Q2 2024 LCI Industries Earnings Call
Good morning or good afternoon and welcome to the LCI Industries second quarter earnings call. My name is Adam and I'll be your operator today. If you'd like to ask a question in the Q&A portion of today's call, please press star followed by 1 on your telephone keypad to enter the queue. I will now hand the floor to Lillian Etzkorn to begin. So Lillian, please go ahead when you're ready.
Lillian Etzkorn: Good morning, everyone, and welcome to the LCI Industries second quarter 2024 conference call. I am joined on the call today by Jason Lippert, President and CEO, along with Kip Emenheiser, VP of Finance and Treasurer.
Lillian Etzkorn: Good morning, everyone, and welcome to the LCI Industries second quarter 2024 conference call.
Lillian Etzkorn: Discuss the results for the quarter in just a moment, but first I would like to inform you that certain statements made in today's conference call regarding LCI industries and its operations maybe considered forward looking statements under the securities laws and involve a number of risks and uncertainties.
Lillian Etzkorn: We will discuss the results for the quarter in just a moment. But first, I would like to inform you that certain statements made in today's conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statement.
Lillian Etzkorn: As a result, the company cautions you that there are a number of factors many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward looking statements. These factors are discussed in our earnings release and in our Form 10-K and in other filings with the SEC.
Lillian Etzkorn: These factors are discussed in our earnings release and in our Form 10-K and in other filings with the FCC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. With that, I would like to turn the call over to Jason. Thanks, Lillian, and good
Jason Lippert: More importantly, our EBITDA rose nearly 40%, and margins expanded by over 300 days. We again delivered market share gains in both RBOEM and aftermarket. We also delivered solid operating cash generation, totaling $439 million of operating cash flows in the last 12 months thanks to strong P&L performance and disciplined working capital management, including $142 million year-over-year reduction in inventory.
Jason Lippert: Thanks, Lillian, and good morning. I'd like to welcome everyone to our second quarter 2024 earnings call. We delivered strong results in the second quarter with meaningful year-over-year margin expansion and solid performance from our aftermarket and OEM. We believe these results highlight how our diversification strategy has structurally improved our business foundation. Total revenue was $1.1 billion in the quarter, an increase of 4% year over year, with our VOEM growing approximately 20%.
Jason Lippert: These results would not have been possible as a pure play RV business. We believe our diversification strategy is clearly working, reducing cyclicality by lifting revenues and margins while greatly expanding our growth opportunities across our diverse, Over the last decade, our diversification has expanded Lippert's reach to include attractive markets like transportation, residential building products, marine, automotive, marine, and RV aftermarkets in Europe. As a result, we have over $10 billion in opportunity just in these areas where we compete today.
Jason Lippert: And our opportunity should continue to expand as we innovate new products for these markets. Beyond diversification, we believe our right to win these markets is strong because of the investments we've made to build world-class manufacturing capabilities and teams. Our specialized teams and facilities are focused on the most sophisticated products and challenges from our customers in each of these markets.
Jason Lippert: Due to decades-long relationships with our customers, we believe that they trust us to develop and launch cutting-edge solutions, and that we excel at designing and producing products that require complex engineering and innovation that others simply haven't been able to provide. We think that these advantages, combined with our reputation for quality, service, and delivery speed, drive incredible value for our OEMs and the consumer. Looking ahead, we remain focused on identifying incremental cost reductions to support improved profitability.
Jason Lippert: We are streamlining production and optimizing our manufacturing footprint while keeping capacity flexible. We have already eliminated nearly 1 million square feet of production space during the last 18 months without sacrificing production capacity, and we have more consolidation plans.
Jason Lippert: Through our company-wide Continuous Improvement Program, we have launched and completed over 25,000 Continuous Improvement Projects year-to-date in 2024 that improve operational manufacturing efficiencies, quality, and safety processes across our business. At the same time, we will continue to capture strategic growth opportunities, as we did with our latest acquisition of Camping World's furniture business in May. This acquisition is already driving results, with aftermarket sales to Camping World up 30% during the pandemic. Beyond the lift and furniture, our enhanced partnership with Camping World should increase our presence across all our aftermarket product categories, both online and in their growing retail footprint of roughly 215 stores, which is targeted to reach 320 by the year 2028.
Speaker Change: And of course.
Speaker Change: Beyond the lift in furniture, our enhanced partnership with camping World should increase our presence across all our aftermarket product categories, both online and Theyre growing retail footprint of roughly 215 stores, which is targeted to reach 320 by the year 2028.
Jason Lippert: I'll now walk you through what we are seeing in each of our businesses. First, on RV OEM, sales increased 20% during the second quarter of 2024 compared to 2023, driven by a 15% increase in North American travel trailer and fifth wheel wholesale shipments, as well as meaningful market share. This improvement in our OEM business, along with the performance in the adjacent OEM businesses, yielded an operating margin expansion of nearly 400 basis points for our OEM sector. Content for total RV for the quarter was $5,237. Content for the motorhome RV was $3,766.
Speaker Change: I will now walk you through what we are seeing in each of our businesses first on RV OEM sales increased 20% during the second quarter of 2024 compared to 2023, driven by a 15% increase in North American travel trailer and fifth wheel wholesale shipments as well as meaningful market share gains this improvement in RV OEM business, along with the performance in the adjacent <unk>.
Speaker Change: Businesses yielded an operating margin expansion of nearly 400 basis points for our OEM segment.
Speaker Change: Content for total RV for the quarter was 50 to $137.
Speaker Change: <unk> for motor home RB was 3700 $66.
Jason Lippert: Both were down slightly over a year, while up sequentially. These declines have moderated and are largely due to index pricing pass-throughs, as well as a product mix leaning towards smaller RVs. To highlight this point, organic content for towables increased 1% during the second quarter, both sequentially and year-over-year. In addition, we have now driven sequential growth for both towable and motorhome content for two consecutive quarters. All told, we have grown content by more than 50% in towable RVs since the year 2020, with organic growth coming from innovations across product groups like chassis, appliances, awnings, axles, windows, and air conditioning. These are all products that are either completely integral to the vehicle or include features and benefits that can easily be replicated by other suppliers.
Speaker Change: Both were down slightly year over year, while up sequentially. These declines have moderated and are largely due to index pricing pass throughs as well as product mix leaning towards smaller armies to highlight this point organic content for <unk> increased 1% during the second quarter, both sequentially and year over year. In addition, we have now driven sequential growth for both <unk> and <unk>.
Speaker Change: Modern home content two quarters in a row, all told we have grown content by more than 50% of total RMB since the year 2020 with organic growth coming from innovation across product groups like chassis appliances on.
Speaker Change: <unk> Windows and air conditioners.
Jason Lippert: Importantly, our increased content is also an indicator of our overall market share. As we continue to invest in new product development and innovation, we believe organic content will keep trending higher. Looking ahead, we believe that motorhome shipments will likely remain a drag on industry wholesale for the next 12 months, but total shipments and dealer inventories are showing signs of recovery, and should trend modestly upward.
Jason Lippert: In addition, the 2025 model year changeover should help drive our content during the second half of 2024, with our commercial teams already seeing strong reception from OEMs that want to incorporate new and existing Lippert content. We believe that this continued expansion of our OEM content through innovation, coupled with our strong OEM relationship, is expanding our market share and elevating our leadership position within our core RV market. While we are tempering expectations for 2024 wholesale shipments, updating our anticipated range to 315 to 325,000 units due to increased softness and retail demand and the continued pressure of higher interest rates on consumer sentiment, we are confident in the overall industry resilience to return to steady growth. RV demographics are still very strong, and the lifestyle continues to draw people from all age groups through the attractiveness of outdoor recreation and family travel.
Jason Lippert: Our confidence in our ability to drive future growth is driven by our significant competitive moat. We believe newer entrants and smaller competitors will have difficulty as long as we continue to innovate and supply SKU complex product lines within short delivery times. We also have very strong customer relationships and leadership teams that have been in the making for three decades. We believe that our product breadth is the largest in the industry and that these products are more sophisticated in design and manufacturing as our manufacturing processes have been evolving for three decades.
Jason Lippert: Additionally, we think that our reputation, history of innovation, our ability to make products in so many different categories, from steel and aluminum fabrication, glass processing, electronic design and manufacturing, plastics forming, furniture and mattress manufacturing, design and manufacturing of electric and hydraulic slide and stabilization systems, and so much more, gives us a huge edge over existing and new competitors. We should continue to attract incremental business from players and legacy OEM partners alike, helping to cement our position as a go-to supplier in the RV space for components in many categories. Turning to the aftermarket, net sales were $258 million for the quarter, up 1% versus the same period in 2023.
Jason Lippert: Our operating margins in our aftermarket segment increased by approximately 120 basis points, and that segment remains one of our most profitable parts of our business, delivering operating margins at least 400 basis points higher than our OEM segment. Our current business, which contributes roughly half of our aftermarket segment sales, continues to perform well, helping to drive market share gains and an 8% increase in automotive aftermarket sales during the second quarter, offsetting the slight softness in the RV and marine aftermarket.
Jason Lippert: We also now have over 60% market share in aftermarket hitches and are gaining momentum with auto OEMs, where our current family of products has grown 40% since our 2019 acquisition. We also continue to gain share with Burien's line of innovative products, which includes ovens, hot water heaters, cameras, furnaces, refrigerators, and air conditioners, as consumers look to upgrade their vehicles with best-in-class content. With hundreds of thousands of vehicles entering the repair and replacement cycle annually, we believe that we can capitalize on a growing demand for service replacement parts and upgrades with meaningful growth runway ahead and aftermarket products.
Jason Lippert: We will attempt to capitalize on these tailwinds through best-in-class customer service and on-site dealership technical training and sales teams. We believe that having a solid and trusted presence at the dealer level is the key to pulling through our large lineup of aftermarket products into the aftermarket. Our commitment to industry-leading customer service should continue to set us apart, as according to our customers and the aftermarket, we're one of the easiest companies to do business with. And our care center facilitates over a million interactions annually with dealers and consumers.
Jason Lippert: We strive to continuously evolve and improve the way in which we serve these customers in order to continue to be best in class, which we believe will ultimately bring more and more transactions in the aftermarket back to us. In addition, we believe that initiatives like Lippert Scouts, the Campground Project, many consumer rallies, and Lippert Ambassadors foster trust, cultivate loyalty, and strengthen our connection and relationship with the RVers out there using our products.
Speaker Change: We need to be best in class, which we believe will ultimately bring more and more transactions in the aftermarket back to deliver brands.
Speaker Change: In addition, we believe that the initiatives like liberate Scouts campground project.
Speaker Change: Many consumer rallies and liberate ambassadors Foster trust cultivate loyalty and strengthen our connection and relationship with the <unk> out there using our products. We also believe that our commitment to our customers is further exemplified by the enhanced products, we deliver based on their feedback move.
Jason Lippert: We also believe that our commitment to our customers is further exemplified by the enhanced products we deliver based on their feedback. Moving to North American marine and adjacent markets, our revenues were down 12% compared to the prior year, with marine revenue down 33% compared to the prior year, which we believe is due to ongoing softness in the marine retail environment, while boat dealers lower their inventory.
Speaker Change: Moving to North American Marine and adjacent markets, our revenues were down 12% compared to the prior year with marine revenue down 33% compared to the prior year, which we believe is due to ongoing softness in the marine retail environment, while boat dealers lowered their inventories.
Jason Lippert: In the interim, we continue to focus on meaningful, longer-term marine opportunities. For example, during the quarter, Lumar, our leading brand of high-end marine components and equipment based in the UK, launched a pontoon industry-first auto windlass anchoring system and thruster product. These products are brand new to the pontoon market and should create significant content opportunities for us. Some of our larger customers are planning to launch these products during the next model year, and we are excited to see the pontoon boat experience taken to another level.
Speaker Change: In the interim we continue to focus on meaningful longer term marine opportunities for example, during the quarter Loomer, our leading brand of high end marine components and equipment based out of the UK has launched the pontoon industry first auto winless anchoring system and trust your products.
Speaker Change: These products are brand new for the pontoon market and should create significant content opportunities for us some of our larger customers are planning to launch these products over the next model year and we're excited to see the pontoon boat experience taken to another level.
Jason Lippert: Outside Marine, overall revenues were up as we had solid results with several of our other adjacent markets. We were seeing strength in our residential vinyl window business, for example, which continues to gain share with this $2 billion addressable market. Moreover, over COVID, many of the traditional vinyl window suppliers simply could not keep up with demand for home remodeling.
Jason Lippert: And since we manufacture vinyl windows for manufactured homes, we developed a lineup of vinyl windows designed specifically for the residential market. Since we have taken advantage of that opportunity, our new business has grown to over $30 million in this product alone. Other adjacencies, like our manufactured housing building products group, are consistently supporting momentum from the top and bottom lines. In addition, our transportation group for on-highway and off-highway vehicles continues to grow with customers like Polaris, Starcraft Bus, ATW, and Bluebird.
Jason Lippert: We anticipate making more headway in our adjacent business as we continue to grow organically and inorganically. Revenue from our international business was roughly flat compared to the previous year, but business continues to perform well in Europe, where business cycles tend to be less volatile than here in North America. I toured several of our European businesses last month, including our high-end Lumar business and state-of-the-art acrylic window and door manufacturer, Polypoint. During these visits, I was impressed by the creativity of our teams, their operational execution, and the innovative new content they are developing.
Jason Lippert: Products developed within our European brands, such as pop-tops, acrylic windows, anchor and windlass systems, bedlifts, doors, and electronics, highlight how our global footprint fosters innovation globally. We continue to receive positive feedback from customers as we introduce these products in North America. Looking ahead, we expect our international business to remain healthy with continued growth from Europe as new products and strategic opportunities strengthen our position in this market.
Jason Lippert: Innovation is another important growth driver that is moving the needle on market share. We continue to make meaningful R&D investments during the quarter to help develop the advanced products that we believe consumers want. We also continue to enhance existing products, adding features that consumers typically value and are willing to pay a premium for. With the annual RV Open House only a month away, we look forward to showcasing these fantastic product introductions and our R&D driving content.
Jason Lippert: We wanted to know a few of these industry-first innovations and product launches. The first being our new Chill Cube air conditioner system, which was designed to provide super cooling efficiency at a significantly reduced noise level and is the first ever with an 18,000 BTU capacity. Our new Analog Braking System Brake Technology, or ABS, developed by our team in Detroit, Michigan, is receiving great feedback from the industry, and we will be inviting dealers to take a test ride in a unit equipped with ABS at a test track near the. Consumers have been vocal when pushing for improvements in the kind of safety and security that we believe our ABS system brings to the table.
Jason Lippert: To demonstrate its popularity, Keystone Kruger, the best-selling chisel in the country, has adopted this product. Also, our TCS suspension system and Helix pin box innovation significantly dampen the rides for our viewers, and it seems to be gaining traction. We designed the new suspension to significantly lessen the wear and tear that the inside of the towable RV experiences when it is moving down the road, which should ultimately give the consumers a better experience and improve the durability of the RV for the OEMs and the consumers.
Jason Lippert: Finally, Brinkley RV partnered with us to design some new windows in an effort to change the window game, and now those windows are starting to gain traction in the market. We should create window content that didn't previously exist on an already existing product line.
Jason Lippert: OEMs have already shown demand for many of these innovative products, and we look forward to explaining in future quarters how much these products will impact our organic growth and content. I can say without a doubt I've never seen a 12-month period during which our teams have introduced more transformational innovations for the industry. Our continued focus on culture and leadership development is an important source of fuel for the rest of our. We simply believe you can't make long-term sustainable progress and quality, safety, innovation, and efficiency without team members that not only like to be here but are also energized and bring an extra level of passion to the business and their team they're a part of.
Jason Lippert: Said differently, if we have team members who feel like Lippert truly cares about them and develops them, we will perform better than companies at which they feel they aren't important or cared about. During the quarter, we launched our second Built to Serve event in Eau Claire, Wisconsin, in collaboration with Acres for Joy. We are proud to expand these types of initiatives and even prouder of our team's efforts to meaningfully serve and support their communities to create lasting change.
Jason Lippert: We took over 50 of our leaders and high-potential team members to serve with our team members in Wisconsin on their home turf and to truly engage both groups. From our experience, engaged team members stay longer and are more productive. That's in addition to the community benefits that serving brings, which is why we plan to continue to lead by example in our community and support our team members in participating in hundreds of service events like this every year.
Jason Lippert: Moving on to capital allocation, our strong operating performance and focus on working capital management, specifically improved inventory returns, continue to drive strong cash generation of $439 million in the last 12 months. Additionally, we paid down $25.8 million of debt under our current agreement in the second quarter. Looking forward, our teams remain deeply committed to effective cash management, and we expect to drive additional reductions in inventory levels, further strengthening our cash position.
Jason Lippert: We have been extra diligent around CapEx this year as well, as the RV business remains soft. Additionally, we have prospects in the acquisition pipeline and plan to continue to execute on strategic acquisitions in the coming 12 months. We also plan to continue returning capital to shareholders while investing in R&D and innovation, pursuing both organic and inorganic growth opportunities over the near and longer terms. In closing, we want to express our deepest appreciation to all of our team members for their unwavering commitment and hard work to drive Lippert forward. Reflecting on my 30 years here at Lippert, I'm incredibly proud of what our business has become and even prouder of the hardworking leaders that run it day to day.
Speaker Change: He tasteful.
Speaker Change: Our consolidated net sales for the second quarter were $1 1 billion, an increase of 4% from the second quarter of 2023.
Speaker Change: OEM net sales for the second quarter of 2024 were $796 million up 5% from the same period of 2023.
Speaker Change: RV OEM net sales for the second quarter of 2024 were $490 million up 20% compared to the prior year period led by volumes, which were driven by a 15% increase in north American travel trailer and fifth wheel wholesale shipments increased selling prices, which are indexed to select commodities and market share.
Speaker Change: Game.
Speaker Change: Content per towable, RV unit was $5237, while content per motorized unit was $3766.
Speaker Change: Both were down marginally compared to the prior year period, primarily due to index pricing pass through and mix.
Speaker Change: <unk> increased $140 sequentially for total and wonder under $10 for motor home content excluding.
Jason Lippert: Excluding index pricing, mix, and M&A, organic content increased 1% both sequentially and year over year as the market continues to respond well to our innovation, which remains a key strategic pillar of ours and an engine for growth. Additionally, we had $4 million of reduced warranty expense in the quarter. Of note, on a year-to-date basis, warranty costs have decreased by $12 million compared to the prior year period. We anticipate depreciation and amortization in the range of $125 to $135 million during the full year 2024.
Speaker Change: Yeah.
Speaker Change: Our first question comes from Scott <unk> from Roth and Mccann Scott. Your line is open. Please go ahead.
Scott: Good morning, and thanks for taking my questions.
Scott: Good morning.
Scott: Whether you're in you just said that you expect overall sales I think for the third quarter to be down 5%. Yet you are running up about 6% can you maybe just talk about the different buckets.
Speaker Change: Of how we see a deceleration.
Jason Lippert: from the trends that you're seeing, at least through the month of July.
Speaker Change: From the trends that youre seeing at least through the month of July.
Speaker Change: Sure good morning.
Speaker Change: So if you recall last year, specifically with the RFP.
Speaker Change: When we came out of July 4th holiday last year, we had some pretty extended shutdown.
Speaker Change: Just given where the demand profile was in 2023.
Speaker Change: In part when you're Comping that for July of this year, where we didn't have the same extended shutdowns in the month.
Speaker Change: <unk> had more favorable comp.
Speaker Change: As we start looking to August and September we are expecting the customers to take some extended shutdown around labor day holiday and also some additional shutdowns in September so the.
Speaker Change: Timing and the cadence of some of those shut down year over year just different timeline.
Jason Lippert: retail, you know, probably one-to-one at this point in time and doing some destocking until the interest rate situation changes. There is retail out there.
Jason Lippert: Dealers aren't, you know, super negative. They're just kind of waiting for some of this pent-up demand to release once interest rates change and, you know, we get past the election. So, we look forward to mid-single digits in 2025. I mean, we really feel that that's, you know, likely, depending on how much interest rates change. It could be bigger, but dealers are not negative. They're just trying to fight through and grind through the environment that we're in with interest rates right now.
Jason Lippert: Yeah, so you're correct about 1% organic growth is what we've seen in these past two quarters. But really, I think
Jason Lippert: I think there's still a little.
Operator: The next question comes from Daniel Moore from CJF Securities. Daniel, your line is open. Please go ahead.
Jason Lippert: Yes, I think from the inventory perspective, there's still room for us to move. We've taken care of some of the low-hanging fruit, you know, over the last handful of quarters. So, you know, like anything, we need to develop some momentum on things like, you know, inventory reductions. We've still got opportunities across our 140 locations, and we'll keep working on that. With respect to the other question, it was, what was the other question again, Dan?
Speaker Change: To develop some momentum on things like inventory reductions, we've still got opportunities across our 140 locations and we'll keep working on that.
Dan: With respect to the other question was what was the other question again Dan.
Jason Lippert: Just in terms of dealer inventories, you know, to get back to normal, how much of a restock is likely once retail does bottom and, you know, start to recover a bit from your first act? I'm
Dan: Just in terms of dealer inventories to get back to normal how much of a restock.
Dan: <unk> retail does bottom and start to recover a bit from your perspective.
Speaker Change: Hi.
Speaker Change: I mean, we think it will be we think it will be slower to restock theyre not going to go go crazy.
Speaker Change: I think that the industry would just like to get back to one to one at some point in the Destocking too.
Speaker Change: To see so again, we're kind of predicting.
Speaker Change: Mid single digits next year.
Speaker Change: It'll be a slow comeback, but but.
Speaker Change: Like we keep talking about every every 50000 units the industry goes up that's another $250 million in top line for us just on RV.
Speaker Change: A little bit more than that with really good incremental margins of around mid 20. So that's.
Speaker Change: That's really healthy.
Speaker Change: Whether we get 25 next year, a 50 year or 18, it's still it's still a win.
Speaker Change: Very helpful and then switching gears.
Speaker Change: Obviously appreciate the updated view on marine kind of similar question, where inventory levels for pontoon boats.
Speaker Change: Destock continued destocking.
Speaker Change: Outlook.
Speaker Change: Anticipate and then it sounds like it's going to continue into 'twenty five you see things starting to turn around by mid year next year or is it.
Speaker Change: Yes.
Speaker Change: Take a little longer to.
Speaker Change: From where you are seeing in the market. Thanks.
Speaker Change: Yes, that's good.
Speaker Change: The Big boat shows are this month.
Speaker Change: There's a few going on right now so we expect to have some some really good information in the coming week, but I.
Speaker Change: I think our our gut feel is that there is obviously some more destocking to happen on the boat.
Speaker Change: <unk> side of things there is still a little bit more pain to take there on the <unk>.
Speaker Change: Dealer side, so the Oems will regulate production and reel that back for the time being I think it could last until the first quarter.
Speaker Change: But we expect that to normalize hopefully hopefully by spring selling season next year.
Jason Lippert: All right, last for me, a balance sheet in good shape and getting better by the quarter given the working capital release. Just talk about the pipeline where you've seen the most opportunity in terms of M&A and, you know, how do you rank the order? You know, things like, you know, buying back your own stock versus potential M&A opportunities.
Speaker Change: Alright last from your balance sheet.
Speaker Change: In good shape and getting better by the quarter given the working capital release.
Speaker Change: Just talk about pipeline, where are you seeing the most opportunity in terms of M&A and.
Speaker Change: How do you rank ordering yes.
Speaker Change: Things like.
Speaker Change: Buying back your own stock versus potential M&A opportunities here. Thanks.
Speaker Change: Yes.
Speaker Change: M&A and acquisitions are a key part of our growth strategy.
Speaker Change: We've got a couple a couple that we're looking at at the moment.
Speaker Change: We'll give more detail on the future on those but we've got we've got a pipe we've got a full pipeline.
Speaker Change: There is generally seven or eight of companies that we're looking at or talking to but we are getting serious with a couple so more to come in the future quarter.
Speaker Change: I think also building on there.
Speaker Change: Yes.
Speaker Change: Look at the balance sheet really the health of the business.
Speaker Change: This is a business that very strong generator of cash.
Speaker Change: We work through this down cycle.
Speaker Change: We generated very strong operating cash that's something that we'll expect to continue to do that that affords the flexibility to.
Speaker Change: Look at the various options, obviously, we want to continue to maintain that really solid balance sheet working towards.
Speaker Change: Net debt of about one five turn is also important to us as we continue to support the growth and innovation and look at organic and inorganic opportunities. So I feel really good that we're very well positioned to continue to generate positive shareholder return and support the growth that we need going forward.
Speaker Change: I think to add on to that Dan just real quick we're going to we're not done with cost saves and some plant consolidations.
Dan: Some of the restructuring we're still working on so while it's been a long two year drop in and wholesale volumes were still working on on the business and not only working on efficiencies and working on some structure related things in some consolidations with some of our facilities and getting more efficient from a cost standpoint.
Speaker Change: Working on that.
Speaker Change: Yes.
Speaker Change: Alright, very helpful look forward to an update.
Speaker Change: Out of the open house in a month or so.
Speaker Change: Okay.
Operator: The next question comes from Mike Schwartz from Truist Securities. Mike, your line is open, please go ahead.
Speaker Change: The next question comes from Mike Swartz from True Securities. Your line is open. Please go ahead.
Mike Swartz: Hey, good morning, guys.
Lillian Etzkorn: To start Lillian.
Lillian Etzkorn: On the call.
Lillian Etzkorn: Total content are.
Operator: The next question comes from Bret Jordan of Jeffreys. Bret, your line is open, please go ahead.
Jason Lippert: On the rate topic, I think, yeah, good morning. I guess you were sort of talking about expectations that some rate adjustments or reductions going into 2025 would be constructive. I guess what level of rate cuts do you think is needed to really shift consumer sentiment in the RV space now?
Lillian Etzkorn: <unk>.
Lillian Etzkorn: Average price it's not a.
Speaker Change: We don't need people to go out and spend $200000 on an RV or a vehicle here. So.
Speaker Change: The.
Speaker Change: The options for us are pretty good once the once that tie changes and goes the other direction RBS.
Speaker Change: <unk> is still very affordable and prices have come down and.
Speaker Change: The lifestyle is really attractive still so we just need to see that momentum going the other way I think.
Jason Lippert: Okay, I guess your outlook for open houses, you know, obviously, last year there was not a lot of purchasing activity; more looking. Are you expecting this year to be a big uptick as far as, you know, year over year actual dealer transactions?
Speaker Change: Okay, and I guess your outlook for open house.
Speaker Change: Obviously last year was not a lot of purchasing activity more looking are you expecting this year to be a big up tick as far as.
Speaker Change: Year over year actual dealer transaction.
Jason Lippert: I don't think there's going to be a big uptick. I think that, like we kind of stated earlier, the dealers don't start restocking until they see a little bit more retail. There's not going to be a little bit more retail until the rates adjust and see some change.
Speaker Change: Yes, I think I don't think theres going to be a big uptick I think that the.
Speaker Change: Like we've kind of stated earlier the dealers don't start restocking until they see a little bit more retailers that can be a little bit more retail until the rates rates adjust and see some see some change though.
Jason Lippert: So I think, you know, they come here and they spend a lot of time building relationships more than anything with the suppliers and the OEMs. And then, on top of that, they get to see all the new products that we're looking at. They're going to get to see ABS. They're going to get to ride along, you know, our ride-in vehicles that are towing units with ABS. And, you know, we're going to have our innovation on display.
Speaker Change: I think they come here and they spend a lot of time building relationships more than anything with the suppliers and the Oems and then on top of that they get to see all the new products that we're looking at they're going to get to see ABS theyre going to get it right along.
Speaker Change: Ah right in vehicles that are telling units with ABS and we're going to have our innovation on display in the Oems will have all of their new products and floor plans on display and you'll get to see kind of hey, when it when it comes time to really a restock.
Jason Lippert: And the OEMs will have all their new products and floor plans on display. And they'll get to see kind of, hey, when it comes time to really restock in a meaningful way, they're going to know what kind of products are available to them that'll help, you know, move the market and attract new customers.
Speaker Change: Meaning full way.
Speaker Change: Theyre going to know what kind of products that are available to them that will help move the market and attract new customers. So.
Speaker Change: Okay, and then final question I guess on the aftermarket business with camping World is that margin profile different that aftermarket average or pretty much in line.
Jason Lippert: Okay, and then quick final question, I guess on the aftermarket business with Camping World, is that margin profile different than the aftermarket average or pretty much in line?
Harvey: That's in line with the Harvey Harvey RV aftermarket margins.
Jason Lippert: Great. Thank you. Yes.
Speaker Change: Okay, great. Thank you.
Speaker Change: Yep.
Operator: The next question comes from Alice Wycklendt from Baird. Alice, your line is open, please go ahead. Good morning. Thanks for taking my questions. Most have been answered. So maybe just a couple of housekeeping ones.
Speaker Change: The next question comes from Alex <unk> from Baird Your.
Speaker Change: Your line is open. Please go ahead.
Alex: Yeah. Good morning, Thanks for taking my questions. Most have been answered so maybe just a couple of housekeeping ones.
Alex: I think you took your capex guidance down about $15 million, what drove that change is there a shift in priorities or is it a timing issue.
Jason Lippert: We're just being more diligent, you know, in this kind of environment where things are still a little uncertain. We're just trying to, you know, play it safe and, you know, take advantage of the projects that have really, really good ROIs and quick paybacks, but not doing too much. We obviously have a lot of projects we'd like to do, and when business starts to come back a little bit, you'll see us; you'll see us go back to, you know, more normalized levels.
Speaker Change: We're just being more diligent.
Speaker Change: And this kind of environment, where it was still things are a little uncertain. We're just trying to play it safe and.
Speaker Change: No.
Speaker Change: Take advantage of the projects that have really really good rois quick paybacks, but not doing too much.
Speaker Change: We've got obviously a lot of projects, we'd like to do.
Speaker Change: When the business starts to come back a little bit Youll see us Youll see us go back to.
Speaker Change: Normalized levels, but we think we can get in the range of 40% to $55 million. This year, which is which is still significantly lower than last year and last year was significantly lower than the year before.
Jason Lippert: But, you know, we think we can get in the range of $40 to $55 million this year, which is still significantly lower than last year, and last year was significantly lower than the year before. Great. And then apologies if I missed it.
Speaker Change: Great and then apologies if I missed it I did have some connection issue, but do you have any contribution revenue contribution from acquisitions in the quarter.
Jason Lippert: About $5 million. I mean, pretty nominal. Okay.
Speaker Change: Hi.
Speaker Change: Nominal.
Speaker Change: Okay.
Speaker Change: That's helpful. That's it for me thank you.
Tom: Thanks, Tom.
Operator: The next question comes from Tristan Thomas-Martin from BMO Capital Markets. Tristan, your line is open. Please go ahead.
Speaker Change: The next question comes from Tristan Thomas Martin from BMO Capital markets. Tristan. Your line is open. Please go ahead.
Speaker Change: Hey, good morning.
Tristan Thomas: Hey, good morning. Can, can you talk to maybe what the industry production versus industry shipment dynamic in the quarter kind of seems like production outpaces shipment in the quarter? Can you maybe talk about that?
Ken Can: Hey, good morning, Ken can.
Speaker Change: Can you talk to maybe what the industry production versus industry shipment dynamic in the quarter. It kind of seems like production outpaced shipment in the quarter can you maybe talk to us.
Jason Lippert: You know, I can't say that it did or it didn't feel, I don't know, it didn't feel any different to us. I don't think so.
Speaker Change: I can see that it did or it didn't it didn't feel I don't know I didn't feel any different to us I don't think.
Speaker Change:
Speaker Change: Yes.
Jason Lippert: No, definitely not what we had seen last year, Tristan, in terms of that mismatch of production versus shipment. There can always be a little bit of timing, you know, especially as you cross the quarter, but it definitely did not seem like it was anything of any significance this year. Yeah, could be some of the reporting too, as you know, some of that reporting comes in later, they misstate, some things like that, so there might be some catch-up to come.
Speaker Change: Definitely not what we had seen last year and in terms of.
Speaker Change: That mismatch of the production versus shipment.
Speaker Change: There can always be a little bit of timing, especially as you cross the quarter end.
Speaker Change: But it definitely did not seem like it was anything of any significance the share count could be some are reporting to us.
Speaker Change: Some of that reporting comes in later, they miss dates and things like that so there might be some catch up to come but.
Jason Lippert: But we think that the OEMs are being really diligent in production. We see that in their production schedules, you know, so that's good.
Speaker Change: But we think that the Oems have been really diligent on production, we see that in their production schedules.
Speaker Change: That's good.
Tristan Thomas: Okay, I'm just trying to square kind of your travel trail or fifth wheel revenue up 26 versus industry shipments up 13. You can maybe kind of talk about what that delta was.
Speaker Change: Okay, I'm, just I'm, just trying to square kind of your travel trailer fits well revenue up 26 versus industry shipments up 13.
Speaker Change: Could you maybe kind of talk to what that Delta was.
Tristan Thomas: Say it again. Say it again, Tristan. Yeah, can you repeat it?
Speaker Change: Say it again say it again, Tristan can you repeat it please.
Tristan Thomas: I'm...
Jason Lippert: Oh, your RV revenue in the quarter was right up 26% year over year, but industry shipments were only 13. It is aligned to production and OEM production. There are also elements of pricing within that that is going to benefit. There is organic content as well. You know, we always, we tend to focus more on the trailing 12 month metric for content. But when you look at just the pure quarter, there's favorable content there. So there are some other elements that are helping the top line result. Okay, and then just one final question for me.
Tristan: Oh, your RV revenue in the quarter right up 26% year over year, but industry shipments on 13.
Speaker Change: Yes.
Speaker Change: What drove that.
Speaker Change: Yes.
Speaker Change: Yes, so couple of different things obviously.
Speaker Change: It is aligned to the <unk>.
Speaker Change: Production in the OEM production.
Speaker Change: So the elements of pricing within that that is going to benefit.
Speaker Change: There is organic content as well.
Speaker Change: We tend to focus more on the trailing 12 month metric for our content, but when you look at just the pure quarter Theres favorable the contents. There. So there are some other elements that are.
Speaker Change: Helping the top line result.
Jason Lippert: You've talked a lot about kind of the incremental content on the Model Year 25. How has the kind of competitive bidding environment been, let's call it kind of a like for like? on 25 versus 24. The what? The what environment? I said like the incremental. So, right, we understand the incremental content on 25 and those opportunities, but what has been the kind of competitive bidding environment? products that you have on the 24s that you want to keep.
Speaker Change: Okay and then just one final question for me.
Speaker Change: <unk> talked a lot about kind of the incremental content on the model year 'twenty five.
Speaker Change: The kind of competitive bidding environment than let's call it kind of a like for like content on 25 versus <unk> 24 was again.
Speaker Change: The wet environment.
Speaker Change: So I'd like the incremental.
Speaker Change: We understand the incremental content on 25 in those opportunities, but what has been the kind of competitive bidding environment.
Speaker Change: Products that you had on the 20 fours that you want to keep on the 25.
Jason Lippert: Yeah, I think I think in line. I think we expect our content to continue to grow and our market share to continue to grow. You know, content growth is generally, you know, an indicator that we're keeping or growing our market share. So we haven't seen any changes that are negative. In fact, we've seen some positive changes in the core products that we supply to the market.
Speaker Change: Yes, I think I think I think in line I think our we expect our content to continue to grow and our market share continues to grow.
Speaker Change: The content growth is generally.
Speaker Change: An indicator that we're keeping or growing our market share. So we haven't seen any any changes to the negative if anything we've seen some positive changes in the core products that we supply to the market.
Jason Lippert: Core products: that's what I was talking about. Thank you.
Speaker Change: Alright core products, that's what I was talking about thank you.
Speaker Change: Yes, yes.
Speaker Change: Yes.
Jason Lippert: Thank you for your time.
Speaker Change: ACS final question, there's been a big gainer.
Operator: Apologies. Our final question today comes from Brandon Rowlett from D.A. Davidson. Brandon, your line is open. Please go ahead.
Speaker Change: Policies are.
Brendan: Our final question today comes from Brian <unk> from D. A Davidson Brendan Your line is open. Please go ahead.
Brandon Roll: Thank you. Good morning. Following up on Tristan's question, just on your market share and key categories, maybe this year versus last year, would you be able to comment on that, like chassis and maybe some of the other main businesses within RVOEM, especially given the fact that it seems like you just said the competitive environment hasn't really increased, but just wondering how that's played out. And, you know, if you were able to maintain your share, did that come at the expense of any margin?
Brendan: Thank you good morning, following up on <unk> question just.
Brendan: Just on your market share in key categories, maybe this year versus last year would you be able to comment on that like chassis and maybe some of the other.
Speaker Change: Businesses within RV, OEM, especially given the.
Speaker Change: It seems like you just said the competitive environment hasn't really increased but I'm just wondering.
Speaker Change: How that's played out and if you were able to maintain your share did that come at the.
Speaker Change: The expense of any margin. Thank you.
Jason Lippert: No, I would say from the perspective of market share on core products. Brandon, you know, Chassis, Axles, Windows, Furniture. We're at or above where we were last year in all those key categories. And then in some categories, like Appliances, we're up. I can tell you about Axles, for example, one of our top three categories. We're going to do more in sales this year for Axles than we did in 2022, near 600,000. So I'm really pleased with our ability to change environments.
Speaker Change: No I would say from the perspective of market share on core products Brandon.
Jesse: Jesse as axles windows furniture were at or above where we were last year and all of those key categories and in some categories like appliances were up.
Speaker Change: I can tell you the actuals for example, one of our top three categories.
Speaker Change: We're going to do more in sales this year in <unk> than we did in 2022.
Speaker Change: 600000 so.
Speaker Change: Im really pleased with our ability.
Jason Lippert: And like I said in previous calls, you know, we compete, we've competed for the last 30 years for every little business, bit of business we've taken. And I think our teams are competing as well as they ever have right now in maintaining or improving market shares and Core Products.
Speaker Change: Set of environments and like I said in past calls we compete we've competed for the last 30 years for every little business been a business, we've taken and I think our teams are competing as well as they ever have right now on maintaining or improving market shares and core products.
Jason Lippert: Okay, great. And then just a follow up on another of Tristan's questions. You had mentioned that 26% growth versus 13% wholesale shipment growth. How much of the 26% was volume versus price versus mix?
Speaker Change: Okay, Great and then just a follow up on another person's questions you.
Speaker Change: You had mentioned that 26% growth versus 13% wholesale shipment growth.
Speaker Change: How much of a 26% was volume versus price versus mix. Thank you.
Speaker Change: Yes.
Speaker Change: Yes.
Jason Lippert: Yeah, so on that, don't have the specific breakouts or am not gonna share the specific breakout of the differences between the various categories, but I think it's fair to say that they're meaningful, right, in terms of the pricing that we've been able to yield, market share growth, etc. So really can't get into the details of that Brandon.
Speaker Change: Yes.
Speaker Change: On that.
Speaker Change: Don't have the specific breakouts are not going to share the specific breakout of the differences.
Speaker Change: Yes.
Speaker Change: Various categories, but I think it's fair to say that.
Speaker Change: They're they're meaningful right in terms of.
Speaker Change: Pricing that we've been able to heal to the market share growth.
Jason Lippert: Some of it comes like you know, like you just give you a couple examples that are just minor, but all these things add up because we have so many different product lines, but if you take chassis, for example, I mean a lot of the OEMs since last year have beat it up, which increases chassis prices and content there. We've increased our market share on ACs significantly over the last 12 months, so we get bumps and in certain categories like that, so you know the puts and the takes are there, but obviously, there's a lot of takes, or we wouldn't be up. And Brandon, just to clarify the metric itself, the RV business for us aftermarket OEM was up 20%, not 26, so if I had misspoken during the remarks, I apologize for that, but we're up 20%.
Speaker Change: Et cetera.
Speaker Change: I really can't get into the details of that Brandon and some of it comes out.
Brandon: Just give me a couple of examples that are just you know.
Brandon: Minor, but all these things add up because we have so many different product lines, but if you take <unk> for example, I mean, a lot of the Oems its last year of <unk> Zap that increases chassis prices in content there.
Speaker Change: We've increased our market share on Acs significantly over the last 12 months, so we get bumps in certain categories like that so.
Speaker Change: The puts and the puts and takes are there, but obviously theres a lot of there's a lot of puts or we wouldn't be wouldn't be up.
Speaker Change: Brandon just to clarify the metric itself the RV business for us.
Brandon: Market OEM was up 20% not 20.
Brandon: If I had missed spoken during the remarks apologize for that but we are up 20%.
Speaker Change: Yeah.
Jason Lippert: Okay, thank you so much for the additional color.
Speaker Change: Okay. Thank you so much for the additional color.
Speaker Change: Thanks.
Speaker Change: Yes.
Jason Lippert: I'll now hand the call back to Jason for some concluding remarks.
Speaker Change: I'll now hand, the call back to Jason for some concluding remarks.
Jason Lippert: Hey everybody, we appreciate your time and your questions. Thanks for tuning in. We thank all of our team members around the business for the incredible effort they put forward this last quarter and for the year. So, we'll talk to you in Q3. Thanks everybody, bye-bye.
Jason: Everybody. We appreciate your time and your questions. Thanks for tuning into the call. We think so we think all of our team members around the business for the incredible effort. They put put forward this last quarter and for the year. So we'll talk to you in Q3, thanks, everybody Bye bye.
Speaker Change: Yes.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your line.
Speaker Change: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
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Speaker Change: Thank you.