Q4 2024 Winnebago Industries Inc Earnings Call

October 23, 2024

Good day, and thank you for standing by welcome to the Q4 and full year fiscal 'twenty 'twenty, four and 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 speakers' presentation there.

It will be a question and answer session.

Speaker Change: And the conference over to your speaker today right.

Speaker Change: Right beside us Vice President Investor Relations and market intelligence.

Right: Thank you operator, good morning, everyone and thank you for joining us to discuss our fiscal 2020 for fourth quarter and full year earnings results. This call is being broadcast live on our website at Investor WTO Dot net and a replay of the call will be available on our website later today. The news release with our fourth quarter results was issued and posted to our website earlier this morning.

Right: 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.

Right: Turning to slide two 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 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 on our earnings press release, Please turn to slide three joining.

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, Mike will begin with an overview of our Q4 and full year performance, Brian will discuss our financial results at a strategic level provide some further comments on our forward view of the market and discuss our fiscal <unk>.

Speaker Change: 2025 guidance, 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.

Mike: Thanks Ray good morning, and thank you for joining us to discuss our results.

Mike: Let me begin by thanking the employees across Winnebago industries, and our portfolio of outdoor recreation brands for their hard work and resilience throughout the year.

Mike: Although a difficult retail environment made fiscal 2020 for a challenging year for the RV and marine industries.

Mike: The collaborative culture and commitment to excellence at Grand design with a bagel Newmar Barletta, Chris craft and lithium ex all serve as the foundation for a return to growth as market conditions improve in the future.

Mike: Before we get into the details of our Q4 and full year results. There are several key messages I want to convey on this morning's call.

Mike: First while the retail environment remains challenging in the short term, we anticipate gradual market improvement over the next 12 months to 15 months.

Mike: We would expect this to occur more materially as we move into the second quarter of calendar 2025, our third fiscal quarter factoring in the projected easing of interest rates and decreased inventory levels in the motor home RV category.

Mike: Second we have made substantive leadership changes that Winnebago, motorhomes and Winnebago totals to remedy the operational and financial challenges that have affected the performance of those businesses in recent quarters.

Mike: Third we are delighted by the enthusiastic consumer and dealer response to the lineage series M. Grand designs inaugural entry in the motor home RV segment.

The new vehicle was featured at last month's Hershey RV show and RV dealer open house and a small number of units began shipping in Q4 <unk>.

The Grand design team with support from the businesses across our portfolio have created an RV with benefits that we believe set a new standard for excellence in our class C coach.

Mike: And finally today, we are providing annual financial guidance for the first time in light of the continued market uncertainty we are being appropriately cautious out of the gate, but at the midpoint. We are forecasting modest improvement on the topline and adjusted EPS growth of 10% compared to prior year.

Mike: There are several positive takeaways from the quarter worth, noting including initial shipments of lineage series M.

Mike: While not a meaningful contributor in Q4, we expect lineage to gain momentum as production ramps in the first half of fiscal 2025.

Mike: In our Marine segment for Atlantic continued to take market share in the U S aluminum pontoon market in.

In addition August marked the fifth consecutive month of year over year retail growth for Chris craft.

Mike: On a trailing six month basis. This iconic brand has grown its retail volume by 32% compared with the same period in fiscal 'twenty three.

Mike: Driven in part by its new launched 27, Chris Craft's retail share in the 20 to 40 foot fiberglass market has increased in the most recent three six and 12 month periods as well.

Mike: Despite the weak retail market environment, our strong balance sheet and positive free cash flow enable us to maintain a thoughtful and balanced capital allocation approach in Q4, we generated free cash flow of $30 million and returned a combined $19 million to our shareholders in the form of share repurchases and dividend.

Mike: Payments underscoring our confidence in Winnebago industry's long term growth prospects.

Mike: Turning to slide five the RV industry Association now estimates calendar 2024 wholesale shipments at a median of about 324000 units and we are aligned with that projection.

We anchor calendar year 2025, RV industry shipments in the range of 320 to 350000 units.

Mike: Wholesale total RV industry shipments were up 10% year over year for the month of August and up 14, 5% year to date through the first eight months of calendar 'twenty four.

Mike: This reflects continued progress towards right sizing inventory and in addressing the growing consumer demand for affordability.

Mike: The motor home portion of the industry remains in Destocking mode with wholesale shipments down 31% year over year in August and down 24, 2% year to date.

Mike: Within our universe of RV dealers inventory turns were down very slightly in the fourth quarter compared with the year earlier period inventory for Winnebago industries was down four 5% from Q4 of fiscal 'twenty, three which underscores our focus on continuing to aggressively manage production amidst what remains a.

Mike: <unk> macroeconomic environment.

Mike: Turning to slide six for the trailing 12 months ended August 31, our total market share was 11, 1% down 50 basis points from the same period in 'twenty three.

Mike: As I noted on our Q3 call we have introduced new products over the past two quarters that we believe will contribute to stabilizing our market share in the coming months.

Mike: We believe this deliberate approach is crucial for fostering strong long term relationships with our dealer partners. As a result, we were pleased to see positive share gains for our Winnebago branded class C motor home and numerous full motorized product lines.

Mike: Both of which showed year over year growth across the trailing three six and 12 month periods through the end of August.

Mike: Slide seven showcases <unk> continued momentum in the marine segment for the trailing 12 months through August 2024 are let us market share increased 200 basis points year over year to nine 1%.

Mike: Our premium pontoons consistently out performed competitors driving exceptional results for our dealer network and elevating the customer experience.

Mike: Turning to recent highlights on slide eight during the quarter, we made some strategic changes to our executive team and the leadership and our Winnebago Motorhomes Winnebago <unk> businesses.

Mike: West who previously served as senior Vice President of Enterprise Ops and bar, let our boats was named President of our Winnebago branded Motorhomes in specialty vehicles business, Chris an eight year veteran of Winnebago industries. In addition to previous oversight responsibilities of the enterprises manufacturing and supply chain operations.

Mike: Also successfully led the integration of our letter and played a vital role in the both brands achievement of double digit market share growth.

Mike: His broad experience will be invaluable as we further enhance the winnebago brands influence impact in market share.

Mike: Our Winnebago branded <unk> business has underperformed our expectations and it is imperative that we have two strong told those brands to compete successfully in the marketplace.

Mike: To enable the Winnebago branded <unk> business to reach its full potential.

Mike: Clark has been promoted to group president of our <unk> business effective November one.

Mike: Don will expand his responsibilities to oversee Winnebago totals. In addition to his role as president of Grand design RV.

Mike: This change Centralizes, our totals expertise in Indiana his insights operational acumen and extensive knowledge of what it takes to win in this space will make down the ideal and logical choice to lead the team during their next evolution.

Mike: Chris and Don will continue to report to me.

Mike: These changes are designed to bolster our position as the trusted leader in the premium outdoor recreation market and drive our next phase of growth.

Mike: Turning to our product innovations.

Mike: I am excited to highlight our bold and innovative model year 2025 lineup much.

Mike: Much of which we recently showcased at the Hershey RV show occur.

Mike: Across our Winnebago Grand design and Newmar brands, we introduced nearly 150, new models and floor plans, demonstrating our commitment to technology design and comfort.

Mike: As expected one of the highlights of the Hershey show was the class C lineage series M. Grand designs first ever motor home model from its thoughtfully designed interior to its superior payload capacity and driving performance lineage more than lives up to the high expectations and exacting standards of our loyal grant.

Mike: Design customers.

Mike: These product innovations across our portfolio of premium brands underscore our dedication to elevating every moment outdoors for our customers now.

Now, let me turn the call over to Brian.

Brian: For the financial review.

Brian: Thanks, Mike and good morning, everyone Hasnt.

As a reminder, in my prepared remarks, I will focus on the key drivers of our performance.

Brian: Starting with our consolidated results on slide nine retail demand continued its sluggish performance in the fourth quarter.

Brian: Operating expenses increased in the fourth quarter, primarily driven by a $33 million impairment charge associated with the Chris craft reporting unit startup costs associated with associated with the launch of the Grand design motorized business and strategic investments in engineering digital asset development and increased data and information technology.

Knowledge and capabilities.

Brian: The Chris craft impairment was the result of lower current financial performance due to challenging conditions in the recreational marine industry.

Brian: These factors resulted in adjusted EBITDA margin that was down from the prior year period.

Brian: Note that adjusted EBITDA shown excludes the impact from the Chris craft impairment.

Brian: We generated healthy full year cash flow and our balance sheet remains strong.

Brian: We paid $9 million of dividends in the quarter, and we bought back $10 million of shares in the quarter, bringing the fiscal year 2024 dividend payments to $37 million and repurchases to $70 million.

Brian: I also want to call your attention to two important housekeeping item <unk>.

Brian: Beginning of fiscal quarter, we are no longer including an adjustment for the impact of the cost spread overlay in our calculation of adjusted diluted earnings per share.

Brian: As previously disclosed this adjustment was made to represent the economic offset a dilution risk from the costs that overlay on our 2025 convertible notes.

Brian: This adjustment has significantly decreased from prior year largely due to the note repurchase earlier this fiscal year.

Brian: There was no impact from the cost spread overlay in fiscal Q4 of 2024.

Brian: You'll note that we have included a table in the appendix of our earnings presentation that shows the historical adjusted EPS, excluding this adjustment.

Brian: Next we wanted to give you early notice that starting with our first quarter fiscal 2025 results, we will no longer be providing segment backlog information.

Brian: As previously disclosed backlog may not necessarily be an accurate measure of future sales due to the fact that orders and backlog generally can be canceled or postponed at the option of the dealer at any time without penalty.

Brian: Also dealers are typically slow to place orders through the trough in the cycle.

Brian: Therefore, we do not believe that backlog is a meaningful measure of future performance.

Brian: To provide our analyst with more relevant financial and operational insight into how we are thinking about the future for the first time, we are providing quantitative annual guidance on what we consider to be our key financial Kpis.

Brian: Consolidated revenues and adjusted EPS.

I'll have more on this shortly.

Brian: Turning to our performance by segment, starting with <unk> on slide 10.

Brian: <unk> were down from last year's fourth quarter, reflecting a reduction in average selling price per unit related to product mix, partially offset by an increase in unit volume.

Brian: Segment, adjusted EBITDA margin was down versus last year, which was attributable to higher warranty expense due to a favorable prior year trend.

Brian: Deleverage from a reduction in average selling price per unit related to product mix and operational challenges in our Winnebago branded towable business.

Brian: These issues in the Winnebago brand are related to a shift in plant production, whereby we consolidated activities under one roof, rather than two and the inefficiencies in making this change.

Brian: Poor inventory management practices for several of the products that led to inventory write downs and write off as well as sales incentives to push these products through to dealers and customers.

Brian: And higher warranty expense in this business due to some elevated quality issues in this brand.

Brian: We also want to highlight that warranty as a percentage of net revenue in our Grand design business remains at or below our pre 2023 right.

Brian: Turning to slide 11 revenues for the motor home RV segment were down from the same period last year.

Brian: The year over year change was attributable to product mix the decline in unit volume related to market conditions, partially offset by price increases related to higher motorized chassis costs.

Brian: Segment, adjusted EBIT was down from last year attributable to deleverage operational challenges and higher warranty expense.

Brian: The operational challenges in the Winnebago brand include higher cost per unit produced as we navigate online supply challenges and issues related to quality sales challenges and higher incentives and promotional activity as we position our premium product portfolio in a very cost conscious and competitive environment.

Costs associated with manufacturing line consolidation and write off of inventory related to product lines that we are discontinuing or easing back on.

Brian: We are looking forward to improved performance of our Winnebago branded motorized business. Following the appointment of new leadership for this business and we are also excited to see the contribution.

Brian: From Grand design entering the motor home business and the accretion in market share and profit that rig.

Brian: Moving to our Marine segment on Slide 12 revenue was down in the fourth quarter, primarily due to product mix and a decline in unit volume related to market conditions and dealer destocking, partially offset by targeted price increases.

Brian: To support dealers and moving inventory and create stronger incentives for customers discounts and allowances remained elevated in the quarter.

Brian: Also net revenue in the fourth quarter was affected by a mix shift towards product offerings, such as the bilateral ARIA as well as the reduction in Chris craft volume year over year.

Brian: Segment, adjusted EBITDA margin was down from the prior year due to volume deleverage and higher discounts and allowances, partially offset by targeted price increases.

Moving on to the balance sheet on slide 13 at fiscal year end Winnebago industries had a net debt to EBITDA ratio of approximately two times, which is slightly above our targeted range of 0.9% to one five times.

Brian: Last month, we paid a quarterly cash dividend of 34 per share.

Brian: Fiscal 2024 was the sixth consecutive year of dividend increases at Winnebago industries.

Brian: During the quarter, we repurchased approximately $10 million of our stock and at year end had $230 million remaining on our repurchase program.

Brian: In fiscal 2024, we returned $106 $8 million to shareholders, consisting of $70 million in share repurchases and $36 8 million and dividend payments.

Brian: Wrapping up on Slide 14, let me discuss our financial expectations for fiscal 2025, and the assumptions underlying our outlook as.

Brian: As a starting point our calendar 2025 outlook for RV wholesale shipments is 320 to 350000 unit industry wide.

Brian: To put this in context, our midpoint represents about 3% growth from the RV Ias median wholesale shipment forecast in calendar 2024.

Brian: With this important assumption in mind, we expect fiscal year 2025 revenue in the range of $2 9 billion to $3 2 billion.

Brian: We also expect fiscal year 2025 of adjusted earnings per share in the range of $3 to $4 50.

Brian: The midpoint of our adjusted EPS range would reflect growth of 10% from fiscal 'twenty four.

Brian: Lastly, we anticipate full year interest expense of approximately $25 million to $30 million.

Brian: Based on current trends and due to normal seasonality, we anticipate that revenue and adjusted EPS in the first half of fiscal 'twenty five will be lower than the prior year period with growth in the second half of the year compared with the same period in fiscal 'twenty four.

Given the state of field inventories and dealer reluctance to take product as we head into the slow winter months, we expect Q1 revenues to be down sequentially as well as year over year and that profit will be challenged in like fashion.

Brian: We anticipate that the Grand design RV Motor home entry will experience fiscal 'twenty, five sales of $100 million and could even exceed that amount.

Brian: That said, we believe that motor home dealers are expecting to further reduce inventories across the board during our fiscal year 2025, meaning our existing brands and those of our competitors.

Brian: Grand designs motor home business will be dilutive to the motor homes segment profit measures initially, particularly in the first half of the year as Grand design begins ramping up production and the associated cost and the startup business are not paired with revenues that are at scale.

Brian: We are confident that this new business will be accretive to our motor home profit metrics as we cross into fiscal 2006 and beyond.

Brian: As a reminder, the costs associated with the startup of this business have been included in our corporate segment through our Q4 of fiscal 'twenty, four and amounted to approximately $5 million in the fourth quarter.

Brian: Please note fiscal 'twenty five sales guidance for Grand design RV Motor home is being provided to help size. The initial opportunity only and Grand design motor home sales will not be broken out going forward, but will be included in our motor homes segment results.

Brian: In closing as macroeconomic conditions improve and the RV and marine industries stage that recovery, we remain confident in our mid cycle organic targets, we shared in March.

Brian: Typically we target sales in the range of four $5 billion to $5 billion with EBITDA margins in the range of 11% to 11, 5% and free cash flow of $325 million to $375 million.

Brian: We can continue to invest in our core competencies and enhancing the customer experience through new products and technologies, while maintaining a balanced approach to capital allocation to drive value creation for our shareholders.

Brian: Now please turn to slide 15, as I turn the call over to Mike for some closing comments Mike.

Mike: Thanks, Brian as.

Mike: As we look to the future I am confident in our company's strong positioning and long term growth potential let.

Let me highlight the key factors that underpin my optimism.

Mike: Our portfolio of premium outdoor recreation brands isn't just about market presence. It is the foundation for a robust future profitability and long term margin expansion.

Mike: We have established enterprise wide centers of excellence that are more than just organizational structures. There are catalysts for synergies. These synergies are positioned to help us drive accelerated growth and enhanced profitability across our operations.

Mike: At our core we're powered by our robust technology engine that we believe sets the pace for the end markets, we serve our unyielding commitment to quality and continuous product innovation ensures we maintain competitive differentiation.

Mike: In an ever changing economic landscape, our flexible integrated operating model and highly variable cost structure, our key assets.

Mike: They enable us to maintain durable profitability, regardless of economic cycles, providing stability and resilience.

Mike: Our strong balance sheet and healthy free cash flows are not just numbers on a page they represent opportunity we have ample dry powder to invest smartly in growth initiatives, while simultaneously returning capital to our value to shareholders.

Mike: Finally.

Mike: I want to emphasize the strength of our management team they bring deep operational experience to the table coupled with a proven track record of executing accretive M&A.

Mike: This expertise will be crucial as we navigate future opportunities and challenges.

Mike: Now, Brian and I will be happy to take your questions. This morning operator.

Mike: Please open the line for Q&A.

Speaker Change: Thank you and at this time, we will conduct a question and answer session.

Speaker Change: Ask a question you press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again, please limit yourself to one question and one related follow up you can rejoin the queue for additional questions. Please stand by we compile the Q&A roster.

Speaker Change: One moment for our first question.

Speaker Change: Our first question will come from the line of Joe answer Belo from Raymond James Your line is open.

Speaker Change: Thank you Hey, guys good morning.

Speaker Change: So a couple of high level questions on guidance, obviously, breaking with tradition here and giving guidance.

Speaker Change: Give us a sense for why you decided to provide it now and maybe your general philosophy around it. So we view this as a realistic or perhaps conservative.

Speaker Change: Good morning, Joe This is Mike.

Mike: The decision to provide guidance at this time was one of thoughtful deliberation.

Mike: And certainly a move that we thought was in the best interests of.

Mike: Investors being able to understand future business expectations.

Mike: As well as the company contributing more intentionally too.

Mike: The broader street narrative.

Mike: Around our future in a more formalized way.

Speaker Change: I think Brian reflected appropriately.

Speaker Change: The midpoint of our guidance.

Reflecting.

Speaker Change: Modest expectations on both revenue.

Speaker Change: But also upside possibilities on earnings per share.

Speaker Change: And I won't comment on whether I think the guidance ranges, neither conservative nor aggressive, but we were very thoughtful about.

Speaker Change: So we included for this morning's call.

Speaker Change: Okay. That's helpful. Maybe just to follow up on that the EPS range.

Speaker Change: Our range is fairly wide.

Speaker Change: I can certainly understand it probably would do the same thing if that was in your shoes, but maybe lay out for us the scenarios that would.

Speaker Change: I'll have to happen to get you to the high end and the low end of those ranges is it largely volume and revenue based or are there other factors impacting margin and maybe what are you assuming in terms of market share in FY 'twenty five.

Speaker Change: Yes, Joe this is Brian good morning.

Speaker Change: That.

Speaker Change: The EPS range is largely just the flow through of the market.

Speaker Change: The 320000 in the low end of the 350000 in the high end, we run a number of different scenarios than somewhat to your point of your question as it relates to market share as well as margin.

Speaker Change: A lot of the margin assumptions, we look at highs and lows based on the leverage equation as well as what we think the market will allow in the form of pricing.

Speaker Change: Inflation is certainly incorporated into some of those margin views and then similarly on the market share.

Speaker Change: We look at things like the entry of Grand design into the motor home business, which we think should certainly be.

Speaker Change: Accretive, but balanced with all the other forces going on in the market, including current trends on market share. We factored all of those things in and weighed them appropriately to come up with a downside and upside as well as the midpoint.

Speaker Change: Okay Super Thank you.

Speaker Change: Before we move on I, just want to point out to the audience here, we're going to be intentional in the time, we allow for Q&A. We've received a lot of feedback in the past that our call can get a little lengthy so we're going to draw. The line at 10 o'clock if that means that one of you don't get a chance at a question we will certainly weigh that on our next quarterly call.

Speaker Change: And as always we will follow up with the sell side and one on one calls.

Speaker Change: Today and tomorrow. So I wanted to just point that out upfront so no ones surprised when we cut the call off at 10, it is intentional and by design.

Speaker Change: Thank you. Our next question comes from the line of Scott <unk> from Ross Your line is open.

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

Speaker Change: Hey, good morning, Scott.

Scott: Could you guys talk about what youre seeing at retail as we speak right now there was some positive vibes coming out of open house regarding.

Scott: The Hershey show, just trying to get a sense, what youre seeing across the entire enterprise for rvs, mainly.

Scott: With rates, having come down and secondarily are you see any.

Scott: Signs of Green shoots that the lower rates are helping dealers.

Scott: To become more constructive on taking 25 product.

Mike: Good morning, Scott. This is Mike I'll start with the second half of your question I believe it's a little early.

Mike: For us to see the impact of the fed funds rate move.

Mike: Weeks ago with either our channel partners.

Mike: At the retail level. So at this time I cannot point to a significant or material impact.

Mike: Retail volume nor wholesale volume.

Mike: Totally related to.

Mike: The move by the fed here recently.

Mike: Concerning your question about recent retail activity my only comment there would be that.

Mike: Retail continues to be challenging.

Mike: Sluggish would even be probably the right word.

Mike: Comp year over year context.

We have not seen a meaningful change in overall retail conditions.

Mike: Since.

Mike: At the end of our fiscal year, including the open house period in late September.

Speaker Change: Got it and then just the last question on motorized.

EBITDA margins they.

They have climbed up to double digits or low double digits before.

Speaker Change: The recent.

Speaker Change: Falloff in profits, but with.

Speaker Change: The Grand design in the mix can you, maybe just give us a broader.

Speaker Change: View, where you expect margins in motorized to come back to at some point.

Speaker Change: We have a more normalized market and then once obviously grand design is really hitting full steam with their new products.

Speaker Change: Scott Good morning, this is <unk>.

Ryan our expectations for motor home have not changed I think we feel more bullish about them broadly in the long term with green desire in the market.

Speaker Change: And believe that longer term that we can return to that double digit range of EBITDA margin.

Ryan: Got it thank you.

Speaker Change: One moment for our next question.

Speaker Change: As a reminder, please limit yourself to one question and one related follow up.

Speaker Change: Our next question comes from the line of Craig Kennison from Baird. Your line is open.

Speaker Change: Craig Your line is open.

Speaker Change: We will continue one moment for our next question.

Speaker Change: Our next question comes from the line of Michael Swartz from <unk>. Your line is open.

Michael Swartz: Hey, guys good morning.

Michael Swartz: Maybe just to start on.

Michael Swartz: Guidance.

Michael Swartz: I think there was some caveat in the press release, just talking about your assumption is there is no changes in current market conditions macro et cetera, but I'm. Just wondering are you embedding any additional.

Michael Swartz: Interest rate cut in your current or your <unk>.

Michael Swartz: Fiscal year 'twenty five guidance.

Speaker Change: Yes, good morning, Mike This is Mike.

Speaker Change: I would say that our planning process.

Speaker Change: Taps into a variety of sources from an economic projection standpoint.

Speaker Change: As you know theres not necessarily a consensus on the number of.

Speaker Change: Or the amount of.

Speaker Change: Basis point wise cuts in the future.

Speaker Change: I think we all realize that the fed will probably take that on.

Speaker Change: A meeting by meeting basis.

Speaker Change: They look at the broader health of the.

Speaker Change: The U S economy.

Speaker Change: But I would say that our planning would generally factor in.

Speaker Change: An average consensus of cuts.

Speaker Change: The reality, though is is that it's as probably most of you on the call know, it's quite difficult to correlate a singular elements. Even one is important as retail interest rates.

Speaker Change: To the trajectory of the future business.

Speaker Change: And so.

Speaker Change: We have projected here.

In the call this morning.

Speaker Change: We do project that based on a combination of factors easing field inventory.

Speaker Change: Likelihood of.

Speaker Change: <unk>.

Speaker Change: Maybe a more retail friendly environment in the second calendar quarter of 2025.

Speaker Change: That conditions for retail in the outdoor recreation economy.

Speaker Change: Could improve in that time period.

Speaker Change: Which as we mentioned would actually be probably more so our third fiscal quarter of this 25 fiscal fiscal year. So no specific number of cuts included in our planning but.

Speaker Change: General alignment with probably the average economic consensus and that would be reflected in the high end most likely of the RV wholesale shipment range that Brian referenced in his comments this morning.

Speaker Change: Okay, Okay fair enough.

Speaker Change: And then just on the Grand design business and I appreciate you're sizing that out for us the 100 million plus in revenue opportunity for fiscal 'twenty, five but trying to understand what exactly that is based on is that just some kind of.

Speaker Change: The stocking level at the dealers that will be stocking. This is that based on initial orders you've received from consumers.

Speaker Change: Just any any clarity that you can provide there.

Speaker Change: Yes, Mike as you would expect the Grand design team has been busy.

Speaker Change: Busy launching the lineage series.

Speaker Change: Both at the wholesale and retail level for many many months, we have been signing up motorized dealers, some who are existing grand design <unk> dealers and some who are not yet part of the Grand design family of dealers.

Speaker Change: That dealer list has been built here over the past number of months and we'll continue to be built out into fiscal year 'twenty. Five. We've also begun to take retail orders through the dealers whether they are at retail shows like Hershey or Dallas or.

Speaker Change: Against the stocking inventory, that's beginning to flow into the field and we have a projection on both wholesale and retail for the lineage series M. The other comment I will make although we're not providing any details yet at this time.

Any specificity is that we've stated consistently that the Grand design Motor home line will be multifaceted in terms of the number of models in the line.

Speaker Change: And you can expect by the end of fiscal year 'twenty five.

Speaker Change: For us to potentially be in the market.

Speaker Change: More in motorized models from Grand design as well so it's a combination of factors in the first year of any new business strategy. Like this there is an ordinarily a heavier emphasis on stocking inventory, which the team has.

Good handle on based on their conversations with dealers some in the in the form of firm orders and some candidly.

Speaker Change: The form at this point still of forecasted future orders.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Craig Kennison from Baird. Your line is open.

Speaker Change: Okay, hopefully you can hear me.

Speaker Change: Yes, we can this time Craig.

Craig Kennison: Alright, thank you.

Craig Kennison: Mike I was wondering maybe if you would share any any mandates or kpis that you have.

Craig Kennison: Discussed with Chris West or Don Clark, what should investors expect in terms of a change in performance and where you're focused.

Good morning, Craig Thanks for the question.

Craig Kennison: Get into any kpis.

Speaker Change: Short term timeframe, but I'll talk at a.

Craig Kennison: At a higher level certainly in this way.

Craig Kennison: I'll start with <unk>, we believe that it's a strategic imperative.

Winnebago industries has at least two strong told those brands to compete in the North American totals RV market segment in the future.

Craig Kennison: We are very pleased.

Craig Kennison: With the performance of the Grand design <unk> business over time and continue to feel that there is significant runway. There. So one of the mandates to Don Clark candidly on the Grand design total side is to continue with his team to do everything possible to grow their share and profitability of that business in the future.

Craig Kennison: On the Winnebago branded towable side. This is a business candidly thats, probably running at about one 5% market share of the total space today we.

Craig Kennison: We see no reason why long term that can't be a brand that is at least double that size in the future.

Craig Kennison: Potentially could challenge, 5% someday I'm, not putting a timeline on that 3% to 5% range, but that is the expectation.

Craig Kennison: Internally is that we can build a business of that significance to complement the grand design <unk> business.

Craig Kennison: Listen Chris West has been around the company for eight years has had a number of different roles. He understands our expectations on Winnebago branded motorhomes in terms of share and.

Craig Kennison: And profitability Brian's talked about some of the profitability expectations on our different segments over time.

Craig Kennison: So im not sure they are much different than historically, what we've targeted for in the past.

Craig Kennison: So in the short term Chris is expected to stabilize the consistent performance of that business quarter to quarter, probably we'll probably take a couple of quarters for Chris to be able to do that.

Craig Kennison: But then he will begin to build profitable share in that business with his team over time as well we are very fortunate now to have three brands.

Craig Kennison: Motorized product in the market with Winnebago, and Newmar and Grand design, and we have a market share goal for those three brands in the motorized segment that would contribute to our overall north American RV market share goal of 13% that we communicated last March where their mid cycle targets.

Speaker Change: Thanks, Mike.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Tristan Thomas Martin from BMO Capital markets. Your line is open.

Speaker Change: Hi, good morning.

Good morning, gentlemen, just according to my math.

Speaker Change: A retail level, you've outperformed the broader industry in the quarter can you maybe talk to what drove that performance on a relative basis.

Speaker Change: Good morning, Tristan.

Speaker Change: We're starting to see some early signs of progress on some of the more affordable products that we've introduced into the marketplace, whether thats. The reflection 100 series Grand design, along with the imagine aim some of the transcend models that they've introduced.

Speaker Change: We are starting to see some traction.

Here in the past month or two that those products will indeed potentially hit the mark.

Speaker Change: And be able to both stabilize.

Speaker Change: <unk> share and potentially take it back in the right direction. The other thing I will note is that all of new Mars motorized product categories are gaining share.

Speaker Change: Class a luxury diesel class a.

Speaker Change: Sort of mainstream.

Speaker Change: Diesel class a gas and supersede all four of those categories Newmark continues to gain share on here.

Speaker Change: Here in <unk>.

Speaker Change: The U S and we have gained share recently as well on Winnebago branded class C product, our echo branded product has been a hit in the.

Speaker Change: Place with retail consumers.

Speaker Change: We are pleased with some of the retail performance here recently.

Speaker Change: In that RV business, one last comment I know you didn't ask this but I'll just offer it up.

Speaker Change: We noted pretty explicitly in the materials that barletta continues to take significant share as well and the aluminum pontoon space now reaching on a trailing 12 month basis, 9% share so.

Speaker Change: While the macro market share story has been certainly slowed or impacted from a number standpoint, because of some of the <unk> and class B Mab.

Speaker Change: We are seeing some very positive signs of market share growth in a number of our brands and categories now around the company.

Speaker Change: Okay got it and then just quickly on the table.

Speaker Change: Margin headwinds, where you break out how much of that was <unk> how much of that was grand design.

Speaker Change: What is transitory in nature.

Speaker Change: Yes.

Speaker Change: Yes interest and theirs.

Speaker Change: There's a lot of moving pieces here and the total margin mechanism necessarily breakout or quantity quantify.

Speaker Change: The business unit pieces, I'd say that you've probably got just to give a little bit more substance of point to a point and a half of deleverage.

Speaker Change:

Speaker Change: 225 points of pricing and mix I would say that that is.

Speaker Change: Overweighted to the Winnebago brand as it relates to the net pricing that we're able to achieve in the market right now in that brand in the discounts and allowances.

Speaker Change: That are necessary I would also state though that.

Speaker Change: There was an overweight of transcend.

Speaker Change: In the Grand design line up in the quarter.

Speaker Change: As a.

Speaker Change: Mix that.

Speaker Change: That was shipped into the market. Some of this is just the success Mike was just talking about on the retail expectations as well as some channel fill so.

Speaker Change: So we had overweighted transcend which drove some of that pricing.

Speaker Change: Slash mix in the quarter.

Speaker Change: There's about a point and a half of warranty.

Speaker Change: Year over year remember, we cited that we had favorable warranty in the prior year. So it's really a tough comp that we're facing.

Speaker Change: That's causing that and then probably another point of let's call. It overall productivity and operational challenges. We cited the Winnebago brand specifically as it relates to some of the profit challenges.

Speaker Change: From an operational standpoint, the consolidation under one roof.

Speaker Change: Some of the inventory write downs or write offs that we took in that business.

Speaker Change: And just some inefficiencies that we're experiencing there that we expect to turnaround under Don's leadership. So a lot of things in play there that impacted <unk>.

Speaker Change: Total margins it was a disappointing quarter from our vantage point net profitability and we're taking steps to address it.

Speaker Change: Thank you.

Speaker Change: One woman for next question.

Speaker Change: Our next question comes from the line of James Hardiman from Citi. Your line is open.

James Hardiman: Hey, good morning.

James Hardiman: So on the fiscal 'twenty guidance.

James Hardiman: I don't know, which of you youll youll sort of get into but I'm curious about.

James Hardiman: How do you see inventory turns finishing the year.

James Hardiman: You talked about continued destock motorized I'm curious about that asps for the year and then I think there was a question about market share I didn't know if you had any if we assume that sort of the midpoint of your guidance if that assumes any share gains or share losses.

James Hardiman: Yes, several several points.

James Hardiman: Touch on the Asp's first.

James Hardiman: James I'd say asp's were expecting.

Modest increases in Asps on.

James Hardiman: On an apples to apples basis.

James Hardiman: Within the motor home segment, I think totals will continue to see some headwinds as it relates to MIT.

James Hardiman: Affordability preferences that we had.

James Hardiman: In this past year I think some of those will persist into the coming year.

James Hardiman: See some modest ASP declines from a mixed perspective on the total business.

James Hardiman: And then similarly are probably not too differently modest headwinds.

James Hardiman: Sure.

James Hardiman: Marine side of the business as it relates to <unk>.

Asps.

Can you repeat for me that last question, we have James as it relates to the guidance.

James Hardiman: Yes.

James Hardiman: There was the inventory turns question and then I'll return for the year and then the market share assumptions.

James Hardiman: Yeah in terms of turns I think theres still some improvements that dealers will be looking for.

James Hardiman: On the motorized side, specifically I think broadly speaking the tolls business has is in a pretty good shape as it relates to dealer inventories.

James Hardiman: <unk> a little bit of work left to do on the marine side of the business as well in terms of bringing inventory levels down, but we really like our position on the <unk> business in particular.

James Hardiman: Increasing our position on dealer lots some of that enabled by the full lineup now that we have in the area. We still don't touch the lowest price points in that aluminum pontoon segment.

James Hardiman: But we have.

James Hardiman: Reach into the biggest sizes or the biggest size segments of the pontoon market now with the ARIA included so we're continuing to improve our our lot share.

James Hardiman: And the bar a lot of brands so thats in.

James Hardiman: In good shape.

Speaker Change: Market share assumptions.

James Hardiman: Assumptions that we're making.

James Hardiman: I would I would characterize them as is no dramatic changes from the current state as we looked at our low end of the range and the high end of the range Theres just modest assumptions that we factored in most notably.

James Hardiman: Just to reiterate the Grand design Motor home entry, we certainly expect that to be net accretive.

James Hardiman: We know that there's going to be some cannibalization of the Winnebago brand, but because of the approach that we're taking in the market. There. We think that most of the market share gains from the Grand design.

James Hardiman: Entry there will come from competition. We're also assuming that bar ladder will continue to improve some market share as they continue to penetrate dealer lots and have success on the retail side. So those are the I'd say the most notable market share assumptions that we are making as we put together that guidance.

Speaker Change: Got it and if I could if I could sneak one more in the marine business. It seems like Youre, telling us how great. Chris craft is doing but there was a big write down there.

And then I guess more broadly one of your peers is getting rid of their marine business. So I guess.

Speaker Change: What's your commitment to the marine business at this point.

Speaker Change: If it.

If it is.

Speaker Change: Core competency for you guys going forward would you potentially be interested in those assets.

Speaker Change: James and a few comments related to those questions number one we are committed to the marine business. We are very proud of both the barletta and the Chris craft businesses.

Speaker Change: The impairment that was taken on Chris craft, both Brian and I would probably characterize as somewhat of a cyclical trough impairment.

Speaker Change: The size of the.

Speaker Change: Total addressable market for Chris craft.

Speaker Change: Craft products combined.

Speaker Change: Combined with our very intentional efforts to make sure that dealer inventory is right sized.

Speaker Change: That business really led us to almost an analytical place there on the impairment that was taken this quarter.

Speaker Change: We still believe that that's.

Speaker Change: A very solid business for us in that particular segment.

Speaker Change: As we mentioned in the call Chris Craft has had I believe five straight months through the end of fiscal 2000 for Q4 positive retail comp year over year.

And as Brian just comment here recently.

Speaker Change: We feel that the <unk> business is in as good a shape as any other pontoon brand in the marine industry at this point in time in the marine cyclical trough and we gain share consistently each month throughout.

Speaker Change: The decline of that market.

Speaker Change: And we believe we are really well positioned.

Speaker Change: Going forward into the future. So I will not make a public comment on the assets that are in the possession of it.

Speaker Change: Any other company at this time.

Speaker Change: We just simply haven't ambition as we've stated in our mid cycle targets.

Speaker Change: To increase the size and profitability of our non RV business in a very smart intentional and accretive way for our shareholders and so we will continue multiple efforts to do that.

Speaker Change: <unk> broadening.

Speaker Change: Sort of the strength and quality of our marine business over time at the right times.

Speaker Change: But again.

Should not read anything into the impairment in terms of.

Speaker Change: Our confidence in the Chris craft business going forward.

Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Brandon Rolle from D. A Davidson your line is open.

Speaker Change: Good morning, Thank you for taking my question.

Brandon Rolle: Couple of questions ago, you had mentioned increased <unk> shipments and we have picked up on.

Brandon Rolle: And the chassis provider for those units.

Brandon Rolle: Also transcend changing to sell products or norco.

Brandon Rolle: Could you talk about the pricing benefits that you might receive from changing.

Brandon Rolle: Changing the provider there or.

Brandon Rolle: Maybe any other diversification efforts that you might be looking into maybe given the success of your market share during the recent quarter. Thank you.

Speaker Change: Thanks, Brandon Good morning, we will not comment publicly on the construction of our bill of materials.

Brandon Rolle: Individual supplier relationships.

Brandon Rolle: I can just tell you that each of our business unit and branded teams.

Brandon Rolle: Our very rigorous in their.

Brandon Rolle: Their decisions about what suppliers to work with just as we have to earn the business of our channel partners on a daily basis, our suppliers need to earn our brands business consistently as well, so but I will not get into the specific.

Brandon Rolle: Construction of our bill on any one of our particular brands I will tell you.

Brandon Rolle: Because of the transcend line, particularly the transcend one in the transcend explore our vital from a pricing standpoint to be able to hit certain targeted price ranges.

In instances like that our teams.

Brandon Rolle: Probably more than ever keep all options open on the table in terms of.

Brandon Rolle: Supplier choices to use.

Brandon Rolle: On those particularly those opening price point type products. So that's all I'll comment on this morning.

Speaker Change: Great. Thank you.

Speaker Change: And our next question.

Speaker Change: Our next question comes from the line of Fred Wightman from Wolfe Research. Your line is open.

Fred Wightman: Hey, guys. Good morning, Mike you made a comment about expecting a gradual improvement in retail over the next 12 months to 15 months and I'm wondering if that's an RV only comment if it includes marine and maybe if you could just help us think about.

Fred Wightman: When each of the different sub categories or sectors would start to see that our retail.

Speaker Change: Thanks, Fred Good morning comment was probably intended to simply project.

Fred Wightman: That.

Speaker Change: 12 to 15 months from now retail conditions should be better than they are today.

Speaker Change: Timing of when that happens, we've hinted that from a planning standpoint.

Speaker Change: We are projecting some favorability in retail conditions, beginning next spring of calendar 2025.

Speaker Change: Second calendar quarter third fiscal quarter.

Speaker Change: And how that varies by.

Speaker Change: RV subsegment and Marine sub segment.

Speaker Change: It's difficult for us.

Speaker Change: Be very accurate on that and so even as we sit here today.

Speaker Change: Six seven weeks into our fiscal first quarter of fiscal 'twenty five.

Speaker Change: Got some businesses that are positive from a retail comp standpoint year over year and we've got several businesses that are negative and so they are already moving.

Speaker Change: Both in terms of market conditions and our share.

Speaker Change: They are already moving at slightly different paces as we speak. So we just we just feel that the dealers need some more time to manage.

Speaker Change: Inventory.

Speaker Change: Although I will tell you our ageing inventory as we sit here at the end of fiscal 'twenty four is it meaningfully better shape than it was at the end of fiscal 'twenty three.

Speaker Change: But it still has a little bit of room to go I am sure in the dealers minds and they'll use the winter and early spring months as.

As Brian said.

Speaker Change: Take care of that and possibly destock a little.

Speaker Change: And we anticipate once we get past the general election in this country. The fed has a several more meetings to make some decisions on what they're going to do.

Speaker Change: The possibility for a <unk>.

Speaker Change: Healthier retail and wholesale environment.

Speaker Change: Could exist.

Speaker Change: And that second calendar quarter. So I would say, that's where we're hinging a potential upswing, but really won't get into specific details as to brand by brand or segment by segment.

Speaker Change: Thank you one moment for our next question.

Our next question comes from the line now is that skin from Keybanc capital markets. Your line is open.

Speaker Change: Alright, Thanks for taking my question most have been asked and answered, but just hoping you could provide kind of an update on.

Speaker Change: This data of your dealer base health.

Speaker Change: Both in RV and marine just kind of any any thoughts on sentiment as well. Thanks.

Speaker Change: And all of this is Brian.

Speaker Change: No Big news on that front, we continue to monitor our dealer channel.

Speaker Change: Think broadly speaking theres been some some specific dealers public.

Speaker Change: Most notably that people are keeping an eye on on their cash flow generation, which is clearly the focus right now versus just the P&L focus it's very much a cash flow environment right now for dealers as they.

Speaker Change: Manage through the higher interest rate environment, and the impact that that has on floor plan financing but.

Speaker Change: I'd say no notable change from the prior quarter as it relates to the dealer network.

Speaker Change: Thank you.

Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Next question will come from the line Bret Jordan from Jefferies. Your line is open.

Speaker Change: Hey, Good morning, guys. This is Patrick Buckley on for Brett Thanks for taking our questions.

Speaker Change: Yes.

Are there any notable recent trends to call out in the competitive environment within RV are you guys seeing more aggressive strategies pricing strategies from anyone looking at take care of things been relatively rational despite the challenging backdrop.

Speaker Change: Yes.

Speaker Change: Good morning.

Speaker Change: The retail marketplace continues to be aggressive.

Speaker Change: I wouldn't call it irrational per se, but I would just suggest that.

Speaker Change: The focus on affordability.

Speaker Change: And price points that.

Speaker Change: Consumers are open to engaging with.

Speaker Change: Our high volume lower cost competitors.

Speaker Change: Innately, probably have more of an advantage.

Speaker Change: And appetite.

Speaker Change: To compete aggressively in those price points I won't call out specific names, but one of the larger Oems has been a share gain winner in.

Speaker Change: In the industry and one of the larger dealers in the industry appears to have some share momentum is.

Speaker Change: Well.

Speaker Change: So but.

Speaker Change: As Brian alluded to in his financial comments discounts and allowances are elevated across the board totals motorized marine and Thats a reflection obviously of competition.

Speaker Change: Being.

Speaker Change: Aggressive.

Speaker Change: As well in key spots in our in our respective segments. So.

Speaker Change: But that's my comment there.

Speaker Change: Great I'll keep it at one as we hit the end here thanks guys.

Speaker Change: Thank you.

Speaker Change: We have reached the end of the call I'll turn it back over to Ray for Stylus for any closing remarks.

Speaker Change: That at the end of our fourth quarter earnings call. We look forward to seeing some of you at the upcoming Fort Lauderdale boat show later this month. Thank.

Speaker Change: Thank you for joining and enjoy the rest of your day.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.

Speaker Change: Thank you.

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Speaker Change: Good day, and thank you for standing by welcome to the Q4 and full year 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 will be a question and answer session.

Speaker Change: Now like to hand, the conference over to your speaker today.

Speaker Change: Ray Posadas, Vice President Investor Relations and market intelligence.

Ray Posadas: Thank you operator, good morning, everyone and thank you for joining us to discuss our fiscal 2020 for fourth quarter and full year earnings results. This call is being broadcast live on our website at Investor Dot WTO Dot net and a replay of the call will be available on our website later today. The news release with our fourth quarter results was issued and posted to our website earlier this morning.

Ray Posadas: 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 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.

Ray Posadas: 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 on our earnings press release, Please turn to slide three joining.

Ray Posadas: Mike will begin with an overview of our Q4 and full year performance.

Ray Posadas: Ian will discuss our financial results at a strategic level provide some further comments on our forward view of the market and discuss our fiscal 2025 guidance, 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.

Mike Scott: Thanks Ray good morning, and thank you for joining us to discuss our results.

Mike Scott: Let me begin by thanking the employees across Winnebago industries, and our portfolio of outdoor recreation brands for their hard work and resilience throughout the year.

Mike Scott: Although a difficult retail environment made fiscal 2024 and challenging year for the RV and Marine industries.

Mike Scott: The collaborative culture and commitment to excellence at Grand design with a bagel Newmar Barletta, Chris craft and lithium ex all serve as the foundation for a return to growth as market conditions improve in the future.

Mike Scott: Before we get into the details of our Q4 and full year results. There are several key messages I want to convey on this morning's call.

Mike Scott: First while the retail environment remains challenging in the short term, we anticipate gradual market improvement over the next 12 to 15 months.

Mike Scott: We would expect this to occur more materially as we move into the second quarter of calendar 2025, our third fiscal quarter factoring in the projected easing of interest rates and decreased inventory levels in the motor home RV category.

Mike Scott: Second we have made substantive leadership changes at Winnebago, Motorhomes and Winnebago towboat to remedy the operational and financial challenges that have affected the performance of those businesses in recent quarters.

Mike Scott: Third we are delighted by the enthusiastic consumer and dealer response to the lineage series M. Grand designs inaugural entry in the motor home RV segment.

Mike Scott: The new vehicle was featured at last month's Hershey RV show and RV dealer open house and a small number of units began shipping in Q4 the.

Mike Scott: The Grand design team with support from the businesses across our portfolio have created an RV with benefits that we believe set a new standard for excellence in our class C coach.

Mike Scott: And finally today, we are providing annual financial guidance for the first time in light of the continued market uncertainty we are being appropriately cautious out of the gate, but at the midpoint. We are forecasting modest improvement on the topline and adjusted EPS growth of 10% compared to prior year.

Mike Scott: There are several positive takeaways from the quarter worth, noting including initial shipments of lineage series M.

While not a meaningful contributor in Q4, we expect lineage to gain momentum as production ramps in the first half of fiscal 2025.

Mike Scott: In our Marine segment <unk> continued to take market share in the U S aluminum pontoon market in.

Mike Scott: In addition August marked the fifth consecutive month of year over year retail growth for Chris grabbed.

Mike Scott: On a trailing six month basis. This iconic brand has grown its retail volume by 32% compared with the same period in fiscal 'twenty three.

Mike Scott: Driven in part by its new launched 27, Chris Crafts retail share in the 20 to 40 foot fiberglass market has increased in the most recent three six and 12 month periods as well.

Mike Scott: Despite the weak retail market environment, our strong balance sheet and positive free cash flow enable us to maintain a thoughtful and balanced capital allocation approach in Q4, we generated free cash flow of $30 million and returned a combined $19 million to our shareholders in the form of share repurchases and dividends.

Mike Scott: Payments underscoring our confidence in Winnebago industry's long term growth prospects.

Mike Scott: Turning to slide five the RV industry Association now estimates calendar 2024 wholesale shipments at a median of about 324000 units and we are aligned with that projection.

Mike Scott: We anchor calendar year 2025, RV industry shipments in the range of 320 to 350000 units.

Mike Scott: Wholesale total RV industry shipments were up 10% year over year for the month of August and up 14, 5% year to date through the first eight months of calendar 'twenty four.

Mike Scott: This reflects continued progress towards right sizing inventory and then addressing the growing consumer demand for affordability.

Mike Scott: The motor home portion of the industry remains in Destocking mode with wholesale shipments down 31% year over year in August and down 24, 2% year to date.

Within our universe of RV dealers inventory turns were down very slightly in the fourth quarter compared with the year earlier period inventory for Winnebago industries was down four 5% from Q4 of fiscal 'twenty, three which underscores our focus on continuing to aggressively manage production amidst what remains a <unk>.

Mike Scott: Challenging macroeconomic environment.

Mike Scott: Turning to slide six for the trailing 12 months ended August 31, our total market share was 11, 1% down 50 basis points from the same period in 2003.

Mike Scott: As I noted on our Q3 call we have introduced new products over the past two quarters that we believe will contribute to stabilizing our market share in the coming months.

We believe this deliberate approach is crucial for fostering strong long term relationships with our dealer partners. As a result, we were pleased to see positive share gains for our Winnebago branded class C motor home and numerous full motorized product lines.

Both of which showed year over year growth across the trailing three six and 12 month periods through the end of August.

Mike Scott: Slide seven showcases <unk> continued momentum in the marine segment for the trailing 12 months through August 2020 for <unk> market share increased 200 basis points year over year to nine 1%.

Mike Scott: Our premium pontoons consistently out performed competitors driving exceptional results for our dealer network and elevating the customer experience.

Mike Scott: Turning to recent highlights on slide eight during the quarter, we made some strategic changes to our executive team and the leadership and our Winnebago Motorhomes and Winnebago told those businesses Chris.

Mike Scott: Chris West who previously served as senior Vice President of Enterprise Ops, and Barletta boats was named President of our Winnebago branded motor home and specialty vehicles business, Chris an eight year veteran of Winnebago industries. In addition to previous oversight responsibilities of the enterprises manufacturing and supply chain operations.

Mike Scott: Also successfully led the integration of Barletta and played a vital role in the both brands achievement of double digit market share growth.

Mike Scott: His broad experience will be invaluable as we further enhanced the winnebago brands influence impact in market share.

Our Winnebago branded <unk> business has underperformed our expectations and it is imperative that we have two strong told those brands to compete successfully in the marketplace.

Mike Scott: To enable the Winnebago branded <unk> business to reach its full potential Don Clark has been promoted to group president of our <unk> business effective November one.

Mike Scott: John will expand his responsibilities to oversee Winnebago totals. In addition to his role as president of Grand design RV.

Mike Scott: This change Centralizes, our <unk> expertise in Indiana his insights operational acumen and extensive knowledge of what it takes to win in this space will make down the ideal and logical choice to lead the team during their next evolution.

Mike Scott: Both Chris and Don will continue to report to me.

Mike Scott: These changes are designed to bolster our position as the trusted leader in the premium outdoor recreation market and drive our next phase of growth.

Turning to our product innovations I.

Mike Scott: I am excited to highlight our bold and innovative model year 2025 lineup much.

Mike Scott: Much of which we recently showcased at the Hershey RV show occur.

Mike Scott: Across our Winnebago Grand design and Newmar brands, we introduced nearly 150, new models and floor plans, demonstrating our commitment to technology design and comfort.

Mike Scott: As expected one of the highlights of the Hershey show was the class C lineage series M. Grand designs first ever motor home model from its thoughtfully designed interior to its superior payload capacity and driving performance lineage more than lives up to the high expectations and exacting standards of our loyal grant.

Mike Scott: Design customers.

Mike Scott: These product innovations across our portfolio of premium brands underscore our dedication to elevating every moment outdoors for our customers now.

Speaker Change: Now, let me turn the call over to Brian for the financial review.

Thanks, Mike and good morning, everyone as.

Speaker Change: As a reminder, in my prepared remarks, I will focus on the key drivers of our performance.

Brian: Starting with our consolidated results on slide nine retail demand continued its sluggish performance in the fourth quarter.

Brian: Operating expenses increased in the fourth quarter, primarily driven by a $33 million impairment charge associated with the Chris craft reporting unit startup costs associated associated with the launch of the Grand design motorized business and strategic investments in engineering digital asset development and increased data and information technology.

Brian: Knowledge capabilities.

Brian: The Chris craft impairment was the result of lower current financial performance due to challenging conditions in the recreational marine industry.

Brian: These factors resulted in adjusted EBITDA margin that was down from the prior year period.

Brian: Note that adjusted EBITDA shown excludes the impact from the Chris craft impairment.

Brian: We generated healthy full year cash flow and our balance sheet remains strong.

Brian: I also want to call your attention to two important housekeeping items bigger.

Brian: Beginning this fiscal quarter, we are no longer including an adjustment for the impact of the cost spread overlay in our calculation of adjusted diluted earnings per share.

Brian: As previously disclosed this adjustment was made to represent the economic offset a dilution risk from the cost spread overlay on our 2025 convertible notes.

Brian: This adjustment has significantly decreased from prior year largely due to the note repurchase earlier this fiscal year.

Brian: There was no impact from the call spread overlay in fiscal Q4 of 2024.

Brian: You will note that we have included a table in the appendix of our earnings presentation that shows the historical adjusted EPS, excluding this adjustment.

Brian: Next we wanted to give you early notice that starting with our first quarter fiscal 2025 results, we will no longer be providing segment backlog information.

Brian: Also dealers are typically slow to place orders through the trough in the cycle.

Brian: Therefore, we do not believe that backlog is a meaningful measure of future performance.

Brian: Consolidated revenues and adjusted EPS.

Brian: I'll have more on this shortly.

Turning to our performance by segment, starting with total RV on slide 10.

Brian: Revenues were down from last year's fourth quarter, reflecting a reduction in average selling price per unit related to product mix, partially offset by an increase in unit volume.

Brian: Segment, adjusted EBITDA margin was down versus last year, which was attributable to higher warranty expense due to a favorable prior year trend.

Brian: Deleverage from a reduction in average selling price per unit related to product mix and operational challenges in our Winnebago branded towable business.

These issues in the Winnebago brand are related to a shift in plant production, whereby we consolidated activities under one roof, rather than two and the inefficiencies of making this change.

Brian: And higher warranty expense in this business due to some elevated quality issues in this brand.

Brian: We also want to highlight that warranty as a percentage of net revenue in our Grand design business remains at or below our pre 2023 right.

Brian: Turning to slide 11 revenues for the motor home RV segment were down from the same period last year.

Brian: Segment, adjusted EBITDA was down from last year attributable to deleverage operational challenges and higher warranty expense.

Brian: Costs associated with manufacturing line consolidation and write offs of inventory related to product lines that we are discontinuing or easing back on.

Brian: From Grand design entering the motor home business and the accretion in market share and profit that this should ring.

Brian: To support dealers and moving inventory and create stronger incentives for customers discounts and allowances remained elevated in the quarter.

Brian: Also net revenue in the fourth quarter was affected by a mix shift towards product offerings, such as the bilateral.

Brian: As well as the reduction in Chris craft volume year over year.

Brian: Segment, adjusted EBITDA margin was down from the prior year due to volume deleverage and higher discounts and allowances, partially offset by targeted price increases.

Brian: Moving on to the balance sheet on slide 13 at fiscal year end Winnebago industries had a net debt to EBITDA ratio of approximately two times, which is slightly above our targeted range of 0.9% to one five times.

Brian: Last month, we paid a quarterly cash dividend of <unk> 34 per share.

Fiscal 2024 was the sixth consecutive year of dividend increases at Winnebago industries.

Brian: During the quarter, we repurchased approximately $10 million of our stock and at year end had $230 million remaining on our repurchase program.

Brian: In fiscal 2024, we returned $106 8 million to shareholders, consisting of $70 million in share repurchases and $36 8 million and dividend payments.

Brian: Okay.

Brian: Wrapping up on Slide 14, let me discuss our financial expectation for fiscal 2025, and the assumptions underlying our outlook as.

Brian: As a starting point our calendar 2025 outlook for RV wholesale shipments is 320 to 350000 unit industry wide.

Brian: To put this in context, our midpoint represents about 3% growth from the RV IAA median wholesale shipment forecast in calendar 2024.

Brian: With this important assumption in mind, we expect fiscal year 2025 revenue in the range of $2 9 billion to $3 2 billion.

Brian: We also expect fiscal year 2025 of adjusted earnings per share in the range of $3 to $4 50.

Brian: The midpoint of our adjusted EPS range would reflect growth of 10% from fiscal 'twenty four.

Brian: Lastly, we anticipate full year interest expense of approximately $25 million to $30 million.

Brian: Given the state of field inventories and dealer reluctance to take product as we head into the slow winter months, we expect Q1 revenues to be down sequentially as well as year over year and that profit will be challenged in like fashion.

Brian: We anticipate that the Grand design RV motor home entry will experienced fiscal 'twenty, five sales of $100 million and could even exceed that amount.

Grand designs motor home business will be dilutive to the motor homes segment profit measures initially, particularly in the first half of the year as Grand design begins ramping up production and the associated cost and the startup business are not paired with revenues that are at scale.

Brian: We are confident that this new business will be accretive to our motor home profit metrics as we cross into fiscal 'twenty six and beyond.

Brian: In closing as macroeconomic conditions improve and the RV and marine industries stage. The recovery, we remain confident in our mid cycle organic targets. We shared in March specifically, we target sales in the range of four $5 billion to $5 billion with EBITDA margins in the range of <unk> 11.

Brian: 1% to 11, 5% and free cash flow of $325 million to $375 million.

Brian: We can continue to invest in our core competencies and enhancing the customer experience through new products and technologies, while maintaining our balanced approach to capital allocation to drive value creation for our shareholders.

Speaker Change: Now please turn to slide 15, as I turn the call over to Mike for some closing comments Mike.

Mike Scott: Thanks, Brian.

Mike Scott: As we look to the future I am confident in our company's strong positioning and long term growth potential.

Mike Scott: Let me highlight the key factors that underpin my optimism.

Mike Scott: Our portfolio of premium outdoor recreation brands isn't just about market presence. It is the foundation for robust future profitability and long term margin expansion.

Mike Scott: We have established enterprise wide centers of excellence that are more than just organizational structures. There are catalysts for synergies. These synergies are position to help us drive accelerated growth and enhanced profitability across our operations.

Mike Scott: At our core we're powered by our robust technology engine that we believe sets the pace for the end markets, we serve our unyielding commitment to quality and continuous product innovation ensures we maintain competitive differentiation.

Mike Scott: In an ever changing economic landscape, our flexible integrated operating model and highly variable cost structure, our key assets.

Mike Scott: They enable us to maintain durable profitability, regardless of economic cycles, providing stability and resilience.

Mike Scott: Our strong balance sheet and healthy free cash flows are not just numbers on a page they represent opportunity we have ample dry powder to invest smartly in growth initiatives, while simultaneously returning capital to our value to shareholders.

Mike Scott: Finally.

Mike Scott: I want to emphasize the strength of our management team they bring deep operational experience to the table coupled with a proven track record of executing accretive M&A.

Mike Scott: This expertise will be crucial as we navigate future opportunities and challenges.

Mike Scott: Now, Brian and I will be happy to take your questions. This morning operator.

Mike Scott: Please open the line for Q&A.

Speaker Change: Thank you and at this time, we will conduct a question and answer session.

Speaker Change: Ask a question you press star one on your telephone and wait for your name to be announced.

Speaker Change: One moment for our first question.

Speaker Change: Our first question comes from the line of Joe answer Belo from Raymond James Your line is open.

Speaker Change: Thank you Hey, guys good morning.

Speaker Change: So couple of high level questions on guidance, obviously, breaking with tradition here in <unk>.

Speaker Change: Guidance.

Give us a sense for why you decided to provide it now and maybe your general philosophy around it. So we view this as a realistic or perhaps conservative.

Mike Scott: Good morning, Joe This is Mike.

Mike Scott: The decision to provide guidance at this time was one of thoughtful deliberation and certainly a move that we thought was in the best interests of.

Mike Scott: Investors being able to understand future business expectations.

Mike Scott: As well as the company contributing more intentionally too.

Mike Scott: The broader street narrative.

Mike Scott: Around our future in a more formalized way.

Speaker Change: I think Brian reflected.

Speaker Change: <unk>.

Speaker Change: The.

Speaker Change: The midpoint of our guidance.

Reflecting.

Speaker Change: Modest.

Speaker Change: Expectations on both revenue.

Speaker Change: But also upside possibilities on earnings per share.

Speaker Change: And I won't comment on whether I think the guidance ranges, neither conservative nor aggressive, but we were very thoughtful about the numbers. We included for this morning's call.

Speaker Change: Okay. That's helpful. Maybe just a follow up on that the EPS range is fairly wide, which I completely understand and probably will do the same thing if that was in your shoes, but maybe lay out for us the scenarios that would.

Speaker Change: I'll have to happen to get you to the high end and the low end of those ranges is it largely volume and revenue based or are there other factors impact the margin and maybe what are you assuming in terms of market share it FY 'twenty five.

Speaker Change: Yes, Joe This is Brian good morning, I'll take that.

Speaker Change: The EPS range is largely drove the flow through of the the market.

Speaker Change: The 320000 at the low end of the 350000 in the high end, we run a number of different scenarios than somewhat to your point of your question as it relates to market share as well as margin.

Speaker Change: Lot of the margin assumptions, we look at highs and lows based on the leverage equation as well as what we think the market will allow in the form of pricing.

Speaker Change: Inflation is certainly incorporated into some of those margin views and then similarly on the market share.

Speaker Change: We look at things like the entry of Grand design into the motor home business, which we think should certainly be.

Speaker Change: Accretive, but balanced with all the other forces going on in the market, including current trends and market share, we factored all of those things and and weighed them appropriately to come up with a downside and upside as well as the midpoint.

Speaker Change #100: Okay Super Thank you.

Speaker Change #101: Before we move on I, just want to point out to the audience here, we are going to be intentional in the time, we allow for Q&A. We've received a lot of feedback in the past that our call can get a little lengthy so we're going to draw. The line at 10 o'clock if that means that one of you don't get a chance at a question we will certainly weigh that on our next quarterly call.

And as always we will follow up with the sell side and one on one calls.

Speaker Change #101: Today and tomorrow. So I wanted to just point that out upfront. So no one's surprise when we cut the call off at 10, it is intentional and by design.

Speaker Change #101: Thank you.

Next question comes from the line of Scott <unk> from Ross Your line is open.

Speaker Change #102: Hey, good morning, guys and thanks for taking my questions.

Speaker Change #103: Hey, good morning, Scott.

Scott: Could you guys talk about what youre seeing at retail as we speak right now there were some positive vibes coming out of open house regarding.

Scott: The Hershey show just trying to get a sense, what you're seeing across the entire enterprise for rvs, mainly.

Scott: With rates, having come down and secondarily are you seeing any.

Scott: Signs of Green shoots that the lower rates are helping dealers.

Scott: To become more constructive on taking 25 product.

Speaker Change #104: Good morning, Scott. This is Mike I'll start with the second half of your question I believe it's a little early.

Speaker Change #104: For us to see the impact of the fed funds rate move.

Speaker Change #104: <unk> weeks ago with either our channel partners.

Speaker Change #104: At the retail level. So at this time I cannot point to a significant or material impact.

Speaker Change #104: Retail volume nor wholesale volume.

Speaker Change #104: Totally related to.

Speaker Change #104: The move by the fed here recently.

Speaker Change #105: Concerning your question about recent retail activity my only comment there would be that.

Speaker Change #105: Retail continues to be challenging.

Speaker Change #105: Sluggish would even be probably the right word.

Speaker Change #105: Comp year over year context.

Speaker Change #105: And we have not seen a meaningful change in overall retail conditions.

Speaker Change #105: Since.

Speaker Change #105: At the end of our fiscal year, including the open house period in late September.

Speaker Change #105: Got it and then just the last question on motorized.

Speaker Change #106: EBITDA margins.

Speaker Change #106: Have climbed up to double digits or low double digits before the recent.

Falloff in profits, but with.

Speaker Change #107: The Grand design in the mix can you, maybe just give us a broader view of where you expect margins in motorized to come back to at some point when we have a more normalized market and then once obviously grand design is really hitting full steam with their new products.

Speaker Change #106: Sure.

Speaker Change #108: Yes, Scott good morning.

Brian.

Brian: Our expectations for motor home have not changed I think we feel more bullish about them broadly in the long term with green desire in the market.

Brian: And believe that longer term that we can return to that double digit range of EBITDA margin.

Speaker Change #109: Got it thank you.

Speaker Change #109: One moment for our next question.

Speaker Change #111: As a reminder, please limit yourself to one question and one related follow up.

Speaker Change #112: Our next question comes from the line of Craig Kennison from Baird. Your line is open.

Speaker Change #112: Craig Your line is open.

Speaker Change #112: We will continue one moment for our next question.

Speaker Change #113: Our next question comes from the line of Michael Swartz from <unk>. Your line is open.

Hey, guys good morning.

Michael Swartz: Maybe just to start on <unk>.

Guidance.

Michael Swartz: I think there were some caveats in the press release, just talking about your assumption. There is no changes in current market conditions macro et cetera, but I'm. Just wondering are you embedding any additional.

Michael Swartz: Interest rate cut in your current or your <unk>.

Michael Swartz: Fiscal year 'twenty five guidance.

Yes, good morning, Mike This is Mike.

Michael Swartz: I would say that our planning process.

Michael Swartz: Taps into a variety of sources from an economic projection standpoint.

Michael Swartz: As you know theres not necessarily a consensus on the number of.

Michael Swartz: Or the amount of.

Basis point wise cuts in the future.

Michael Swartz: I think we all realize that the fed will probably take that on.

A meeting by meeting basis.

They look at the broader health of the U S economy.

Michael Swartz: But I would say that our planning would generally factor in.

Michael Swartz: An average consensus of cuts.

Michael Swartz: The reality, though is is that it's as probably most of you on the call know, it's quite difficult to correlate a singular element even one is important as retail interest rates.

Michael Swartz: To the trajectory of the future business.

Michael Swartz: And so.

Michael Swartz: We have projected here in the in the call. This morning that we we do project that based on a combination of factors easing field inventory.

Likely hood.

Michael Swartz: <unk>.

Michael Swartz: Maybe a more retail friendly environment in the second calendar quarter of 2025.

Michael Swartz: That conditions for retail in the outdoor recreation economy.

Michael Swartz: Could improve in that time period.

Michael Swartz: Which as we mentioned would actually be probably more so our third fiscal quarter of this 25 fiscal fiscal year. So no specific number of cuts included in our planning but.

Michael Swartz: General alignment with probably the average economic consensus and that would be reflected in the high end most likely of the RV wholesale shipment range that Brian referenced in his comments this morning.

Speaker Change #114: Okay, Okay fair enough.

Speaker Change #115: And then just on the Grand design business and appreciate you're sizing that up worth 100 million plus in revenue opportunity for fiscal 'twenty five.

Speaker Change #116: I'm trying to understand what exactly that is based on is that just some kind of.

Speaker Change #116: The stocking level at the dealers that.

Speaker Change #116: That will be stocking there does that based on initial orders you've received from consumers.

Speaker Change #116: Any any clarity that you can provide there.

Speaker Change #117: Yes, Mike as you would expect the Grand design team has been busy launching the lineage series.

Speaker Change #118: At the wholesale and retail level for many many months, we have been signing up motorized dealers, some who are existing grand design <unk> dealers and some who are not yet part of the Grand design family of dealers.

Speaker Change #118: That dealer list has been built here over the past number of months and we will continue to be built out.

Speaker Change #118: Into fiscal year 'twenty five we've also begun to take retail orders through the dealers whether they are at retail shows like Hershey or Dallas or.

Speaker Change #118: Against the stocking inventory, that's beginning to flow into the field and we have a projection on both wholesale and retail for the lineage series M. The other comment I will make although we're not providing any details yet at this time if.

Speaker Change #118: If any specificity is that we've stated consistently that the Grand design Motor home line will be multifaceted in terms of the number of models in the line.

Speaker Change #118: And you can expect by the end of fiscal year 'twenty five.

Speaker Change #118: For us to potentially be in the market.

Speaker Change #118: With more than motorized models from Grand design as well. So it's a combination of factors in the first year of any new business strategy. Like this there is an ordinarily a heavier emphasis on stocking inventory, which the team has a good handle on based on their conversations.

Speaker Change #118: With dealers some in the in the form of firm orders and some candidly.

Speaker Change #118: In the form at this point still of forecasted future orders.

Speaker Change #119: Okay, great. Thank you.

Speaker Change #119: Thank you.

Speaker Change #121: For next question.

Speaker Change #122: Our next question comes from Craig Kennison from Baird. Your line is open.

Craig Kennison: Okay, hopefully you can hear me.

Speaker Change #123: Yes, we can this time Craig alright.

Craig Kennison: Alright. Thank you Mike I was wondering maybe if you would share any any mandates or kpis that you have.

Craig Kennison: <unk> discussed with Chris West or Don Clark, what should investors expect in terms of a change in performance and where you're focused.

Speaker Change #124: Good morning, Craig Thanks for the question.

Speaker Change #124: I won't get into any kpis in a short term timeframe, but I'll talk.

Craig Kennison: At a higher level certainly in this way.

Craig Kennison: I'll start with <unk>.

Craig Kennison: We believe that it's a strategic imperative.

That Winnebago industries has at least two strong told those brands to compete in the North American totals RV market segment in the future.

Craig Kennison: We are very pleased.

Craig Kennison: With the performance of the Grand design <unk> business over time and continue to feel that there's significant runway. There. So one of the mandates to Don Clark candidly on the Grand design total side is to continue with his team to do everything possible to grow their share and profitability of that business in the future.

Craig Kennison: On the Winnebago branded towable side. This is a business candidly thats, probably running at about one 5% market share of the total space today.

Craig Kennison: We see no reason why long term that can't be a brand that is at least double that size in the future.

Craig Kennison: And potentially could challenge, 5% someday I'm, not putting a timeline on that 3% to 5% range, but that is the expectation.

Craig Kennison: Internally is that we can build a business of that significance to complement the grand design totals business listen Chris West has been around the company for eight years has had a number of different roles he understands our expectations.

Craig Kennison: On Winnebago branded Motorhomes in terms of share.

Craig Kennison: And profitability Bryan has talked about some of the profitability expectations on our different segments over time, so I'm not sure they're much different than historically, what we've targeted for in the past.

Craig Kennison: But then he will begin to build profitable share in that business with his team over time as well we are very fortunate now to have three brands.

Speaker Change #126: Thanks, Mike.

Speaker Change #127: Thank you one moment for our next question.

Speaker Change #128: Our next question comes from the line of Tristan Thomas Martin from BMO Capital markets. Your line is open.

Speaker Change #128: Hey, good morning.

Speaker Change #130: Good morning, gentlemen.

According to my math.

Speaker Change #131: Retail level us outperform the broader industry in the quarter can you maybe talk to what drove that performance on a relative basis.

Good morning, Tristan.

Speaker Change #132: We're starting to see some early signs of progress on some of the more affordable products that we've introduced into the marketplace, whether thats. The reflection 100 series Grand design, along with the imagine aim some of the transcend models that they've introduced.

Speaker Change #132: We are starting to see some traction.

Speaker Change #132: Here in the past month or two that those products will indeed potentially hit the mark.

And be able to both stabilize our total share and potentially take it back in the right direction. The other thing I will note is that all of new Mars motorized product categories are gaining share.

Speaker Change #132: Class a luxury diesel class a.

Speaker Change #132: Sort of mainstream.

Speaker Change #132: Diesel class a gas and Super C. All four of those categories Newmark continues to gain share on here.

Speaker Change #132: Here in the U S and we have gained share recently as well on Winnebago branded class C product, our echo branded product has been hit in the marketplace with retail consumers.

Speaker Change #132: And so we are pleased with some of the retail performance here recently.

Speaker Change #132: In that RV business, one last comment I know you didn't ask this but I'll just offer it up we noted pretty explicitly in the materials that bar letter continues to take significant share as well and the aluminum pontoon space now reaching on a trailing 12 month basis, 9% share so while the Mac.

Speaker Change #132: <unk> market share.

Speaker Change #132: Story has been certainly slowed or impacted from a number standpoint, because of some of the totals and class B Mab.

Speaker Change #132: We are seeing some very positive signs of market share growth in a number of our brands and categories now around the company.

Speaker Change #133: Okay got it and then just quickly on the table.

Speaker Change #133: The margin headwinds, where you break out how much of that was <unk> how much of that was grand design kind of what.

Speaker Change #133: Transitory in nature. Thanks.

Speaker Change #133: Yes, and there is a lot of moving pieces here and the total margin meconin necessarily breakout or quantity quantify.

Speaker Change #134: The business unit pieces, I'd say that you've probably got just to give a little bit more substance.

Speaker Change #134: Point to point and a half of deleverage.

Speaker Change #134: 225 points of pricing and mix I would say that that is <unk>.

Speaker Change #134: Overweighted to the Winnebago brand as it relates to the net pricing that we're able to achieve in the market right now in that brand in the discounts and the allowances.

Speaker Change #134: That are necessary I would also state though that.

Speaker Change #134: There was an overweight of transcend.

Speaker Change #134: In the Grand design lineup in the quarter.

Speaker Change #134: As a.

Speaker Change #134: Mix that.

Speaker Change #134: That was shipped into the market. Some of this is just the success Mike was just talking about on the retail expectations as well as.

Speaker Change #134: Some channel fill so we had over weighted transcend which drove some of that pricing.

Speaker Change #134: Slash mix in the quarter.

Speaker Change #134: There was about a point and a half of warranty.

Speaker Change #134: Year over year remember, we cited that we had favorable warranty in the prior year. So it's really a tough comp that we're facing.

Speaker Change #134: That's causing that and then probably another point of it.

Speaker Change #134: Let's call it overall productivity and operational challenges, we cited the Winnebago brand specifically as it relates to some of the profit challenges.

Speaker Change #134: From an operational standpoint, the consolidation under one roof.

Speaker Change #134: Some of the inventory write downs or write offs that we took in that business.

Speaker Change #134: And just some inefficiencies that we're experiencing there that we expect to turnaround under Don's leadership. So a lot of things in play there that impacted <unk>.

Speaker Change #134: Total margins it was a disappointing quarter from our vantage point on that profitability and we're taking steps to address it.

Speaker Change #135: Thank you.

Speaker Change #136: One woman for next question.

Speaker Change #137: Our next question comes from the line of James Hardiman from Citi. Your line is open.

James Hardiman: Hey, good morning.

James Hardiman: So on the fiscal 'twenty five guidance.

James Hardiman: I don't know, which of you youll youll start to get into but I'm curious about.

James Hardiman: How do you see inventory turns finishing the year.

James Hardiman: Yes, several several points.

James Hardiman: Touch on the Asp's first.

James Hardiman: James I'd say asp's were expecting.

Modest increases in Asps on.

James Hardiman: On an apples to apples basis.

James Hardiman: Within the motor home segment, I think <unk> will continue to see some headwinds as it relates to MIT and affordability preferences that we had.

James Hardiman: In this past year I think some of those will persist into the coming year.

James Hardiman: See some modest ASP declines from a mixed perspective on the <unk> business.

James Hardiman: And then similarly are probably not too differently modest headwinds.

James Hardiman: Yeah.

James Hardiman: The marine side of the business as it relates to.

James Hardiman: Asps.

Speaker Change #138: Can you repeat for me that last question, we have James as it relates to the guidance.

James Hardiman: Yes.

James Hardiman: There was the inventory turns question and then I'll return for the year and then the market share assumptions.

Speaker Change #139: Yeah in terms of turns I think theres still some improvements that dealers will be looking for.

Speaker Change #139: On the motorized side, specifically I think broadly speaking the <unk> business is is in a pretty good shape as it relates to dealer inventories.

Speaker Change #139: <unk> a little bit of work left to do on the marine side of the business as well in terms of bringing inventory levels down, but we really like our position on the <unk> business in particular.

Increasing our position on dealer lots some of that enabled by the full lineup now that we have in the area. We still don't touch the lowest price points in that aluminum pontoon segment.

But we have.

Speaker Change #139: Reach into the biggest sizes or biggest size segments of the pontoon market now with the ARIA included so we're continuing to improve our our lot share on.

Speaker Change #139: The <unk> brand so that's in <unk>.

Speaker Change #139: In good shape.

Speaker Change #139: Market share assumptions.

Assumptions that we're making.

Speaker Change #139: I would I would characterize them as is no dramatic changes from the current state as we looked at our low end of the range and the high end of the range Theres just modest assumptions that we factored in most notably.

Speaker Change #139: Just to reiterate the Grand design Motor home entry, we certainly expect that to be net accretive.

Speaker Change #139: We know that there's going to be some cannibalization of the Winnebago brand, but because of the approach that we're taking in the market. There. We think that most of the market share gains from the Grand design.

Speaker Change #139: Entry there will come from competition. We're also assuming that bar ladder will continue to improve some market share as they continue to penetrate dealer lots and have success on the retail side. So those are the I would say the most notable market share assumptions that we are making as we put together that guidance.

Speaker Change #140: Got it and if I could if I could sneak one more in the marine business. It seems like Youre, telling us how great. Chris craft is doing but there was a big write down there.

Speaker Change #141: And then I guess more broadly one of your peers is getting rid of their marine business. So I guess.

Speaker Change #141: What's your commitment to the marine business at this point.

Speaker Change #141: If it.

Speaker Change #141: If it is sort of a core competency for you guys going forward would you potentially be interested in those assets.

Speaker Change #142: James a few comments related to those questions number one we are committed to the marine business. We are very proud of both the barletta and the Chris craft businesses.

Speaker Change #142: The impairment that was taken on Chris craft, both Brian and I would probably characterize as somewhat of a cyclical trough impairment.

Speaker Change #142: The size of the.

Speaker Change #142: Total addressable market for Chris craft Chris.

Chris craft products.

Speaker Change #142: Bind with are very intentional efforts to make sure that dealer inventory is right sized in that business really led us to almost an analytical place there on the impairment that was taken this quarter.

Speaker Change #142: We still believe that that's.

Speaker Change #142: A very solid business for us in that particular segment.

Speaker Change #142: As we mentioned in the call Chris Craft has had I believe five straight months through the end of fiscal 2000 for Q4 positive retail comp year over year.

Speaker Change #142: And as Brian just comment here recently.

Speaker Change #142: We feel that the <unk> business is in as good a shape as any other pontoon brand in the marine industry at this point in time in the marine cyclical trough and and we gain share consistently each month throughout.

The decline of that market and we believe we are really well positioned.

Speaker Change #142: <unk> forward into the future so.

Speaker Change #142: We'll not make a public comment on the assets that are in the possession of any other company at this time.

Speaker Change #142: We just simply haven't ambition as we've stated in our mid cycle targets.

Speaker Change #142: To increase the size and profitability of our non RV business in a very smart intentional and accretive way for our shareholders and so we will continue multiple efforts to do that.

Speaker Change #142: <unk> broadening.

Speaker Change #142: Sort of the strength and quality of our marine business over time at the right times.

Speaker Change #142: But again.

Speaker Change #142: Should not read anything into the impairment in terms of.

Speaker Change #142: Our confidence in the Chris craft business going forward.

Speaker Change #143: Thank you one moment for our next question.

Speaker Change #144: Our next question comes from the line of Brandon Rolle from D. A Davidson your line is open.

Brandon Rolle: Good morning, Thank you for taking my question.

Brandon Rolle: Couple of questions ago, you had mentioned increased <unk> shipments and we have picked up on.

Brandon Rolle: And the chassis provider for those units.

Brandon Rolle: Also transcend changing to sell products or norco.

Brandon Rolle: Could you talk about the pricing benefits that you might receive from changing.

Brandon Rolle: Changing the provider there or.

Brandon Rolle: Maybe any other diversification efforts that you might be looking into maybe given the success of your market share during the recent quarter. Thank you.

Speaker Change #145: Thanks, Brandon Good morning, we will not comment publicly on the construction of our bill of materials.

Speaker Change #145: Individual supplier relationships.

Speaker Change #145: I can just tell you that each of our business unit and branded teams.

Speaker Change #145: Our very rigorous in their.

Speaker Change #145: Their decisions about what suppliers to work with just as we have to earn the business of our channel partners on a daily basis, our suppliers need to earn our brands business consistently as well, so but I will not get into the specific construction of a bill on any one of our.

Speaker Change #145: Our particular brands I will tell you.

Speaker Change #145: That because of the transcend line, particularly the transcend one in the transcend explore our vital from a pricing standpoint to be able to hit certain targeted price ranges.

Speaker Change #145: In instances like that our teams.

Speaker Change #145: Probably more than ever keep all options open on the table in terms of.

Speaker Change #145: Supplier choices to use.

Speaker Change #145: On those particularly those opening price point type products. So that's all I'll comment on this morning.

Speaker Change #146: Great. Thank you.

Speaker Change #147: And our next question.

Speaker Change #148: Our next question comes from the line of Fred Wightman from Wolfe Research. Your line is open.

Fred Wightman: When each of the different sub categories or sectors would start to see that our retail.

Mike Scott: Thanks, Fred Good morning, the comment was probably intended to simply project.

Mike Scott: That.

Mike Scott: 12 to 15 months from now retail conditions.

Mike Scott: Should be better than they are today.

Mike Scott: Timing of when that happens, we've hinted that from a planning standpoint.

We are projecting some favorability in retail conditions, beginning next spring of calendar 2025.

Mike Scott: Second calendar quarter third fiscal quarter.

Mike Scott: And how that varies by.

Mike Scott: RV subsegment and Marine sub segment.

Mike Scott: It's difficult for us.

Mike Scott: Be very accurate on that and so even as we sit here today.

Mike Scott: Six seven weeks into our fiscal first quarter of fiscal 'twenty five.

Mike Scott: We've got some businesses that are positive from a retail comp standpoint year over year and we've got several businesses that are negative and so they are already moving.

Mike Scott: Both in terms of market conditions and our share.

Mike Scott: They are already moving at slightly different paces as we speak. So we just we just feel that the dealers need some more time to manage.

Mike Scott: Inventory.

Mike Scott: Although I will tell you our ageing inventory as we sit here at the end of fiscal 'twenty four is a meaningfully better shape than it was at the end of fiscal 'twenty three.

Mike Scott: But it still has a little bit of room to go I am sure in the dealers minds and they will use the winter and early spring months as.

Speaker Change #149: As Brian said.

Speaker Change #149: Take care of that and possibly destock a little.

And we anticipate once we get past the general election in this country. The fed has a several more meetings to make some decisions on what they're going to do.

Speaker Change #149: That the possibility for a <unk>.

Speaker Change #149: Healthier retail and wholesale environment.

Speaker Change #149: Could exist.

Speaker Change #149: And that second calendar quarter. So I would say, that's where we're hinging a potential upswing, but really won't get into specific details as to brand by brand or segment by segment.

Speaker Change #150: Thank you one moment for our next question.

Speaker Change #151: Our next question comes from the line now is that skin from Keybanc capital markets. Your line is open.

Speaker Change #152: Alright, Thanks for taking my question most have been asked and answered, but just hoping you could provide kind of an update on.

Speaker Change #153: This data of your dealer base health, both in RV and Marine just kind of any any thoughts on demand as well. Thanks.

Speaker Change #153: And obviously Brian.

Speaker Change #154: No Big news on that front, we continue to monitor our dealer channel.

Speaker Change #154: I think broadly speaking theres been some some specific dealers public most.

Speaker Change #154: Most notably that that people are keeping an eye on on their cash flow generation, which is clearly the focus right now versus just the P&L focus it's very much a cash flow environment right now for dealers as they.

Speaker Change #154: <unk>.

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