk> field inventory base to be a little bit better.
Speaker Change: But we continue to work on that.
Speaker Change: Quite specifically.
Michael J. Happe: Our motorized RV inventory may be slightly higher in the field than our dealers might like, but not by very much. And again, we actually think our aging inventory position on the motorized side is as competitive as any other OEM in the market. Lastly, on the marine side, specific to Barletta and Pontoons, while we are gaining significant retail share in that particular market segment, we continue to partner in a very positive way with dealers to position their field inventory in a position that they feel comfortable in.
Speaker Change: Our motorized RV inventory, maybe slightly higher in the field then.
Speaker Change: Our dealers might like but not by very much.
Michael Happe: And again, we actually think our aging inventory position on the motorized side is as competitive as any other OEM in the market.
Speaker Change: Again, we we actually think our aging inventory position on the motorized side is as competitive as any other Oems in the market.
Michael Happe: Lastly, on the marine side, specific to Barletta and Pantunes, while we are gaining significant retail share in that particular market segment, we continue to partner in a very positive way with dealers to position their field inventory to a position that they feel comfortable. And that will be that will continue to put a bit of pressure on shipments on that brand here over the next quarter, at a minimum. But all in all, we generally feel okay about the field inventory levels and continue to work on obviously transitioning the composition of that inventory to more recent, you know, recently aged inventory.
Speaker Change: Lastly, on the marine side specific to barletta in pontoons.
Speaker Change: We are gaining significant retail share in that particular market segment.
Speaker Change: We continue to partner and a very positively with dealers to position their field inventory to a position that they feel comfortable in.
Michael J. Happe: And that will continue to put a bit of pressure on shipments for that brand here over the next quarter at a minimum. But all in all, we generally feel okay about the field inventory levels and continue to work on obviously transitioning the composition of that inventory to more recent, you know, recently aged inventory. We have actually slightly delayed some of our model year 2025 introductions so that we can continue to work as an example on some of the model year 2023 or 2024 products. Bryan, I might ask you to talk about the profitability drivers in Q4. Yeah, we talked about it sequentially, right?
Speaker Change: That will be that we'll continue to put a bit of pressure on shipments on that brand here over the next quarter at a minimum but all in all we generally feel okay about the field inventory levels and continue to work on obviously transitioning the composition of that inventory.
Speaker Change: Two more recent.
Speaker Change: Recently, aged inventory, we have actually slightly delayed some of our model year 2025 introductions. So that we can continue to work as an example on some of the model year 2023 or 2024 product.
Michael Happe: We have actually slightly delayed some of our model year 2025 introductions so that we can continue to work as an example on some of the model year 2023 or 2024 product.
Bryan Hughes: Bryan, I might ask you to talk about the profitability drivers in Q4. Yeah, we talked about it sequentially, right? And I think the biggest driver, you kind of alluded to it, Tristan, is going to be continued marketplace pressures on discounting allowances, just a tougher environment than what I think the industry was anticipating. As we get through the selling season and into the start to ease in the June, July, August period, our Q4, in terms of dealers' willingness to take on product, also you have some seasonality of sorts. You know, on the marine side, for example, we have interest reimbursement programs that start to kick in in our Q4 versus Q3. So I think broadly speaking, I would characterize, you know, that profit guidance we provided as a bit of a seasonal, as well as an expectation of continued very, very tough market conditions and dealer sentiment.
Speaker Change: Brian I might ask you to talk about the profitability drivers in Q4.
Speaker Change: Yes, we talk about it sequentially right.
Bryan L. Hughes: And, I think the biggest driver, you kind of alluded to it, Tristan, is going to be continued marketplace pressures on discounting, allowances, just a tougher environment than what I think the industry was anticipating as we get through the selling season and start to ease in the June, July, August period, our Q4 in terms of dealers' willingness to take on product. Also, you have some seasonality of sorts. On the marine side, for example, we have interest reimbursement programs that start to kick in in our Q4 versus Q3. So I think, broadly speaking, I would characterize
Speaker Change: I think the biggest driver you kind of alluded to it Tristan is going to be continued marketplace pressures.
Speaker Change: Discounting allowances.
Speaker Change: Just a tougher environment than what I think the industry was anticipating as we get through the selling season.
Speaker Change: And into the start to ease in the June July August period, our Q4 in terms of dealers willingness to take on product also you have some seasonality or thoughts on the marine side. For example, we have interest reimbursement programs that start to kick in.
Speaker Change: In our Q4 versus Q3, so I think broadly speaking I would I would characterize.
Bryan L. Hughes: You know, that profit guidance we provided is a bit of a seasonal average as well as an expectation of continued very, very tough market conditions and dealer sentiment. Okay, thank you. I'll hop back in the queue.
Speaker Change: That profit guidance, we've provided is a bit of a seasonal as well as our expectation of continued very very.
Speaker Change: Tough market conditions and dealer sentiment.
Speaker Change: Okay.
Tristan Thomas: Okay, thank you. I'll have that again, thank you.
Speaker Change: Okay. Thank you I'll hop back in queue.
James Hardiman: Thank you. Our next question goes from James Hardiman with City. You may proceed. Hey good morning, thanks for taking my question. So on the inventory front, maybe a little surprise to hear you say you're actually pushing back the introduction of some of the model year 25. I'm certainly some of the commentary that we heard from dealers is that they're actually waiting for the model year 25 to make orders because they don't want to further exacerbate the aging issue. Maybe speak to the thought process there. Do you think it'll be a catalyst once the 25 begin to make their way into the channel? And I think there's been some discussion from at an industry level of moving up that model year change over. Any thought there?
Speaker Change: Thank you.
Tristan M. Thomas: Thank you. Our next question comes from James Hardiman with Citi. You may proceed. Hey, good morning.
Speaker Change: Our next question comes from James Hardiman with Citi. You May proceed.
James Lloyd Hardiman: Thanks for taking my question. So on the inventory front, maybe a little surprised to hear you say you're actually pushing back on the introduction of some of the Model Year 25s. Certainly some of the commentary that we've heard from dealers is that they're actually waiting for the Model Year 25s to make orders because they don't want to further exacerbate the aging issue. Maybe speak to the thought process there.
Hey, good morning, Thanks for taking my question so on the.
James Lloyd Hardiman: The inventory front.
Speaker Change: Maybe a little surprised to hear you say youre actually pushing back.
Speaker Change: The introduction of some of the model year 'twenty five certainly some of the commentary that we've heard from dealers is that they're actually waiting for the model year 'twenty five can make orders because they don't want to further exacerbate.
Speaker Change: The aging issue.
Michael J. Happe: Do you think it'll be a catalyst? Once the 25s begin to make their way into the channel, and I think there's been some discussion at an industry level of moving up that model year changeover. Any thoughts there? Yeah, good morning, James. This is Mike.
Speaker Change: Maybe speak to the thought process. There do you think it will be a catalyst.
Speaker Change: Once the 25 begin to make their way into the channel and I think you are.
Speaker Change: There's been some discussion at an industry level.
Speaker Change: <unk> up that that model year changeover or any thoughts there.
Michael Happe: Yeah, good morning James, this is Mike. Let me be more specific on my comment about model year 25. My comment does not apply to the entire portfolio in the same way. There are certain pockets of our portfolio where we are being very intentional in the timing and delivery of model year 25 product for two reasons: one, we may still have a little bit of model year 24 carry over on our own wants; and number two, we, with the dealers, think it is best to continue to work on any of the aged inventory in the field. Our model year 22 inventory is virtually nonexistent at the end of third quarter, very small number of units, and we continue to put some of our select promotional support dollars on the age side against a number of the model year 23 products.
Michael J. Happe: Let me be more specific about my comment about model year 25. My comment does not apply to the entire portfolio in the same way. There are certain pockets of our portfolio where we are being very intentional in the timing and delivery of Model Year 25 products for two reasons.
Mike: Yes. Good morning, James This is Mike let me be more specific on my comment about model year 'twenty five.
Mike: My comment does not apply to the entire portfolio in the same way.
Mike: There are certain pockets of our portfolio, where we are being very intentional in the timing and delivery of model year 'twenty five product.
Michael J. Happe: One, we may still have a little bit of Model Year 24 carryover on our own lots. And number two... We dealers, you know, think it is best to continue to work on any of the aged inventory in the field. Our model year 22 inventory is virtually non-existent at the end of the third quarter, a very small number of units, and we continue to put some of our select promotional support dollars on the age side against a number of model year 23 products.
Mike: For two reasons, one we may still have a little bit of model year 2004 carryover.
Mike: On our own lots and number two.
Mike: We with the dealers think it is best to continue to work on any of the aged inventory in the field.
Mike: Our model year 'twenty, two inventory is virtually nonexistent at the end of third quarter.
Mike: A small number of units and we continue to put.
Mike: Some of our select promotional support dollars on the AG side against a number of the model year 'twenty three.
Michael Happe: So that is that is really our focus there on on 25 in terms of timing. I would actually say that the, you know, it appears to me that the RV industry continues to probably move towards a more common model, your future model, your release window, and in my opinion, based on you know the activity that I'm seeing and hearing, I don't believe that that that window in future years will move up. up. I actually think it will stay in the mid-summer period, and hopefully we will continue to see good discipline by other OEMs across the industry to make a reasonable model your transition in a time period.
Products.
Michael J. Happe: So that is... That is really our focus there on 25. In terms of timing, I would actually say the industry continues to probably move towards a more common future model year release window. In my opinion, based on the activity that I'm seeing and hearing, I don't believe that window in future years will move up. I actually think it will stay in the mid-summer period, and hopefully, we will continue to see good discipline by other OEMs across the industry to make a reasonable model of your transition in a time period that makes sense. There were some outliers on the total side to that summertime model year introduction, just a couple outliers.
Mike: That is.
Mike: That is really our focus there on on.
Mike: 25.
Mike: In terms of timing I would actually say the.
Mike: It appears to me that the RV industry continues to probably.
Mike: <unk> moved towards a more common.
Mike: Model year future model year release window.
Mike: In my opinion based on.
Mike: The activity that I'm seeing and hearing I don't believe that that that that window in future years will move up.
Mike: I actually think it will stay in the mid.
Mike: Summer period in.
Mike: And hopefully we will continue to see.
Mike: Good disciplined by other Oems across the industry too.
Mike: To make a reasonable model year transition in the time period that makes sense.
Michael Happe: It makes sense. There have been some suppliers on the toll side to that summertime model year introduction, just a couple outliers. I think the big players, for the most part, are disciplined in that regard.
Mike: And theres been some private buyers on the toll good side to that Summertime model year introduction, just a couple of outliers I think the big players for the most part are disciplined in that regard the motor home. It's been less disciplined flip you will look at it segment by segment.
Michael Happe: The motor home has been less disciplined, so if you were to look at it segment by segment, motor home has certainly had a history and continued this year to introduce the next model year earlier than the summer period here in July when the industry largely shakes hands and agrees is the model year turnover. Some of that is driven by the OEM, the chassis providers on the motor I side, having a different timing of model year change over to. Got it.
Michael J. Happe: I think the big players, for the most part, are disciplined in that regard, with the exception of the model year turnover. Some of that driven by the OEM, the chassis providers on the motorized side having a different timing of the model year changeover. Got it.
Mike: Home has has certainly had a history and continued this year to introduce the next model year earlier than the.
Mike: In the summer period here in July when the industry, largely shakes hands and Greece is the model year turnover some of that driven by the OEM the chassis providers on the motorized side, having a different.
Mike: Timing of model year changeover too.
Michael J. Happe: And then, any quantification you could give us on the flex frame issue, both the extension of the warranty and the transferability of the warranty? Sounds like you don't think it's going to be a meaningful driver of increased warranty expense. But so maybe walk us through the major assumptions that lead you to that conclusion. Thanks. Dave, this is Mike.
Speaker Change: Got it and then.
James Hardiman: And then any quantification you could give us on the flex frame issue, but the extending of the warranty and the transferability of the warranty. Sounds like you don't think it's going to be a meaningful driver to increase warranty expense. But, so maybe walk us through the major assumptions that lead you to that conclusion.
Speaker Change: Any quantification you could give us on the flex frame issue.
Speaker Change: Both the extending of the warranty and the transferability of the warranty. It sounds like you don't think it's going to be a meaningful.
Speaker Change: Driver to increased warranty expense.
Speaker Change: <unk>.
Speaker Change: But so maybe walk us through the major assumptions that that leads you to that conclusion.
James Hardiman: Thanks.
Michael Happe: James, this is Mike.
Michael J. Happe: Let me put this in perspective for everybody; less than one percent of all grand design fifth wheels built in the entire history of its company have experienced any sort of excessive frame flex issue. This is an issue which is not as large in actuality from a unit impact standpoint, nor in financial impact. As Several stakeholders perceive it. The impact of warranty to date. In fiscal year 24, the concern regarding excessive frame flex has been nominal.
Mike: Dave This is Mike let me put this in perspective for everybody.
Michael Happe: Let me put this in perspective for everybody. Less than 1% of all Grand Design fit wheels built in the entire history of its company have experienced any sort of excessive frame flex issue. This is an issue which is not as large in actuality from a unit impact standpoint, nor in financial impact as several stakeholders perceive it to be. The impact of warranty to date in fiscal year 24 regarding excessive frame flex has been nominal, and as Brian alluded, we are maintaining historical warranty levels now around most of our businesses, including Grand Design. In the announcement that the grand design business made candidly to signal to its consumers that we have maximum confidence in our products, and that we will provide the utmost and complete support to customers in the future, will come with very little financial impact in the rest of this fiscal year or future fiscal years given the current warranty rate we're seeing on this topic.
Speaker Change: Less than 1%.
Of all Grand designs fifth wheels built in the entire history of its company have experienced any sort of excessive frame flex issue.
Speaker Change: This is this is an issue which is.
Speaker Change: Not as large in actuality.
Speaker Change: From a unit impact standpoint, nor in financial impact.
Speaker Change: As.
Speaker Change: Several stakeholders perceive it to be.
Speaker Change: The impact of warranty to date in.
Michael J. Happe: And as Bryan alluded, we are maintaining historical warranty levels now around most of our businesses, including grand design. In the announcement that the grand design business made, candidly, to signal to its consumers that we have maximum confidence in our product and that we will provide the utmost and complete support. [inaudible] given the current warranty rate we're seeing on this topic. So, that's why I use the word misinformation in my prepared comments.
Speaker Change: In fiscal year 'twenty four regarding.
To access a frame flex has been nominal and as Brian alluded.
Speaker Change: We are maintaining historical warranty levels now.
Speaker Change: Around most of our businesses, including Grand design.
Speaker Change: And the announcement that the Grand design business made.
Speaker Change: Candidly to signal to its consumers that we have maximum confidence in our products and that we will provide the provide the utmost in complete support to customers in the future will come with very little financial impact in the rest of this fiscal year or future fiscal years.
Speaker Change: Given the.
Speaker Change: The current.
Speaker Change: Warranty rate, we're seeing on this topic.
Michael Happe: That's why I use the word misinformation in my prepared comments. This topic is not having a significant impact on our warranty expense line now, and we don't anticipate that to be the case in the future.
Speaker Change: So that's why I use the word misinformation.
Speaker Change: In my prepared comments.
Michael J. Happe: This, this, uh... Topic is not having a significant impact on our warranty expense line now, and we don't anticipate that to be the case in the future. Yeah, and just to add a little bit to that, as Mike said, the experience rate is so low on this. We do have some, of course, experience where we've seen it, as Mike said, less than 1%. And in those instances where we have seen it, the cost per fix is likewise not meaningful.
Speaker Change: This this.
Speaker Change: The topic is not having a significant impact on our warranty expense line now and we don't anticipate that to be the case in the future, yes, just to add a little bit to that.
Bryan Hughes: Just add a little bit to that. As Mike said, the experience rate is so low on this. We do have some, of course, experience where we've seen it. It's Mike said less than 1%. We have seen that the cost per 6 is like why it's not meaning. and then lastly, you know, Grand Design has always taken care of the customers.
As Mike said the experience rate is so low on this we do have some of course experience, where we've seen it as Mike said less than 1% none of those instances, where we have seen at the cost per fix is likewise not meaningful.
Bryan L. Hughes: And then lastly, you know, Grand Design has always taken care of customers, okay? So we call it goodwill practices, and I think most on the call know what that means from an industry perspective, even, in other words, outside of warranty, Grand Design has historically taken care of customers on these types of issues as well, so it's already effectively in the run rate, we feel, this additional warranty that was just extended.
Speaker Change: And then lastly, Grand design has always taken care of the customers. Okay. So call. It goodwill practices I think most of the call to know what that means from an industry perspective, even in other words outside of warranty Grand design has historically taken care of customers on these types of issues as well so it's already effectively in the run rate we feel.
Bryan Hughes: Okay, so call it good wheel practices. I think most of them call them know what that means from an industry perspective. Even in other words, outside of warranty, Grand Design has historically taken care of customers on these types of issues as well. So it's already effectively in the run rate we feel this additional warranty that was just extended.
Speaker Change: This additional warranty.
That was just extended so for all those reasons.
Bryan Hughes: So, for all those reasons, you know, hopefully that gives you some perspective on why we think this is not a kind of financial event, call it as we try to put this our customers at ease through this extended warranty.
Bryan L. Hughes: So for all those reasons, hopefully that gives you some perspective on why we think this is not, you know, any kind of financial event, call it that, as we try to put this, our customers at ease, through this extended warranty.
Speaker Change: Hopefully that gives you some perspective on why we think this is not a.
Speaker Change: Any kind of financial event call. It as we tried to put this custom.
Speaker Change: Customers at ease through this this extended warranty.
Bryan Hughes: It does.
James Lloyd Hardiman: That's a good perspective. Thanks, guys. Thank you. And as a reminder, please limit yourself to one question and one related follow-up. Our next question comes from Bret Jordan on Jeffrey's He May Proceed. Hey, good morning, guys.
James Hardiman: That's a good perspective. Thanks, guys.
That's good perspective, thanks, guys.
Bret Jordan: Thank you.
Speaker Change: Thank you.
Ray Posadas: And, as a reminder, please limit yourself to one question and one related follow-up.
Speaker Change: And as a reminder, please limit yourself to one question and one related follow up. Our next question comes from Bret Jordan with Jefferies. You May proceed.
Bret Jordan: Our next question comes from Brett Jordan with Jeffries; he may proceed. Good morning, guys.
Bret David Jordan: Could you talk a bit more about the relative health, I guess, of the dealer channel marine versus RV? Obviously, the marine downturn started after the RV downturn but might be a little deeper at the moment. And maybe you could talk about, you know, are we going to see attrition or meaningful incremental attrition on either one of those channels, given just inventory carrying costs and slow retail sales? Brett, good morning. This is This is Mike.
Bret David Jordan: Hey, good morning, guys.
Bret Jordan: Could you could you talk a bit more about the general, the relative health, I guess, of the dealer channel marine versus RV. Obviously, the marine downturn started after the RV downturn that might be a little deeper at the moment.
Bret David Jordan: Could you could you talk a bit more about the general the relative health I guess at the dealer channel Marine versus R&D, obviously, the marine downturn started after the RV downturn, but it might be a little deeper at the moment.
Bret Jordan: And maybe could you talk about, you know, are we going to see a trition or meaningful incremental attrition on either one of those channels given just inventory carrying costs and slow retail sales.
Bret David Jordan: And maybe you could you talk about are we going to see attrition or meaningful incremental attrition on either one of those channels, given just inventory carrying cost and slow retail sales.
Michael Happe: Brett, good morning.
Michael J. Happe: You know, as we've stated before, we can discuss specifically the marine market segments that we're in. And so I'll focus my comments here on pontoons, because that is where the... You know, that's obviously where the majority of our marine volume lies. I am extremely pleased with our Barletta branded business and the way they've been managing both their support of increasing retail market share in a difficult environment but also their prudence and discipline around field inventory.
Mike: Brent Good morning. This is this is Mike.
Michael Happe: This is this is Mike. You know, as we've stated before, we can discuss specifically the marine market segments that we're in. And so I'll focus my comments here on pontoons because that is where the, you know, that's obviously where the majority of our marine volume lies. I am extremely pleased with our Barletta branded business in the way they've been managing both their support of increasing retail market share in a difficult environment, but also their prudence and discipline around field, you know, field inventory. And this is a business as an example where, at the end of our third quarter, we didn't have a single model your 2025 product in the channel yet.
Speaker Change: As we've stated before we can we can discuss specifically.
Mike: The marine market segments that we're in and so I'll focus my comments here on on pontoons, because that is where the.
Mike: That's obviously, where the majority of our marine volume lies.
Mike: I am extremely pleased with our barletta branded business and the way they've been managing both their support of increasing retail market share in a difficult environment, but also their prudence and discipline around.
Mike: Field field inventory.
Michael J. Happe: And this is an example of a business where, at the end of our third quarter, we didn't have a single model year 2025 product in the channel yet. And I'm not even sure that's the case today. I don't think it is.
Mike: And this is a business as an example, where at the end of our third quarter.
Mike: Didn't have a single model year 2025 product.
Mike: In the channel yet.
Michael Happe: And I'm not even sure that's the case today. I don't think it is. So we continue to focus on running out our model your 24s and are working with the dealers to make sure that the turn rate that they desire. In light of some of the pressures they're facing on inventory flooring costs, as an example, across all of their lines, not just Barletta, that we're a good partner in making sure that their Barletta inventory levels are in a position to both drive double-digit market retail share. But also help them drive acceptable profitability on their retail transactions and manage any carrying costs that they have.
Mike: And I'm not even sure. That's the case today I don't think it is so we continue to focus on running out our model year 'twenty fours.
Michael J. Happe: So we continue to focus on running out our model year 24s and are working with the dealers to make sure that the turn rate that they desire, in light of some of the pressures they're facing on inventory flooring costs, as an example, across all of their lines, not just Barletta, that we're a good partner in making sure that their Barletta inventory levels are in a position to both drive double-digit market retail share but also help them drive And so we've actually brought down Barletta's total inventory as of the end of the third quarter, right, probably somewhere in the range of 800 to 900 units.
Mike: And are working with the dealers to make sure that that the turn rate that they desire in light of some of the pressures they're facing on inventory flooring costs. As an example across all of their lines not just <unk> letter.
Mike: That word a good partner and making sure that Theyre barletta inventory levels are in a position to both drive double digit market retail share.
Mike: But also help them drive acceptable profitability on their retail transactions and manage any carrying costs that they have and so we've actually brought down barletta total inventory.
Michael Happe: And so we've actually brought down Barletta total inventory as of the end of the end of the third quarter, probably somewhere in the range of, you know, 800 to 900 units, and we anticipate, you know, also driving that field inventory position a little bit lower here, particularly over the fourth quarter. And we think that is the best thing to do for our dealers without sacrificing our ability to go after double-digit market share. So that we can position ourselves for an even stronger model, your 25 line release that will happen probably in the, you know, the August, you know, time period.
Mike: As of the end of the.
Mike: End of the third quarter by probably somewhere in the range of.
Mike: 800 to 900 units and we anticipate.
Michael J. Happe: And we anticipate, you know, driving that field inventory position a little bit lower here, particularly in the fourth quarter. And we think that is the best thing to do for our dealers without sacrificing our ability to go after double-digit market share so that we can position ourselves for an even stronger model year 25 line release that will happen probably in the August time period.
Mike: Also driving that field inventory position, a little bit lower here, particularly over the fourth quarter and we think that is the best thing to do for our dealers without sacrificing our ability to go after double digit market share.
So that we can position ourselves for an even stronger model year 'twenty five line release.
Mike: That will happen probably in the.
Mike: The August.
Mike: Same periods.
Michael Happe: So you know our marine inventory position is in I think really really decent shape to begin with, and we're going to make it even stronger here over the next 90 to 120 days. Hopefully, market conditions will be in a place where you know we can stabilize and get back to a one-to-one, you know, retail to shipment ratio in that particular, in that particular business.
Mike: So.
Mike: Our marine.
Michael J. Happe: The inventory position is in, I think, really, really decent shape to begin with, and we're going to make it even stronger here over the next 90 to 120 days. And then, hopefully, market conditions will be in a place where we can stabilize and get back to a one-to-one retail-to-shipment ratio in that particular business. Hey Bret, if you were asking about broader, just dealer health in general. As both RV and Marine get through the selling season here, I think... It's the best time of year for them, right?
Mike: The inventory position is in I think really really decent shape to begin with and we're going to make it even stronger here over the next 90 to 120 days.
Mike: And then hopefully market conditions will be in a place where.
Mike: We can we can stabilize and get back to a one to one.
Mike: Retail to shipment.
Mike: Ratio in that particular in that particular business.
Bryan Hughes: Hey Brad, if you were asking about broader just dealer health in general, you know, as both RV and marine get through the selling season here, I think it's the best time of your form, right? They'll have decent cash flow and at least some profitability to get them through the selling season.
Speaker Change: Hey, Brett if you were asking about broader dealer health in general.
Mike: <unk>.
Mike: At both RV and marine and get through the selling season here I think.
Mike: It's the best time of year for them right they'll have decent cash flow.
Bryan L. Hughes: They'll have decent cash flow and at least some profitability to get them through the selling season. I think there is some exposure, call it, remaining in marine, heightened above RV. But what I am certainly hearing and want to acknowledge is that the marine OEMs, broadly speaking, of which we're a very small piece, are doing a very good job of pulling back on production and making sure that the dealers only have what they need really to get through this selling season and trying to help them with carrying costs. So if that was your broader question, just wanted to throw that in. Great, thank you.
Mike: And at least some.
Mike: Some profitability.
To get them through the selling season I think there is some exposure to call. It remaining in marine heightened above RV, but what I am certainly hearing and want to acknowledges that the marine Oems broadly speaking of which again were very small piece are doing a very good job at pulling back on production.
Bryan Hughes: And I think there is some exposure, call it remaining in marine, heightened above RV, but what I am certainly hearing and want to acknowledge is that the marine OEMs, probably speaking of which, again we're a very small piece, are doing a very good job at pulling back on production and making sure that the dealers only have what they need really to get through this selling season and trying to help them with carrying costs.
Mike: And making sure that the dealers only have what they need really to get through the selling season and trying to help them with carrying costs. So if that was your your broader question just wanted to throw that into.
Bret Jordan: So if that was your broader question, just wanted to throw that into great. Thank you, appreciate it.
Speaker Change: Okay, great. Thank you I appreciate it.
Michael Swartz: Thank you.
Speaker Change: Thank you.
Michael Swartz: Our next question goes from Michael Swartz, with two securities he may proceed.
Bret David Jordan: I appreciate it. Thank you. Our next question comes from Michael Swartz with True Security. He may proceed.
Speaker Change: Our next question comes from Michael Swartz with two Securities you May proceed.
Michael Swartz: Hey, hey guys, good morning. Maybe just drilling down a little bit into the profitability and more specifically the motorized business. I think even on margins we were in the four or five range this quarter and over the past year, so as productions come down, they'd really been kind of sticking in that 7% range. So maybe help us understand, I guess, one what changed. During the third quarter to drive it down about 300 basis points, and then I guess to how do we how should we think about that going forward.
Michael Arlington Swartz: Hey guys, good morning. Maybe just drilling down a little bit into profitability and, more specifically, the motorized business. I think EBITDA margins were in the 4 or 5 range this quarter, and over the past year or so, as production has come down, they've really been kind of sticking in that 7% range. So, maybe help us understand, I guess, one, what changed during the third quarter to drive it down about 300 basis points. And then I guess, too, how should we think about that going forward? Yeah, certainly. Mike, good morning.
Michael Arlington Swartz: Hey, guys good morning.
Michael Arlington Swartz: Maybe just drilling down a little bit into the profitability and more specifically the motorized business.
Speaker Change: EBITDA margins were in the four five range this quarter and over the past year or so as productions come down that road and kind of sticking in that 7% range. So maybe help us understand I guess, one what changed.
Speaker Change: During the third quarter to drive it down about 300 basis points, and then I guess to how do we how should we think about that going forward.
Michael Swartz: Yeah, certainly, Mike. Good morning. Certainly, do you leverage continues to weigh heaviest? We talked about how the market. I wasn't seeing any improvement as we thought it might on retail in April. May that that affected us; it also caused, I'd say, the Winnebago brand to get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures as a result of that. There was some certain specific brands that we needed to be really aggressive on considering the market conditions, and so that was a big impact productivity. You know, as the market slowed down and as our product mix becomes one of those things that you have to juggle from a production perspective, that drove our productivity below where we were expecting and wanting to see as well.
Bryan L. Hughes: Certainly, de-leverage continues to weigh heaviest. We talked about how the market wasn't seeing any improvement as we thought it might on retail in April and May. That affected us.
Speaker Change: Yes, certainly.
Mike Good morning, certainly deleverage continues to weigh heaviest we talked about how the market.
Speaker Change: It wasn't seeing any improvement as we thought it might on retail in April and May.
Affected us it also caused I would say the Winnebago brand.
Bryan L. Hughes: It also caused, I'd say, the Winnebago brand to get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures as a result of that. There were some specific brands that we needed to be really aggressive on considering the market conditions. And so that was a big impact.
Speaker Change: To get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures.
Speaker Change: As a result of that there was some certain specific brands that we needed to be really aggressive on.
Speaker Change: Considering the market conditions, and so that was the big impact productivity as the market slowed down and as our product mix.
Bryan L. Hughes: It became one of those things that you have to juggle from a production perspective that drove our productivity below where we were expecting and wanting to see as well, in the form of both direct labor productivity and direct labor in getting the units out the door. So those were the biggest things that we fought here in our Q3. Okay, and on the... I guess on the new grand design lineage; I know this product hasn't officially launched yet, but any color or context you can give us around just the response from the dealer base would be helpful in any way to think about, you know, maybe the initial distribution opportunity there, maybe the number of doors, and then, you know, what maybe the initial stocking levels will look like in that business. Good morning, Mike. This is Mike.
Speaker Change: Becomes one of those things that you have to juggle from a production perspective that drove our productivity below where we were expecting and wanting to see as well so that in the form of both direct labor.
Bryan Hughes: So that in the form of both direct labor productivity and direct labor in getting the unit out the door. So those were the biggest things that we fought here in our Q3.
Speaker Change: Productivity and direct labor and getting the units out the door.
Speaker Change: Those are the biggest things that we thought here in our Q3.
Speaker Change: Okay and on the.
Michael Happe: On the new grand design lineage, I know this product hasn't officially launched yet, but any color or context you can give us around just the response from the dealer base in any way to think about maybe the initial distribution opportunity there, maybe the number of doors, and what maybe the initial stocking levels will look like on that business. Good morning, Mike. This is Mike.
Speaker Change: I guess on the new Grand design lineage I know this product hasnt officially launched yet, but any any color or context, you can give us around just the response from the dealer base in any way to think about maybe the initial distribution opportunity there maybe the number of doors and then what maybe the initial stocking levels will look.
Speaker Change: Like on that business.
Mike: Good morning, Mike This is Mike.
Michael Happe: As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City. We will not, you know, share at this time the number of dealers that, you know, we have mutually committed to on the product line. But I can say that the quality of that dealer stocking list is every bit as impressive as what we have on our Grand Design models, and we will have a couple of examples of what we have on our Grand Design models. We have a couple of examples of what we have on our grand design models.
Michael J. Happe: As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City. We will not share at this time the number of dealers that we have mutually committed to on the product line, but I can say that the quality of that dealer stocking list is every bit as impressive as what we have on our grand design toolables list. And in fact, it includes several of the same loyal and fantastic grand design dealers that carry towables, but it also includes a few new dealers to the grand design brand for the specifically the motorized launch.
As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City.
Mike: We will not share at this time the number of dealers that.
We have mutually committed to on the product line.
Mike: But I can say that the quality of that dealer.
Stocking list is every bit as impressive as what we have on our Grand design totals list.
Mike: In fact that includes several of the same.
Mike: Loyal and fantastic Grand design dealers that carry <unk>, but it also includes.
Mike: A few new dealers to the Grand design brand for specifically the motorized launch.
Michael J. Happe: As I said earlier, we will have a very light amount of shipments late in the fourth quarter, probably in the month of August for this product, and then the majority of the stocking orders and deliveries will begin in fiscal 25. And so as we firm up those orders here, we will begin to reflect those to you all as well in the backlog. I don't believe our current motorized backlog includes any grand design orders at this time, but those conversations obviously on a stocking order commitment are very much happening.
Mike: As I said earlier, we will have.
Mike: Very light amount of shipments late in the fourth quarter, probably in the month of August on this product and then the majority of the stocking orders and deliveries.
Mike: We'll begin in fiscal 'twenty five.
Mike: And so as we firm up those orders.
Mike: Here, we will we begin to reflect those to you all as well.
Mike: In the backlog I don't believe our current motorized backlog includes any grand design orders at this time.
Mike: But those those conversations obviously on a stocking order commitment are very much happening and so you will begin to see the impact of that probably when we announce our fourth quarter earnings.
Michael J. Happe: And so you will begin to see the impact of that probably when we announce our fourth-quarter earnings in October. The other thing that I will mention, and we're not providing specifics on this yet, is the class C lineage is the first of several grand design motorized products that are on the drawing board. And over the next, you know, probably six months, you will hear more from Winnebago Industries and Grand Design about our intentions for a couple other products. (Inaudible) Okay, great, thanks.
Michael Happe: So you will begin to see the impact of that probably when we announce our fourth quarter earnings in October.
Mike: In October the other thing that I will mention and we're not providing specifics on this yet.
Michael Happe: The other thing that I will mention, and we're not providing specifics on this yet, is the Class C lineage is the first of several grand design motorized products that are on the drawing board. And over the next, you know, probably six months, you will hear more from Winnebago Industries and Grand Design about our intentions on a couple other products that we could be bringing to the market here in the next, you know, I would say probably nine to, you know, 15 months as well.
Mike: As the class C lineage is the first.
Of several Grand design motorized products that are on the drawing board and over the next probably six months you will hear more from Winnebago industries and Grand design about our intentions on a couple of other products.
Mike: That we could be bringing to the market here in the next.
Mike: I would say probably nine to 15.
Mike: <unk> 15 months as well.
Michael Happe: So this is the beginning, and more details to come as we're comfortable. Okay.
Mike: This is the beginning.
Mike: And more details to come as we are comfortable.
Michael Happe: Great. Thanks.
Speaker Change: Okay, great. Thanks.
Noah Zaskin: Thank you. Our next question goes from Noah Zaskin with KeyBank Capital Markets. You may proceed.
Speaker Change: Thank you.
Michael Arlington Swartz: Thank you. Our next question comes from Noah Zatzkin with KeyBank Capital Markets. Please proceed.
Speaker Change: Our next question goes from no is that skin with Keybanc capital markets. You May proceed.
Noah Seth Zatzkin: Hi, thanks for taking my question. I guess, just kind of related to the kind of affordability concerns in the industry, just wondering if you could kind of provide any color on how you're thinking about ASPs across segments. And then somewhat relatedly, you know, I think we kind of picked up from some other industry participants that they're expecting motorized chassis price increases from the auto OEMs. So as it relates to the motorized side and model year 25, like, is ASP and offset there? Kind of how are you thinking through those kind of cost increases? Thanks. Hello, this is Bryan.
Noah Zaskin: Hi. Thanks for taking my question.
Speaker Change: Hi, Thanks for taking my question.
Noah Zaskin: I guess just kind of related to the kind of affordability concerns in the industry, just wondering if you could kind of provide any color on how you're thinking about ASPs across segments.
Speaker Change: I guess just kind of related to the.
Speaker Change: Kind of affordability concerns in the industry just wondering if you could.
Speaker Change: Kind of provide any color on how youre thinking about.
Speaker Change: Asps across segments.
Bryan Hughes: and then somewhat relatedly, you know, I think we had kind of picked up from some other industry participants that they're expecting motorized chaffee price increases from the auto OEMs. So as it relates to the motorized side and model your 25 like ASP and offset there, kind of how are you thinking through those kind of cost increases. Thanks.
Speaker Change: And then somewhat relatedly.
Speaker Change: Yes, I think we had we had kind of picked up from that from some other industry participants that theyre expecting motorized chassis price increases from the auto Oems.
Speaker Change: So as it relates to the motorized side and model year 'twenty five.
Speaker Change: As ASP and offset there kind of how are you thinking through those kind of cost increases.
Bryan L. Hughes: I'll start with the second part of your question. Yeah, I did see your note on chassis costs. I think, frankly, the industry has seen most of those increases. It's in the rear view mirror.
Bryan Hughes: And I'll start with your second part of your question. Yeah, I did see your note on chassis cost. I think, frankly, the industry has seen most of those increases. It's in the rearview mirror. There's still some inflationary pressures remaining on motorized Chaffee that were anticipating, but nothing of the magnitude that you cited. We certainly, I don't want to minimize the size of increases we've seen to motorized chaffees over the last three years because they have been high, but the remaining increases, you know, I think will be will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years.
Bryan L. Hughes: This is Bryan I'll start with your second part of your question, Yes, I did see your note on chassis costs I think frankly, the industry has seen most of those increases it's in the rearview mirror.
Bryan L. Hughes: There are still some inflationary pressures remaining on motorized chassis that we're anticipating, but nothing of the magnitude that you cited. I don't want to minimize the size of the increases we've seen in motorized chassis over the last three years because they have been high. But the remaining increases, I think, will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years. So I guess I'd start with that, and then it kind of gets into the affordability question that you raised broadly.
Bryan L. Hughes: There is still some inflationary pressures.
Bryan L. Hughes: Remaining on motorized chassis that were anticipating.
Bryan L. Hughes: But nothing of the magnitude that you cited we certainly I don't want to minimize the size of increases we've seen in motorized chassis over the last three years because.
Bryan L. Hughes: Because they have been high.
Bryan L. Hughes: But the remaining increases.
Bryan L. Hughes: I think will be will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years.
Bryan Hughes: So I guess I'd start with that.
Speaker Change: I guess I'd start with that and then it kind of gets into the affordability question that you raised broadly.
Bryan Hughes: And then it kind of gets into the affordability question that you raised broadly. So I'll shift to that part of the question. I'm on the total side; we're seeing a very benign cost environment. So on an Apple's apples basis, if we look at our bombs from Molly or 24 to 25, they're very neutral. And so pricing, as a result, likewise, the neutral on an Apple's Apple's basis, what we're doing to address, you know, that customer preference for lower price points is introducing a lot of new product that allows us to do that without compromising our premium brand position.
Speaker Change: So I'll shift to that part of the question on the total side, we're seeing very benign cost environment. So on an apples to apples basis, if we look at our bonds.
Speaker Change: From model year, 'twenty four to 25, they're very neutral and so pricing as a result will likewise be neutral on an apples to apples basis, what we're doing to address.
Bryan L. Hughes: You know, that customer preference for lower price points is introducing a lot of new products that allow us to do that without compromising our premium brand position. So products like the new Transcend One is an example, Reflection 100, the Influence, all those on the grand design side, the Access, the stick and tin product for the Winnebago branded, you know, these are examples of price point model introductions that we think will help maintain our premium position but also start to defend some of the market share more aggressively. So I'd say that's what we're doing on the tollable side.
Speaker Change: That customer preference for lower price points is introducing a lot of new product that allows us to do that without compromising our premium brand position so products like.
Bryan Hughes: So products like the new Transcend 1, is an example; Reflection 100, the Influence, all those on the Grand Design side, the Access, the Stick and Tin product for the Winnebago branded, you know, these are, these are examples of price point model introductions that we think will help maintain our premium position, but also start to defend some of the market share more aggressively. So I'd say that's what we're doing on the, on the total side. On the motorized side, we don't expect, you know, going back to my earlier comments, we don't expect significant apples-to-apples bombing increases, you know, more in the modest two, three percent.
Speaker Change: The new transcend one.
Speaker Change: As an example reflection 100.
Speaker Change: Influence all those on the Grand design side, the access the stick and tin products.
Speaker Change: Product for the Winnebago branded these are these are examples of price point model introductions that we think will help maintain.
Speaker Change: Maintain our premium position, but also.
Speaker Change: Start to defend some of the market share more aggressively so I'd say, that's what we're doing on the on the <unk> side on the motorized side, we don't expect.
Bryan L. Hughes: On the motorized side, we don't expect, you know, going back to my earlier comments, we don't expect significant apples-to-apples bomb increases, you know, more in the modest 2%, 3%. And so we will address those accordingly with pricing where we think it's appropriate, as well as some new product introductions that the teams are working on. Certainly, the grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers at price points that they find to be very competitive. Thank you. Our next question comes from Craig Kennison with Baird. You may proceed. Hey, good morning.
Speaker Change: Going back to my earlier comments, we don't expect significant apples to apples Bom increases.
Speaker Change: More than a modest two 3%.
Bryan Hughes: And so we will address those accordingly with pricing where we think it's appropriate, as well as some new product introductions that the teams are working on. Certainly, the grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers at price points that they find to be very competitive.
Speaker Change: And so we will address those accordingly, with with pricing, where we think it's appropriate as <unk>.
Well as some new product introductions that the teams are working on certainly the Grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers.
Speaker Change: At price points that.
Speaker Change: They find to be very competitive.
Speaker Change: Thank you.
Speaker Change: Thank you.
Craig Kennison: Our next question comes from Craig. Can you send it with there? You may proceed.
Speaker Change: Our next question comes from Craig Kennison with Baird You May proceed.
Craig Kennison: Good morning, thanks for taking my question. You've addressed most of them already, but I wanted to follow up on Mike's question earlier regarding grand design in motorhomes and scaling that opportunity. What's the philosophy around the margin profile of that brand within motor homes? Would you expect it to be a creative to margin in motor homes over time in the way that it is in towables?
Craig R. Kennison: Thanks for taking my question. You've addressed most of them already. But I wanted to follow up on Mike's question earlier, regarding grand design in motorhomes and scaling that opportunity. What's the philosophy around the margin profile of that? Would you expect it to be accretive to margin in motorhomes over time in the way that it is in towables? Good morning, Craig.
Craig R. Kennison: Hey, good morning, Thanks for taking my question, you've addressed most of them already but I wanted to follow up on Mikes question earlier regarding Grand design and motor homes and scaling that opportunity.
Speaker Change: Whats the philosophy around the margin profile of that.
Speaker Change: Brand within motor homes would you expect it to be accretive to margin and motor homes over time and the way that it is in total.
Craig Kennison: Good morning, Craig. Appreciate the question. The answer is yes. We do anticipate that we will have motorized profitability that is, first of all, probably a creative to our overall portfolio profitability yield, but we expect that grand design motorized profitability will be very comparable, candidly, to the profitability of their towables business. Certainly, that will vary by product type, but our team is very committed at Grand Design to have differentiated, highly valued, and sought after. They are premium, profitable motorized product in the market. Grand Design has often stated their intent to major in the majors, and so their motorized product will be pointed at some of the higher volume sub-segments of that category, and we anticipate based on what we've seen so far with the lineage work, but also some of the projections on future products.
Michael J. Happe: I appreciate the question. The answer is yes. We do anticipate that we will have motorized profitability that is, first of all, probably accretive to our overall portfolio profitability yield, but we expect that Grand Design motorized profitability will be very comparable, candidly, to the profitability of their towables, although certainly, that will vary by product type. But, you know, our team is very committed at Grand Design to having differentiated, highly valued, and sought-after premium profitable motorized products in the market. Grand Design has often stated their intent to compete in the majors.
Craig R. Kennison: Good morning, Craig I.
Speaker Change: I appreciate the question.
Speaker Change: The answer is yes, we do anticipate that we will have motorized profitability that.
Speaker Change: First of all probably accretive to.
Speaker Change: Our overall portfolio profitability yield.
Speaker Change: But we expect that Grand design motorized profitability will be.
Speaker Change: Very comparable candidly to the profitability of their total business.
Speaker Change: Certainly that will vary by.
Speaker Change: Product type.
Speaker Change: But.
Speaker Change: Our team is very committed at Grand design to have differentiated.
Speaker Change: Highly valued and sought after.
Speaker Change: Premium profitable motorized product in the market.
Grand design has often stated their intent to major in the majors.
Michael J. Happe: And so their motorized product will be pointed at some of the higher volume sub-segments of that category. And we anticipate, based on what we've seen so far with the lineage work, but also some of the projections on future products, that the profitability on that line should be quite acceptable. So time will tell.
Speaker Change: So theyre motorized product will be pointed at some of the higher volume.
Speaker Change: Sub segments of that category.
Speaker Change: And we anticipate based on.
What we've seen so far with the lineage work, but also some of the projections on future products that.
Craig Kennison: Yes, that the profitability on that line should be quite acceptable. So time will tell; the team will need to execute to what I just stated, and certainly competition isn't going to hand Grand Design market share very freely. So we anticipate an intense battle, but we have a very strong and focused team on that product line.
Speaker Change: But the profitability on that line should be <unk>.
Speaker Change: Get acceptable so time will tell the team will need to execute to what I, just stated and certainly competition isn't going to hand.
Michael J. Happe: The team will need to execute on what I just stated, and certainly, competition isn't going to hand a grand design market share very freely. So we anticipate an intense battle, but we have a very strong and focused team on that product. In the initial months, of course, Craig, the initial quarters will require some scale-up. So it's not expected immediately to be accretive, but it certainly will very soon.
Speaker Change: Grand design market share very freely.
Speaker Change: We anticipated.
Speaker Change: And intense.
Speaker Change: Battle, but we have a.
Speaker Change: A very strong and focused team.
Speaker Change: On that product line and the initial months of course, Craig initial quarters will require some scale up.
Craig Kennison: In the initial months, of course, Greg, initial quarters will require some scale up, so it's not expected immediately to be a creative, but it certainly will very soon.
Speaker Change: So it is not not expected immediately to be accretive, but it certainly will.
Speaker Change: Very soon.
Craig Kennison: That's great. And then maybe to follow up, you made some comments about Q4 revenue and margin profile profitability profile. I'm wondering if you could just help us think through like segment EBITDA assumptions in that. In particular, I'm guessing motor homes could stick around that four and a half percent range. Is that what you're suggesting?
Michael J. Happe: That's great. And then maybe to follow up, you made some comments about Q4 revenue and margin profile, profitability profile. I'm wondering if you could just help us think through like segment EBITDA assumptions in that. And in particular, I'm guessing, you know, motorhomes could stick around that four and a half percent range. Is that what you're suggesting?
Speaker Change: That's great and then maybe to follow up.
Speaker Change: You made some comments about Q4.
Speaker Change: Revenue and margin profile profitability profile I'm wondering if you could just help us think through.
Speaker Change: Segment EBIT.
Speaker Change: Assumptions in that and in particular I'm guessing.
Speaker Change: Motor homes could stick around that four 5% range is that is that what youre, suggesting.
Michael Happe: I think, Greg, we're going to refrain from getting into the segment-level conversations that we've been providing the last couple of quarters. We'll come back in the fall in our part of our 2024 wrap up and looking forward into 2025 and provide some, I think we think better guidance forward looking guidance was that the industry and, and more specifically when a bagel related. So we're going to refrain from getting into a segment-level forward discussion at this time.
Craig R. Kennison: I think, Craig, we're going to refrain from getting into the segment-level conversations that we've been providing the last couple of quarters. We'll come back in the fall as part of our 2024 wrap-up and look forward into 2025 and provide some, we think, better guidance, forward-looking guidance, whether that be industry-related or more specifically Winnebago-related. But we're going to refrain from getting into a segment-level forward discussion at this point. Sounds good.
Speaker Change: Yes, I think Craig we're going to refrain from getting into the the segment level conversations that we've been.
Speaker Change: Providing the last couple of quarters.
Speaker Change: We'll come back in the fall.
Speaker Change: And are is part of our 2020 for wrap up and looking forward into 2025, and <unk> and provide some we think better guidance forward looking guidance, whether that the industry and.
Speaker Change: And more specifically winnebago related, but we're going to we're going to refrain from getting into a segment level forward discussion.
Speaker Change: At this time.
Craig Kennison: Sounds good. Thanks.
Speaker Change: Sounds good thanks.
Scott Stember: Thank you.
Speaker Change: Thank you.
Scott Stember: Our next question comes from Scott's number with Roth. You may proceed.
Bryan L. Hughes: Thanks. Thank you. Our next question comes from Scott Stember with Roth. You may proceed.
Speaker Change: Our next question comes from Scott <unk> with Ross You May proceed.
Scott Stember: Good morning, guys, and thanks for taking my questions. Mike, you made a comment about how dealers, it sounds like they're starting to go back to some of their prior pre-COVID ordering patterns, which would help your share, but then you also mentioned that at least, I guess, on the two opposing comments, or, you know, just some of it have to do with, you know, there's a couple of new players in the market, you know, that may be giving a couple of headwinds, just trying to make, trying to parse that out. Yeah, good morning, Scott. Appreciate the question.
Scott Lewis Stember: Good morning, guys, and thanks for taking my questions. Mike, you made a comment about how dealers are starting to go back to some of their prior... Pre-COVID ordering patterns, which would help you share. But then you also mentioned that, at least, I guess, on Tobol's grand design, that you expect some near-term pressure on market share. Can you maybe just talk about those two opposing comments?
Scott Lewis Stember: Good morning, guys and thanks for taking my questions.
Speaker Change: Okay.
Mike: Mike you made a comment about how dealers it sounds like they are starting to go back to some of their prior pre COVID-19 ordering patterns, which would help you share. But then you also mentioned that at least I guess on the totals Grand design that you expect.
Speaker Change: So near term pressure on market share can you maybe.
Speaker Change: Just talk about those two opposing comments or.
Michael J. Happe: Or, you know, does some of it have to do with, you know, I know there's a couple of new players in the market, but I don't know, you know, that may be giving a couple of headwinds. Just trying to make sure, trying to parse that out. Yeah, good morning, Scott.
Speaker Change: If it has to do with a couple of new players in the market.
Speaker Change: Maybe giving a couple of headwinds just trying to.
Speaker Change: Trying to parse that out.
Michael J. Happe: I appreciate the question. We do believe that the dealers have been actively trimming and focusing their brand assortments here, really over the better part of the last year, as market conditions have gotten more challenging, and they have tried to narrow their focus on profitable products that sell. We do believe that in, you know, a high majority of the cases, our brands are not just survivors but winners on those lots as dealers make those trimming decisions.
Speaker Change: Yes, good morning, Scott.
Speaker Change: Great question.
Scott Stember: We do believe that the dealers have been actively trimming and focusing their brand assortments here, really over the better part of the last year, as market conditions have gotten more challenging, and they have tried to narrow their focus on profitable products that turn. We do believe that in, you know, a high majority of the cases that our brands are not just survivors, but winners on those lots as dealers make those trimming decisions. That does not mean, however, that there is not still intense competition across all of the segments, but particularly, they're totally told with several of the new entrants that you mentioned in your question as well.
Speaker Change: We do believe that the <unk>.
Dealers have been actively trimming and focusing their brand assortments here really over the better part of the last year as.
Speaker Change: As market conditions have gotten more challenging and they have tried to narrow their focus on profitable products that turn.
Speaker Change: We do believe that in.
Speaker Change: A high majority of the cases that our brands are not just survivors, but winters.
Speaker Change: On those lots as dealers make those trimming decisions.
Michael J. Happe: That does not mean, however, that there is not still intense competition across all of the segments, but particularly tolls with several of the new entrants that you mentioned in your question as well. You know, Grand Design is very familiar with the competition from new entrants, particularly on the fifth wheel side with a couple of the newer companies in Elkhart County.
That does not mean, however that there is not still intense competition across all of the segments.
Speaker Change: But particularly <unk> with.
Speaker Change: Several of the new entrants that you mentioned in your question as well.
Michael J. Happe: And they continue to do what they think is necessary at Grand Design to combat those new competitive challenges. But, you know, some of the share results specific to that brand probably do reflect some of the success of the new startup brands. But, you know, this is a battle that will be ongoing, and the Grand Design team is very focused on being one of, if not the top fifth wheel manufacturers in the toll industry. We believe on the tollable side there is significant runway on the tollable, excuse me, travel trailer market share for both our Winnebago and Grand Design brands.
Michael Happe: You know, Grand Design is very familiar with the competition from new entrants, particularly on the fifth wheel side, with a couple of the newer companies in Elkar County, and they continue to, you know, do what they think is necessary at Grand Design to combat those new competitive challenges. But, you know, some of the share results specific to that brand probably do reflect some of the success of the new startup brands. But, you know, this is a, this is a battle that will be ongoing, and the grand design team is very focused on, you know, being one of, if not the top fifth wheel manufacturers in the total industry.
Speaker Change: <unk>.
Speaker Change: <unk> is very familiar with the competition from new entrants, particularly on the fifth wheel side.
Speaker Change: With a couple of the newer companies in Elkhart County.
Speaker Change: And they continue to.
Speaker Change: Do what they think is necessary at Grand design to combat those new competitive challenges, but.
Speaker Change: The.
Speaker Change: Some of the share results specific to that brand probably do reflect some of the success of the new startup brands.
Speaker Change: But this is.
Speaker Change: This is a battle that will be ongoing and the Grand design team is very focused on.
Speaker Change: Being one of if not the top fifth wheel manufacturers and the total.
Michael Happe: We believe on the total side, there is significant runway on total, excuse me, travel trailer market share for both our Winnebago and Grand Design brands. And you're seeing quite a bit of work from Grand Design, as Brian alluded to earlier, on their trend, send line to make headway on the travel trailer segment going forward. So, competition in macro has been relatively rational. You know, we have seen though recently some spots from some of our bigger OEM competitors with some quite aggressive incentives for, especially, you know, volume buys into the industry. And this is where we just have to, you know, weigh the benefits of a short-term response versus in a long-term pricing integrity for our brand.
Speaker Change: Industry, we believe on the <unk> side, there is significant runway on total.
Speaker Change: Excuse me travel trailer market share for.
For both our Winnebago and Grand design brands, and Youre seeing quite a bit of work from Grand design as Brian alluded to earlier on their transcend line.
Michael J. Happe: And you're seeing quite a bit of work from Grand Design, as Brian alluded to earlier, on their Transcend line to make headway in the travel trailer segment going forward. So competition in macro has been Relatively rational, you know, we have seen, though, recently some spots from some of our bigger OEM competitors with some quite aggressive incentives for especially volume buys into the industry, and this is where we just have to, you know, weigh the benefits of a short-term response versus, you know, long-term pricing integrity for our brands. So competition, Scott, remains intense. Got it. And then just the last question.
To make headway on the travel trailer.
Speaker Change: Segment going going forward so.
Speaker Change: Competition in macro has been.
Speaker Change: Relatively rational we have seen recently some some spots from some of our bigger OEM competitors.
Speaker Change: With some quite aggressive.
Speaker Change: Incentives.
Four especially.
Speaker Change: Volume buys into the industry and this is where we just have to.
Scott: In a way the benefits of a short term response versus long term pricing integrity for our brands. So so competition Scott remains intense.
Michael Happe: So, competition's got remained until.
Michael Happe: Scott, and then just the last question: you made a comment that there's really no 22s left and 23s and 24s out in the field on the RV side. Could you, I don't know if you gave the information of how much of it is 23s versus 24s and a percentage standpoint? Scott, I can share a little bit more detail with you here this morning on the RV in the RV business model your 23s at the end of our third quarter. So the end of May probably were in the low teens percentage in the field. That is probably a little bit better than actually where we were a year ago on RV, two year ago model inventory at that same time.
Scott Lewis Stember: You made a comment that there are really no 22s left and 23s and 24s out in the field on the RV side. I don't know if you gave the information on how much of it is 23s versus 24s from a percentage standpoint. Scott, I can share a little bit more detail with you here this morning on the RV in the RV business model year 23s at the end of our third quarter, so the end of May, probably were in the low teens percentage in the field.
Speaker Change: Got it and then just last question you made a comment that there's really no 20 twos left in 'twenty three 'twenty four is out in the field on the RV side could you I don't know if you gave the information of how much of it is 23% versus 24 as a percentage standpoint.
Scott: Scott I can share a little bit more detail with you here this morning.
On the RV in the RV business.
Scott: Our model year 'twenty threes at the end of our third quarter. So the end of May.
Scott: Probably we're in the.
Scott: Low teens percentage in the field.
Scott Lewis Stember: That is probably a little bit better than where we were a year ago on RV, and two years ago on model inventory at that same time. It is historically on the higher side when you look at pre-COVID.
Scott: That is probably.
Scott: A little bit better than actually where we were a year ago.
Scott: On RV.
Scott: Two year ago model inventory at that same time. It is historically on the higher side when you look at pre Covid.
Michael Happe: It is historically on the higher side when you look at pre-COVID. But again, I would say that at the end of May, in the RV segment, we were probably in that 12 to 14% range for model your 23 inventory in the field. And certainly that's now one of our focuses as we work with dealers to reduce that as the model your 25 product comes in. Again, we don't think it's in a position which is existentially dangerous, you know, for OEMs or dealers, but it is historically, you know, too high, and we need to continue to focus on it, and our teams will do so to that end.
Michael J. Happe: But again, I would say that at the end of May, in the RV segment, we were probably in that 12% to 14% range for model year 23 inventory in the field, and certainly that is now one of our focuses as we work with dealers to reduce that as the model year 25 product comes in. Again, we don't think it's in a position which is existentially dangerous for OEMs or dealers, but it is historically too high, and we need to continue to focus on it, and our teams will do so to that end. So it's trending in the right direction.
Scott: But again I would say that at the end of May in the RV segment, we were probably in that.
Scott: 12% to 14% range for model year, 'twenty three inventory in the field.
Scott: <unk>.
Scott: And certainly that's that's now one of our focuses as we work with the dealers to reduce that as the model year 'twenty five product.
Scott: It comes in again, we don't we don't think it's in a.
Scott: In a position which is ex essentially dangerous.
Scott: For Oems, our dealers, but it has historically.
Scott: Too high and we need to continue to focus on it and our teams will do so to that end. So it's trending in the right direction.
Michael Happe: So it's trending in the right direction. By the way, our June retail to date is trending better than our May retail performance, you know, across the RV brands. And so we are hopeful that that that retail trend in June is helping to bring that inventory down from prior model years as well.
Michael J. Happe: By the way, our June retail to date is trending better than our May retail performance across the RV brands. And so we are hopeful that that retail trend in June is helping to bring that inventory down from prior model years as well. Gotcha, that's all I have.
Scott: By the way our June retail to date is trending better than our may retail performance.
Scott: Across the RV brands and so we are hopeful that that that retail trend in June is helping to bring.
Scott: That inventory down from prior model years as well.
Michael Happe: So that's all I have.
Speaker Change: Got it so that's all I have thank you.
Speaker Change: Thank you.
Joseph Altobello: Our next question comes from Joe Altevello, with Graeme and James. You may proceed. Thanks. Hey guys, good morning.
Joseph Nicholas Altobello: Thank you. Thank you. Our next question comes from Joe Altobello with Raymond James. You may proceed. Thanks. Hey, guys. Good morning.
Speaker Change: Our next question comes from Joe <unk> with Raymond James You May proceed.
Michael J. Happe: Mike, I just want to pick up on that last comment you made about June being a little bit better, better than May. I guess first, was that an industry comment as well? Or was it just Winnebago specific?
Mike: Thanks, Hey, guys. Good morning, Mike I, just want to pick up on that last comment you made about June being held at better better than may.
Joseph Altobello: Mike, I just want to pick up on that last comment you made about June being a little bit better, better than May. I guess first, was that an industry comment as well, or was it just Winnebago specific? No, Joe. Good morning, by the way. My comment was specific to Winnebago Industries RV brands. We have about three weeks of retail. You know, it's a five-week month the way we kind of count it fiscally, but we have about three weeks of retail under our belts in June. And the total retail performance from a comp standpoint versus last June is running at a more favorable rate than our May comp rate actual.
Joseph Nicholas Altobello: I guess first was that an industry comment as well or was it just winnebago specific.
Michael J. Happe: Good morning, by the way. My comment was specific to Winnebago Industries RV brands. We have about three weeks of retail under our belts in June. You know, it's a five-week month the way we kind of count it fiscally, but we have about three weeks of retail under our belts in June. And the total retail performance from a comp standpoint versus last June is running at a more favorable rate than our May comp rate actuals. However, it is still inconsistent.
Speaker Change: No Joe good morning by the way good morning.
Mike: My comment was specific to Winnebago Industries' RV brands, we have about three weeks of.
Mike: Retail.
Mike: A five week month, the way, we kind of count it fiscally, but we have about three weeks of retail under our belts in June.
Mike: <unk>.
Mike: <unk> total retail performance from a comp standpoint versus last June is running at a more favorable rate than our may comp rate actuals.
Joseph Altobello: It is still inconsistent. This is a bit of a maddening environment. You can see one week where you think blue skies are emerging. And then the next week you'll see a more difficult retail week. The dealers that we speak to are echoing that the foot traffic remains steady, but retail is inconsistent. But in macro, we're seeing a little bit better retail in June sequentially than we were in May. And again, that's for Winnebago Industries. We don't yet have insight into the industry. Yeah. Okay, helpful. And just to follow up on that, I mean, obviously, you mentioned, you know, causes dealer network several times this call and other calls.
Michael J. Happe: This is a bit of a maddening environment. You can see one week where you think blue skies are emerging, and then the next week you'll see a more difficult retail week. The dealers that we speak to are echoing that. The foot traffic remains steady, but retail is inconsistent.
Mike: It is still inconsistent.
Mike: As a bit of a maddening environment you can see one week, where you think blue skies are emerging and then the next week Youll see a more difficult retail week, the dealers that we speak to our echoing that.
Mike: The foot traffic remains steady.
Mike: But retail is inconsistent but in macro we're seeing a little bit better retail in June sequentially than we were in May and again Thats for Winnebago industries, we don't yet have insight into the the industry yes.
Michael J. Happe: But in macro terms, we're seeing a little bit better retail in June sequentially than we were in May. And again, that's for Winnebago Industries. We don't yet have insight into the industry. Okay.
Joseph Nicholas Altobello: And just to follow up on that, I mean, obviously, you mentioned the cautious dealer network several times on this call and other calls. What do you think your dealers need to see to start ordering at a more normal rate? I mean, obviously, one or two good months probably isn't going to do it.
Speaker Change: Okay. That's helpful and just a follow up on that I mean, obviously, you mentioned cautious dealer network several times this call and other calls.
Joseph Altobello: What do you think your dealers need to see, you know, to start ordering at a more normal rate? I mean, obviously, one or two good months probably is going to deal it. But what are you hearing from dealers in terms of what would cause them or push them to start ordering at a more normalized order pattern? That is the ultimate question, Joe, I think, and obviously our dealers would be best positioned to answer that. When you ask that question, where my head is, heads is the following. Number one, they'd like to see their prior model year inventory from, in this case, well, 24 and 23 in a little bit better position than it is today.
Speaker Change: Do you think your dealers need to see.
Speaker Change: Just start ordering at a more normal rate I mean, obviously, one or two good months, probably is going to deal with but what are you hearing from dealers in terms of what would cause them or push them to start ordering at a more normalized order pattern.
Michael J. Happe: But what are you hearing from dealers in terms of what would cause them or push them to start ordering in a more normalized order pattern? That is the ultimate question, Joe, I think. And obviously, our dealers would be best positioned to answer that. But when you ask that question, where my head is headed is the following. Number one, they'd like to see their prior model year inventory, in this case, both 24 and 23, in a little bit better position than it is today.
Joe: That is the ultimate question, Joe I think and obviously, our dealers would be best positioned to answer that.
When you ask that question.
Speaker Change: My head to heads is the following.
One they'd like to see their prior model year inventory.
Speaker Change: In this case about 'twenty four and 'twenty three.
Speaker Change: In a little bit better position that it is today so.
Michael Happe: So they, especially the 23 and 23. Number two, they'd like to have a higher level of confidence that retail in the future is, you know, what I'll call stabilized and that there is a shot of flat to positive retail for an extended period going forward. Third, I think they want to make sure that they understand, you know, that OEM pricing on model year 25 product that is rolling out is competitive and that the support is there. And then lastly, probably number four, is some sort of signal of relief on some of those macroeconomic pressures that end up being real costs to them, i.e.
Michael J. Happe: So they, especially the 23 inventories. Number two, they'd like to have a higher level of confidence that retail in the future is, you know, what I'll call stabilized, in that there is a shot of flat to positive retail for an extended period going forward. Third, I think they want to make sure that they understand, you know, that OEM pricing on model year 25 products that are rolling out is competitive, and that the support is there.
Speaker Change: So, especially the 'twenty three inventory.
Speaker Change: Number two.
Speaker Change: They'd like to have a higher level of confidence.
Speaker Change: That retail in the future is.
Speaker Change: What I'll call stabilized and that there is a shot of flat to positive retail for an extended period going forward.
Speaker Change: Third I think they want to make sure that they understand.
That.
Speaker Change: That OEM pricing on model year 'twenty five.
Speaker Change: Product that is rolling out as competitive and that the support is there and then lastly, probably number four.
Michael J. Happe: And then lastly, probably number four, is some sort of signal of relief on some of those macroeconomic pressures that end up being real costs to them. I.e., the cost of carrying inventory, you know, or the retail cost of financing, you know, for a consumer that at times they buy down either directly or through negotiations on the trade ends.
Speaker Change: As some sort of signal of relief on.
Speaker Change: On some of those macroeconomic pressures that ended up being real cost to them I E. The cost of carrying inventory.
Michael Happe: the cost of carrying inventory, you know, or the retail cost of financing, you know, for a consumer that at times they buy down either directly or through negotiations on the trade ends. So I think it's a combination of those factors, and we believe that, you know, the world's getting a little bit more stable across the board. On that, Brian referenced, you know, inflation is really nominal, you know, in our bill of materials these days. We're able to see price stability with our future line-ups. OEMs are working hard on more competitive and affordable price points. So I think the pieces are coming together.
Speaker Change: Or the retail cost of financing.
Brian: For a consumer that at times, they buy down either directly or through negotiations on the trade ends. So I think it's a combination of those factors in and we believe that the world is getting a little bit more stable across the board on that Brian referenced.
Joseph Nicholas Altobello: So I think it's a combination of those factors, and we believe that, you know, the world is getting a little bit more stable across the board on that. Bryan mentioned inflation is really nominal, you know, in our bill of materials these days. We're able to see price stability with our future lineups, and OEMs are working hard on more competitive and affordable price points. So I think the pieces are coming together. June retail sales are a little bit better than May.
Speaker Change: Inflation is really nominal in our bill of materials. These days, we are able to to see price stability with our future lineups.
Speaker Change: <unk> are working hard on more competitive and affordable price points. So I think the pieces are coming together June retail is a little bit better than may.
Michael Happe: June retail is a little bit better than May.
Michael Happe: So, you know, listen, nobody's been able to call accurately the sort of the, you know, the pivot here to an upside cycle beginning, and we indicated under prepared comments that the rest of calendar 2024, you know, could remain sluggish. But, you know, we think conditions are slightly improving in terms of the timing of that to come around.
So.
Joseph Nicholas Altobello: So, listen, nobody's been able to accurately call accurately the sort of the, you know, the pivot here to an upside cycle beginning, and we indicated in our prepared comments that the rest of calendar 2024 could remain sluggish, but, you know, we think conditions are slightly improving in terms of the timing of that coming around. Got it.
Speaker Change: Listen nobody has been able to call accurately.
Speaker Change: Sort of the the <unk>.
Speaker Change: Pivot here.
Speaker Change: Upside cycle beginning.
Speaker Change: And we indicated on our prepared comments that the rest of calendar 2024.
Speaker Change: Could remain sluggish.
Speaker Change: But we think conditions are slightly improving.
Speaker Change: In terms of the timing of that to come around.
David Whiston: Very helpful. Thank you. Thank you. Our next question comes from David Whiston with Morningstar. You may proceed. Thanks. Good morning.
Speaker Change #100: Got it very helpful. Thank you.
David Whiston: Thank you.
Speaker Change #101: Thank you.
David Whiston: Our next question goes from David Wiston with Morningstar.
Bryan L. Hughes: In the press release, you called out inefficiencies on towables and motorhomes. I'm just curious, is the motorhome an efficiency issue, is that chassis-related, or is it more the other variables you were talking about earlier, like direct labor? That's more direct labor, David.
Speaker Change #102: Our next question comes from David Whiston with Morningstar You May proceed.
David Whiston: You may proceed. Thanks.
David Whiston: Thanks, Good morning.
David Whiston: Good morning. In the press release, you call that inefficiencies on tables and motorhomes. I'm just curious, is the motorhome inefficiencies that chassis related, or is it more the other variables you were talking about earlier, like direct labor? That's more direct labor, David. And then on the toable side, as I mentioned, we had some plant consolidation; the Winnebago line, we had some new product launches that didn't go as we would have liked them to in terms of the productivity. So, those things that I mentioned are really—drivers. Okay, and in marine, revenue was down 32% there, but you also talked about rising Barletta share.
David Whiston: In the press release, you call out inefficiencies on durables and motor homes.
David Whiston: And I was just curious as the motor home inefficiencies that chassis related or is it more the other variables you were talking about earlier like direct labor.
Speaker Change #104: That's more direct labor David.
Bryan L. Hughes: And then on the installable side, as I mentioned, we had some plant consolidation in the Winnebago line. We had some new product launches that didn't go as we would have liked them to in terms of productivity. So those things that I mentioned are really the, Okay, and in Marine, revenue was down 32% there, but you also talked about rising Barletta share. So I'm just curious, is there more headwind maybe on the Criscraft side, where that customer is maybe on the sidelines a bit too much right now? No, I don't think that's the case, David.
Speaker Change #105: Total side as I mentioned, we had some plant consolidation in the Winnebago line, we had some new product launches that Didnt go as we would have liked them to in terms of the productivity.
Speaker Change #105: Those things that I mentioned are really the drivers.
Speaker Change #106: Okay and in marine.
Speaker Change #107: Revenue was down 32% there, but you also talked about.
Speaker Change #108: Rising barletta share.
David Whiston: So I'm just curious, is there more headwind maybe on the criss-crap side, where that customer is maybe on the sidelines a bit too much right now? No, I don't think that that's the case, David. You know, criss-crap is a niche segment; it's small to really impact our story there on the marine segment. It's really the result of a broad sense of the dealer network having too much inventory, pontoon, not just the Barletta brand, but all the other brands on dealers' lots are certainly impacting the willingness by dealers to take additional product, even when we've got terrific momentum on the Barletta side and conversations with dealers about expanding on their lots in terms of our presence versus some of the competitor presence, some expansion of the dealer network itself, expansion of the product line as I mentioned with the ARIA earlier.
Speaker Change #109: So I'm just curious is there more headwind maybe on the Chris craft side, where that customers may be on the sidelines a bit too much right now.
David Whiston: No I don't I don't think that Thats. The case, David Chris Craft is a niche segment is too small to really impact.
Bryan L. Hughes: I, you know, Chris Craft is a niche segment. It's too small to really impact our story there in the marine segment. It's really the result of a broad sense of the dealer network having too much inventory. Pontoon, not just the Barletta brand, but all the other brands on dealers' lots are. We're certainly impacting the willingness by dealers to take additional product, even when we've got terrific momentum on the Barletta side and conversations with dealers about expanding on their lots in terms of our presence versus some of the competitor presence, some expansion of the dealer network itself, and expansion of the product line, as I mentioned with the Aria earlier.
Our story there on the Marine segment, it's really the result of a <unk>.
David Whiston: Broad sense of the dealer network, having too much inventory.
David Whiston: <unk> not just the <unk> brand, but all the other brands on dealers' lots are.
David Whiston: Are certainly impacting the willingness by dealers to take additional product even when we've got terrific momentum on the <unk> side in conversations with dealers about expanding on their lots in terms of our presence versus some of the competitor presence.
David Whiston: Some expansion of the dealer network itself expansion of the product line as I mentioned with the ARIA.
David Whiston: So it's more related to dealer appetite to carry inventory in the marine side right now, coming off some really high levels of inventory over the past six to nine months, in particular. David, I'll specifically mention on criss-crap that we've actually seen positive comp year-over-year retail each of the last four months on that brand. So that's really promising. Dealer inventory to brands points probably a little higher on that brand than we would like it to be currently. And if you look at slide 17 of the supplemental slides that we provide as well during this day, you'll see a new product from Criss-Craft called the Sportster 25, which is a premium water sports enthusiast product under the Criss-Craft brand that we think, with an MSRP starting at $150,000, which is quite attractive for a Criss-Craft brand that could make some waves, pun intended, in a positive way in the future for that business.
Bryan L. Hughes: So it's more related to dealer appetite to carry inventory on the marine side right now, coming off some really high levels of inventory over the past six to nine months, in particular. David, I'll specifically mention ChrisCraft that we've actually seen positive comp year-over-year retail growth each of the last four months on that brand, so that's really promising. Dealer inventory, to Bryan's point, is probably a little higher on that brand than we would like it to be currently, and if you look at slide 17 of the supplemental slides that we provide as well during this day, you'll see a new product from ChrisCraft called the Sportster 25, which is a premium sort of water sports enthusiast product under the ChrisCraft brand that we think, with an MSRP starting at $150,000, which is quite attractive So, as Bryan said, it's a brand new cherry on top of the sundae for us.
Earlier so.
David Whiston: It's more related to dealer appetite to carry inventory in the marine side right now coming off some really high levels of inventory over the past six to nine months in particular, David I'll, specifically mentioned on Chris craft that we've actually seen positive comp year over year retail each of the last four months on that.
David Whiston: And so that's really promising.
Brian: Dealer inventory to Brian's point is probably a little higher on that brand and we would like it to be currently.
Brian: And if you look at slide 17 of the supplemental slides that we provide as well during this day youll see a new product from Chris craft called the Sportster 25.
Brian: Which is a.
Brian: Our premium sort of water sports enthusiast products.
Brian: Under the Chris craft brand that.
Brian: That we think with an MSRP starting at $150000, which is quite attractive for our Chris craft brand.
Brian: <unk>.
Could make some some waves no pun intended.
Speaker Change #110: Positive way in the future for that business, So as Brian said.
David Whiston: So, as Brian said, it's a brand cherry on top of the Sunday for us. It's 150 years old, but we're also very serious about remaining competitive on that brand as well, and the team's working hard to that end.
Speaker Change #110: It's a brand cherry on top of the Sunday for Us.
Michael J. Happe: It's 150 years old, but we're also very serious about remaining competitive on that brand as well, and the team's working hard to that end. Thank you. And just one last question on the direct labor issue we talked about earlier. Is that a quality-related issue or something else? Yeah, in certain instances, there are some quality things that we've been dealing with in the portfolio. I wouldn't, I wouldn't, I wouldn't say that it's on the top side of that.
Speaker Change #110: Third 50 years old but were also very serious about remaining competitive on that that brand as well and the team is working hard to that end.
David Whiston: Thank you.
Speaker Change #111: Alright, Thank you and just one last question on the direct labor issue, we talked about earlier is that quality.
David Whiston: And just one last question on the direct labor issue we talked about earlier. Is that a quality-related issue or something else? Yeah, in certain instances, there's some quality things that we've been dealing with on the portfolio. I wouldn't say that it's at the top side of that, but it's not the main driver. The main driver is just the level of shipment, the de-leverage that occurs in the product mix shifts that need to be done in an environment like this. So I would characterize it more related to that. We have had some new product introductions that have cost some initial productivity challenged as well, but that's not terribly unusual relative to our past.
Speaker Change #112: Quality related issue or something else.
David Whiston: But it's not the main driver. The main driver is just, you know, the level of shipments, and the deleverage that occurs in the product mix. Shifts that need to be done in an environment like this, so I would characterize it more related to that. We have had some new product introductions that have caused some initial productivity challenges as well, but that's not terribly unusual relative to our past. You're not furloughing anybody, are you?
Speaker Change #112: Yes.
Speaker Change #112: Certain instances, there's some some quality things that we've been.
Speaker Change #112: Dealing with on the portfolio.
Speaker Change #113: I wouldn't I wouldn't say that it's at the upside of that but it's not the main driver. The main driver is just.
Speaker Change #113: The level of shipments the deleverage that occurs in the product mix.
Speaker Change #113: Shifts that need to be done in an environment like this so I would characterize it more.
Speaker Change #113: Related to that.
Speaker Change #113: We have had some new product introductions.
Speaker Change #113: That of.
Speaker Change #113: Cost some initial productivity challenge as well, but thats not terribly unusual relative to our past.
David Whiston: You're not furlowing anybody, are you? David, we've worked responsibly over the last seven years to react to the market downturn. We employ around 6,000 employees today. We were at a peak of almost 7,700 employees back in, you know, probably fiscal 21, fiscal 22. And so we've been very carefully and hopefully respectfully right-sizing our workforce to the size of the market and the size and the health of our business. And so, we make adjustments in the workforce both from a manufacturing and/or office standpoint very carefully. And we've been doing that diligently over, you know, over the past couple of years, you know, as we've managed this down market.
Speaker Change #114: Youre not furloughing anybody how are you.
David Whiston: David, we worked responsibly over the last several years to react to the market downturn. We employ around 6,000 employees today. We were at a peak of almost 7,700 employees back in.
David: David we worked to responsibly over the last.
David: Several years to react to the market downturn.
Employee around 6000 employees today.
David: We're at a peak of almost 7700 employees back in.
Michael J. Happe: You know, probably fiscal 21, fiscal 22. And so we've been very carefully and, hopefully, respectfully right-sizing our workforce to the size of the market and the size and the health of our business. And so we make adjustments in the workforce both from a manufacturing and office standpoint very carefully. And we've been doing that diligently over the past couple of years as we've managed this down market. So no new news on that front, but just a constant management of having, you know, the right quantity and certainly a great quality of teammates here, you know, at our business. Okay, thank you.
David: Probably fiscal 'twenty, one fiscal 'twenty, two and so we've been <unk>.
David: Very carefully and hopefully respectfully right sizing.
David: Our.
David: Our workforce to the the size of the market and the size and the health of our business and so.
David: We make we make adjustments in the workforce both from a manufacturing <unk> office standpoint very carefully.
David: And we've been we've been.
David: Doing that diligently.
David: Over the past couple of years.
David: As we manage this down market so no new news on that front, but just a just a constant.
David Whiston: So no new news on that front, but just a, you know, just a constant management of having, you know, the right quantity and certainly great quality of teammates, you know, here, you know, at our businesses.
David: Management of having the right quantity and certainly great quality of teammates here at our at our businesses.
David Whiston: Okay, thank you. I appreciate it.
Speaker Change #116: Okay. Thank you I appreciate it.
David Whiston: I appreciate it. Thank you. I would now like to turn the call back over to Ray Posadas for any closing remarks. Thank you for joining us this morning.
Speaker Change #117: Thank you I would now like to turn the call back over to Ray Pousadas for any closing remarks.
Ray Posadas: I would now like to turn the call back over to Ray Posadas for any closing remarks. Thank you for joining us this morning. We have a number of investor conferences and Nandil road shows plan throughout the summer, and we look forward to meeting with you throughout the summer.
Raymond Posadas: We have a number of investor conferences and non-deal roadshows planned throughout the summer, and we look forward to meeting with you throughout the summer. This concludes our Q3 earnings call. Please enjoy the rest of your day.
Raymond Posadas: Thank you for joining us. This morning, we have a number of investor conferences and non deal Roadshows planned throughout the summer and we look forward to meeting with you.
Throughout the summer. This concludes our Q3 earnings call. Please enjoy the rest of your day.
Ray Posadas: This concludes our Q3 earnings call. Please enjoy the rest of your day. Thank you.
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Speaker Change #119: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
Ray Posadas: This concludes the conference. Thank you for your participation. You may now disconnect. Thank you. ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ � Thank you, Josh.
Speaker Change #119: [music].
Speaker Change #119: [music].
Speaker Change #120: Good day and thank you for standing by welcome to the Q3 fiscal 2020 for Winnebago Industries Financial results Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation there'll be a question and answer session to ask a question.
Speaker Change #120: Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would now like to hand, the conference over to your Speaker today, Ray Pousadas, Vice President Investor Relations and market intelligence.
Raymond Posadas: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you, Josh. Good morning, everyone, and thank you for joining us to discuss our fiscal 2024 third quarter earnings.
Josh: Thank you Josh good morning, everyone and thank you for joining us to discuss our fiscal 2024 third quarter earnings results. This call is being broadcast live on our website at Investor Dot WG O Dot net and a replay of the call will be available on our website later today.
Ray Posadas: Good morning, everyone, and thank you for joining us to discuss our fiscal 2024 third quarter earnings results. This call is broadcast live on our website at investor.wga.net, and the replay of the call will be available on our website later today. We have a presentation session of our website under quarterly results.
Raymond Posadas: This call is being broadcast live on our website at investor.wgo.net, and the replay of the call will be available on our website later today. The news release with our third-quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor relations section of our website under quarterly results. Turning to slide 2.
Josh: The news release with our third quarter results was issued and posted to our website earlier. This morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the Investor Relations section of our website under quarterly results.
Ray Posadas: Turning to slide two, let me remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward looking statements involve a number of risks and are inherently uncertain, and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which we encourage you to read.
Josh: Turning to slide two.
Raymond Posadas: Let me remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities law. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain, and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which we encourage you to read. In addition, on today's call, management will refer to GAAP and non-GAAP financial measures, and the reconciliation of the non-GAAP measures to the comparable GAAP measures is available in our earnings press release; please turn the slide.
Josh: Let me remind you that certain statements made during today's conference call regarding Winnebago industries and its operations may be considered forward looking statements under securities laws.
Josh: The company cautions you that forward looking statements involve a number of risks and are inherently uncertain and a number of factors many of which are beyond the company's control could cause actual results to differ materially from these statements. These.
Josh: These factors are identified in our SEC filings, which we encourage you to read in addition on today's call management will refer to GAAP and non-GAAP financial measures and the reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release.
Ray Posadas: In addition, on today's call, management will refer to gap and non-GAAP financial measures, and the reconciliation of the non-GAAP measures to the comparable gap measures is available in our earnings press release. Please turn to slide three.
Josh: Please turn to slide three.
Ray Posadas: Joining me on today's call are Michael Happe, the President and Chief Executive Officer of Winnebago Industries, and Bryan Hughes, Senior Vice President and Chief Financial Officer. Michael will begin with an overview of our Q3 performance, and then Bryan will discuss our financial results at a strategic level. Michael conclude our prepared remarks with the business outlook, and management will be happy to take your questions.
Speaker Change #122: Joining me on today's call are Michael Happy the President and Chief Executive Officer of Winnebago Industries, and Bryan Hughes, Senior Vice President and Chief Financial Officer.
Raymond Posadas: Mike will begin with an overview of our Q3 performance, and then Bryan will discuss our financial results at a strategic level. Mike will conclude our prepared remarks with the business outlook, and management will be happy to take your questions. With that, please turn to slide four as I hand the call over to Mike. Thanks, Ray. Good morning, everyone.
Speaker Change #122: Mike will begin with an overview of our Q3 performance and then Brian will discuss our financial results at a strategic level.
Speaker Change #122: Mike will conclude our prepared remarks with the business outlook and management will be happy to take your questions.
Michael Happe: With that, please turn to slide four as I hand the call over to Mike.
Mike: Please turn to slide four as I hand, the call over to Mike.
Michael Happe: Thanks, Ray.
Michael J. Happe: And thanks for joining us to discuss our third quarter Fiscal 24 Financial Results. In the eight weeks since our Q2 earnings call, RV industry retail demand has remained both inconsistent and sluggish, with limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year. While this environment necessitates near-term caution and discipline, the secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business in the long term. With that in mind...
Mike: Thanks, Greg Good morning, everyone and thanks for joining us to discuss our third quarter fiscal 2000 <unk> financial results.
Michael Happe: Good morning, everyone, and thanks for joining us to discuss our third quarter fiscal 24 financial results. In the eight weeks since our Q2 earnings call, our V industry retail demand has remained both inconsistent and sluggish, with limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year. While this environment necessitates near-term caution and discipline, the secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business long term. With that in mind, I will emphasize three points to our investors early to frame this morning's discussion.
Mike: In the eight weeks since our Q2 earnings call RV industry retail demand has remained both inconsistent and sluggish.
Mike: With limited evidence that economic conditions are improving for outdoor recreation consumers as we move into the fourth quarter of our fiscal year.
Mike: While this environment necessitates near term caution and discipline.
Mike: The secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business long term.
Mike: With that in mind.
Michael J. Happe: I will emphasize three points to our investors early to frame this morning's discussion. First, over the long term. Challenging markets make strong companies even stronger. Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering. Our collaborative operating model across our brands and functional centers of excellence ensures the choices we make in the short term are in our best long-term interest, maintaining valued product differentiation and premium brand essence.
Mike: I will emphasize three points to our investors early to frame this morning's discussion.
Michael Happe: First, over the long term, challenging markets make strong companies even stronger. Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering. Our collaborative operating model across our brands and functional centers of excellence ensures the choices we make in the short term are in our best long-term interests. Maintaining valued product differentiation, premium brand essence, total aftermarket support toward dealers and end customers, and relevant share all matter great. Lee, but must be balanced with a commitment to sustainable profitability. Second, while we expect industry softness to continue in fiscal Q4, on a year-over-year basis in our Motorhome, RV, and Marine segments, the gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond.
Mike: First over the long term.
Mike: <unk> markets make strong companies even stronger.
Mike: Our focus on maintaining durable margins and resilient profitability relative to competitors through production discipline and intentional sales support is unwavering.
Our collaborative operating model across our brands and functional centers of excellence ensures the choices we make in the short term are in our best long term interests.
Mike: Maintaining valued product differentiation premium brand essence, total aftermarket support to our dealers and end customers and relevant share all matter greatly.
Michael J. Happe: Total aftermarket support to our dealers and end customers and relevant share all matter greatly but must be balanced with a commitment to sustainable profitability. While we expect industry softness to continue in fiscal Q4 on a year-over-year basis in our motorhome RV and marine segments, the gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond. Our healthy balance sheet and strong cash flows enable us to execute on our select growth priorities while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchase.
Mike: But must be balanced with our commitment to sustainable profit profitability.
Second.
Mike: While we expect industry softness to continue in fiscal Q4 on a year over year basis in our motor home RV and marine segments.
The gradual improvement we are seeing in field inventory composition in these markets is an encouraging sign for calendar 2025 and beyond.
Michael Happe: Third, our healthy balance sheet and strong cash flows enable us to execute on our select growth priorities while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchases. Our cultural, strategic, and financial strengths have us poised to successfully pursue the mid-cycle targets communicated in a prior earnings call in the years ahead.
Mike: Third.
Mike: Our healthy balance sheet and strong cash flows enabled us to execute on our select growth priorities, while maintaining a balanced capital allocation strategy that continues to return cash to our shareholders through dividends and share repurchases.
Michael J. Happe: Our cultural, strategic, and financial strength have us poised to successfully pursue the mid-cycle targets communicated in a prior earnings call in the years ahead. Turning now to our results, in the third quarter, we continued to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation.
Mike: Our cultural strategic and financial strength have us poised to successfully pursue the mid cycle targets communicated in a prior earnings call in the years ahead.
Michael Happe: Turning now to our results. In the third quarter, we continue to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation. Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity, output, and costs are aligned with retail and wholesale order patterns and inventory levels. Third quarter consolidated net revenue was $786 million, down 12.7% from the same period in 2023, but up 11.7% sequentially from Q2, supported by our towable RV and marine segments. Adjusted earnings per share for the quarter were $1.13, with adjusted EBITDA of $58 million.
Turning now to our results in the third quarter, we continued to experience the effects of macroeconomic softness caused by elevated interest rates and pockets of persistent inflation.
Michael J. Happe: Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity, output, and costs are aligned with retail and wholesale order patterns and inventory levels. Third quarter consolidated net revenue was $786 million, down 12.7% from the same period in 2023 but up 11.7% sequentially from Q2, supported by our towable RV and marine segment. Adjusted earnings per share for the quarter were $1.13, with adjusted EBITDA of $58 million, although not a financial contributor to our third quarter performance.
Mike: Our highly variable cost business model remains a strategic advantage in this market environment as we continue to focus on ensuring that capacity output and costs are aligned with retail and wholesale order patterns and inventory levels.
Mike: Third quarter consolidated net revenue was $786 million.
Mike: Down 12, 7% from the same period in 2023.
Mike: But up 11, 7% sequentially from Q2 supported by our Towable RV and marine segments.
Mike: Adjusted earnings per share for the quarter were $1 13.
Mike: With adjusted EBITDA of $58 million.
Michael Happe: While not a financial contributor to our third quarter performance, we did officially announce the introduction of Grand Design's new Lineage Class C product, marking that brand's inaugural entrance into the motorized RV segment. Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its training 12-month share of US aluminum pontoons to 8.6% for the period ending in April. More importantly, training three and six-month performance has Barletta running in the low double-digit percentage share zone, signaling increased momentum for that brand at retail. Turning to recent RV industry trends on slide five, as anticipated, dealers remain cautious with respect to orders in the third quarter, resulting in a higher level of promotional activity on some products compared to the same period last year.
Mike: While not a financial contributor to our third quarter performance. We did officially announced the introduction of Grand designs, New lineage class C product marketing that brands inaugural entrance into the motorized RV segment.
Michael J. Happe: We did officially announce the introduction of Grand Design's new Lineage Class C product, marking that brand's inaugural entrance into the motorized RV segment. Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its trailing 12-month share of U.S. aluminum pontoons to 8.6% for the period ending in April. More importantly, trailing three and six month performance has Barletta running in the low double digit percentage share zone, signaling increased momentum for that brand at retail.
Mike: Meanwhile, in our marine business, we are exceptionally pleased with the powerful performance of our Barletta brand, which increased its trailing 12 months share of U S aluminum pontoons to eight 6% for the period ending in April.
Mike: More importantly, trailing three and six month performance Hasbro letter running in the low double digit percentage share zone signaling increased momentum for that brand at retail.
Michael J. Happe: Turning to recent RV industry trends, on slide five, as anticipated, dealers remain cautious with respect to orders in the third quarter, resulting in a higher level of promotional activity on some products compared to the same period last year. The recent RV Industry Association data supports our view that towable RV inventories have been largely right-sized from a quantity standpoint as we head into the summer selling season. However, we also believe that more time and work is needed to further reduce prior model year inventory across the industry. April wholesale shipments of towable RVs were up 14.2% year-over-year and 15.4% year-to-date from the first four months of calendar 23.
Turning to recent RV industry trends on slide five.
Mike: As anticipated dealers remain cautious with respect to orders in the third quarter.
Mike: Resulting in a higher level of promotional activity on some products compared to the same period last year.
Michael Happe: The recent RV industry association data supports our view that towable RV inventories have been largely right-sized from a quantity standpoint as we head into the summer selling season. We also believe that more time and work is needed, though, to further reduce prior model-year inventory across the industry. April, wholesale shipments in Tollville RVs were up 14.2% year-over-year and 15.4% year-to-date from the first four months of calendar 23. By contrast, wholesale industry shipments in the Motorhome RV category were down 19.4% in April and 21.5% on a year-to-date basis from 2023. The industry still has a little work to do in terms of bringing down total industry inventory levels.
Mike: The recent RV industry Association data supports our view that total RV inventories have been largely right size from a quantity standpoint, as we head into the summer selling season.
Mike: We also believe that more time and work is needed though to further reduce prior model year inventory across the industry.
Mike: April wholesale shipments in total rvs were up 14, 2% year over year and 15, 4% year to date from the first four months of calendar 'twenty three.
Michael J. Happe: By contrast, wholesale industry shipments in the motorhome RV category were down 19.4% in April and 21.5% on a year-to-date basis from 2023. The motorhome portion of the RV industry still has a little work to do in terms of bringing down total industry inventory levels. 2024 RV shipments through April totaled more than 120,000 units, 9.4% ahead of last year's pace. But while the growth in shipments is encouraging, the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated.
By contrast, wholesale industry shipments in the motor home RV category were down 19, 4% in April and 21, 5% on a year to date basis from 2023.
Mike: The motor home portion of the RV industry still has a little work to do in terms of bringing down total industry inventory levels.
Michael Happe: 2024 RV shipments through April total more than 120,000 units, 9.4% ahead of last year's pace. But while the growth in shipments is encouraging, the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated. Based on industry results to date, ongoing economic softness, and reduced order backlogs across the industry, we expect additional destocking by dealers for the remainder of the calendar year. As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335,000 units, slightly below the midpoint of the RV Industry Association's most recent estimate.
Mike: 2024, RV shipments through April total more than 120000 units nine 4% ahead of last year's pace.
Mike: But while the growth in shipments is encouraging the industry's retail recovery is not occurring as rapidly as industry stakeholders anticipated.
Michael J. Happe: Based on industry results to date, ongoing economic softness, and reduced order backlogs across the industry, we expect additional destocking by dealers for the remainder of the calendar year. As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335,000 units, slightly below the midpoint of the RV Industry Association's most recent estimate. Our latest retail estimate for this same calendar 2024 period is around 340,000 units.
Mike: Based on industry results to date ongoing economic softness and reduced order backlogs across the industry. We expect additional destocking by dealers for the remainder of the calendar year.
Mike: As a result, we have revised our industry RV wholesale shipment forecast for calendar year 2024 to a range of 330 to 335000 units.
Mike: Slightly below the midpoint of the RV industry associations, most recent estimate.
Michael Happe: Our latest retail estimate for this same calendar 2024 period is around 340,000 units. Moving to slide 6 and our recent RV market share performance for the training 12 months ended April 30, it totaled 11.2%. Which is down 70 basis points from the same period in 2023. Well, not what we would ideally like to see. This share loss is due in part to our commitment to hold integrity in wholesale and retail pricing models. That we see is important to healthy channel relationships in the future. While we have worked intently to increase the strength of our opening price point skews in our RV lightups, seen slight share loss in an environment where affordability is being so strongly emphasized, is not to be unexpected for a premium portfolio such as ours.
Mike: Our latest retail estimate for this same calendar 'twenty 'twenty four period is around 340000 units.
Michael J. Happe: Moving to slide six and our recent RV market share performance. For the trailing 12 months ended April 30th, it totaled 11.2 percent, which is down 70 basis points from the same period in 2023. Not what we would ideally like to see.
Mike: Moving to slide six and our recent RV market share performance for the trailing 12 months ended April 30 totaled 11, 2%.
Mike: Which is down 70 basis points from the same period in 2023.
Michael J. Happe: This share loss is due in part to our commitment to hold integrity in wholesale and retail pricing models that we see as important to healthy channel relationships in the future. As a result, we have worked intently to increase the strength of our opening price point SKUs in our RV lineup. Seeing slight share losses in an environment where affordability is being so strongly emphasized is not to be unexpected for a premium portfolio such as ours.
Mike: While not what we would ideally like to see this share losses due in part to our commitment to hold integrity in wholesale and retail pricing models.
Mike: That we see is important to healthy channel relationships in the future.
Mike: While we have worked intently to increase the strength of our opening price point skus in our RV lineups.
Mike: <unk> slight share loss in an environment, where affordability is being so strongly emphasize is not to be unexpected for a premium portfolio such as ours.
Michael Happe: We are confident this trend will reverse in future years with new innovative products in our pipeline and an upward cyclical move to more stable market pricing. Looking at the marine segment on slide 7, our Barletta products continue to deliver superior results for its dealer network and an exceptional experience for their customers. The Barletta team is passionately focused on serving our end customers, cultivating lasting relationships with our channel partners as well, and building the best premium pontoons in the market. The path to our 13% mid cycle share target is about our letter remaining innovative and focused on customer needs to reach a top two or three position over time.
Michael J. Happe: We are confident this trend will reverse in future years with new, innovative products in our pipeline and an upward cyclical move to more stable market prices. Looking at the marine segment on slide seven, our Barletta products continue to deliver superior results for its dealer network and an exceptional experience for their customers. The Barletta team is passionately focused on serving our end customers, cultivating lasting relationships with our channel partners as well, and building the best premium pontoons in the market.
We are confident this trend will reverse in future years with new innovative products in our pipeline and an upward cyclical move to more stable market pricing.
Mike: Looking at the Marine segment on slide seven our bar letter products continue to deliver superior results for its dealer network and an exceptional experience for their customers.
Mike: <unk> team is passionately focused on serving our end customers cultivating lasting relationships with our channel partners as well and building the best premium pontoons in the market.
Michael J. Happe: The path to our 13% mid-cycle share target is about Barletta remaining innovative and focused on customer needs to reach a top two or three position over time. Turning to recent highlights on slide eight, in April, Grand Design introduced its first motorized RV in its history, the Lineage Series M. The name reflects the brand quality and service excellence Grand Design has embodied since its inception in 2012. What is particularly exciting to us is the opportunity for Grand Design to partner with the leading dealers across the country to market this new classy product to a new customer base. To celebrate the launch of the Lineage, we are hosting an ultimate glamping pop-up this Saturday, the 22nd of June, in New York City's Bryant Park from 11.30 a.m. to 5 p.m. Eastern.
Mike: The path to our 13% mid cycle share target is about our letter remaining innovative and focused on customer needs to reach a top two or three position overtime.
Michael Happe: Turning to recent highlights on Slide 8. In April, Grand Design introduced its first motorized RV in its history, the Lineage Series M. The name reflects the brand quality and service excellence Grand Design has embodied since its inception in 2012. What is particularly exciting to us is the opportunity for Grand Design to partner with the leading dealers across the country to market this new classy product to a new customer base. To celebrate the launch of the Lineage, we are hosting an ultimate glamping pop-up this Saturday, the 22nd of June, in New York City's Bryant Park, from 11:30 a.m. to 5:00 p.m. Eastern.
Mike: Turning to recent highlights on slide eight in April Grand design introduced its first motorized RV in its history. The lineage series M. The name reflects the brand quality and service excellence Grand design has embodied since its inception in 2012.
Mike: What is particularly exciting to us is the opportunity for Grand design to partner with the leading dealers across the country to market. This new class C product.
Mike: To a new customer base to.
Mike: To celebrate the launch of the lineage, we are hosting an ultimate glamping pop up this Saturday. The 20 <unk> of June in New York City's Bryant Park from 11, 30 am to five PM eastern.
Michael Happe: The new Lineage will be on display at the event, and we invite those of you in the area to come down and see Grand Design's terrific new motorized RV in person. As I noted on our Q2 call, initial limited shipments of Lineage are on track to begin late this quarter. Most of the stocking deliveries for the Lineage product, however, will take place in the fiscal 2025 year.
Michael J. Happe: The new Lineage will be on display at the event, and we invite those of you in the area to come down and see Grand Design's terrific new motorized RV in person. As I noted on our Q2 call, initial limited shipments of the Lineage are on track to begin late this quarter. Most of the stocking deliveries for the Lineage product, however, will take place in the fiscal 2025 year before turning it over to Bryan for the financial review.
Mike: The new and Andrew will be on display at the event and we invite those of you in the area to come down and see Grand designs terrific, new motorized RV in person.
Mike: As I noted on our Q2 call initial limited shipments of lineage are on track to begin late this quarter.
Most of the stocking deliveries for the lineage product, however will take place in the fiscal 2025 year.
Michael Happe: Before turning it over to Bryant for the financial review, I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large Solitude and Momentum fifth wheel products. In each reported case, the Grand Design team and/or its network of dealers have performed a thorough product review and are collaborating directly with impacted customers to resolve any concerns. The team has also been working directly with our frame supplier, a third-party structural engineering firm, and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Speaker Change #123: Before turning it over to Brian for the financial review.
Michael J. Happe: I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large Solitude of Momentum fifth wheel product. In each reported case, the Grand Design team and its network of dealers have performed a thorough product review and are collaborating directly with impacted customers to resolve any concern. The team has also been working directly with our frame supplier, a third-party structural engineering firm, and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Speaker Change #123: I want to directly address the misinformation that has been disseminated on social media regarding excessive frame flex across the industry, including a small percentage of our large solitude momentum fifth wheel products.
Speaker Change #123: In each reported case the Grand design team <unk> network of dealers have performed a thorough product review and are collaborating directly with impacted customers.
Speaker Change #123: Resolve any concerns the.
Speaker Change #123: The team has also been working directly with our frame supplier.
Speaker Change #123: Third party structural engineering firm and industry experts to continue to ensure that our products and processes meet and exceed industry standards.
Michael Happe: Our commitment to customers is absolute, and we continue to stand behind every product we build. To reinforce that commitment, we recently extended our frame warranty to five years on all Grand Design products. Our one-year base warranty, three-year structural warranty, and new five-year frame warranty are also transferable to subsequent owners during the warranty period based on the original purchase date. These warranties will continue to be honored retroactively from the date of original purchase, beginning with model year 2020.
Michael J. Happe: Our commitment to customers is absolute, and we continue to stand behind every product we build. To reinforce that commitment, we recently extended our frame warranty to five years on all Grand Design products. Our one-year base warranty, three-year structural warranty, and new five-year frame warranty are also transferable to subsequent owners during the warranty period based on the original purchase date.
Speaker Change #123: Our commitment to customers is absolute and we continue to stand behind every product we build.
Speaker Change #123: To reinforce that commitment we recently extended our framework to five years on all Grand design products.
Speaker Change #123: Our one year base warranty three year structural warranty and new five year frame or NT are also transferrable to subsequent owners during the warranty period based on the original purchase date.
Michael J. Happe: These warranties will continue to be honored retroactively from the date of original purchase, beginning with model year 2020. Importantly, across Winnebago Industries, three core values guide how we operate every day: do the right thing, put people first, and Be The Best.
Speaker Change #123: These warranties will continue to be honored retroactively from the date of original purchase beginning with model year 2020.
Michael Happe: Importantly, across Winnebago Industries, three core values guide how we operate every day. Do the right thing, put people first, and be the best. These values support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders.
Speaker Change #123: Importantly across Winnebago industries, three core values guide, how we operate every day.
Speaker Change #123: Do the right thing.
Put people first and.
Speaker Change #123: And be the best.
Bryan L. Hughes: These values support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders. With that, I'll now hand the call over to Bryan Hughes. Thanks, Mike, and good morning, everyone. As a reminder, in my prepared remarks, starting on slide 9, I will focus on the key drivers of our performance. Please refer to our earnings release and earnings supplement documents for a detailed overview of our key financial results. Winnebago Industries delivered a solid third quarter.
Speaker Change #123: These value support our vision to be the trusted leader in premium outdoor recreation and guide interactions with all stakeholders.
Bryan Hughes: With that, I'll now hand the call over to Brian Hughes. Thanks, Mike, and good morning, everyone. As a reminder, in my prepared remarks starting on slide nine, I will focus on the key drivers of our performance. Please refer to our earnings release and earnings supplement documents for a detailed overview of our key financial results. Winnebago Industries delivered a solid third quarter. The U over your decrease in consolidated net revenue reflected a shift in product mix, with customers demonstrating a preference for lower priced units, primarily in the total RB segment, as well as lower unit volumes in our mortar home RB and marine segment.
Speaker Change #124: With that I'll now hand, the call over to Bryan Hughes.
Bryan L. Hughes: The year-over-year decrease in consolidated net revenue reflected a shift in product mix, with customers demonstrating a preference for lower-priced units, primarily in the towable RV sector, as well as lower unit volumes in our motorhome RV and marine segment as we continue to aggressively manage production amid challenging retail market conditions. Gross margin for the third quarter was 15%, primarily reflecting the deleveraging effect of lower sales and competitive marketplace pricing with elevated discounts, as well as the Operational Efficiency Challenge.
Thanks, Mike and good morning, everyone.
Bryan L. Hughes: As a reminder, in my prepared remarks, starting on slide nine I will focus on the key drivers of our performance.
Bryan L. Hughes: Please refer to our earnings release and earnings supplement document for a detailed overview of our key financial results.
Speaker Change #125: Winnebago industries delivered a solid third quarter.
Speaker Change #125: The year over year decrease in consolidated net revenue reflected a shift in product mix with customers demonstrating a preference.
Speaker Change #125: For lower priced units, primarily in the total RV segment.
Speaker Change #125: As well as lower unit volume in our motor home RV and Marine segment as we continued to aggressively manage production amid challenging retail market condition.
Bryan Hughes: As we continue to aggressively manage production amid challenging retail market conditions, gross margin for the third quarter was 15%. Primarily reflecting the de-leveraging effect of lower sales and competitive marketplace pricing with elevated discounts, as well as operational efficiency challenges. We are addressing those challenges through a range of cost containment initiatives, including flex production days, product line consolidation, and the deferral of certain CAPX projects. Warranty expense, although up year over year, comparing against favorable expense in last year's third quarter, has returned to historical rates. Lastly, and while not shown on this slide but worthy of a call out, we continue to generate robust free cash flow, which totaled 88.4 million in fiscal Q3.
Speaker Change #125: Gross margin for the third quarter with 15% <unk>.
Speaker Change #125: Primarily reflecting the deleveraging effect of lower sales and competitive marketplace pricing with elevated discount as well as operational efficiency challenges.
Bryan L. Hughes: We are addressing those challenges through a range of cost containment initiatives, including flux production days, product line consolidation, and the deferral of certain CapEx projects. Warranty expense, although up year over year, compared against favorable expense in last year's third quarter, has returned to historical levels. Lastly, and while not shown on this slide, but worthy of a call-out, we continued to generate robust free cash flow, which totaled $88.4 million in fiscal Q3. During the quarter, we executed 20 million share repurchases, bringing the year-to-date total to 60 million.
Speaker Change #125: We are addressing those challenges through a range of cost containment initiatives.
Speaker Change #125: Including flex production days product line consolidation and the deferral of certain capex projects.
Speaker Change #125: Warranty expense, although up year over year comparing against the favorable expense in last year's third quarter.
Speaker Change #125: Has returned to historical rates.
Speaker Change #125: Lastly, and while not shown on this slide but worthy of a call out.
Speaker Change #125: We continued to generate robust free cash flow, which totaled $88 4 million in fiscal Q3.
Bryan Hughes: During the quarter, we executed 20 million of share repurchases, bringing the year-to-date total to 60 million. Turning to our performance by segment, starting with total RB on slide 10, revenues were up 35.7% from the second quarter of 2024, or sequentially. Revenue was up 0.6% from Q3 of last year, reflecting an increase in unit volume partially offset by a reduction in average selling price per unit related to product mix. Segment adjusted EBITDA was down 22% versus the prior year, or 310 basis points of margin. Partly reflecting operational efficiency challenges as we worked through a plant consolidation in the Winnebeggle branded Tollable Business and production ramp up of new product.
Speaker Change #125: During the quarter, we executed $20 million of share repurchases, bringing the year to date total to $60 million.
Bryan L. Hughes: Turning to our performance by segment, starting with towable RV on slide 10, revenues were up 35.7% from the second quarter of 2024 or sequentially, reflecting an increase in unit volume, partially offset by a reduction in average selling price per unit related to product merit. Segment-adjusted EBITDA was down 22% versus the prior year, or 310 basis points of margin, partly reflecting operational efficiency challenges.
Speaker Change #125: Turning to our performance by segment, starting with <unk> on Slide 10 revs.
Speaker Change #125: Revenues were up 35, 7% from the second quarter of 2024 or sequentially.
Speaker Change #125: Revenue was up <unk>, 6% from Q3 of last year.
Speaker Change #125: <unk> an increase in unit volume.
Speaker Change #125: We offset by a reduction in average selling price per unit related to product mix.
Speaker Change #125: Segment, adjusted EBITDA was down 22% versus the prior year or 310 basis points of margin.
Speaker Change #125: Partly reflecting operational efficiency challenges.
Bryan L. Hughes: As we work through a plant consolidation in the Winnebago branded towable business and a Production Ramp-Up of New Products, and for the Tobol RV segment more broadly, there was a difficult comp with Q3 of last year benefiting from favorable warranty expense expressed as a percentage of sales. Fiscal 2024 third quarter warranty expense for this segment remains lower than average warranty rates prior to fiscal 2023. Additionally, we do not expect any warranty expense, including the expense associated with the excess frame flex issues and the warranty changes recently introduced by Grand Design.
Speaker Change #125: As we worked through a plant consolidation in the Winnebago branded <unk> business and.
Speaker Change #125: <unk> ramp up of new product.
Bryan Hughes: And for the Tollable RB segment more broadly, there was a difficult comp with Q3 of last year, benefiting from favorable warranty expense expressed as a percentage of sales. Fiscal 2024, third quarter warranty expense for the segment, remains lower than average warranty rates prior to Fiscal 2023. Importantly, we do not expect our warranty expense, including the expense associated with the excess spring flux issues and the warranty changes recently introduced by Grand Design, to cost meaningfully elevated warranty expense as a percentage of sales. While we had these headwinds to profitability broadly, we experienced a decrease or favorable impact to profitability in the level of discounts and allowances in the Tollable RB segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023.
Speaker Change #125: And for the total RMB segment more broadly there was a difficult comp with Q3 of last year benefiting from favorable warranty.
Speaker Change #125: Expressed as a percentage of sales.
Speaker Change #125: Fiscal 2024 third quarter warranty expense for this segment remains lower than average warranty rates prior to fiscal 2023.
Speaker Change #125: Importantly, we do not expect our warranty expense, including the expense associated with the excess spring flooding issues and the warranty changes recently introduced by Grand design.
Bryan L. Hughes: The cost meaningfully elevated warranty expense as a percent of sales. However, while we had these headwinds to profitability broadly, we experienced a decrease or favorable impact to profitability in the level of discounts and allowances in the TOEBL RV segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trough in retail demand. Total RV backlog was down 35.1% in dollars from the prior year, reflecting current industry and demand trends. Turning to slide 11.
Speaker Change #125: The cost meaningfully elevated warranty expense as a percent of sales.
Speaker Change #125: While we had these headwinds to profitability broadly.
Speaker Change #125: A decrease or favorable impact of profitability and the level of discounts and allowances in the total RV segment in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023.
Bryan Hughes: This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trust in retail demand. Total RB backlog was down 35.1% in dollars from the prior year, reflecting current industry and demand trends. Turning to slide 11, revenues for the Motorhome RB segment were down 20.1% from the prior year on lower unit volume and an increased level of discounts and allowances as we continue to work closely with our dealer partners to strengthen the health of their inventory. This was partially offset by price increases related to higher motorized chassis costs.
Speaker Change #125: This is a direct result of our highly disciplined production utilization as the industry moves its way through the current trough in retail demand.
Speaker Change #125: Total RV backlog was down 35, 1% in dollars from the prior year, reflecting current industry and demand trends.
Speaker Change #125: Turning to slide 11.
Speaker Change #125: Revenues for the motor home RV segment were down 21% from the prior year on lower unit volume and an increased level of discounts and allowances as we continue to work closely with our dealer partners to strengthen the health of their inventory.
Bryan L. Hughes: This was partially offset by price increases related to higher motorized chassis. However, with strict credit standards and elevated interest rates affecting consumer lending, retail and wholesale shipments both remain stubbornly soft during the May and June selling seasons. Segment-adjusted EBITDA decreased 50.2% or 270 basis points of margin compared to Q3 last. The variance reflected volume to leverage and operational efficiency challenges partially offset by cost containment efforts. Sequentially, motorhome margins were down 320 basis points due to deleverage and higher discounts and allowances, as the anticipated strengthening of the retail market in April and May failed to materialize. Backlog in the motorized RV segment was down 55.7% in dollars from the prior year.
Speaker Change #125: This was partially offset by price increases related to higher motorized chassis costs.
Bryan Hughes: With strict credit standards and elevated interest rates affecting consumer lending, retail and wholesale shipments both remain stubbornly soft during the May and June selling season. Segment adjusted EBITDA decreased 50.2% or 270 basis points of margin compared to Q3 last year. The variance reflected volume, delivery, and operational efficiency challenges, partially offset by cost containment efforts. Sequentially, motorhome margins were down 320 basis points due to de-laverage and higher discounts and allowances, as the anticipated strengthening of the retail market in April and May failed to materialize. Backlog and the motorized RB segment was down 55.7% in dollars from the prior year.
Speaker Change #125: With strict credit standards and elevated interest rates affecting consumer lending retail and wholesale shipments both remain stubbornly soft during the may and June selling season.
Speaker Change #125: Segment, adjusted EBITDA decreased 52% or 270 basis points of margin compared to Q3 last year.
Speaker Change #125: The variance reflected volume deleverage and operational efficiency challenges, partially offset by cost containment efforts.
Speaker Change #125: Italy Motor home margins were down 320 basis points due to deleverage and higher discounts and allowances as the anticipated strengthening of the retail market in April and May failed to materialize.
Speaker Change #125: Backlog in the motorized RV segment was down 55, 7% in dollars from the prior year.
Bryan Hughes: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter, considering dealer inventory levels and a tepid retail demand for this segment.
Bryan L. Hughes: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter, considering dealer inventory levels and the tepid retail demand for this segment. Moving to our marine segment, on slide 12, given current economic conditions, revenues in the third quarter were down 31.8% from the prior year, in line with expectations driven by soft retail demand and a cautious dealer network.
Speaker Change #125: We expect to maintain heavy discipline and capacity utilization in our upcoming fourth quarter, considering dealer inventory levels and a tepid retail demand for this segment.
Bryan Hughes: Moving to our marine segment on slide 12, given current economic conditions, revenues in the third quarter were down 31.8% from the prior year, in line with expectations, driven by soft retail demand and a cautious dealer network. Inventory levels continue to be elevated relative to dealer preferences, considering higher interest rates and the cost of carrying inventory. These factors cause our shipments to be down in the quarter compared to the prior year. In addition, net revenue was impacted by a shift in product mix toward loader price product offering. For example, the introduction of Barletta's ARIA offering in the past year.
Speaker Change #125: Moving to our Marine segment on slide 12.
Speaker Change #125: Given current economic conditions revenues in the third quarter were down 31, 8% from the prior year.
Speaker Change #125: In line with expectations, driven by soft retail demand and a cautious dealer network.
Bryan L. Hughes: Inventory levels continue to be elevated relative to dealer preferences considering higher interest rates and the cost of carrying inventory. These factors caused our shipments to be down in the quarter compared to the prior year. In addition, net revenue was impacted by a shift in product mix toward lower-priced product offers, for example, the introduction of Barletta's ARIA offering in the past year.
Speaker Change #125: Inventory levels continued to be elevated relative to dealer preferences, considering higher interest rates and the cost of carrying inventory.
These factors caused our shipments to be down in the quarter compared to the prior year.
Speaker Change #125: In addition, net revenue was impacted by a shift in product mix towards lower priced product offering.
For example, the introduction of our latest offering in the past year.
Bryan Hughes: Marine segment adjusted EBITDA margin decreased 370 basis points versus the prior year. This was primarily due to volume due to leverage, partially offset by cost containment efforts. Backlog for the marine segment was down from the prior year period.
Speaker Change #125: Marine segment, adjusted EBITDA margin decreased 370 basis points versus the prior year.
Bryan L. Hughes: This was primarily due to volume de-leverage, partially offset by cost containment. However, backlog for the marine segment was down from the prior year period. Moving now to the balance sheet on slide 13, as of the end of the quarter, Winnebago Industries had a net debt-to-EBITDA ratio of approximately 1.7 times, slightly above our targeted range of 0.9 to 1.5. This month, we will pay a quarterly cash dividend of $0.31 per share to common shareholders of record as of June 12, marking the 40th consecutive quarter Winnebago Industries has paid a dividend. This record speaks to the board's sustained competence in our strategy, performance, and growth process. During the quarter, we repurchased approximately 318,000 shares of stock at a total cost of $20 million.
Speaker Change #125: This was primarily due to volume deleverage, partially offset by cost containment efforts.
Speaker Change #125: Backlog for the Marine segment was down from the prior year period.
Bryan Hughes: Moving now to the balance sheet on slide 13. As the end of the quarter, Winnebago Industries had a net debt to EBITDA ratio of approximately 1.7 times, which is slightly above our targeted range of 0.9 to 1.5 times. This month, we will pay a quarterly cash dividend of 31 cents per share to common shareholders of record as of June 12th. Marking the 40th consecutive quarter Winnebago Industries has paid a dividend. This record speaks to the board's sustained competence in our strategy, performance, and growth prospects. During the quarter, we repurchased approximately 318,000 shares of stock at a total cost of 20 million.
Speaker Change #125: Moving now to the balance sheet on slide 13.
Speaker Change #125: As of the end of the quarter Winnebago industries had a net debt to EBITDA ratio of approximately one seven times.
Speaker Change #125: Which is slightly above our targeted range of <unk> nine to one five times.
Speaker Change #125: This month, we will pay a quarterly cash dividend of <unk> 31 per share to common shareholders of record as of June 12th marking the 14th consecutive quarter Winnebago industries has paid a dividend.
Speaker Change #125: This record speaks to the board sustained confidence in our strategy performance and growth prospects.
Speaker Change #125: During the quarter, we repurchased approximately 318000 shares of stock at a total cost of $20 million.
Bryan Hughes: At quarter end, we had 240 million remaining in our repurchased program. We have repurchased 60 million of stock in our fiscal year to date and have paid 28 million of dividends.
Speaker Change #125: At quarter end, we had 240 million remaining in our repurchase program.
Bryan L. Hughes: At quarter end, we had $240 million remaining in our repurchase program. We have repurchased $60 million of stock in our fiscal year to date, and we have paid $28 million in dividends. Before turning the call back to Mike, let me provide some color on our near-term expectations. Based on the current business environment, we anticipate the retail market will remain sluggish through the end of our fiscal fourth quarter. Reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season, our commitment remains steadfast.
Speaker Change #125: We have repurchased $60 million of stock in our fiscal year to date and have paid $28 million of dividends.
Bryan Hughes: Before turning the call back to Mike, let me provide some color on our near-term expectations. Based on the current business environment, we anticipate the retail market will remain sluggish through the end of our fiscal fourth quarter, reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season. Our commitment remains steadfast. We will use our capacity wisely, maintain our premium positioning, introduce exciting new products tailored to our customer bases, preferred price points, and prioritize long-term profitability across our brand. This commitment will guide us as we navigate the current industry downturn and its short-term effect on market share.
Speaker Change #126: Before turning the call back to Mike, Let me provide some color on our near term expectations based on the current business environment. We anticipate the retail market will remain sluggish through the end through the end of our fiscal fourth quarter, reflecting the dealer caution and tepid consumer sentiment that have marked the early part of the selling season.
Speaker Change #126: Our commitment remains steadfast.
Speaker Change #126: We will use our capacity wisely, maintaining our premium positioning introduce exciting new products tailored to our customer basis preferred price points and prioritize long term profitability across our brand.
Bryan L. Hughes: Introduce exciting new products tailored to our customer base's preferred price points and prioritize long-term profitability across our brand. This commitment will guide us as we navigate the current industry downturn and its short-term effect on market share. Now, let me turn the call back to Mike to provide some closing comments. Mike, back to you. Thanks, Bryan.
Speaker Change #126: This commitment will guide us as we navigate the current industry downturn and its short term effect on market share.
Michael Happe: Now let me turn the call back to Mike to provide some closing comments.
Speaker Change #127: Now, let me turn the call back to Mike to provide some closing comments Mike back to you.
Michael Happe: Mike, back to you. Thanks, Brian. Turning to slide 14, as we think about the future of our business, we continue to believe that, over the long term, fortune will favor the companies with the best brands who drive for mutual success with their dealer partners and a seamless, joyful end-to-end experience with their customers. We have been making steady investments in engineering, data, digital asset development, and IT capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers. When I say the best brands, I'm not talking only about a multitude of floor plans and comfortable sofas within those brands.
Michael J. Happe: As we think about the future of our business, we continue to believe that, over the long term, fortune will favor the companies with the best brands, who drive for mutual success with their dealer partners and a seamless, joyful, end-to-end experience with their customers. We have been making steady investments in engineering, data, digital asset development, and IT capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers. When I say the best brand,
Mike: Thanks, Brian turning to slide 14.
Mike: As we think about the future of our business. We continue to believe that over the long term fortune will favor the companies with the best brands.
Mike: Who drive for mutual success with their dealer partners and.
Mike: And a seamless joyful end to end experience with their customers.
Mike: We have been making steady investments in engineering data digital asset development and capabilities to ensure we have the right product offerings and tools to appeal to various segments of the future market and stay close to our customers.
Mike: When I say the best brands.
Michael J. Happe: I'm not talking only about a multitude of floor plans and comfortable sofas within those brands. It's also about making sure that our owners get outstanding service and support, have great technology at their fingertips, and become customers for life. Some of that is certainly dependent on having great dealer relationships, and that is an area where Winnebago Industries continues to lean in. As demand trends settle back into a more normalized pattern, dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy OEMs.
Mike: Not talking only about a multitude of floor plans and comfortable sofas within those brands.
Michael Happe: It's also about making sure that our owners get outstanding service and support, have great technology at their fingertips, and become customers for life. Some of that is certainly dependent on having great dealer relationships, and that is an area where Winnebago Industries continues to lean in. As demand trends settle back into a more normalized pattern, dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy OEMs. We are seeing more dealers seeking preferred and even exclusive relationships with Winnebago Industries' family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles.
Mike: It's also about making sure that our owners get outstanding service and support have great technology at their fingertips and become customers for life.
Mike: Some of that is certainly dependent on having great dealer relationships and that is an area, where winnebago industries continues to lean in.
Mike: As demand trends settle back into a more normalized pattern.
Mike: Dealers are beginning to shed the smaller brands and focus instead on much deeper relationships with trustworthy Oems.
Michael J. Happe: We are seeing more dealers seeking preferred and even exclusive relationships with the Winnebago Industries family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles. The dealer partnerships we have built over time provide our end customers with real advantages over the life of their ownership. To expand on Bryan's comments on Q4, we do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year.
Mike: We are seeing more dealers seeking preferred and even exclusive relationships with Winnebago industries' family of brands because they know they can count on us through the peaks and valleys of outdoor recreation cycles.
Michael Happe: The dealer partnerships we have built over time provide our end customers with real advantage over the life of their ownership.
Mike: The dealer partnerships, we have built over time provider and customers with real advantage over the life of their ownership.
Michael Happe: To expand on Brian's comments on Q4, we do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year. Consumer sentiment impacted by delays to the lowering of interest rates and other difficult macroeconomic factors. will continue to weigh on dealer willingness to order and carry inventory. With these factors in mind, we are anticipating Winnebago Industries Q4 to be flat to slightly down versus Q3 on a sequential basis on the top revenue line. We expect we will continue to face margin or yield challenges tied primarily to market pressures and pricing.
Speaker Change #128: To expand on Brian's comments on Q4.
Speaker Change #129: We do not currently expect a notable improvement in the RV and marine industries through the end of the calendar year.
Michael J. Happe: Consumer sentiment, impacted by delays in the lowering of interest rates and other difficult macroeconomic factors, will continue to weigh on dealer willingness to order and carry inventory. With these factors in mind, we are anticipating Winnebago Industries' Q4 to be flat to slightly down versus Q3 on a sequential basis on the top revenue line.
Speaker Change #130: Consumer sentiment impacted by delays to the lowering of interest rates and other difficult macroeconomic factors.
Speaker Change #130: We'll continue to weigh on dealer willingness to order and carry inventory.
Speaker Change #130: With these factors in mind, we are anticipating Winnebago industries Q4 to be.
Speaker Change #130: That to slightly down versus Q3 on a sequential basis on the top revenue line.
Michael J. Happe: We expect we will continue to face margin or yield challenges tied primarily to market pressures and pricing in the form of heightened discounts, and we are therefore anticipating profitability will be down sequentially as well. These expectations are consistent with the prevailing retail trends in the industry and are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels.
Speaker Change #130: We expect we will continue to face margin or yield challenges tied primarily to market pressures on pricing in the form of heightened discounts.
Michael Happe: In the form of heightened discounts, and we are therefore anticipating profitability will be down sequentially as well. These expectations are consistent with the prevailing retail trends in the industry and are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels. This guidance for our financial performance is also consistent with the full calendar year retail and hotel shipment expectations in our share; therefore, of that we mentioned earlier.
Speaker Change #130: And we are therefore, anticipating profitability will be down sequentially as well.
Speaker Change #130: These expectations are consistent with the prevailing retail trends in the industry and are also consistent with dealer sentiment and their preference to stay appropriately lean on inventory levels.
Michael J. Happe: This guidance for our financial performance is also consistent with the full calendar year retail and wholetail shipment expectations we mentioned earlier. We will provide further updates on expectations for the remainder of calendar year 2024 and for calendar year 2025 during our fourth quarter earnings call in October. That said, the future of our business remains bright. Our most recent Winnebago Industries Spotlight Survey continues to show strong demand for outdoor recreation, with 86% of participants saying they plan to increase or maintain their current participation level in outdoor activities. Winnebago Industries is better positioned today than at any time in its storied history.
Speaker Change #130: This guidance for our financial performance is also consistent with the full calendar year retail and wholesale shipment expectations and our shared therefore of that we mentioned earlier.
Michael Happe: We will provide further updates on expectations for the remainder of calendar year 2024 and for calendar year 2025 during our fourth quarter earnings call in October.
Speaker Change #130: We will provide further updates on expectations for the remainder of calendar year 2024.
Speaker Change #130: And for calendar year 2025.
Speaker Change #130: During our fourth quarter earnings call in October.
Michael Happe: That said, the future of our business remains bright. Our most recent Winnebago Industries Spotlight Survey continues to show strong demand for outdoor recreation. With 86% of participants saying they plan to increase or maintain their current participation level in outdoor activities. Winnebago Industries is better positioned today than at any time in our story history. If you compare our position today to where we were in 2014, when RV industry retail performance was similar to what we were experiencing in 2024, we are in a much better position in terms of market share, breadth of portfolio and financial performance.
Speaker Change #130: That said the future of our business remains bright.
Speaker Change #130: Our most recent Winnebago industries Spotlight survey continues to show strong demand for outdoor recreation.
Speaker Change #130: With 86% of participants, saying they plan to increase or maintain their current participation level in outdoor activities.
Speaker Change #130: Winnebago industries is better positioned today than at any time in our storied history.
Michael J. Happe: If you compare our position today to where we were in 2014, when RV industry retail performance was similar to what we are experiencing in 2024, we are in a much better position in terms of market share, breadth of portfolio, and financial performance. Likewise, if you compare where our portfolio brands sit today compared to pre-pandemic 2019, we have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price.
Speaker Change #130: If you compare our position today to where we were in 2014.
Speaker Change #130: When RV industry retail performance was similar to what we are experiencing in 2024.
Speaker Change #130: We are in a much better position in terms of market share breadth of portfolio and financial performance.
Michael Happe: Likewise, if you compare where our portfolio brand sits today compared to pre-pandemic 2019, we have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price points. All of this is translated to much stronger financial performance and a more robust balance sheet. We are extremely proud of the high level of trust and confidence customers have in our brands, putting us in a great position as the market recovers and consumers regain their economic footing.
Speaker Change #130: Likewise, if you compare where our portfolio of brands sits today compared to pre pandemic 2000 22019.
Speaker Change #130: We have a more robust portfolio of products across all our brands, reaching a broader range of customers with a wider array of features as well as price points.
Michael J. Happe: All of this translates into much stronger financial performance and a more robust balance. We are extremely proud of the high level of trust and confidence customers have in our brands, putting us in a great position as the market recovers and consumers regain their economic footing. In closing, let me acknowledge the work of almost 6,000 team members across Winnebago Industries. The Grand Design, Winnebago, Numar, Chris Graft, and Barletta nameplates carry a unique appeal to the customers of each of those premium brands, an attraction that signifies quality, safety, and reliability. Our new strategic technology vertical lithionics battery is also positively disrupting the mobile lithium battery space, winning new business in both the outdoor industry and across specialty vehicle applications.
Speaker Change #130: All of this has translated to much stronger financial performance and a more robust balance sheet.
Speaker Change #130: We are extremely proud of the high level of trust and confidence customers have in our brands, putting us in a great position as the market recovers and consumers regain their economic footing.
Michael Happe: In closing, let me acknowledge the work of almost 6,000 team members across Winnebago Industries. The Grand Design, Winnebago, Numar, CRISGraft, and Barletta name plates carry a unique appeal to the customers of each of those premium brands, an attraction that signifies quality, safety, and reliability. Our new strategic technology vertical Lithionics battery is also positively disrupting the mobile lithium battery space and winning new business in both the outdoor industry and across specialty vehicle applications. The people who support design and build these brands are our strongest asset, and I am extremely proud of the value they deliver every day to enable our customers to be great outdoors.
Speaker Change #130: In closing.
Speaker Change #130: Let me acknowledge the work of almost 6000 team members across Winnebago industries the.
Speaker Change #130: The Grand design, Winnebago, and Newmar, Chris craft, and Barletta nameplates carry a unique appeal to the customers of each of those premium brands.
Speaker Change #130: <unk> that signifies quality safety and reliability.
Speaker Change #130: Our new strategic technology vertical lithium Onyx battery is also positively disrupting the mobile lithium battery space and winning new business in both the outdoor industry and across specialty vehicle applications.
Operator: The people who support, design, and build these brands are our strongest asset, and I am extremely proud of the value they deliver every day to enable our customers to Be Great Outdoors. With that, I will turn the call back over to the operator, who will open the line for your questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
Speaker Change #130: The people, who support design and build these brands are our strongest asset and I am extremely proud of the value. They deliver every day to enable our customers to be great outdoors.
Ray Posadas: With that, I will turn the call back over to the operator, who will open the line for your questions. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please limit yourself to one question and one related follow-up. One moment for questions.
Speaker Change #131: With that I will turn the call back over to the operator, who will open the line for your questions.
Speaker Change #132: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and one related follow up one moment for questions.
Operator: Please limit yourself to one question and one related follow-up. One moment for questions. Our first question comes from Tristan Thomas Martin with BMO Capital Markets. You may proceed. Hey, good morning.
Tristan Thomas: Our first question comes from Tristan Thomas Martin with BMO Capital Markets. You may proceed.
Speaker Change #133: Our first question comes from Tristan Thomas Martin with BMO capital markets. You May proceed.
Michael Happe: Hey, good morning. Mike, the profitability headwind in the fourth quarter is that pie to clearing kind of the remaining carry-over inventory or just incentivizing dealers to order. And then, while you're at it, where do you think carry-over inventory is for you guys meant for the minister?
Speaker Change #134: Hey, good morning.
Speaker Change #134: Mike.
Speaker Change #135: Profitability headwinds in the fourth quarter is that tied to clear in kind of the remaining carryover inventory or just incentivizing dealers to order.
Speaker Change #135: And then while Youre at it where do you think carryover inventory is for you guys and then for the industry.
Michael Happe: Yeah, good morning, Tristan. I'd like to start with the back after your question first in terms of carry-over inventory. We are generally pleased with the composition of the inventory given the type of market conditions we're facing as we sit today. The total inventory levels for us in the toable space seem very appropriate for where we're at. We'd prefer for aging inventory in our toable field inventory base to be a little bit better, but we continue to work on that quite specifically. Our motorized RV inventory may be slightly higher in the field than our dealers might like, but not by very much.
Speaker Change #135: Yes.
Michael J. Happe: Mike, the possibility of headwinds in the fourth quarter, is that tied to clearing kind of the remaining carryover inventory or just incentivizing dealers to order? And then, while you're at it, where do you think the carryover inventory is for you guys and then for the industry? Yeah, good morning, Tristan.
Speaker Change #136: Yes, good morning Tristan.
Michael J. Happe: I'd like to start with the back half of your question first. In terms of carryover inventory, we are generally pleased with the composition of the inventory given the type of market conditions we're facing as we sit today. The total inventory levels for us in the towable space seem very appropriate for where we are. We'd prefer the aging inventory in our towable field inventory base to be a little bit better, but we continue to work on that quite specifically.
Speaker Change #137: I'd like to start with the back half of your question first in terms of carryover inventory.
Speaker Change #137: We are generally pleased with the.
Speaker Change #137: The composition of the inventory given the type of market conditions, we're facing.
Speaker Change #137: As we sit today.
Speaker Change #137: Total inventory levels.
Speaker Change #137: For us in the in the total space.
Speaker Change #137: Seem very appropriate for where we're at.
Speaker Change #137: We prefer for aging inventory in our <unk> field inventory base to be a little bit better.
Speaker Change #137: We continue to work on that.
Speaker Change #137: Quite specifically.
Michael J. Happe: Our motorized RV inventory may be slightly higher in the field than our dealers might like, but not by very much. And again, we actually think our aging inventory position on the motorized side is as competitive as any other OEM in the market. Lastly, on the marine side, specific to Barletta and Pontoons, while we are gaining significant retail share in that particular market segment, we continue to partner in a very positive way with dealers to position their field inventory in a position that they feel comfortable in.
Speaker Change #137: Our motorized RV inventory, maybe slightly higher in the field then.
Speaker Change #137: Our dealers might like but not by very much.
Michael Happe: And again, we actually think our aging inventory position on the motorized side is as competitive as any other OEM in the market.
Speaker Change #137: Again, we we actually think our aging inventory position on the motorized side is as competitive as any other Oems in the market.
Michael Happe: Lastly, on the marine side, specific to Barletta and Pantunes, while we are gaining significant retail share in that particular market segment, we continue to partner in a very positive way with dealers to position their field inventory to a position that they feel comfortable. And that will be that will continue to put a bit of pressure on shipments on that brand here over the next quarter, at a minimum. But all in all, we generally feel okay about the field inventory levels and continue to work on obviously transitioning the composition of that inventory to more recent, you know, recently aged inventory.
Speaker Change #137: Lastly, on the marine side specific to barletta in pontoons.
Speaker Change #137: We are gaining significant retail share in that particular market segment.
Speaker Change #137: We continue to partner and a very positively with dealers to position their field inventory to a position that they feel comfortable and that will be that we'll continue to put a bit of pressure on shipments on that brand here over the next quarter at a minimum but all in all we generally feel okay.
Michael J. Happe: And that will continue to put a bit of pressure on shipments for that brand here over the next quarter at a minimum. But all in all, we generally feel okay about the field inventory levels and continue to work on obviously transitioning the composition of that inventory to more recent, you know, recently aged inventory. We have actually slightly delayed some of our model year 2025 introductions so that we can continue to work as an example on some of the model year 2023 or 2024 products. Bryan, I might ask you to talk about the profitability drivers in Q4. Yeah, we talked about it sequentially, right?
Speaker Change #137: About the field inventory levels and continue to work on obviously transitioning the composition of that inventory to more recent.
Speaker Change #137: Recently, aged inventory, we have actually slightly delayed some of our model year 2025 introductions. So that we can continue to work as an example on some of the model year 2023 or 2024 product.
Michael Happe: We have actually slightly delayed some of our model year 2025 introductions so that we can continue to work as an example on some of the model year 2023 or 2024 product.
Bryan Hughes: Brian, I might ask you to talk about the profitability drivers in Q4. Yeah, we talked about it sequentially, right? I think the biggest driver you kind of alluded to it, Tristan, is going to be continued marketplace pressures on discounting, allowances, just a tougher environment than what I think the industry was anticipating. As we get through the selling season and start to ease in the June, July, August period, our Q4 in terms of dealers' willingness to take on product.
Speaker Change #138: And I might ask you to talk about the profitability drivers in Q4.
Speaker Change #139: Yes, we talked to about it sequentially right.
Bryan L. Hughes: And, I think the biggest driver, you kind of alluded to it, Tristan, is going to be continued marketplace pressures on discounting, allowances, just a tougher environment than what I think the industry was anticipating as we get through the selling season and start to ease in the June, July, August period, our Q4 in terms of dealers' willingness to take on product. Also, you have some seasonality of sorts on the marine side. For example, we have interest reimbursement programs that start to kick in in our Q4 versus Q3.
Speaker Change #139: I think the biggest driver you kind of alluded to it Tristan is going to be continued marketplace pressures on.
Speaker Change #140: Discounting allowances.
Speaker Change #140: A tougher environment than what I think the industry was anticipating as we get through the selling season.
Speaker Change #140: And into the start to ease in the June July August period, our Q4 in terms of dealers willingness to take on product also you have some seasonality or thoughts on the marine side. For example, we have interest reimbursement programs that start to kick in.
Bryan Hughes: Also, you have some seasonality of sorts on the marine side. For example, we have interest reimbursement programs that start to kick in in our Q4 versus Q3. So I think broadly speaking, I would characterize that profit guidance we provided as a bit of a seasonal, as well as an expectation of continued very tough market conditions and dealer sentiment.
Speaker Change #140: In our Q4 versus Q3, so I think broadly speaking I would I would characterize.
Bryan L. Hughes: So I think, broadly speaking, I would characterize that profit guidance we provided as a bit of a seasonality as well as an expectation of continued very, very tough market conditions and dealer sentiment. Okay, thank you. I'll hop back in the queue.
Speaker Change #140: That profit guidance, we provided a bit of a seasonal as well as a.
Expectation of continued very very tough market conditions.
Speaker Change #140: Dealer sentiment.
Tristan Thomas: Okay, thank you. Oh, I'm back.
Speaker Change #141: Okay. Thank you I'll hop back in queue.
Yes.
Speaker Change #142: Thank you.
James Hardiman: Our next question goes from James Hardiman with city. You may proceed.
Tristan M. Thomas: Thank you. Our next question comes from James Hardiman with Citi. You may proceed. Hey, good morning.
Speaker Change #143: Our next question comes from James Hardiman with Citi. You May proceed.
Michael Happe: Hey, good morning. Thanks for taking my question. So, on the inventory front, maybe a little surprise to hear you say you're actually pushing back the introduction of some of the model. You're 25. Certainly, some of the commentary that we've heard from dealers is that they're actually waiting for the model of your 25 to make orders because they don't want to further exacerbate the aging issue. Maybe speak to the thought process there. Do you think it'll be a catalyst once the 25s begin to make their way into the channel? And I think there's been some discussion from at an industry level of moving up that that model your change over. Any thought there?
James Lloyd Hardiman: Thanks for taking my question. So on the inventory front, maybe a little surprised to hear you say you're actually pushing back on the introduction of some of the Model Year 25s. Certainly some of the commentary that we've heard from dealers is that they're actually waiting for the Model Year 25s to make orders because they don't want to further exacerbate the aging issue. Maybe speak to the thought process there.
James Lloyd Hardiman: Hey, good morning, Thanks for taking.
James Lloyd Hardiman: My question so on the.
<unk>.
James Lloyd Hardiman: The inventory front.
Speaker Change #144: Maybe a little surprised to hear you say youre actually pushing back.
Speaker Change #144: The introduction of some of the model year 'twenty five certainly some of the commentary that we've heard from dealers that they are actually waiting for the model year 'twenty five can make orders because they don't want to further exacerbate.
Speaker Change #144: The aging issue.
Michael J. Happe: Do you think it'll be a catalyst? Once the 25 begin to make their way into the channel, and I think there's been some discussion at an industry level of moving up that model year changeover. Any thoughts there? Yeah, good morning, James. This is Mike.
Speaker Change #144: Maybe.
Speak to the thought process. There do you think it will be a catalyst.
Speaker Change #145: Once the 25 begin to make their way into the channel and I think theres been some discussion at an industry level moving up that that model year changeover any thoughts there.
Michael Happe: Yeah, good morning, James.
Michael J. Happe: Let me be more specific about my comment about model year 25. My comment does not apply to the entire portfolio in the same way. There are certain pockets of our portfolio where we are being very intentional in the timing and delivery of Model Year 25 products for two reasons. One, we may still have a little bit of Model Year 24 carryover on our own lots. And number two, we, the dealers, you know, think it is best to continue to work on any of the aged inventory in the field.
Mike: Yes. Good morning, James This is Mike let me be more specific on my comment about model year 'twenty five.
Michael Happe: This is Mike. Let me be more specific on my comment about model your 25. My comment does not apply to the entire portfolio in the same way. There are certain pockets of our portfolio where we are being very intentional in the timing and delivery of Model Your 25 product. For two reasons. One, we may still have a little bit of model your 24 carryover on our own lots. And number two, we with the dealers, you know, think it is best to continue to work on any of the aged inventory in the field. Our model your 22 inventory is virtually nonexistent at the end of third quarter.
My comment does not apply to the entire portfolio in the same way.
Mike: There are certain pockets of our portfolio, where we are being very intentional.
Mike: And the timing and delivery of model year 'twenty five product.
Mike: For two reasons, one we may still have a little bit of model year 2004 carryover.
Mike: Our own lots and number two.
Mike: We with the dealers think it is best to continue to work on any of the aged inventory in the field.
Michael J. Happe: Our model year 22 inventory is virtually non-existent at the end of the third quarter, a very small number of units, and we continue to put some of our select promotional support dollars on the H side against a number of model year 23 products. So that is... That is really our focus there on 25. In terms of timing, I would actually say the, It appears to me that the RV industry continues to probably move towards a more common future model year release window.
Mike: Our model year 'twenty, two inventory is virtually nonexistent at the end of third quarter.
Michael Happe: Very small number of units, and we continue to put some of our select promotional support dollars on the age side against a number of the model your 23 products. So that is, that is really our focus there on 25. In terms of timing, I would actually say that the, you know, it appears to me that the RV industry continues to probably move towards a more common model, your future model, your release window. And in my opinion, based on, you know, the activity that I'm seeing and hearing, I don't believe that that that window in future years will move up.
Mike: A small number of units and we continue to put.
Mike: Some of our select promotional support dollars on the <unk> side against a number of the model year 'twenty three.
Mike: Products.
Mike: That is.
Mike: That is really our focus there on on.
Mike: 25%.
Mike: In terms of timing I would actually say the.
Mike: It appears to me that the RV industry continues to probably.
Move towards a more common.
Model year future model year release window.
Michael J. Happe: In my opinion, based on the activity that I'm seeing and hearing, I don't believe that window in future years will move up. I actually think it will stay in the mid-summer period, and hopefully, we will continue to see growth. You know, good discipline by other OEMs across the industry to make a reasonable model of your transition in a time period that makes sense. There have been some outliers on the total side to that summertime model year introduction, just a couple outliers.
Mike: In my opinion based on.
Mike: The activity that I'm seeing and hearing I don't believe that that that that window in future years will move up.
Michael Happe: up. I actually think it will stay in the mid summer period, and hopefully we will continue to see good discipline by other OEMs across the industry to make a reasonable model your transition in a time period. It makes sense. There have been some suppliers on the toll side to that summertime model year introduction, just a couple outliers. I think the big players, for the most part, are disciplined in that regard. The motor home has been less disciplined. If you were to look at it, segment by segment, motor home has certainly had a history and continued this year to introduce the next model year earlier than the summer period here in July, when the industry largely shakes hands and agrees is the model year turnover.
Mike: I actually think it will stay in the mid <unk>.
Mike: Summer period in.
Mike: And hopefully we will continue to see.
Mike: Good discipline by other Oems across the industry too.
Mike: To make a reasonable model year transition in the time period that makes sense.
Michael J. Happe: I think the big players, for the most part, are disciplined in that regard, https://www.motorhome.com is the model year turnover. Some of that driven by the OEM, the chassis providers on the motorized side, having a different timing of the model year changeover. Got it.
Mike: And theres been some private buyers on the toll good side to that summer time model year introduction, just a couple of outliers I think the big players for the most part are disciplined in that regard the motor home. It's been less disciplined flip you will look at it segment by segment.
Mike: Home has has certainly had a history and continued this year to introduce the next model year earlier then.
Mike: The summer period here in July when the industry, largely shakes hands and Greece is the model your turnover some of that driven by the OEM the chassis providers on the motorized side, having a different timing of model year changeover too.
Michael Happe: Some of that is driven by the OEM, the chassis providers on the motor side having a different timing of model year changeover to. Got it.
Michael J. Happe: And then any quantification you could give us on the flex frame issue, both the extension of the warranty and the transferability of the warranty? Sounds like you don't think it's going to be a meaningful driver of increased warranty expense. But so maybe walk us through the major assumptions that lead you to that conclusion. Thanks. Dave, this is Mike.
Speaker Change #146: Got it and then.
James Hardiman: And then any quantification you could give us on the flex frame issue, both the extending of the warranty and the transferability of the warranty. Sounds like you don't think it's going to be a meaningful driver to increase warranty expense. But, so maybe walk us through the major assumptions that lead you to that conclusion.
Speaker Change #147: Any quantification you could give us on the flex frame issue.
Speaker Change #146: Both.
Speaker Change #148: Extending up the warranty and the transferability of the warranty it sounds like you don't think it's going to be a meaningful.
Speaker Change #149: Driver of the increased warranty expense.
Speaker Change #150: But so maybe walk us through the major assumptions that.
Speaker Change #151: Lead you to that conclusion.
James Hardiman: Thanks.
Michael J. Happe: Let me put this in perspective for everybody; less than one percent of all grand design fifth wheels built in the entire history of its company have experienced any sort of excessive frame flex issue. This is an issue which is not as large in actuality from a unit impact standpoint, nor in financial impact, as several stakeholders perceive it to be, the impact of warranty to date. In fiscal year 24, the concern regarding excessive frame flex has been nominal.
Michael Happe: James, this is Mike.
Mike: David This is Mike let me put this in perspective for everybody.
Michael Happe: Let me put this in perspective for everybody. Less than 1% of all Grand Design fifth wheels built in the entire history of its company have experienced any sort of excessive frame flex issue. This is an issue which is not as large in actuality from a unit impact standpoint, nor in financial impact as several stakeholders perceive it to be. The impact of warranty to date in fiscal year 24 regarding excessive frame flex has been nominal, and as Brian alluded, we are maintaining historical warranty levels now around most of our businesses, including Grand Design. In the announcement that the grand design business made candidly to signal to its consumers that we have maximum confidence in our products and that we will provide the utmost and complete support to customers in the future will come with very little financial impact in the rest of this fiscal year or future fiscal years, given the current warranty rate we're seeing on this topic.
Speaker Change #152: Less than 1%.
Speaker Change #152: Of all Grand designs fifth wheels built in the entire history of its company.
Speaker Change #153: <unk> experienced any sort of excessive frame flex issue.
Speaker Change #153: This is this is an issue which is.
Speaker Change #153: Not as large in actuality.
Speaker Change #153: From a unit impact standpoint, nor in financial impact.
Speaker Change #153: As.
Speaker Change #153: Several stakeholders perceive it to be.
Speaker Change #153: The impact of warranty to date.
Michael J. Happe: And as Bryan alluded, we are maintaining historical warranty levels now around most of our businesses, including grand design. In the announcement that the grand design business made, We are here candidly to signal to its consumers that we have maximum confidence in our products and that we will provide the utmost and complete support to our customers, and many customers in the future will come with very little financial impact on the rest of this fiscal year or future fiscal years, given the current warranty rate we're seeing on this topic. So, that's why I use the word misinformation in my prepared comments.
Speaker Change #153: In fiscal year 'twenty four regarding.
Speaker Change #154: Excessive frame flex has been nominal and as Brian alluded.
Speaker Change #155: We are maintaining historical warranty levels now.
Speaker Change #155: Around most of our businesses, including Grand design.
Speaker Change #155: In the announcement that the Grand design business made.
Speaker Change #155: Candidly to signal to its consumers that we have maximum confidence in our products and that we will provide the provide the utmost in complete support to customers in the future will come with very little financial impact in the rest of this fiscal year or future fiscal years.
Speaker Change #155: Given the.
Speaker Change #155: The current <unk>.
Speaker Change #155: Warranty rate, we're seeing on this topic.
Michael Happe: So that's why I use the word misinformation in my prepared comments. This topic is not having a significant impact on our warranty expense line now, and we don't anticipate that to be the case in the future.
Speaker Change #155: So that's why I used the word misinformation.
Speaker Change #155: In my prepared comments.
Michael J. Happe: This, this, uh... Topic is not having a significant impact on our warranty expense line now, and we don't anticipate that to be the case in the future. Yeah, and just to add a little bit to that, as Mike said, the experience rate is so low on this. We do have some, of course, experience where we've seen it, as Mike said, less than 1%. And in those instances where we have seen it, the cost per fix is likewise not meaningful.
Speaker Change #155: This this.
Speaker Change #155: Topic is not having a significant impact.
Speaker Change #155: Impact on our warranty expense line now and we don't anticipate that to be the case in the future and just add a little bit to that.
Bryan Hughes: Just add a little bit to that. As Mike said, the experience rate is so low on this. We do have some, of course, experience where we've seen it. As Mike said, less than one percent.
Mike: As Mike said the experience rate is so low on this we do have some of course experience, where we've seen it as Mike said less than 1% none of those instances, where we have seen at the cost per fixed is likewise not meaningful.
Bryan Hughes: Now, those instances where we have seen it, the cost per fix is likewise not meaning. and then lastly, you know, Grand Design has always taken care of the customers. Okay, so call it good wheel practices.
Bryan L. Hughes: And then lastly, you know, Grand Design has always taken care of the customers, okay? So we call it goodwill practices. I think most in the call know what that means from an industry perspective, even, in other words, outside of warranty, Grand Design has historically taken care of customers on these types of issues as well, so it's already effectively in the run rate, we feel, this additional warranty that was just extended. So for all those reasons, you know, hopefully that gives you some perspective on why we think this is not a, you know, any kind of financial event, call it, as we try to put this, our customers at ease, through this extended warranty.
Speaker Change #156: And then lastly, Grand design has always taken care of the customers. Okay. So call it goodwill practices.
Bryan Hughes: I think most in the call know what that means from an industry perspective. Even in other words, outside of warranty, Grand Design has historically taken care of customers on these types of issues as well. So it's already effectively in the run rate; we feel this additional warranty that was just extended.
Speaker Change #156: Most of the call know what that means from an industry perspective, even in other words outside of warranty Grand design has historically taken care of customers on these types of issues as well. So it is already effectively in the run rate we feel this additional warranty.
Speaker Change #156: That was just extended so for all those reasons.
Bryan Hughes: So for all those reasons, you know, hopefully that could do some perspective on why we think this is not a financial, you know, any kind of financial event. Call it as we try to put this our customers at ease through this extended warranty.
Speaker Change #156: Hopefully that gives you some perspective on why we think this is not a.
Speaker Change #156: Any kind of financial event call. It as we try to put this our customers at ease through this this extended warranty.
James Hardiman: It does. That's good perspective.
That's good perspective, thanks, guys.
Speaker Change #157: Thank you and as a reminder, please limit yourself to one question and one related follow up. Our next question comes from Bret Jordan with Jefferies. You May proceed.
Ray Posadas: And, as a reminder, please limit yourself to one question and one related follow-up.
Bret Jordan: Our next question comes from Bret Jordan with Jeffries. He may proceed.
James Lloyd Hardiman: That's a good perspective. Thanks, guys. Thank you. And as a reminder, please limit yourself to one question and one related follow-up. Our next question comes from Bret Jordan on Jeffrey's, you may proceed. Hey, good morning, guys.
Bret Jordan: Good morning, guys. Can you could you talk a bit more about the general, the relative health, I guess, of the dealer channel marine versus RV. Obviously, the marine downturn started after the RV downturn that might be a little deeper at the moment.
Bret David Jordan: Hey, good morning, guys.
Bret David Jordan: Could you talk a bit more about the general, relative health, I guess, of the dealer channel marine versus RV? Obviously, the marine downturn started after the RV downturn but might be a little deeper at the moment. And maybe you could talk about, you know, are we going to see attrition or meaningful incremental attrition on either one of those channels, given just inventory carrying costs and slow retail sales? Brett, good morning. This is This is Mike.
Bret David Jordan: Could you could you talk a bit more about that general the relative health I guess at the dealer channel Marine versus R&D, obviously, the marine downturn started after the RV downturn, but might be a little deeper at the moment.
Bret Jordan: And maybe could you talk about, you know, are we going to see a trition or meaningful incremental attrition, either one of those channels given just inventory carrying costs and slow retail sales.
Bret David Jordan: Maybe you could you talk about are we going to see attrition or meaningful incremental attrition on either one of those channels, given just inventory carrying costs and slow retail sales.
Michael Happe: We're at Good morning. This is this is Mike. You know, as we've stated before, we can discuss specifically the marine market segments that we're in. And so I'll focus my comments here on pontoons because that is where the, you know, that's obviously where the majority of our marine volume lies. I am extremely pleased with our Barletta branded business in the way they've been managing both their support of increasing retail market share in a difficult environment, but also their prudence and discipline around field, you know, field inventory. And this is a business as an example. We're at the end of our third quarter.
Michael J. Happe: You know, as we've stated before, we can discuss specifically the marine market segments that we're in, and so I'll focus my comments here on pontoons because that is where the, You know, that's obviously where the majority of our marine volume lies. I am extremely pleased with our Barletta branded business in the way they've been managing both their support of increasing retail market share in a difficult environment but also their prudence and discipline around field, you know, field inventory.
Mike: Brent Good morning. This is this is Mike.
Speaker Change #158: As we've stated before we can we can discuss specifically.
The marine market segments that we're in and so on.
Speaker Change #159: I'll focus my comments here on on pontoons, because that is where the.
Speaker Change #159: That's obviously, where the majority of our marine volume wise.
Speaker Change #159: Yeah.
I am extremely pleased with our barletta branded business and the way <unk> been managing both their support of increasing retail market share.
Speaker Change #159: In a difficult environment, but also their prudence and discipline around.
Speaker Change #159: Field field inventory.
Michael J. Happe: And this is an example of a business where, at the end of our third quarter, we didn't have a single model year 2025 product in the channel yet. And I'm not even sure that's the case today. I don't think it is.
Speaker Change #159: And this is a business as an example, where at the end of our third quarter.
Michael Happe: We didn't have a single model Your 2025 product in the channel yet. And I'm not even sure that's the case today. I don't think it is. So we continue to focus on running out our model your 24s. And are working with the dealers to make sure that the turn rate that they desire in light of some of the pressures they're facing on inventory flooring costs, as an example, across all of their lines, not just Barletta, that word a good partner in making sure that their Barletta inventory levels are in a position to both drive double digit market retail share.
Speaker Change #159: Didn't have a single model year 2025 product.
Speaker Change #159: In the channel yet.
Speaker Change #159: And I'm not even sure. That's the case today I don't think it is so we continue to focus on running out our model year 'twenty fours.
Michael J. Happe: So we continue to focus on running out our model year 24, and we are working with the dealers to make sure that the turn rate that they desire in light of some of the pressures they're facing on inventory flooring costs, as an example, across all of their lines, not just Barletta, that we're a good partner in making sure that their Barletta inventory levels are in a position to both drive double-digit market retail share but also help them drive acceptable And so we've actually brought down Barletta's total inventory as of the end of the third quarter, right, probably somewhere in the range of, you know, 800 to 900 units.
We are working with the dealers to make sure that that the turn rate that they desire in light of some of the pressures they're facing on inventory flooring costs. As an example across all of their lines not just part letter.
Speaker Change #159: We're a good partner and making sure that Theyre barletta inventory levels are in a position to both drive double digit market retail share.
Michael Happe: But also help them drive acceptable profitability on their retail transactions and manage any carrying costs that they have. And so we've actually brought down Barletta total inventory as of the end of the end of the third quarter, probably somewhere in the range of 800 to 900 units. And we anticipate, you know, also driving that field inventory position a little bit lower here, particularly over the fourth quarter. And we think that is the best thing to do for our dealers without sacrificing our ability to go after double-digit market share. So that we can position ourselves for an even stronger model, your 25 line release that will happen probably in the, you know, the August, you know, time period.
Speaker Change #159: But also help them drive acceptable profitability on their retail transactions and manage any carrying costs that they have and so we've actually brought down barletta total inventory.
Speaker Change #159: As of the end of the.
Speaker Change #159: End of the third quarter by probably somewhere in the range of.
Speaker Change #159: 800 to 900 units and.
Michael J. Happe: And we anticipate, you know, driving that field inventory position a little bit lower here, particularly in the fourth quarter. And we think that is the best thing to do for our dealers without sacrificing our ability to go after double-digit market share so that we can position ourselves for an even stronger model year 25 line release that will happen probably in the August time period.
Speaker Change #159: And we anticipate.
Speaker Change #159: Also driving that field inventory position, a little bit lower here, particularly over the fourth quarter and we think that is the best thing to do for our dealers without sacrificing our ability to go after double digit market share. So that we can position ourselves for an even stronger model year 'twenty.
Speaker Change #159: Five line release.
Speaker Change #159: That will that will happen probably in the August.
Speaker Change #159: <unk> time period.
Michael Happe: So, you know, our marine inventory position is in, I think, really, really decent shape to begin with, and we're going to make it even stronger here over the next 90 to 120 days. And then hopefully market conditions will be in a place where, you know, we can, we can stabilize and get back to a one-to-one, you know, retail to shipment ratio in that particular, in that particular business.
Speaker Change #159: So.
Speaker Change #159: Yeah.
Speaker Change #159: Our marine.
Michael J. Happe: The inventory position is in, I think, really, really decent shape to begin with, and we're going to make it even stronger here over the next 90 to 120 days. And then, hopefully, market conditions will be in a place where we can stabilize and get back to a one-to-one retail-to-shipment ratio in that particular business. Hey, Bret, if you were asking about broader, just dealer health in general. As both RV and Marine get through the selling season here, I think... It's the best time of year for them, right?
Speaker Change #159: The inventory position is and I think really really decent shape to begin with and we're going to make it even stronger here over the next 90 to 120 days.
Speaker Change #159: And then hopefully market conditions will be in a place where.
Speaker Change #159: We can we can stabilize and get back to a one to one.
Speaker Change #159: Retail to shipment.
Speaker Change #159: Ratio in that particular in that particular business.
Michael Happe: Hey, Brad, if you were talking about broader just dealer health in general, you know, as both RV and marine get through the selling season here, I think it's the best time of your form, right? They'll have decent cash flow and at least some profitability to get them through the selling season. And I think there is some exposure, call it remaining, and marine heightened above RV, but what I am certainly hearing and want to acknowledge is that the marine OEMs, probably speaking of which again, we're a very small piece, are doing a very good job at pulling back on production and making sure that the dealers only have what they need really to get through the selling season and trying to help them with carrying costs.
Speaker Change #160: Hey, Brett if you were asking about broader dealer health in general.
Speaker Change #160: At both RV and marine get through the selling season here I think.
Speaker Change #160: It's the best time of year for them right they'll have decent cash flow and at least.
Bryan L. Hughes: They'll have decent cash flow and, at least, some profitability to get them through the selling season. I think there is some exposure, call it, remaining in marine, heightened above RV.
Speaker Change #160: Some profitability.
Speaker Change #160: To get them through the selling season I think there is some exposure to call. It remaining in marine heightened above RV, but what I am certainly hearing and want to acknowledges that the marine Oems broadly speaking of which again were very small piece are doing a very good job at pulling back on production.
Bret David Jordan: But what I am certainly hearing and want to acknowledge is that the marine OEMs, broadly speaking, of which we're a very small piece, are doing a very good job of pulling back on production and making sure that the dealers only have what they need, really, to get through the selling season and trying to help them with carrying costs. So if that was your broader question, just wanted to throw that in. Great. Thank you. I appreciate it.
Speaker Change #160: And making sure that the dealers only have what they need to get through the selling season and trying to help them with carrying costs. So if that was your broader question just wanted to throw that into.
Bryan Hughes: So if that was your broader question, just wanted to throw that into.
Bret Jordan: Great, thank you. I appreciate it.
Speaker Change #161: Great. Thank you I appreciate it.
Speaker Change #160: Okay.
Michael Swartz: Thank you.
Speaker Change #162: Thank you.
Michael Swartz: Our next question goes from Michael Swartz to a security he may proceed.
Michael Arlington Swartz: Thank you. Our next question comes from Michael Swartz with Tourist Security. He may proceed. Hey, hey, guys.
Speaker Change #163: Our next question comes from Michael Swartz with two Securities you May proceed.
Michael Swartz: Hey, hey guys, good morning. Maybe just drilling down a little bit into the profitability and more specifically the motorized business. I think even on margins were in the four or five range, this quarter and over the past year. So as productions come down, they'd really been kind of sticking in that 7% range.
Michael J. Happe: Good morning. Maybe just drilling down a little bit into profitability and, more specifically, the motorized business. I think EBITDA margins were in the 4 or 5 range this quarter, and over the past year or so, as production has come down, they've really been kind of sticking in that 7% range. So, maybe help us understand, I guess, one, what changed during the third quarter to drive it down about 300 basis points, and then I guess, too, how should we think about that going forward? Yeah, certainly. Mike, good morning.
Michael Arlington Swartz: Hey, guys good morning, maybe.
Michael Arlington Swartz: Maybe just drilling down a little bit into the profitability and more specifically the motorized business I think EBITDA margins were in the four five range this quarter and over the past year or so as production has come down that road and kind of sticking in that 7% range. So maybe help us understand I guess, one what changed.
Bryan Hughes: So maybe help us understand, I guess, one what changed during the third quarter to drive it down about 300 basis points. And then I guess two, how do we, how should we think about that going forward?
Michael Arlington Swartz: During the third quarter to drive it down about 300 basis points, and then I guess to how do we how should we think about that going forward.
Bryan Hughes: Yeah, certainly Mike, good morning. Certainly, due leverage continues to weigh heaviest. We talked about how the market wasn't seeing any improvement as we thought it might on retail in April and May. That affected us. It also caused, I'd say the one of Bego brand to get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures as a result of that. There was some certain specific brands that we needed to be really aggressive on, considering the market conditions. And so that was a big impact on productivity, you know, as the market slowed down and as our product mix becomes one of those things that you have to juggle from a production perspective. That drove our productivity below where we were expecting and wanting to see as well.
Bryan L. Hughes: Certainly, de-leverage continues to weigh heaviest. We talked about how the market wasn't seeing any improvement as we thought it might on retail in April and May. That affected us.
Mike: Yeah, certainly Mike Good morning, certainly deleverage continues to weigh heaviest.
Mike: We talked about how the market wasn't seeing any improvement as we thought it might on retail in April and May.
Mike: That affected us. It also caused I would say the Winnebago brand to get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures.
Bryan L. Hughes: It also caused, I'd say, the Winnebago brand to get a little bit ahead of the market in terms of its production and then be faced with higher discount pressures as a result of that. There were some specific brands that we needed to be really aggressive on considering the market conditions. And so that was a big impact. It became one of those things that you have to juggle from a production perspective. That drove our productivity below where we were expecting and wanting to see as well.
Mike: As a result of that there was some certain specific brands that we needed to be really aggressive on.
Mike: Considering the market conditions, and so that was the big impact productivity as the market slowed down and as our product mix.
Mike: Becomes one of those things that you have to juggle from a production perspective that drove our productivity below where we were expecting and wanting to see as well so that in the form of both direct labor productivity and direct labor and getting the units out the door.
Bryan Hughes: So that in the form of both direct labor productivity and direct labor and getting the unit out the door. So those were the biggest things that we fought here in our Q3.
Mike: Those were the biggest things that we've thought here in our Q3.
Speaker Change #164: Okay and on the.
Michael Happe: On the new Grand Design lineage, I know this product hasn't officially launched yet, but any color or context you can give us around just the response from the dealer base and any way to think about maybe the initial distribution opportunity there, maybe the number of doors and maybe the initial stocking levels will look like on that business. Good morning, Mike.
Speaker Change #165: I guess on the on the new Grand design lineage I know this product Hasnt officially launched ship it to any any color or context, you can give us around just the response from the dealer base in any way to think about maybe the initial distribution opportunity there maybe the number of doors and what maybe the initial stocking levels will look like.
Speaker Change #165: On that business.
Bryan L. Hughes: So that in the form of both direct labor, productivity, and direct labor in getting the units out the door. So those were the biggest things that we fought here in our Q3. Okay, and on the... I guess on the new grand design lineage. I know this product hasn't officially launched yet, but any color or context you can give us around just the response from the dealer base and any way to think about, you know, maybe the initial distribution opportunity there, maybe the number of doors, and then, you know, what maybe the initial stocking levels will look like in that business? Good morning, Mike. This is Mike.
Speaker Change #166: Good morning, Mike.
Speaker Change #166: Mike.
Michael Happe: As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City. We will not share at this time the number of dealers that we have mutually committed to on the product line, but I can say that the quality of that dealer stocking list is every bit as impressive as what we have on our Grand Design toables list. In fact, it includes several of the same loyal and fantastic Grand Design dealers that carry towables, but it also includes a few new dealers to the Grand Design brand for specifically the motorized launch.
Michael J. Happe: As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City. We will not, you know, share at this time the number of dealers that we have mutually committed to on the product line, but I can say that the quality of that dealer stocking list is every bit as impressive as what we have on our grand design tollables list. In fact, it includes several of the same loyal and fantastic grand design dealers that carry towables, but it also includes a few new dealers to the grand design brand for the specifically the motorized launch.
Speaker Change #167: As I mentioned in our comments, we will actually be unveiling more specifics about the product this Saturday in New York City.
Speaker Change #168: We will not share at this time the number of dealers that.
Speaker Change #168: We have mutually committed to on the product line, but.
Speaker Change #168: But I can say that the quality of that dealer.
Stocking list is every bit as impressive as what we have on our Grand design.
Speaker Change #168: <unk> list.
Speaker Change #168: In fact that includes several of the same.
Speaker Change #168: Loyal and fantastic Grand design dealers that carry <unk>, but it also includes.
A few new dealers to the Grand design brand for specifically the motorized launch.
Michael Happe: As I said earlier, we will have a very light amount of shipments late in fourth quarter, probably in the month of August on this product, and then the majority of the stocking orders and deliveries will begin in fiscal 25. And so, as we firm up those orders, here we begin to reflect those to you all as well in the backlog. I don't believe our current motorized backlog includes any grand design orders at this time, but those conversations obviously on a stocking order or commitment are very much happening.
Michael J. Happe: As I said earlier, we will have a very light amount of shipments late in the fourth quarter, probably in the month of August, on this product, and then the majority of the stocking orders and deliveries will begin in fiscal 25.
Speaker Change #168: As I said earlier, we will have.
Speaker Change #168: Very light amount of shipments late in the fourth quarter, probably in the month of August on this product and then the majority of the stocking orders and deliveries.
Speaker Change #168: We'll begin in fiscal 'twenty five.
Michael J. Happe: And so as we firm up those orders here, we begin to reflect those to you all as well in the backlog. I don't believe our current motorized backlog includes any grand design orders at this time, but those conversations obviously on a stocking order commitment are very much happening. And so you will begin to see the impact of that probably when we announce our fourth-quarter earnings in October. The other thing that I will mention, and we're not providing specifics on this yet, is the class C lineage is the first of several grand design motorized products that are on the drawing board.
Speaker Change #168: And so as we firm up those orders.
Here, we will begin to reflect those to you all as well.
Speaker Change #168: In the backlog I don't believe our current motorized backlog includes any grand design orders at this time, but.
Speaker Change #168: But those those conversations obviously on a stocking order commitment are very much happening and so you will begin to see the impact of that probably when we announce our fourth quarter earnings.
Michael Happe: And so you will begin to see the impact of that, probably when we announce our fourth quarter earnings in October.
Speaker Change #168: In October the other thing that I will mention and it.
Michael Happe: The other thing that I will mention, and we're not providing specifics on this yet, is the Class C lineage is the first of several grand design motorized products that are on the drawing board. And over the next, you know, probably six months, you will hear more from Winnebago Industries and Grand Design about our intentions on a couple other products that we could be bringing to the market here in the next, you know, I would say, probably nine to 15 months as well. So this is the beginning, and more details to come as we're comfortable.
Speaker Change #168: We're not providing specifics on this yet.
Speaker Change #168: As the class C lineage as the first.
Speaker Change #168: Of several Grand design motorized products that are on the drawing board and over the next probably six months you will hear more from Winnebago industries and Grand design about our intentions on a couple of other products.
Michael J. Happe: And over the next, you know, probably six months, you will hear more from Winnebago Industries and Grand Design about our intentions for a couple other products that we could be bringing to the market here in the next, you know, I would say probably nine to, you know, 15 months as well. So this is just the beginning, and more details to come as we're comfortable. Okay, great. Thanks.
Speaker Change #168: That we could be bringing to the market here in the next.
Speaker Change #168: I would say probably nine to 15.
Speaker Change #168: <unk> 15 months as well.
Speaker Change #168: So this is the beginning.
Speaker Change #168: And more details to come as we are comfortable.
Michael Happe: Okay. Great.
Michael Happe: Thanks.
Speaker Change #169: Okay, great. Thanks.
Noah Zaskin: Thank you.
Speaker Change #170: Thank you.
Noah Zaskin: All right.
Michael Arlington Swartz: Thank you. Our next question comes from Noah Zatzkin with KeyBank Capital Markets. He may proceed.
Noah Zaskin: The question goes from Noah Zaskin with KeyBank Capital Market. See me proceed.
Speaker Change #171: Our next question goes from no is that skin with Keybanc capital markets. You May proceed.
Noah Seth Zatzkin: Hi, thanks for taking my question. I guess, just kind of related to the kind of affordability concerns in the industry, just wondering if you could kind of provide any color on how you're thinking about ASPs across segments. And then somewhat relatedly, you know, I think we kind of picked up from some other industry participants that they're expecting motorized chassis price increases from the auto OEMs. So as it relates to the motorized side and model year 25, what is ASP and offset there? Kind of how are you thinking through those kind of cost increases? Thanks. Hello, this is Bryan.
Noah Zaskin: Hi. Thanks for taking my question. I guess just kind of related to the kind of affordability concerns in the industry, just wondering if you could kind of provide any color on how you're thinking about. ASPs across segments.
Speaker Change #172: Hi, Thanks for taking my question.
Speaker Change #173: I guess just kind of related to the.
Speaker Change #174: Kind of affordability concerns in the industry just wondering if you could.
Speaker Change #174: Kind of provide any color on how youre thinking about.
Speaker Change #174: Asps across segments.
Bryan Hughes: and then somewhat relatedly, you know, I think we had kind of picked up from some other industry participants that they're expecting motorized chaffee price increases from the auto OEMs. So as it relates to the motorized side and model your 25 like ASP and offset there, kind of how are you thinking through those kind of cost increases. Thanks.
Speaker Change #174: And then somewhat relatedly.
Speaker Change #175: Yes, I think we had kind of picked up from some other industry participants that theyre expecting motorized chassis price increases from the auto Oems.
Speaker Change #176: So as it relates to the motorized side and model year 'twenty five.
Speaker Change #177: As ASP offset there kind of how are you thinking through those kind of cost increases.
Bryan Hughes: And oh, this is Bryan. I'll start with your the second part of your question. Yeah, I did see your note on chassis costs. I think, frankly, the industry has seen most of those increases. It's in the rearview mirror. There's some inflationary pressures remaining on motorized Chaffee that were anticipating, but nothing of the magnitude that you cited. We certainly don't want to minimize the size of increases we've seen to motorized chaffees over the last three years because they have been high. But the remaining increases, you know, I think will be will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years.
Bryan L. Hughes: I'll start with the second part of your question. Yeah, I did see your note on chassis costs. I think, frankly, the industry has seen most of those increases. It's in the rear view mirror.
Bryan L. Hughes: This is Bryan I'll start with your the second part of your question, Yes, I did see your note on chassis costs I think frankly, the industry has seen most of those increases it's in the rearview mirror.
Bryan L. Hughes: There are still some inflationary pressures remaining on motorized chassis that we're anticipating, but nothing of the magnitude that you cited. I don't want to minimize the size of the increases we've seen in motorized chassis over the last three years because they have been high. But the remaining increases, I think, will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years. So I guess I'd start with that, and then it kind of gets into the affordability question that you raised broadly.
Bryan L. Hughes: There is still some inflationary pressures.
Bryan L. Hughes: Remaining on motorized chassis that were anticipating.
Bryan L. Hughes: But nothing of the magnitude that you cited we certainly I don't want to minimize the size of increases we've seen in motorized chassis over the last three years because.
Bryan L. Hughes: Because they have been high.
Bryan L. Hughes: But the remaining increases.
Bryan L. Hughes: I think will be will be modest and will be digestible as it relates to our ability to price for those remaining increases in the coming years.
Bryan Hughes: So I guess I'd start with that, and then it kind of gets into the affordability question that you raised broadly. Well, I'll shift to that part of the question. I'm on the total side. We're seeing a very benign cost environment. So, on an apples-to-apples basis, if we look at our bombs. From model year 24 to 25, they're very neutral. And so pricing, as a result, likewise, the neutral on an apples apples basis, what we're doing to address. You know, that customer preference for lower price points is introducing a lot of new product that allows us to do that without compromising our premium brand position.
Speaker Change #178: I guess I would start with that and then it kind of gets into the affordability question that you raised broadly.
Bryan L. Hughes: So I'll shift to that part of the question. On the total side, we're seeing a very benign cost environment. So on an apples-to-apples basis, if we look at our bonds from model year 24 to 25, they're very neutral.
Speaker Change #178: So I'll shift to that part of the question on the total side, we're seeing very benign.
Speaker Change #178: Cost environment, so on an apples to apples basis, if we look at our bonds.
Speaker Change #178: From model year, 2020 to 25, they're very neutral and so pricing as a result will likewise be neutral on an apples to apples basis, what we're doing to address.
Bryan L. Hughes: And so pricing as a result will likewise be neutral on an apples-to-apples basis. What we're doing to address, you know, that customer preference for lower price points is introducing a lot of new products that allow us to do that without compromising our premium brand position. So products like the new Transcend One is an example, Reflection 100, the Influence, all those on the grand design side, the Access, the stick and tin product for the Winnebago branded, you know, these are examples of price point model introductions that we think will help maintain our premium position but also start to defend some of the market share more aggressively.
That customer preference for lower price points is introducing a lot of new product that allows us to do that without compromising our premium brand position so products like the.
Bryan Hughes: So products like the new Transcend One is an example, Reflection 100, the Influence, all those on the Grand Design side, the Access, the Stick and Tin product for the Win a Bagel branded. You know, these are examples of price point model introductions that we think will help maintain our premium position but also start to defend some of the market share more aggressively. So I'd say that's what we're doing on the total side on the motorized side. We don't expect, you know, going back to my earlier comments, we don't expect significant apples apples bomb increases. You know, more in the modest two, three percent.
New transcend one.
Speaker Change #178: As an example reflection 100.
Speaker Change #178: Influence all those on the Grand design side, the access the stick and tin product for the Winnebago branded. These are these are examples of price point model introductions that we think will help.
Maintain our premium position, but also.
Speaker Change #178: Start to defend some of the market share more aggressively so I'd say, that's what we're doing on the on the <unk> side on the motorized side, we don't expect.
Bryan L. Hughes: So I'd say that's what we're doing on the tollable side. On the motorized side, we don't expect, you know, going back to my earlier comments, we don't expect significant apples-to-apples price increases, you know, more in the modest 2%, 3%, and so we will address those accordingly with pricing where we think it's appropriate as well as some new product introductions that the teams are working on Certainly, the grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers at price points that they find to be very competitive. Thank you. Our next question comes from Craig Kennison with Baird. You may proceed. Hey, good morning.
Speaker Change #178: Going back to my earlier comments, we don't expect significant apples to apples Bom increases.
Speaker Change #178: More than a modest two 3%.
Bryan Hughes: And so we will address those accordingly with pricing where we think it's appropriate, as well as some new product introductions that the teams are working on. Certainly, the grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers at price points that they find to be very competitive.
Speaker Change #178: So we will address those accordingly with pricing, where we think it's appropriate as.
Speaker Change #178: As well as some new product introductions that the teams are working on certainly the Grand design entry will help us on the motorized side in terms of positioning a product that we think will be really well received by the dealers and the end customers.
Speaker Change #178: At price points that.
Speaker Change #178: They find to be very competitive.
Speaker Change #179: Thank you.
Speaker Change #179: Thank you.
Craig Kennison: Our next question comes from Craig Kennison with Baird; you may proceed.
Speaker Change #180: Our next question comes from Craig Kennison with Baird You May proceed.
Craig Kennison: Good morning. Thanks for taking my question. You've addressed most of them already, but I wanted to follow up on Mike's question earlier regarding grand design in motorhomes and scaling that opportunity. What's the philosophy around the margin profile of that brand within motor homes? Would you expect it to be a creative margin in motor homes over time in the way that it is in towables?
Craig R. Kennison: Thanks for taking my questions. You've addressed most of them already. But I wanted to follow up on Mike's question earlier, regarding grand design in motorhomes and scaling that opportunity. What's the philosophy around the margin profile of that?
Craig R. Kennison: Hey, good morning, Thanks for taking my question, you've addressed most of them already but I wanted to follow up on Mikes question earlier regarding Grand design and motor homes and scaling that opportunity.
Craig R. Kennison: Whats the philosophy around the margin profile of that.
Michael J. Happe: This is a question for the panelists. If you were to design a brand within motorhomes, would you expect it to be accretive to margin in motorhomes over time in the way that it is in towables? Good morning, Craig.
Craig R. Kennison: Brand within motor homes would you expect it to be accretive to margin and motor homes over time and the way that.
Speaker Change #181: It is in totals.
Craig Kennison: Good morning, Craig. Appreciate the question. The answer is yes. We do anticipate that we will have motorized profitability that is, first of all, probably accretive to our overall portfolio profitability yield, but we expect that grand design motorized profitability will be very comparable, candidly, to the profitability of their towables business. Certainly, that will vary by product type, but our team is very committed at Grand Design to have differentiated, highly valued and sought after premium, profitable motorized product in the market. Grand Design has often stated their intent to major in the majors, and so their motorized product will be pointed at some of the higher volume sub-segments of that category. We anticipate, based on what we've seen so far with the lineage work, but also some of the projections on future products, that the profitability on that line should be quite acceptable.
Michael J. Happe: I appreciate the question. The answer is yes. We do anticipate that we will have motorized profitability that is, first of all, probably accretive to our overall portfolio profitability yield, but we expect that grand design motorized profitability will be very comparable, candidly, to the profitability of their totals. Certainly, that will vary by product type. But, you know, our team is very committed at Grand Design to have a differentiated, highly valued, and sought-after premium profitable motorized product in the market. Grand Design has often stated their intent to major in the majors.
Speaker Change #182: Good morning, Craig.
Speaker Change #183: I appreciate the question.
Speaker Change #184: The answer is yes, we do anticipate that we will have motorized profitability that.
Speaker Change #184: First of all probably accretive to our overall portfolio profitability yield.
Speaker Change #184: But we expect that Grand design motorized profitability will be.
Speaker Change #184: Very comparable candidly to the profitability of their total business.
Speaker Change #184: Certainly that will vary by.
Speaker Change #184: Product type.
But.
Speaker Change #184: Our our team is very committed at Grand design to have differentiated.
Speaker Change #184: Highly valued and sought after.
Speaker Change #184: Premium profitable motorized product in the market.
Speaker Change #184: Ran design has often stated there.
Speaker Change #184: They are intent to major in the majors and so theyre motorized product will be pointed at some of the higher volume.
Michael J. Happe: And so their motorized product will be pointed at some of the higher volume sub-segments of that category. And we anticipate, based on what we've seen so far with the lineage work, but also some of the projections on future products, that the profitability on that line should be quite acceptable. So time will tell. The team will need to execute on what I just stated.
Speaker Change #184: Sub segments of that category.
Speaker Change #184: And we anticipate based on.
Speaker Change #184: What we've seen so far with the lineage work, but also some of the projections on future products that.
Speaker Change #184: But the profitability on that line should be <unk>.
Speaker Change #184: Might acceptable so time will tell the team will need to execute to what I, just stated and certainly competition isn't going to hand Grand design market share very freely.
Craig Kennison: So time will tell; the team will need to execute to what I just stated, and certainly competition isn't going to hand Grand Design market share very freely. So we anticipate an intense battle, but we have a very strong and focused team on that product line. In the initial months, of course, initial quarters will require some scale up. So it's not expected immediately to be accretive, but it certainly will very soon.
Michael J. Happe: And certainly, competition isn't going to hand over a grand design market share very freely, so we anticipate an intense battle, but we have a very strong and focused team on that product. In the initial months, of course, Craig, the initial quarters will require some scale-up. So it's not expected immediately to be accretive, but it certainly will very soon.
Speaker Change #184: We anticipate an intense.
Battle, but we have a.
Speaker Change #184: A very strong and focused team on that.
Craig R. Kennison: On that product line and the initial months of course, Craig initial quarters will require some scale up.
Craig R. Kennison: So it's not not expected immediately to be accretive, but it certainly will.
Craig R. Kennison: Very soon.
Craig Kennison: That's great.
Craig R. Kennison: That's great. And then maybe to follow up, you made some comments about Q4 revenue and margin profile, profitability profile. I'm wondering if you could just help us think through like segment EBITDA assumptions in that. And in particular, I'm guessing, you know, motorhomes could stick around that four and a half percent range. Is that what you're suggesting?
Speaker Change #185: That's great and then maybe to follow up.
Craig Kennison: And then maybe to follow up, you made some comments about Q4 revenue and margin profile profitability profile. I'm wondering if you could just help us think through like segment EBITDA assumptions in that in particular, I'm guessing, you know, motor homes could stick around that four and a half percent range. Is that what you're suggesting?
Speaker Change #186: You made some comments about Q4.
Speaker Change #187: Revenue and margin profile profitability profile I'm wondering if you could just help us think through.
Speaker Change #188: Segment EBIT.
Speaker Change #188: Assumptions in that and in particular I'm guessing.
Speaker Change #189: Motor homes could stick around that four 5% range is that is that what youre, suggesting.
Michael Happe: I think, Craig, we're going to refrain from getting into the segment level conversations that we've been providing the last couple of quarters. We'll come back in the fall in our part of our 2024 wrap up and looking forward into 2025 and provide some we think better guidance forward looking guidance. Was that the industry and, more specifically, when a bagel related, but we're going to we're going to refrain from getting into a segment level forward discussion at this time. That's good.
Scott Lewis Stember: I think, Craig, we're going to refrain from getting into the segment-level conversations that we've been providing the last couple of quarters. We'll come back in the fall as part of our 2024 wrap-up and look forward into 2025 and provide some, we think, better guidance, forward-looking guidance, whether that be industry-related or more specifically Winnebago-related. But we're going to refrain from getting into a segment-level, forward discussion at this. Sounds good. Thanks.
Speaker Change #189: Yes, I think Craig we're going to refrain from getting into the segment level conversations that we've been.
Speaker Change #189: Providing the last couple of quarters.
Speaker Change #190: We'll come back in the fall.
Speaker Change #191: And are is part of our 2020 for wrap up and looking forward into 2025, and <unk> and provide some we think better guidance forward looking guidance was that the industry in <unk>.
Speaker Change #191: And more specifically winnebago related, but we're going to we're going to refrain from getting into a segment level forward discussion.
Speaker Change #191: At this time.
Speaker Change #192: Sounds good thanks.
Scott Stember: Thank you. Our next question comes from Scott's number with Roth. You may proceed.
Thank you.
Michael J. Happe: Thank you. Our next question comes from Scott Stember with Roth. You may proceed.
Speaker Change #193: Our next question comes from Scott <unk> with Ross You May proceed.
Scott Stember: Good morning, guys, and thanks for taking my questions. Mike, you made a comment about how dealers, it sounds like they're starting to go back to some of their prior pre-COVID ordering patterns, which would help your share, but then you also mentioned that at least I guess on the table's grand design that you expect some near term pressure on market share. Can you maybe just talk about those two opposing comments?
Michael J. Happe: Good morning, guys, and thanks for taking my questions. Mike, you made a comment about how dealers are starting to go back to some of their prior... pre-COVID ordering patterns, which would help you share. But then you also mentioned that at least, I guess on the total grand design that you expect, some near-term pressure on market share. Can you maybe just talk about those two opposing comments, or does some of it have to do with there being a couple of new players in the market that may be giving a couple of headwinds? Just trying to make sense. Trying to parse that out. Yeah, good morning, Scott.
Scott Lewis Stember: Good morning, guys and thanks for taking my questions.
Scott Lewis Stember: Okay.
Michael Arlington Swartz: Mike you made a comment about how dealers it sounds like they're starting to go back to some of their prior pre COVID-19 ordering patterns, which would help you share. But then you also mentioned that at least I guess on the totals Grand design that you expect.
Michael Arlington Swartz: So near term pressure on market share can you maybe just.
Speaker Change #194: Talk about those those two opposing comments or.
Scott Stember: Or just some of it have to do with the United as a couple of new players in the market that may be giving a couple of headwinds, just trying to make sure to parse that out.
Speaker Change #195: Some of it has to do with a couple of new players in the market.
Speaker Change #196: Maybe giving a couple of headwinds just trying to mix.
Speaker Change #197: Trying to parse that out.
Michael Happe: Good morning, Scott. Appreciate the question. We do believe that dealers have been actively trimming and focusing their brand assortments here, really, over the better part of the last year. As market conditions have gotten more challenging, and they have tried to narrow their focus on profitable products that turn. We do believe that in a high majority of the cases that our brands are not just survivors but winners on those lots as dealers make those trimming decisions. That does not mean, however, that there is not still intense competition across all of the segments, but particularly tollables, with several of the new entrance that you mentioned in your question as well.
Michael J. Happe: I appreciate the question. We do believe that the dealers have been actively trimming and focusing their brand assortments here, really over the better part of the last year, as market conditions have gotten more challenging, and they have tried to narrow their focus on profitable products that sell. We do believe that in, you know, a high majority of the cases, our brands are not just survivors but winners on those lots as dealers make those trimming decisions.
Speaker Change #198: Yes, good morning, Scott I appreciate the question.
Speaker Change #199: We do believe that the dealers have been actively trimming and focusing their brand assortments here really over the better part of the last year.
Speaker Change #199: As market conditions have gotten more challenging and they have tried to narrow their focus on profitable products that turn.
Speaker Change #199: We do believe that in.
Speaker Change #199: A high majority of the cases that our brands are not just survivors, but winners.
Speaker Change #199: On those lots as dealers make those trimming decisions.
Speaker Change #199: That does not mean, however that there is not still intense competition across all of the segments.
Michael J. Happe: That does not mean, however, that there is not still intense competition across all of the segments, but particularly towables, with several of the new entrants that you mentioned in your question as well. You know, Grand Design is very familiar with the competition from new entrants, particularly on the fifth wheel side with a couple of the newer companies in Elkhart County, and they continue to do what they think is necessary at Grand Design to combat those new competitive challenges.
Speaker Change #199: But particularly totals with.
Several of the new entrants that you mentioned in your question as well.
Michael Happe: Grand Design is very familiar with the competition from new entrants, particularly on the fifth wheel side, with a couple of the newer companies in Elkirk County, and they continue to do what they think is necessary at Grand Design to combat those new competitive challenges. But some of the share results specific to that brand probably do reflect some of the success of the new startup brands. But this is a battle that will be ongoing, and the grand design team is very focused on being one of, if not the top fifth wheel manufacturers in the total industry.
Speaker Change #199: Grand design is very familiar with the competition from new entrants, particularly on the fifth wheel side.
Speaker Change #199: With a couple of the newer companies in Elkhart County.
Speaker Change #199: And they continue to.
Speaker Change #199: Do what they think is necessary at Grand design to combat those new competitive challenges, but.
Michael J. Happe: But, you know, some of the share results specific to that brand probably do reflect some of the success of the new startup brands. But, you know, this is a battle that will be ongoing, and the Grand Design team is very focused on being one of, if not the top fifth wheel manufacturers in the towable industry. We believe on the towable side, there is significant runway for towable, excuse me, travel trailer market share for both our Winnebago and Grand Design brands, and you're seeing quite a bit of work from Grand Design, as Brian alluded to earlier, on their Transcend line to make headway in the travel trailer segment going forward.
Speaker Change #199: The <unk>.
Speaker Change #199: Some of the share results specific to that brand probably do reflect some of the success of the new startup brands.
This is.
Speaker Change #199: This is a battle that will be ongoing and the Grand design team is very focused on.
Speaker Change #199: Being one of if not the top fifth wheel manufacturers and the total industry. We believe on the <unk> side. There is significant runway on total.
Michael Happe: We believe on the total side there is significant runway on total, excuse me, travel trailer market share for both our Winnebago and Grand Design brands. And you're seeing quite a bit of work from Grand Design, as Brian alluded to earlier, on their trend send line to make headway on the travel trailer segment going forward. Competition in macro has been relatively rational. We have seen though recently some spots from some of our bigger OEM competitors with some quite aggressive incentives for especially volume buys into the industry.
Speaker Change #199: Excuse me travel trailer market share for.
Speaker Change #200: For both our Winnebago and Grand design brands, and Youre seeing quite a bit of work from Grand design as Brian alluded to earlier on their transcend line.
To make headway on the travel trailer.
Speaker Change #200: Segment going going forward so.
Speaker Change #200: Competition in macro has been.
Michael J. Happe: So competition in macro has been relatively relatively rational, you know; we have seen, though, recently some spots from some of our bigger OEM competitors with some quite aggressive incentives for especially volume buys into the industry, and this is where we just have to, you know, weigh the benefits of a short-term response versus, you know, long-term pricing integrity for our brands. So, competition, Scott, remains intense. Got it. And then just the last question.
Speaker Change #200: Relatively rational we have seen though recently some some spots from some of our bigger OEM competitors.
Speaker Change #200: With some quite aggressive.
Speaker Change #200: Incentives.
Speaker Change #200: Four especially.
Speaker Change #200: Volume buys into the industry and.
Michael Happe: And this is where we just have to weigh the benefits of a short-term response versus long-term pricing integrity for our brand.
And this is where we just have to.
Scott: Weigh the benefits of a short term response versus long term pricing integrity for our brands. So so competition Scott remains intense.
Scott Stember: So competition's got remains until God, and then just the last question: you made a comment that there's really no 22s left and 23s and 24s out in the field on the RV side. Could you, I don't know if you gave the information of how much of it is 23s versus 24s and a percentage standpoint? Scott, I can share a little bit more detail with you here this morning on the RV business model your 23s at the end of our third quarter. So the end of May, probably we're in the low teens percentage in the field.
Scott Lewis Stember: You made a comment that there are really no 22s left and 23s and 24s out in the field on the RV side. I don't know if you gave the information on how much of it is 23s versus 24s from a percentage standpoint. Scott, I can share a little bit more detail with you this morning. In the RV business, model year 23s at the end of our third quarter, so the end of May, probably were in the low teens percent in the field.
Speaker Change #201: Got it and then just last question you made a comment that there's really no 20 twos left in 'twenty three 'twenty four is out in the field on the RV side could you I don't know if you gave the information of how much of it is 23% versus 24 is that a percentage standpoint.
Scott: Scott I can share a little bit more detail with you here this morning.
On the RV in the RV business.
Scott: Model year 'twenty threes at the end of our third quarter. So the end of May.
Scott: Probably we're in the.
Scott: Low teens percentage in the field.
Michael Happe: That is probably a little bit better than actually where we were a year ago on RV two year ago model inventory at that same time. It is historically on the higher side when you look at pre-COVID, but again, I would say that at the end of May in the RV segment, we were probably in that 12 to 14% range for model your 23 inventory in the field. And certainly that's now one of our focuses as we work with dealers to reduce that as the model your 25 product comes in. Again, we don't think it's in a position which is existentially dangerous for OEMs or dealers, but it is historically too high, and we need to continue to focus on it.
Scott Lewis Stember: That is probably a little bit better than where we were a year ago on RV, and two years ago on model inventory at that same time. It is historically on the higher side when you look at pre-COVID, but again, I would say that at the end of May in the RV segment, we were probably in that 12 to 14% range for model year 23 inventory in the field, and certainly that is now one of our focuses as we work with dealers to reduce that as the model year 25 product comes in.
Scott: That is probably.
Scott: A little bit better than actually where we were a year ago.
Scott: RV.
Scott: Two year ago model inventory at that same time. It is historically on the higher side when you look at pre Covid.
Scott: But again I would say that at the end of May in the RV segment, we were probably in that.
Scott: 12% to 14% range for model year, 'twenty three inventory in the field.
Scott: And.
Scott: And certainly that's that's not one of our focuses as we work with our dealers to reduce that as the model year 'twenty five product.
Scott Lewis Stember: Again, we don't think it's in a... position that is existentially dangerous for OEMs or dealers, but it is historically too high, and we need to continue to focus on it, and our teams will do so to that end. So it's trending in the right direction.
Scott: Again, we don't we don't think it's in a.
Scott: And our position, which is ex essentially dangerous.
Scott: For Oems, our dealers, but it has historically.
Scott: Too high and we need to continue to focus on it and our teams will do so to that end. So it's trending in the right direction.
Michael Happe: And our teams will do so to that end. So it's trending in the right direction. By the way, our June retail to date is trending better than our May retail performance across the RV brands. And so we are hopeful that that retail trend in June is helping to bring that inventory down from prior model years as well.
Michael J. Happe: By the way, our June retail to date is trending better than our May retail performance across the RV brands, and so we are hopeful that that retail trend in June is helping to bring that inventory down from prior model years as well. Gotcha. That's all I have.
Scott: By the way our June retail to date is trending better than our may retail performance.
Scott: Across the RV brands and so we are hopeful that that that retail trend in June is helping to bring.
Scott: That inventory down from prior model years as well.
Michael Happe: Yeah, so that's all I have. Thank you.
Speaker Change #202: Got it so that's all I have thank you.
Speaker Change #203: Thank you.
Joseph Altobello: Our next question comes from Joe Altabello with Graeme and James. You may proceed.
Joseph Nicholas Altobello: Thank you. Thank you. Our next question comes from Joe Altobello with Raymond James. You may proceed. Thanks. Hey, guys. Good morning.
Speaker Change #204: Our next question comes from Joe <unk> with Raymond James You May proceed.
Joseph Altobello: Thanks.
Michael J. Happe: Mike, I just want to pick up on that last comment you made about June being a little bit better, better than May. I guess first, was that an industry comment as well, or was it just Winnebago specific?
Joseph Altobello: Hey guys, good morning. Mike, I just want to pick up on that last comment you made about June being a little bit better than May. I guess first, was that an industry comment as well, or was it just when a bago specific?
Michael Arlington Swartz: Thanks, Hey, guys. Good morning, Mike I, just want to pick up on that last comment you made about June being held at better better than may.
Speaker Change #205: First was that an industry comment as well or was it just winnebago specific.
Joseph Altobello: No, Joe.
Michael J. Happe: Good morning, by the way. My comment was specific to Winnebago Industries RV brands. We have about three weeks of retail under our belts in June. You know, it's a five-week month the way we kind of count it fiscally, but we have about three weeks of retail under our belts in June. And the total retail performance from a comp standpoint versus last June is running at a more favorable rate than our May comp rate actuals. However, it is still inconsistent. This is a bit of a maddening environment.
Speaker Change #206: No Joe good morning by the way.
Michael Happe: Good morning, by the way. My comment was specific to one of A Go Industries RV brands. We have about three weeks of retail. You know, it's a five-week month the way we kind of count it fiscally, but we have about three weeks of retail under our belts in June. And the total retail performance from a comp standpoint versus last June is running at a more favorable rate than our May comp rate actual. It is still inconsistent. This is a bit of a maddening environment. You can see one week where you think blue skies are emerging.
My comment was specific to <unk> industries' RV brands, we have about three weeks.
Retail.
Speaker Change #206: It's a five week month, the way, we kind of accounted fiscally, but we have about three weeks of retail under our belts in June.
Speaker Change #206: And.
Speaker Change #206: The total retail performance from a comp standpoint versus last June is running at a more favorable rate than our may comp rate actuals.
Michael J. Happe: You can see one week where you think blue skies are emerging, and then the next week you'll see a more difficult retail week. The dealers that we speak to are echoing that. The foot traffic remains steady, but retail is inconsistent.
Speaker Change #206: It is still inconsistent this is a bit of a maddening environment you can see one week, where you think blue skies are emerging and then the next week Youll see a more difficult retail week, the dealers that we speak to our echoing that.
Michael Happe: And then the next week you'll see a more difficult retail week. The dealers that we speak to are echoing that the foot traffic remains steady, but retail is inconsistent. But in macro, we're seeing a little bit better retail in June sequentially than we were in May. And again, that's for Winnebago Industries. We don't yet have insight into the industry. Yeah.
Speaker Change #206: The foot traffic remains steady.
Michael J. Happe: But in macro terms, we're seeing a little bit better retail in June sequentially than we were in May. And again, that's for Winnebago Industries. We don't yet have insight into the industry. Okay.
Speaker Change #206: But retail is inconsistent but in macro we're seeing a little bit better retail in June sequentially than we were in May and again Thats for Winnebago industries, we don't yet have insight into the industry.
Michael Happe: Okay, helpful. And just to follow up on that, I mean, obviously, you mentioned, you know, cautious dealer network several times this call and other calls.
Joseph Nicholas Altobello: And just to follow up on that, I mean, obviously, you mentioned the cautious dealer network several times on this call and other calls. What do you think your dealers need to see to start ordering at a more normal rate? I mean, obviously, one or two good months probably isn't going to do it.
Speaker Change #207: Okay. That's helpful and just to follow up on that I mean, obviously, you mentioned cautious dealer network several times this call and other calls.
Michael Happe: What do you think your dealers need to see, you know, to start ordering at a more normal rate? I mean, obviously, one or two good months probably is going to deal it. But what are you hearing from dealers in terms of what would cause them or push them to start ordering at a more normalized order pattern?
Speaker Change #208: Do you think your dealers need to see.
Speaker Change #209: Just start ordering at a more normal rate I mean, obviously, one or two good months, probably is going to deal with but what are you hearing from dealers in terms of what would cause them or push them to start ordering at a more normalized order pattern.
Michael J. Happe: But what are you hearing from dealers in terms of what would cause them or push them to start ordering in a more normalized order pattern? That is the ultimate question, Joe, I think. And obviously, our dealers would be best positioned to answer that. But when you ask that question, where my head is headed is the following. Number one, they'd like to see their prior model year inventory, in this case, both 24 and 23, in a little bit better position than it is today.
Michael Happe: That is the ultimate question, Joe, I think. And obviously, our dealers would be best positioned to answer that. When you ask that question, where my head is heads is the following. Number one, they'd like to see their prior model, your inventory from, in this case, well, 24 and 23 in a little bit better position than it is today. So they, especially the 23 inventory. Number two, they'd like to have a higher level of confidence that retail in the future is, you know, what I'll call stabilized and that there is a shot of flat to positive retail for an extended period going forward.
Joe: That is the ultimate question, Joe I think and obviously, our dealers would be best positioned to answer that.
Speaker Change #210: When you asked that question.
Speaker Change #211: My head to heads is the following.
Speaker Change #211: One they'd like to see their prior model your inventory.
Speaker Change #211: In this case about 'twenty four and 'twenty three.
Speaker Change #211: In a little bit better position that it is today so.
Michael J. Happe: So they, especially the 23 inventory. Number two, they'd like to have a higher level of confidence that retail in the future is, you know, what I'll call stabilized, and that there is a shot of flat to positive retail for an extended period going forward. Third, I think they want to make sure that they understand, you know, that OEM pricing on model year 25 products that are rolling out is competitive, and that the support is there.
Speaker Change #211: So, especially the 'twenty three inventory.
Speaker Change #211: Number two.
Speaker Change #211: They'd like to have a higher level of confidence.
Speaker Change #211: That retail in the future is.
Speaker Change #211: What I will call stabilized and that there is a shot of flat to positive retail for an extended period going forward.
Michael Happe: Third, I think they want to make sure that they understand, you know, that, you know, that OEM pricing on model year 25 product that is rolling out is competitive and that the support is there. And then lastly, probably number four, is some sort of signal of relief on some of those macroeconomic pressures that end up being real cost of them, i.e. the cost of carrying inventory, you know, or the retail cost of financing, you know, for a consumer that at times they buy down either directly or through negotiations on the trade ends. So I think it's a combination of those factors.
Speaker Change #211: Third I think they want to make sure that they understand.
Speaker Change #211: That.
Speaker Change #211: The OEM pricing on model year 'twenty five.
Speaker Change #211: Product that is rolling out as competitive and that the support is there and then lastly, probably number four.
Michael J. Happe: And then lastly, probably number four, is some sort of signal of relief on some of those macroeconomic pressures that end up being real costs to them. I.e., the cost of carrying inventory, you know, or the retail cost of financing, you know, for a consumer that at times they buy down either directly or through negotiations on the trade ends.
Speaker Change #211: As some sort of signal of relief.
Speaker Change #211: On some of those macroeconomic pressures that ended up being real cost to them I E. The cost of carrying inventory.
Speaker Change #211: Or the retail cost of financing.
Speaker Change #211: For a consumer that at times, they buy down either directly or through negotiations on the trade ins. So I think it's a combination of those factors.
Joseph Nicholas Altobello: So I think it's a combination of those factors, and we believe that, you know, the world is getting a little bit more stable across the board on that. Bryan mentioned inflation is really nominal, you know, in our bill of materials these days. We're able to see price stability with our future lineups, and OEMs are working hard on more competitive and affordable price points. So I think the pieces are coming together. June retail sales are a little bit better than May.
Michael Happe: And we believe that, you know, the world's getting a little bit more stable across the board on that. Brian referenced, you know, inflation is really nominal, you know, in our bill of materials these days. We're able to see price stability with our future line ups. OEMs are working hard on more competitive and affordable price points. So I think the pieces are coming together. June retail is a little bit better than May. So, you know, listen, nobody's been able to call accurately the sort of the, you know, the pivot here to an upside cycle beginning. And we indicated under a prepared comment that the rest of calendar 2024, you know, could remain sluggish.
Brian: And we believe that the world is getting a little bit more stable across the board on that Brian referenced inflation is really nominal in our bill of materials. These days, we're able to to see price stability with our future lineups.
Brian: Oems are working hard on more competitive and affordable price points. So I think the pieces are coming together June retail is a little bit better than may.
Brian: So.
Joseph Nicholas Altobello: So, listen, nobody's been able to accurately call accurately the sort of the, you know, the pivot here to an upside cycle beginning, and we indicated in our prepared comments that the rest of calendar 2024 could remain sluggish, but, you know, we think conditions are slightly improving in terms of the timing of that coming around. Got it. Very helpful.
Brian: Listen nobody has been able to call accurately.
Brian: Sort of the.
Brian: The pivot here to upside cycle beginning.
And we indicated in our prepared comments that the rest of calendar 2024.
Brian: Could remain sluggish.
Michael Happe: But you know, we think conditions are slightly improving in terms of the timing of that to come around.
Brian: But we think conditions are slightly improving in terms of the timing of that to come around.
Michael Happe: Got it. Very helpful.
Speaker Change #212: Got it very helpful. Thank you.
Speaker Change #213: Thank you.
Joseph Nicholas Altobello: Thank you. Thank you. Our next question comes from David Whiston with Morningstar. You may proceed. Thank you. Good morning.
David Whiston: This question goes from David Wiston with Morningstar. You may proceed. Thanks. Good morning. In the press conference, you call that inefficiencies on tables and motor homes. I'm just curious, is the motor home inefficiencies that chassis related or is it more the other variables you were talking about earlier, like direct labor?
Speaker Change #214: Our next question comes from David Whiston with Morningstar You May proceed.
David Whiston: In the press release, you called out inefficiencies on towables and motorhomes. I'm just curious, is the motorhome and efficiency, is that chassis related, or is it more the other variables you were talking about earlier like direct labor? That's more direct labor, David.
David Whiston: Thanks, Good morning.
Speaker Change #215: In the press release, you called out inefficiencies on totals of motor homes.
David Whiston: And I was just curious as the motor home inefficiencies that chassis related or is it more the other variables you were talking about earlier like direct labor.
David Whiston: That's more direct labor, David.
Speaker Change #216: That's more of a direct labor David.
Bryan L. Hughes: And then on the installable side, as I mentioned, we had some plant consolidation in the Winnebago line. We had some new product launches that didn't go as we would have liked them to, in terms of productivity. So those things that I mentioned are really the, Okay.
David Whiston: And then on the soluble side, as I mentioned, we had some plant consolidation, the Winnebago line. We had some new product launches that didn't go as we would have liked them to in terms of the productivity. So, those things that I mentioned are really... Drivers.
Speaker Change #217: Total side as I mentioned, we had some plant consolidation in the Winnebago line, we had some new product launches that Didnt go as we would have liked them to in terms of the productivity.
Speaker Change #217: So as those things that I mentioned are really the drivers.
David Whiston: Okay, and in Marine, a revenue was down 32% there, but you also talked about rising Barletta share. So I'm just curious, is there more headwind maybe on the criss-crap side, where that customer is maybe on the sidelines a bit too much right now? No, I don't think that that's the case, David. You know, criss-crap is a niche segment; it's small to really impact our story there on the Marine segment. It's really the result of a broad sense of the dealer network having too much inventory, pontoon, not just the Barletta brand, but all the other brands on dealers' lots are certainly impacting the willingness by dealers to take additional product.
Bryan L. Hughes: And in Marine, revenue was down 32% there, but you also talked about rising Barletta share. So I'm just curious, is there more headwind maybe on the Chris Craft side where that customer is maybe on the sidelines a bit too much right now? No, I don't I don't think that that's the case, David, I, you know, Chris craft is a niche segment, it's too small to really impact our story there on the marine segment, it's really the result of a broad sense of dealer the dealer network having too much inventory, pontoon, not just the Barletta brand, but all the other brands on dealers lots are, We're certainly impacting the willingness by dealers to take additional product, even when we've got terrific momentum on the Barletta side and conversations with dealers about expanding on their lots in terms of our presence versus some of the competitor presence, some expansion of the dealer network itself, expansion of the product line, as I mentioned, with the Aria earlier.
Okay and in marine.
Speaker Change #218: Our revenue was down 32% there, but you also talked about.
Speaker Change #219: Rising barletta share.
Speaker Change #220: So I'm just curious is there more headwind maybe on the Chris craft side, where that customers may be on the sidelines a bit too much right now.
No I don't I don't think that Thats the case David.
Speaker Change #220: Chris Craft is a niche segment is too small to really impact.
Speaker Change #220: Our story there on the Marine segment, it's really the result of abroad.
Abroad.
Speaker Change #220: Of the dealer network, having too much inventory.
Speaker Change #220: Pontoon not just the <unk> brand, but all the other brands on dealers' lots R. R.
Certainly impacting the willingness by dealers to take additional product even when we've got terrific momentum on the <unk> side in conversations with dealers about expanding on their lots in terms of our presence versus some of the competitor presence. Some expansion of the dealer network itself expansion of the product line as I mentioned with.
David Whiston: Even when we've got terrific momentum on the Barletta side and conversations with dealers about expanding on their lots in terms of our presence versus some of the competitive presence, some expansion of the dealer network itself, expansion of the product line as I mentioned with the ARIA earlier. So it's more related to dealer appetite to carry inventory in the marine side right now, coming off some really high levels of inventory over the past six to nine months in particular. David also specifically mentioned on Criss-Crap that we've actually seen positive comp year over year retail each of the last four months on that brand.
Speaker Change #220: ARIA earlier so.
Bryan L. Hughes: So it's more related to dealer appetite to carry inventory in the marine side right now, coming off some really high levels of inventory over the past six to nine months in particular. David, I'll specifically mention on ChrisCraft that we've actually seen positive comp year-over-year retail each of the last four months on that brand, so that's really promising. Dealer inventory, to Bryan's point, is probably a little higher on that brand than we would like it to be currently, and if you look at slide 17 of the supplemental slides that we provide as well during this day, you'll see a new product from ChrisCraft called the Sportster 25, which is a premium water sports enthusiast product under the ChrisCraft brand that we think, with an MSRP starting at $150,000, which is quite attractive for a ChrisCraft brand that could make some waves, no pun intended, in a positive way in the future for that business.
David: It's more related to dealer appetite to carry inventory in the marine side right now coming off some really high levels of inventory over the past six to nine months in particular, David I'll, specifically mentioned on Chris craft that we've actually seen positive comp year over year retail each of the last four months.
David: That brand so that's really promising.
David Whiston: So that's really promising. Dealer inventory to brands points probably a little higher on that brand than we would like it to be currently.
Brian: Dealer inventory to Brian's points, probably a little higher on that brand and we would like it to be currently.
David Whiston: And if you look at slide 17 of the supplemental slides that we provide as well during this day, you'll see a new product from Criss-Craft called the Sportster 25, which is a premium water sports enthusiast product under the Criss-Craft brand that we think, with an MSRP starting at $150,000, which is quite attractive for a Criss-Craft brand that could make some waves, pun intended, in a positive way in the future for that business. So, as Brian said, it's a brand cherry on top of the Sunday for us. It's 150 years old, but we're also very serious about remaining competitive on that brand as well, and the team's working hard to that end.
Brian: And if you look at slide 17 of the supplemental slides that we provide as well during this day youll see a new product from Chris craft called the Sportster 'twenty five.
Brian: Which is a.
Brian: Our premium sort of water sports enthusiast products.
Brian: Under the Chris craft brand that.
That we think with an MSRP starting at $150000, which is quite attractive for our Chris craft brand.
That.
Brian: Could make some some waves no pun intended.
Speaker Change #221: Positive way in the future for that business, So as Brian said.
Bryan L. Hughes: So, as Bryan said, it's a brand cherry on top of the sundae for us. It's 150 years old, but we're also very serious about remaining competitive on that brand as well, and the team's working hard to that end. Thank you.
It's a brand Cherry on top of the Sunday for US, It's 150 years old but.
Speaker Change #221: We're also very serious about remaining competitive on that that brand as well and the team is working hard to that end.
David Whiston: Thank you. And just one last question on the direct labor issue we talked about earlier. Is that a quality-related issue, or something else? Yeah, in certain instances, there's some quality things that we've been dealing with on the portfolio. I wouldn't say that it's at the top side of that, but it's not the main driver.
David Whiston: And just one last question on the direct labor issue we talked about earlier. Is that a quality-related issue or something else? Yeah, in certain instances, there are some quality things that we've been dealing with in the portfolio. I wouldn't, I wouldn't, I wouldn't say that it's on the top side of that. But it's not the main driver. The main driver is just, you know, the level of shipments, the de-leverage that occurs, and the product...
Speaker Change #222: Alright, Thank you and just one last question on the direct labor issue, we talked about earlier is that <unk>.
Speaker Change #223: <unk> related issue or something else.
Speaker Change #224: Yes in certain instances, there's some some quality things that we've been.
Dealing with on the portfolio.
I wouldn't I wouldn't say that it's at the top side of that but it's not the main driver. The main driver is just.
David Whiston: The main
Speaker Change #224: The level of of shipments the deleverage that occurs in the product.