Q3 2025 Winnebago Industries Inc Earnings Call
Okay.
Welcome to the Q3 fiscal 2025 Winnebago industries financial results Conference call. At this time, all participants are in a listen only mode.
Operator: Welcome to the Q3 Fiscal 2025 Winnebago Industries Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
After the speaker's presentation, there will be a question and answer session.
Operator: To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.
Ask a question during the session you will need to press star one on your telephone.
I've been here and a big advantage advising that your hand is right to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today right beside it Vice President of Investor Relations and market Intelligence. Please go ahead.
Operator: Please be advised that today's conference is being recorded.
Ray Posadas: I would now like to hand the conference over to your first speaker today, Ray Posadas, Vice President of Investor Relations and Market Intelligence. Please go ahead. Thank you, Tanya.
Speaker Change: Thank you Tania and good morning, everyone and thank you for joining us to discuss our fiscal 2025 third quarter earnings results. This call is being broadcast live on our website at Investor <unk> Dot net and a replay of the call will be available on our website later today.
Ray Posadas: Good morning, everyone, and thank you for joining us to discuss our fiscal 2025 third quarter earnings forecast. This call is being broadcast live on our website at www.investor.wgo.net and the replay of the call will be available on our website later today. The news released with our third quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor section of our website under quarterly results.
Speaker Change: The news release with our third quarter results was issued and posted to our website earlier. This morning. Please note that the earnings slide deck that powers along with our prepared remarks is also available on the investors section of our website under quarterly results.
Speaker: Turning to slide.
Speaker Change: 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 the actual results to differ.
Ray Posadas: 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 the actual results to differ materially. These factors are identified in our SEC filings, which we encourage you In addition, on today's call, management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release.
Speaker Change: Materially from these statements. These factors are identified in our SEC filings, which we encourage you to read it.
Speaker Change: In addition on today's call management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release.
Speaker: Please turn the slide.
Speaker Change: Please turn to slide three joy.
Ray Posadas: Joining me on today's call are Michael Happe, the President and Chief Executive Officer of Winnebago Industries, and Bryan Hughes, Senior Vice President and Chief Financial Mike will begin with an overview of our Q3 performance.
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.
Speaker Change: Mike will begin with an overview of our Q3 performance. Brian will then discuss the associated drivers of our financial results. In addition to sharing our forward view.
Ray Posadas: Bryan will then discuss the associated drivers of our financial results, in addition to sharing our forward view of the market and our fiscal year 2025 guidance.
Speaker Change: And our fiscal year 2020 guidance, Mike will conclude our prepared remarks, and then management will be happy to take your questions with that please turn to slide four as I hand, the call over to Mike.
Ray Posadas: Mike will conclude our prepared remarks, and then management will be happy.
Michael Happe: With that, please turn to slide four as I hand the call over to Mike. Thanks, Ray. Good morning, everyone.
Speaker Change: Thanks Ray.
Mike: Good morning, everyone.
Michael Happe: I want to begin by recognizing the resilience our team has shown in navigating a highly challenging market environment. Their dedication to our customers and commitment to our brands have enabled us to stay sharply focused on advancing the strategic priorities that will enhance long-term value for our state. Our fiscal Q3 performance was consistent with the preliminary results we shared with you earlier this week. Growing macroeconomic uncertainty led to a notable downshift in RV activity from consumers and dealers as the third quarter progressed. These challenges are likely to continue through the remainder of the calendar year, as anticipated by the RV Industry Association's recent reduction in its wholesale shipment forecast for 2025.
Mike: I want to begin by recognizing the resilience of our team has shown and navigating a highly challenging market environment.
Mike: Their dedication to our customers and commitment to our brands have enabled us to stay sharply focused on advancing the strategic priorities that will enhance long term value for our stakeholders.
Mike: Our fiscal Q3 performance was consistent with preliminary results, we shared with you earlier this month.
Mike: Growing macroeconomic uncertainty led to a notable downturn.
Mike: For consumers and dealers third quarter progressed.
Mike: These challenges are likely to continue through the remainder of the calendar year.
Mike: As anticipated by the RV industry Association <unk>.
Mike: Reduction in wholesale shipment forecast for 'twenty.
Mike: 25.
Michael Happe: While the soft market conditions contributed to lower RV margins in both our towable and motorhome segments in Q3. We saw disproportionate results in our Winnebago-branded motorhome business.
Mike: While the soft market conditions contributed to lower RV margins in both our total and motor homes segment in Q3.
Mike: We saw this proportionate resolve and our Winnebago branded motorhomes.
Mike: Last fall, we installed new leadership.
Michael Happe: Last fall, we installed new leadership at both our Winnebago Motorhome and Winnebago Towable Businesses. to strengthen legging operational performance and reinvigorate their product line. Fiscal 25 has seen significant effort to address the root causes of passed out As that work progresses, the rapidly growing interest from both current and prospective Winnebago brand dealer partners in recent months highlights the strong potential of this iconic brand to drive improved margins and meaningful share gains over time.
Mike: At both our Winnebago, Motorhomes and Winnebago global business.
Mike: The strengthening operational performance and reinvigorate their product lineup.
Mike: Fiscal 'twenty five has seen significant effort to address the root causes.
Mike: As that work progresses, the rapidly growing interest from both current and perspective.
Mike: Brand dealer partners in recent months.
Mike: The strong potential of this.
Mike: Brand to drive improved margins.
Mike: Meaningful share gains over time.
Mike: As we navigate an increasingly dynamic market environment.
Michael Happe: As we navigate an increasingly dynamic market environment, we are focused on executing the areas of the business within our control. As part of the business transformation of the Winnebago Motorhome business, we have taken decisive steps to lower field inventory, improve working capital in the future, align our production schedule to market demand, reduce discretionary expenses, and accelerate stronger product value for our customers. Collectively, these actions support a comprehensive margin recapture plan centered on refreshing the product. boosting operational efficiency and rebuilding sustained profitability beginning in fiscal 2020.
Mike: We are focused on executing in the areas of the business within our control.
Mike: As part of the business transformation of the Winnebago Motorhomes business.
Mike: We have taken decisive steps to lower field inventory improved working capital in the future.
Mike: Align our production schedule to market demand.
Mike: Those discretionary expenses and.
Mike: It accelerates.
Mike: <unk> value for our customers.
Mike: Collectively these actions are a comprehensive margin recapture plan.
Mike: Centered on refreshing the product line boost.
Mike: Boosting operational efficiencies and rebuilding sustained profitability beginning in fiscal 2020.
Michael Happe: We are also engaged in a broad set of strategic actions to ensure our long-term competitiveness and enterprise resilience. Across the company, we are conducting a comprehensive capacity utilization analysis. reviewing our manufacturing footprint to identify opportunities for optimization and productivity. and evolving our supply chain in light of expected tariff cost pressure. At the same time, we are re-evaluating our organizational structure to streamline operations and eliminate redundancy.
Mike: We are also engaged in a broad set of strategic actions.
Mike: To ensure our long term competitiveness.
Mike: Enterprise resiliency.
Mike: Across the company, we are conducting a comprehensive.
Mike: Passenger utilization analysis.
Mike: Would you and your manufacturing footprint to identify opportunities for optimization and productivity.
Mike: And evolving our supply chain in light of expected tariff cost pressure.
Mike: At the same time, we are reevaluating, our organizational structure to streamline operations.
Mike: And eliminate redundancies.
Michael Happe: These initiatives are not just about incremental improvement. They represent a strategic imperative in our approach to cost management. By rigorously focusing on operational efficiency and disciplined resource allocation, we are positioning Winnebago Industries to deliver sustainable value to our investors. while maintaining our commitment to quality and innovation.
Mike: These initiatives are not just about incremental improvement.
Mike: They represent a strategic imperative in our approach to cost management.
Mike: I Wonder if we focus on operational efficiency and.
Mike: Our disciplined resource allocation.
Mike: We are positioning Winnebago industries to.
Mike: To deliver sustainable value to our investors, while maintaining our commitment to quality.
Mike: Sure.
Mike: We look forward to sharing further details on progress on these initiatives.
Michael Happe: We look forward to sharing further details and progress on these initiatives during our year-end earnings call in October.
Mike: During our year end earnings call in October.
Mike: Moving now to strategic highlights.
Michael Happe: Moving now to recent strategic highlights. Newmar entered the compact Class C market with the new Freedom Air, part of the Motorhome RV Brand's 2026 model year lineup. The Freedom Mare debuted earlier this month at the Newmark Country Club International Rally in West Virginia.
Mike: Newmar entered the context Pepsi market with the new freedom.
Mike: Part of Motorola RV, perhaps 2020 model year lineup.
Mike: The freedom or debuted earlier this month, the Newmark country Club International rally.
Mike: Yes.
Michael Happe: The dealer ordering process begins this midsummer, with shipments expected to begin by early fiscal Q1. The newest model in the Grand Design Motorhomes lineage series, the VT Class B van on the Ford Transit platform, began initial shipments in the third quarter. More on the trajectory of the lineage lineup momentarily.
Mike: The dealer ordering process begins this summer.
Mike: With shipments expected to begin by early fiscal Q1.
Mike: The new with the Grand design Motor homes series.
Mike: Theories.
Mike: The VP class B van on the Ford Transit platform began initial shipments in the third quarter.
Mike: More on the trajectory of the lineage lineup momentarily.
Mike: Winnebago <unk> recently launched the thrive.
Michael Happe: Winnebago Towables recently launched the Thrive, a completely new travel trailer model, arriving at dealerships just in time for the summer travel season. With a starting MSRP below $50,000, Thrive delivers the design, features, and technology typically found in a much larger and more expensive lightweight travel trailer.
Mike: Clearly new travel trailer model.
Mike: Driving a dealership.
Mike: Just in time for the summer travel season.
Mike: Well, the starting MSRP below $50 thrive delivers the design features and technology typically found in a much larger and more expensive lightweight travel trailers.
Speaker Change: Chris craft, New Catalina 31.
Michael Happe: Chris Craft's new Catalina 31, an exquisitely designed center console powerboat that builds on the brand's iconic Catalina 30, has begun rolling out to a great response from dealers. Barletta's expansive 2026 model year lineup includes helm redesigns of its Lusso and Aria series. A newly refined Cabrio and new premium color options for Reserve, Barletta's flagship pontoon series. The Barletta team also has developed new digital resources to assist dealers with inventory planning. and streamline the parts ordering process.
Speaker Change: An exquisitely design center console powerboat that builds on the brand's iconic Catalina 30 has begun rolling out to a great response from dealers.
Speaker Change: Bartlet as expansive 2026 model year lineup includes helm redesigns of its Lusso and Oreo series, a newly refined caprio and new premium color options for reserve our latest flagship pontoon series.
Speaker Change: The <unk> team also has developed new digital resources to assist dealers with inventory planning.
Speaker Change: And streamline the parts ordering process.
Speaker Change: Lastly, I am also exceptionally proud to share that Winnebago industries has been recognized by Newsweek as one of America's most trustworthy companies for the second consecutive year.
Michael Happe: Lastly, I'm also exceptionally proud to share that Winnebago Industries has been recognized by Newsweek as one of America's most trustworthy companies for the second consecutive year. What makes this award especially meaningful is that it's based on an independent survey of over 25,000 U.S. consumers. This recognition reaffirms our dedication to responsible growth, strong values, and delivering exceptional products and experiences.
Speaker Change: What makes this award, especially meaningful is that it's based on an independent survey of over 25000 U S consumers.
Speaker Change: This recognition reaffirms, our dedication to responsible growth strong values and delivering exceptional products and experiences.
Michael Happe: We also were named one of Newsweek's most responsible companies in America for 2025, highlighting the strength of our corporate responsibility in this.
Speaker Change: We also were named one of Newsweek's, most responsible companies in America for 2025.
Speaker Change: Highlighting the strength of our corporate responsibility initiatives.
Speaker Change: Turning to key RV trends on slide five.
Michael Happe: Turning to key RV trends on slide five, North America RV retail sales declined by 8.2% in April. This marks the third consecutive month of retail sales dropping by more than 8%. A sign that consumer demand remains pressured as buyers continue to navigate economic headwinds and higher borrowing costs. On the wholesale side, total RV shipments increased by 3.4% in April, with total RVs, led by conventional travel trailers, rising 4.2% compared to the same month last year. Calendar year-to-date through April, wholesale shipments were up nearly 11 percent, primarily driven by strong shipments of affordable travel trade. Inventory levels in the towable segment have largely been balanced.
Speaker Change: North America RV retail sales declined by eight 2% in April.
Speaker Change: This marks the third consecutive month of retail sales dropping by more than 8%.
Speaker Change: Sign that consumer demand remained pressured as buyers continue to navigate economic headwinds and higher borrowing costs.
Speaker Change: On the wholesale side total RV shipments increased by three 4% in April.
Speaker Change: With total rvs led by conventional travel trailers rising four 2% compared to the same month last year.
Speaker Change: Calendar year to date through April wholesale shipments were up nearly 11%.
Speaker Change: Primarily driven by strong shipments of affordable travel trailers.
Speaker Change: Inventory levels in the total segment and have largely been balanced with manufacturers and dealers aligning shipments closely with current retail activity.
Michael Happe: with manufacturers and dealers aligning shipments closely with current retail activities.
Speaker Change: However, we do not expect dealers to add much more tolerable total field inventory for the rest of calendar year 2025.
Michael Happe: However, we do not expect dealers to add much more towables total field inventory for the rest of calendar year 2025. In contrast, the motorhome segment still requires further destocking to improve the quality and quantity of field inventories. Motorhome shipments decreased 3.4% in April, and we're down 8.7% calendar year to date, as dealers continue to reduce excess in...
Speaker Change: In contrast, the motor homes segment still requires further destocking to improve the quality and quantity of field inventory there.
Speaker Change: Motor home shipments decreased three 4% in April and were down eight 7% calendar year to date as dealers continued to reduce excess inventory.
Michael Happe: for calendar 2025. We are lowering our industry forecast for wholesale RV ship to a range of 315,000 to 335,000. for a midpoint of $325,000. This is slightly more conservative than the RVIA's recently revised forecast. which anticipates a median shipment of 337,000 units, a 1% increase over calendar 2025. We continue to demonstrate production discipline. and a thoughtful approach to inventory management. Ensuring our output remains closely aligned with in-market demand. With turns at about 1.8 times, we're effectively balancing the needs of our dealer partners with the realities of today's market environment.
Speaker Change: For calendar 2025, we are lowering our industry forecast for wholesale RV shipments.
Speaker Change: A range of 315000 to 335000 units.
Speaker Change: Or a midpoint of 325000 units.
Speaker Change: This is slightly more conservative than the RV, Ias recently revised forecast, which anticipates a medium shipment of 337000 units a 1% increase over calendar 2024.
Speaker Change: We continue to demonstrate production discipline.
Speaker Change: And a thoughtful approach to inventory management.
Speaker Change: Ensuring our output remains closely aligned with end market demand.
Speaker Change: With turns at about one eight times, we're effectively balancing the needs of our dealer partners with the realities of today's market environment.
Michael Happe: Looking ahead, we are targeting a two times turn ratio in all our businesses long term. reflecting our ongoing commitment to operational efficiency and discipline growth.
Speaker Change: Looking ahead, we are targeting a two times turn ratio in all our businesses long term.
Speaker Change: Reflecting our ongoing commitment to operational efficiency and disciplined growth.
Speaker Change: Turning to RV market share on slide six we.
Michael Happe: Turning to RV market share on slide six. We have continued to gain share in several core products that For motorhomes, our enterprise-wide market share in both the Class A gas and Class A diesel category... increased across the three, six, and 12-month periods through Class C Enterprise Share increase for the trailing 6 and 12.
Speaker Change: We have continued to gain share in several core product segments.
Speaker Change: For motor homes are enterprise wide market share in both the class a gas and class a diesel categories increased across the three six and 12 month periods through April.
Speaker Change: Class C enterprise share increase for the trailing six and 12 months.
Michael Happe: Importantly, new product offerings in these areas provide a great foundation for the future. Since debuting its first Lineage motorized model just 12 months ago, Grand Design RV has introduced two additional Lineage products to the market. Series F Class Super Seed. and the Series VT Class B. For the trailing three months through April, Grand Design's lineage series of motorhomes registered a 1.6% retail share, an impressive accomplishment for such a young brand. The lineage lineup is on track to meet or exceed our $100 million plus revenue target in fiscal 2025. Grand Design's tollable market share is also gaining momentum, reversing a modest 20 basis point decline over the trailing 12 months through April.
Speaker Change: Importantly, new product offerings in these areas provide a great foundation for the future.
Speaker Change: Since day viewing its first lineage motorized model just 12 months ago Grand design RV has introduced two additional lineage products to the market the.
Speaker Change: The series F class supersede.
Speaker Change: And the series VT class B.
Speaker Change: For the trailing three months through April Grand designs lineage series of motor homes registered a one 6% retail share an impressive accomplishment for such a young brand.
Speaker Change: Lineage lineup is on track to meet or exceed our 100 million dollar plus revenue target in fiscal 2025.
Speaker Change: Grand designs total market share is also gaining momentum reversing a modest 20 basis point decline over the trailing 12 months through April.
Speaker Change: In the travel trailer segment Grand design has achieved strong market share gains up 60 basis points in April 50 over the past three months and 30 basis points over the past six months highlighting the success of its increased focus on affordability.
Michael Happe: In the Travel Trailer segment, Grand Design has achieved strong market share up 60 basis points in April. 50 over the past three and 30 basis points over the past six.
Michael Happe: highlighting the success of its increased focus on affordability.
Speaker Change: As shown on slide seven <unk> continued to increase its share of the U S aluminum pontoon market.
Michael Happe: As shown on slide 7, Barletta continued to increase its share of the U.S. aluminum pontoon market. from 8.8% at the end of fiscal 2024 to 9.2% for the trailing 12 months through.
Speaker Change: Eight 8% at the end of fiscal 2024 to nine 2% for the trailing 12 months through April.
Michael Happe: In the short span of eight years, Barletta has gone from a startup to the number three player in the U.S. aluminum pontoon industry. And with nearly 60 pontoon brands nationally, that is no small achievement.
Speaker Change: In the short span of eight years by Atlanta has gone from a startup to the number three player in the U S aluminum pontoon industry.
Speaker Change: And with nearly 60 pontoon brands nationally that is no small achievement.
Michael Happe: Both Chris Kraft and Barletta continue to do an exceptional job managing inventory, building strong dealer network. and creating an outstanding boating experience for their customers.
Speaker Change: Both Chris craft and Barletta continues to do an exceptional job managing inventory bill.
Speaker Change: Building strong dealer networks, and creating an outstanding boating experience for their customers.
Speaker Change: I'll now turn the call over to Bryan Hughes for the financial review.
Bryan Hughes: I'll now turn the call over to Bryan Hughes for the financial review. Thanks Mike and good morning everyone. As a reminder, in my prepared remarks, I will focus on the key drivers of our performance.
Speaker Change: Brian.
Speaker Change: Thanks, Mike and good morning, everyone. As a reminder, in my prepared remarks, I will focus on the key drivers of our performance.
Bryan Hughes: Please refer to our earnings release and earnings supplement documents for a detailed overview of our key financial results. Starting with our consolidated results on slide 8, net revenues declined modestly in the quarter, primarily due to mix, as our new lower ASP Grand Design Transcend Series travel trailers outpaced the broader portfolio in terms of units sold. This next shift was partially offset by targeted price increases. Consolidated unit volume increased year over year. primarily reflecting the continued lineup diversification in our grand design towables business, as well as higher volume in the marine sector. Gross margin declined 130 basis points from Q3 last year, which was primarily attributable to higher warranty experience and product mix.
Speaker Change: Please refer to our earnings release and earnings supplement documents for a detailed overview of our key financial results.
Speaker Change: Starting with our consolidated consolidated results on slide eight net revenues declined modestly in the quarter.
Speaker Change: Primarily due to mix as our new lower ESP Grand design transcend theories travel trailers.
Speaker Change: What pace the broader portfolio in terms of units sold.
Speaker Change: This mix shift was partially offset by targeted price increases.
Speaker Change: Consolidated unit volume increased year over year.
Speaker Change: Primarily reflecting the continued lineup diversification in our Grand design <unk> business as well as higher volume in the Marine segment.
Speaker Change: Gross margin declined 130 basis points from Q3 last year, which was primarily attributable to higher warranty experience and product mix.
Bryan Hughes: partially offset by operational efficiencies compared to prior years. Adjusted EBITDA margin declined 140 basis points year-over-year, primarily attributable to the lower gross margin. Turning to our towable RV segments on slide 9, lower net revenues were largely attributable to a shift in product mix with the addition of new grand design travel trailers, primarily the Transcend series. This drove a 2.5% increase in segment unit volume. Adjusted EBITDA margin declined from the prior year, primarily due to higher warranty experience and deleverage, including that associated with product mix, partially offset by operational efficiency. Moving to motorhome RV results on slide 10, third quarter net revenues were down from the prior year, primarily due to lower unit volume related to current market conditions, partially offset by product.
Speaker Change: Partially offset by operational efficiencies compared to prior year.
Speaker Change: Adjusted EBIT margin declined 140 basis points year over year, primarily attributable to the lower gross margin.
Speaker Change: Turning to our total RV segments on slide nine lower net revenues were largely attributable to a shift in product mix with the addition of new Grand design travel trailers, primarily the transcend series. This drove a two 5% increase in segment unit volume.
Speaker Change: Adjusted EBITDA margin declined from the prior year, primarily due to higher warranty experience and deleverage, including that associated with product mix, partially offset by operational efficiencies.
Speaker Change: Moving to motor home RV results on Slide 10 third quarter net revenues were down from the prior year, primarily due to lower unit volume related to current market conditions.
Speaker Change: We offset by product mix.
Bryan Hughes: While the strong performance of Newmar and the successful launch of Grand Design Motorhome's new Lineage brand contributed positively to the product mix, this favorability was more than offset by declines in Winnebago-branded Motorhome shipments. Adjusted EBITDA margin decreased compared to the prior year, primarily reflecting higher discounts and allowances. deleverage, and operational inefficiencies associated with the Winnebago-branded motorhome business. Total motorhome RV volume declined 14.8% in the quarter compared to prior years. Reflecting not only market conditions, but more importantly, the ongoing business transformation at Winnebago Branded Motorhome.
Speaker Change: While the strong performance of Newmar and the successful launch of Grand design Motor homes, New lineage brand contributed positively to the product mix. This favorability was more than offset by declines in Winnebago branded motorhomes shipment.
Speaker Change: Adjusted EBIT margin decreased compared to the prior year, primarily reflecting higher discounts and allowances.
Speaker Change: De leverage and operational inefficiencies associated with the Winnebago branded motor home business.
Speaker Change: Total motor and home RV volume declined 14, 8% in the quarter compared to prior year.
Speaker Change: Reflecting not only market conditions, but more importantly, the ongoing business transformation at Winnebago branded motorhomes.
Speaker Change: As we discussed in our fiscal Q3 preliminary results earlier this month in.
Bryan Hughes: as we discussed in our fiscal Q3 preliminary results earlier this month. In addition to aggressively reducing production schedules to meet demand, the team has taken significant actions at Winnebago-branded motorhome to improve working capital and lower field inventory. We expect to see these initiatives begin to take hold in our fiscal 2025 fourth quarter. The team is also working to accelerate stronger product value for our consumers in fiscal 2026 and beyond. Turning to slide 11, the 15% increase in marine segment net revenue. was driven primarily by higher unit volume and targeted price increases partially offset by product.
Speaker Change: In addition to aggressively reducing production schedules to meet demand. The team has taken significant actions at Winnebago branded motorhomes to improve working capital and lower field inventory.
Speaker Change: We expect to see these initiatives begin to take hold in our fiscal 2025 fourth quarter.
Speaker Change: The team is also working to accelerate stronger product value for our consumers and fiscal 2026 and beyond.
Speaker Change: Turning to slide 11, the 15% increase in Marine segment net revenues was driven primarily by higher unit volume and targeted price increases partially offset by product mix.
Speaker Change: Unit volume was up more than 11% year over year in the quarter.
Bryan Hughes: Unit volume was up more than 11% year over year in the quarter. segment adjusted EBITDA margin increased compared to the prior year, primarily driven by targeted price increases and leverage. This increase was partially offset by product mix and higher warranty. Moving to the balance sheet on slide 12.
Speaker Change: Segment, adjusted EBITDA margin increased compared to the prior year, primarily driven by targeted price increases and leverage.
Speaker Change: This increase was partially offset by product mix and higher warranty expense.
Speaker Change: Moving to the balance sheet on slide 12.
Bryan Hughes: In light of the uncertain economic environment, in the near term, we are focused on deleveraging our balance sheet while continuing to make targeted growth investments in our business. Our cash and cash equivalents position at quarter end reflects a combination of strategic debt repayment and working capital dynamics. As you'll recall, we recently reduced our debt by approximately $159 million. This included the completion of a $100 million cash tender for a portion of our 6.25% senior secured notes due 2028. as well as an additional $59 million related to the extinguishment of convertible debt that matured in April.
Speaker Change: In light of the uncertain economic environment and the near term we are focused on deleveraging our balance sheet, while continuing to make targeted growth investments in our business.
Speaker Change: Our cash and cash equivalent position at quarter end reflects a combination of strategic debt repayments and working capital dynamics.
Speaker Change: As Youll recall, we recently reduced our debt by approximately $159 million. This.
Speaker Change: This included the completion of a $100 million cash tender for a portion of our 625% senior secured notes due 2028.
Speaker Change: As well as an additional $59 million related to the extinguishment of convertible debt that matured in April.
Speaker Change: Free cash flow was negative $81 7 million for the nine month period, driven primarily by the operational inefficiencies we are addressing at Winnebago branded Motorhomes <unk>.
Bryan Hughes: Pre-cash flow was negative $81.7 million for the nine-month period, driven primarily by the operational inefficiencies we are addressing at Winnebago-branded motorhomes, including excess inventory that we are in the process of working through, as well as strategic investments in the grand design motorhome business. We also experience higher accounts receivable at the close of fiscal Q3, which is associated with the seasonality of the industry. Looking ahead, we are tightening operational controls and capacity utilization to address inefficiencies in the Winnebago-branded motorhome business. These actions are expected to drive a significant improvement in working capital as we move into fiscal 2026.
Speaker Change: Including excess inventory that we are in the process of working through.
Speaker Change: As well as strategic investments and the Grand design Motor home business.
Speaker Change: We also experienced higher accounts receivable at the close of fiscal Q3, which is associated with the seasonality of the industry.
Speaker Change: Looking ahead, we are tightening operational controls and capacity utilization to address inefficiencies and the Winnebago branded motor home business. These actions are expected to drive a significant improvement in working capital as we move into fiscal 2026.
Speaker Change: At the end of Q3, our net debt to EBITDA ratio was four eight times.
Bryan Hughes: At the end of Q3, our net debt to EBITDA ratio was 4.8 times. We remain focused on enhancing our working capital position and reducing our net leverage ratio to our historical target range of 0.9 to 1.5 times as we recover our profitability as well.
Speaker Change: We remain focused on enhancing our working capital position and reducing our net leverage ratio to our historical target range of 0.9% to one five times as we recover our profitability as well.
Speaker Change: Year to date, we have returned nearly $80 million to our shareholders.
Bryan Hughes: Year-to-date, we have returned nearly $80 million to our shareholders. consisting of $50 million in share repurchases and $29.3 million in dividends. Our $0.34 per share cash dividend, payable today, represents our 44th consecutive quarterly dividend payment.
Speaker Change: Listing of $50 million in share repurchases and $29 $3 million in dividends.
Speaker Change: Our <unk> 34 per share cash dividend payable today represents our 44th consecutive quarterly dividend payment.
Speaker Change: Given the market uncertainty, we have paused share repurchase activity for the second half of the fiscal year to allocate capital to debt reduction.
Bryan Hughes: Given the market uncertainty, we have paused share repurchase activity for the second half of the fiscal year to allocate capital to debt reduction. As part of our capital allocation priorities, we remain committed to our ongoing growth investments and quarterly dividends.
Speaker Change: As part of our capital allocation priorities, we remain committed to our ongoing growth investments and quarterly dividend.
Speaker Change: Looking at Slide 13, we are taking a comprehensive approach to minimizing the effects of tariffs.
Bryan Hughes: Looking at slide 13, we are taking a comprehensive approach to minimizing the effects of terror. By working closely with suppliers, we pinpoint at-risk components, review bills and materials to determine country of origin. evaluate potential risks, and craft specific mitigation plans. We also consider sourcing from alternate suppliers with reduced tariff exposure to strengthen supply chain resilience. While we anticipate offsetting most tariff-related costs, some residual effects may necessitate price adjustments. We expect that modest price increases of low to mid-single digits will offset the net remaining exposure of tariffs for our fiscal 2025. The level of increase by business or segment will vary, with some categories seeing slightly higher adjustments than others, depending on specific bill of materials and market dynamics.
Speaker Change: By working closely with suppliers, we pinpoint at risk component review bills of materials to determine country of origin.
Speaker Change: Evaluate potential risks and crafts specific mitigation plan.
Speaker Change: We also consider sourcing from alternate suppliers with reduced tariff exposure to strengthen supply chain resilience.
Speaker Change: While we anticipate offsetting most tariff related costs, some residual effects may necessitate price adjustment.
Speaker Change: We expect that modest price increases of low to mid single digit will offset the net remaining exposure of tariff for our fiscal 2025.
Speaker Change: The level of increase by business or segment will vary with some categories seeing slightly higher adjustments than others, depending on specific bill of materials and market dynamics.
Bryan Hughes: Looking ahead to our fiscal 2026, we are monitoring the level of tariffs and our mitigation actions to determine the impact on our sales and profitability. at the tariff rates that are currently in place as communicated by the administration. We believe we have a potential net risk of between $0.50 and $0.75 of diluted earnings per share for fiscal 2026 as a result of escalating costs that we are monitoring with our suppliers. We will continue to work with our supply base to further mitigate this exposure.
Speaker Change: Looking ahead to our fiscal 2026, we are monitoring the level of tariffs and our mitigation actions to determine the impact on our sales and profitability.
Speaker Change: At the tariff rates that are currently in place as communicated by the administration. We believe we have a potential net risk of between 50 and.
Speaker Change: <unk> 75 of diluted earnings per share for fiscal 2026, as a result of escalating cost that we are monitoring with our suppliers.
Speaker Change: We will continue to work with our supply base to further mitigate this exposure, but in the event. We are unable to mitigate this risk and we conclude that we should not pursue price increases to offset this risk the.
Bryan Hughes: But in the event we are unable to mitigate this risk and we conclude that we should not pursue price increases to offset this the $0.50 to $0.75 impact diluted EPS would be realized. It should be further noted that the volume impact of price increases in the current consumer environment are difficult to estimate.
Speaker Change: 50 to 75 impact diluted EPS would be realized.
Speaker Change: It should be further noted that the volume impact of price increases in the current consumer environment are difficult to estimate.
Bryan Hughes: We will share additional perspectives on the overall impact to our fiscal 2026, along with our guidance for the forthcoming year when we release our fiscal 2025 results in October.
Speaker Change: We will share additional perspective on the overall impact to our fiscal 2026.
Speaker Change: Along with our guidance for the forthcoming year, when we release our fiscal 2025 results in October.
Speaker Change: Turning to our fiscal 2025 outlook on slide 14.
Bryan Hughes: Turning to our fiscal 2025 outlook on slide 14. As noted in our preliminary results announced on June 5th. Second half net revenues at our Winnebago Motorhome branded business will be significantly lower than previously expected as a result of market pressures and the ongoing business transition in this segment. This, combined with softer retail experience than expected across the whole of our portfolio, is necessitating reduced production to appropriately meet softening dealer demand.
Speaker Change: As noted in our preliminary results announced on June 5th.
Speaker Change: Second half net revenues at our Winnebago Motorhomes branded business will be significantly lower than previously expected as a result of market pressures and the ongoing business transition in this segment.
Speaker Change: This combined with softer retail experienced an expected across the whole of our portfolio is necessitating reduced production to appropriately meet softening dealer demand.
Speaker Change: Consequently, we are reducing our full year fiscal 2025, adjusted EPS guidance to a range of $1 20 to $1 70 per diluted share and bringing in our consolidated revenue forecast to a range of two seven to $2 8 billion.
Bryan Hughes: Consequently, we are reducing our full year fiscal 2025 adjusted EPS guidance to a range of $1.20 to $1.70 per diluted share and bringing in our consolidated revenue forecast to a range of $2.7 to $2.8 billion. For Q4, we expect motorhome sales to be up versus last year's Q4 due to success from our Grand Design RB lineage lineup. But EBITDA will continue to be challenged due to the Winnebago brand's turnaround discussed during this call. Total sales will be roughly flat to slightly down compared to last year's Q4 sales, with an improvement expected in profitability versus prior year's Q4.
Speaker Change: For Q4, we expect motor home sales to be up versus last year's Q4 due to success from our Grand design RV lineage lineup.
Speaker Change: But EBITDA will continue to be challenged due to the Winnebago brand turnaround discussed during this call.
Speaker Change: Total sales will be roughly flat to slightly down compared to last year's Q4 sales with an improvement expected in profitability versus prior year's Q4, and Marine will show continued growth momentum as compared to last year with modest improvements to profitability as well versus last year.
Bryan Hughes: And Marine will show continued growth momentum as compared to last year, with modest improvements to profitability as well versus last year.
Mike: Now I'll turn to slide 15, as I turn the call back over to Mike for closing comments.
Bryan Hughes: Now turn to slide 15 as I turn the call back over to Mike for closing comments.
Michael Happe: Thanks, Bryan. Although the macroeconomic backdrop presents near-term challenges, We remain confident in the resilience of our brands and the long-term potential of our end market. Our commitment to innovation, reflected in our new products, enables us to consistently deliver exceptional value and elevate every moment outdoors for our community.
Mike: Thanks, Brian.
Mike: Though the macroeconomic backdrop presents near term challenges, we remain confident in the resilience of our brands and the long term potential of our end markets.
Mike: Our commitment to innovation reflected in our new products enables us to consistently deliver exceptional value and elevate every moment outdoors for our customers.
Michael Happe: The Growing Appeal of the Outdoor Lifestyle. especially among younger and more diverse consumers. continues to drive strong interest in Arvene and Bowdoin. This trend supports our view for meaningful growth across our portfolio. as market conditions normalize and the industry moves towards a more stable mid-cycle environment.
Mike: The growing appeal of the outdoor lifestyle, especially among younger and more diverse consumers continues to drive strong interest in RV ing and boating.
Mike: This trend supports our view for meaningful growth across our portfolio.
Mike: As market conditions normalize and the industry moves towards a more stable mid cycle environment.
Speaker Change: Now, Brian and I are happy to take your questions. This morning.
Ray Posadas: Now, Bryan and I are happy to take your questions this morning.
Operator: Operator, please open the line for the Q&A session.
Operator: Operator, please open the line for the Q&A session. Certainly. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster.
Speaker Change: Certainly as it reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile our Q&A roster.
Michael Swartz: And our first question will be coming from Michael Swartz of curious Securities. Your line is open.
Michael Happe: And our first question will be coming from Michael Schwartz of Truist Securities. Your line is open. Hey, good morning, guys. Maybe just to start with on the on the motorized business, and maybe specific to the Winnebago branded portion of that, I guess, talk about some of the steps in more detail that you're taking to, you know, write the course there. Are you evaluating whether or not to exit parts or consolidated parts of that that business, you know, giving some of the changing market dynamics over the past couple years in motorized?
Michael Swartz: Hey, good morning, guys maybe.
Michael Swartz: Maybe just to start with on the on the motorized business.
Michael Swartz: Maybe specific to the Winnebago branded portion of that I guess talk about some of the steps in more detail that you are taking to right. The course, there are you evaluating whether or not to exit parts or consolidated parts of that business.
Michael Swartz: Giving some of the changing market dynamics over the past couple of years.
Michael Swartz: In motorized.
Mike: Good morning, Mike.
Michael Happe: Good morning, Mike.
Michael Happe: This is Mike Happe, and I will speak first here, and Bryan can weigh in with any of his thoughts as well. The turnaround plan for this business has been in motion for some time, and one of the most important decisions we made during the fiscal third quarter here recently was to significantly reduce production of units that we otherwise would likely have had to push to the field with higher sales allowances or discounts than we were comfortable with. And so that decision allowed us then to make some adjustments from a production discipline standpoint and go after some other short-term cost adjustments in the business.
Mike: This is Mike happy and.
Mike: I will speak first here and Bryan can weigh in.
Mike: With any of his thoughts as well.
Mike: The turnaround plan for this business has been in motion for some time.
Mike: The.
Mike: One of the most important decisions we made during the fiscal third quarter.
Michael Swartz: Here recently was to significantly reduce production.
Michael Swartz: <unk> units that we otherwise would likely have had to push to the field.
Michael Swartz: With higher sales allowances or discounts than we were comfortable with.
Michael Swartz: So.
Michael Swartz: That decision.
Michael Swartz: Allowed us then to to make some adjustments from a production.
Michael Swartz: Disciplined standpoint.
Michael Swartz: And and go after some other short term cost adjustments in the business. So our short term focus is certainly too.
Michael Happe: So our short-term focus is certainly to move existing inventory to the field in as profitable a manner as we can. It is to lower our working capital in the business and produce a higher generation of cash flow. But we have also concurrently been working on improving the value proposition of our legacy products. looking at the overall cost structure and operational efficiency of the entire Winnebago Motorhomes manufacturing and operational footprint. And we have a number of new products being developed in the pipeline that we will introduce to the market at some point that will be new to the product catalog.
Michael Swartz: To move existing inventory to the field and is profitable manner. As we can it is to lower our working capital in the business and produce.
Michael Swartz: A higher generation of cash flow, but we have also concurrently been working on improving the value proposition of our legacy products looking at the overall cost structure and operational efficiency of the entire Winnebago Motorhomes menu.
Michael Swartz: Manufacturing and operational footprint.
Michael Swartz: And we have a number of new products being developed in the pipeline.
Michael Swartz: That we will introduce to the market at some point that will be new to the product catalog.
Bryan Hughes: I won't comment on our intentions strategically with this line, other than we are incredibly committed to our flagship brand of Winnebago, both in the motorhome and total space. We intend to compete vigorously and profitably in the future with the Winnebago brand of motorhomes, but we are evaluating many strategic options as to what that business plan looks like in the future. And we will provide all of you and the market more information as we It's the only thing I would add to that, Mike, excuse me, is that the team is working very hard on, it's obviously product, that's the key here, and the team's working very hard at speed to market with new product introductions.
Michael Swartz: I won't comment on our intention strategically with this line.
Michael Swartz: Other than we are incredibly committed to the our flagship brand of Winnebago, both in the motor home in total space we.
Michael Swartz: We intend to compete vigorously and profitably in the future with the Winnebago brand of Motorhomes.
Michael Swartz: But we are evaluating many strategic options as to what that business plan looks like in the future.
Michael Swartz: And we will provide all of you in the market more information.
Michael Swartz: As we can.
Michael Swartz: Yes, the only thing I would add to that Mike excuse me is that the team is working very hard on this obviously product.
Michael Swartz: That's the key here and the team is working very hard at speed to market.
Michael Swartz: With new product introductions.
Bryan Hughes: That's been a challenge for this business historically. In some cases, you can see in our product lineup where we jog right and Loaded more content onto some of our products when the market trod left and looked for affordability, so the team is very focused on product development and speed to market. right now is a key priority as well.
Michael Swartz: Been a challenge for this business historically.
Michael Swartz: In some cases, you can see in our product lineup, where we jogged right.
Michael Swartz: <unk>.
Michael Swartz: Loaded more content on to some of our products when the market jogged left and look for affordability. So.
Michael Swartz: The team is very focused on product development and speed to market right now is a key priority as well.
Michael Swartz: Okay.
Speaker: Okay, that's super helpful.
Bryan Hughes: Then just follow up on motorized. If we look at the profitability year-to-date, I want to say it's down something like 500 basis points year over year. Is there a way just to frame or parse how much of that is volume-related versus maybe some other factors that may be a little more transitory in nature? in the motorhome business specifically, Mike. Yes, so we're Yeah, it's related to many things. I think the D leverage we've seen over time is certainly a big contributor. But as Mike referenced, a sizable contributor also is the discounting and allowances that are necessary to push the product into the market right now.
Michael Swartz: Super Helpful. And then just follow up on motorized if we look at the profitability year to date I want to say, it's down something like <unk>.
Michael Swartz: 500 basis points year over year is there a way just to frame our parse how much of that is volume related versus maybe some other factors that may be a little more transitory in nature.
Michael Swartz: In the motor home business, specifically Mike.
Michael Swartz: Yes.
Michael Swartz: Yes, it's related to many things I think the deleverage we've seen over time is certainly a big contributor, but as Mike referenced.
Michael Swartz: <unk> will contribute there also is the discounting and allowances better.
Michael Swartz: Necessary to push the product into the market right now.
Michael Swartz: Okay. Thank you.
Speaker: Okay, thank you.
Michael Swartz: And our next question.
Operator: And one moment for our next question.
Tristan Thomas Martin: Our next question will be coming from Tristan.
Michael Swartz: Our next question will be coming from Tristan.
Bryan Hughes: Thomas Martin of BMO Capital Markets, your line is open. Hey, good morning. I just want to ask about your kind of commentary about the back half of calendar 25. Reading through the line sounds like we're not going to get a ton of deal ordering retail, you're expecting to remain pressured. So how should we think about kind of the first half of your fiscal year 26, kind of putting everything together, it kind of seems like you're pointing to flats maybe down year over year.
unknown: Thomas Martin of BMO capital markets. Your line is open.
Speaker Change: Hey, good morning.
Speaker Change: I just wanted to ask about your kind of commentary about the back half of this calendar 'twenty five.
Speaker Change: We're going to utilize it sounds like we're not going to get a ton of dealer ordering retail youre expecting to remain pressured. So how should we think about kind of the first half of your fiscal year 'twenty six kind of putting everything together it seems like you're pointing to flat maybe down year over year.
Speaker Change: Yes, good morning, Tristan we will provide more information regarding guidance financially, but also expectations from our end for calendar year 2006 industry shipments.
Bryan Hughes: Yeah, good morning, Tristan. We'll provide more information regarding guidance financially, but also expectations from our end for calendar year 26 industry shipments during our October earnings call. So I'm going to be careful about not to necessarily comment on calendar year 26 at this time. I think it's apparent to all of you that all of us in the RV industry have been hoping for a stronger 2025 year, and that there would be an inflection point from a recovery standpoint at some point during this year. And for a variety of reasons, many of them outside of the control of those of us in the industry, um, that.
Speaker Change: During our October earnings call, so I'm going to be key.
Speaker Change: Careful about not to necessarily comment on calendar year 2006 at this time I think it's apparent.
Speaker Change: To all of you that all of us in the RV industry.
Speaker Change: Had been hoping for a stronger 2025 year and that there would be an inflection point from a recovery standpoint at some point.
Speaker Change: During this year and for a variety of reasons many of them outside of the control of those of us in the industry.
Speaker Change: That.
Bryan Hughes: Inflation point does not appear to be a hap- And so, as you heard on the call, we have tempered our outlook for the remainder of calendar year 25 shipments in the RV space. I would say that sentiment is probably similar on the pontoon space in the marine industry. And we will continue to evaluate the market to see and revise our feelings on when the market can begin to recover. We're focused on, obviously, the health of the field inventory from a quality and quantity standpoint right now. and focusing on obviously retail share as best we can.
Speaker Change: Inflection point does not appear to be happening.
Speaker Change: And so.
Speaker Change: As you heard on the call we have tempered our outlook for the remainder of calendar year 'twenty five shipments.
Speaker Change: In the RV space I would say that sentiment is probably similar.
Speaker Change: On the pontoon space in the marine industry.
Speaker Change: And we will continue to evaluate the market to see.
Speaker Change: And revise our feelings on when the market can begin to recover we're focused on obviously.
Speaker Change: Health of the field inventory from a quality and quantity standpoint right now.
Speaker Change: And focusing on obviously retail share.
Speaker Change: As best we can.
Bryan Hughes: But I'll refrain from offering any thoughts on 2020.
Speaker Change: But I'll refrain from offering any thoughts on 2026.
Tristan Thomas Martin: Okay and then just kind of another 26 question on tariffs.
Speaker Change: Okay, and then just kind of.
Speaker Change: 26 question on tariffs the 50 to 75 is there any way to break it out between kind of what the impact is either by call. It like what what's the motorized chassis impact maybe what's the impact on the outboard engines for marine and kind of what's the impact on the rest of your RV product lineup.
Bryan Hughes: The 50 to 75 cents, is there any way to break it out between kind of what the impact is either by call like what what's the motorized chassis impact maybe what's the impact on outboard engines for marine and kind of what's the impact on the rescue or your RV product line? Thank you. Yeah, here's the way that I will frame the comments that Bryan delivered, you know, in the prepared part of this call. We felt it was important for us to begin to share with you some of the net risk that we continue to see on the tariff front.
Speaker Change: Yes.
Speaker Change: Here's the way that I will frame the comments that Brian delivered.
Speaker Change: In the prepared part of this call.
Speaker Change: We felt it was important for us to begin to share with you.
Speaker Change: Some of the net risk that we continue to see on the tariff front as you. All know this is a very fluid topic.
Michael Happe: As you all know, this is a very fluid topic. April 2nd obviously brought awareness to this at a higher level. There have been negotiations between the U.S. and several countries that have been made public since then. We anticipate, you know, sometime in mid-July to have a more formal update from the administration on the topic of tariffs and their negotiations with other countries. But we are doing everything we can currently with our supply base. to attempt to mitigate the costs of terrorism. And our teams are doing a productive job of that. I won't go into details there.
Speaker Change: April 2nd obviously broad.
Speaker Change: Wariness to this at a higher level there have been negotiations between the U S. In several countries.
Speaker Change: That had been made public sense than we anticipate.
Speaker Change: Some time in mid July.
Speaker Change: To have a more formal update from the administration on the topic of tariffs and their negotiations with other countries.
Speaker Change: But we are we are doing everything we can currently with our supply base.
Speaker Change: Attempt to mitigate the costs.
Speaker Change: Tariffs.
Speaker Change: And our teams are doing a productive job of that I won't go into details there.
Michael Happe: Less than 10% of the volume unit-wise of our bill of materials comes from outside the country. But the dollar exposure to tariffs is much higher. Motorized chassis is a good example of that. Other elements potentially with steel and aluminum, electronics, appliances, and the like. And so that exposure is a little bit higher than I think people have thought it might be for us. Our model year 2026 pricing, which has been released by almost all of our businesses, does reflect We have some tariff pricing in it to cover the short-term tariff risk that we are seeing for the remainder of fiscal year 25 and the early parts of fiscal year 26.
Speaker Change: Less than 10% of the volume.
Speaker Change: Unit wise of our bill of materials comes from outside the country.
Speaker Change: But the dollar exposure to tariffs is much higher our motorized chassis is a good example of that other elements potentially with steel and aluminum electronics.
Speaker Change: Electronics appliances and the like.
Speaker Change: And so that exposure is a little bit higher than I think people have thought it might be for us our model year 2026 pricing, which has been released.
Speaker Change: By almost all of our businesses.
Speaker Change: It does reflect some tariff pricing in it to cover the short term tariff risk that we are seeing for the remainder of fiscal year 'twenty five and the early parts of fiscal year 'twenty six but as we sit here today.
Michael Happe: But as we sit here today, and as Bryan articulated, there remains a net tariff unmitigated risk that we are working hard to reduce. And we wanted to share that risk with all of you today, and we will provide an update on that topic in October as well. But it comes from different countries, it comes from different components, but the team is working hard across the board on several mitigation tactics.
Speaker Change: As Brian articulated there remains a net tariff on mitigated risk that we are working hard to reduce and we wanted to share that risk with all of you today and we will provide an update on that topic in October.
Speaker Change: As well, but.
Speaker Change: It comes from different countries it comes from different components.
Speaker Change: But.
Speaker Change: The team is the team is working hard across the board on several mitigation tactics.
Speaker Change: Okay, great. Thank you.
Speaker: Okay, great. Thank you.
Speaker Change: Yes.
Joe Altobello: One moment for our next question. Our next question will be coming from Joe Altobello of Raymond James. Your line is open, Joe. Thanks. Hey, guys. Good morning.
Speaker Change: Our next question. Our next question will be coming from Joe <unk> of Raymond James Your line is open.
Joe: Thanks, Hey, guys. Good morning, I wanted to go back to your comments earlier, Mike about the Winnebago Motorhomes segment, it sounds like and correct me if I'm wrong.
Michael Happe: I want to go back to your comments earlier, Mike, about the Winnebago Motorhome segment. It sounds like, and correct me if I'm wrong, that your strategy here is rather than play the discount game to kind of focus on innovation toward the lower end in terms of price points in that category. I guess first, is that accurate? And second, if yes, how long do you think that takes?
Speaker Change: Your strategy here is rather than play the discount game.
Speaker Change: So kind of focus on innovation towards the lower end in terms of price points in that category.
Speaker Change: First is that accurate and secondly, if yes, how long do you think that takes.
Speaker Change: Good morning, Joe on this on the topic of sales allowances and discounts the motorized category in the RV industry is very competitive today.
Michael Happe: Good morning, Joe. On this on the topic of sales allowance and discount The motorized category in the RV industry is very competitive today, regardless of the turnaround work that's happening in the Winnebago motorhome business. So it is taking a higher than historical level of discounting to move product to the market today, regardless, I think, of the sort of the status of that business. And that will likely continue for some time from a competitive standpoint within the industry. My sense is most of our competitors are sitting, as we are a bit, on a number of available chassis.
Speaker Change: Regardless of the turnaround work that's happening in the Winnebago motor home business.
Speaker Change: So so.
Speaker Change: Is taking a higher than historical level of discounting to move product to the market today.
Speaker Change: Guard lists I think of the sort of the status of that of that business and that will likely continue for some time from a competitive standpoint within the industry. My sense is is <unk>.
Speaker Change: Most of our competitors are sitting.
Speaker Change: As we are a bit on a number of available chassis and so from a working capital and production standpoint, they have a vested interest in trying to to move that to the market and get the benefit of cash.
Michael Happe: And so from a working capital and production standpoint, they have a vested interest in trying to move that to the market and get the benefit of cash. I would say on the topic of where the product line is headed in the future, as Bryan inferred, it is very important for us to make sure that the value proposition of Winnebago-branded motorhomes is in a stronger position tomorrow than it is today. And Chris West and his leadership team are working vigorously to improve the value proposition of legacy products, and as they come to market in the future with brand-new products, that those have an appropriate value to them as well, in addition to any innovation or differentiation that may be associated with that.
Speaker Change: I would say on the topic of where the product line is hit it in the future.
Brian: As Brian.
Brian: <unk> it is very important for us to make.
Brian: To make sure that the value proposition of Winnebago branded Motorhomes is in a stronger position tomorrow than it is today and Chris West and his leadership team are working vigorously.
Brian: To improve the value proposition of legacy products and as they come to market in the future with brand new products that those have an appropriate.
Brian: <unk> to them as well in addition to any innovation or differentiation that may be associated with that but but yes.
Speaker: But yes, we need to improve the value proposition on Winnebago-branded motorhomes in the future, and the team is working to that. Yeah, very helpful.
Brian: We need to improve.
Brian: The value proposition on Winnebago branded motorhomes in the future and the team is working to that end.
Speaker Change: Got it very helpful and just kind of as a follow up on that in terms of demand trends. You mentioned March was was encouraging in April may not so much.
Speaker: And just kind of to follow up on that in terms of demand trends, you mentioned March was was encouraging, April, May, not so much. It sounds like what you're seeing in June is more of a continuation of what you saw in the latter part of the quarter rather than any any sort of improvement. Is that accurate? Joe, from a macro standpoint, the first three weeks of June are still producing a negative retail comp versus the first three weeks of June a year ago in our business. It does vary, though, by segment and or brand. You know, we do have some bright lights, you know, in that that are that are that are performing higher than our company average.
Speaker Change: It sounds like what Youre seeing in June there is more of a continuation of what you saw in the latter part of the quarter rather than any sort of improvement is that accurate.
Speaker Change: Joe from a macro standpoint, the first three weeks of June.
Speaker Change: Still producing.
Speaker Change: Negative retail comps versus the first three weeks of June a year ago in our business. It does vary though by segment <unk> brand.
Speaker Change: We do have some bright lights.
Speaker Change: In that that are that are that are performing higher than our company average.
Michael Happe: And that run rate, the first three weeks of June is actually trending for us. Slightly better than what we saw in the month of May from a macro standpoint. So it's not it's not great in the sense that it's an across the board positive comp across all of our brands and in category segments. But it, it, it, it has gotten a little bit better with our internal information versus our internal May information. And so, you know, that's a good thing. You know, it's stable to slightly better in June, but I will not suggest that, you know, things have turned incredibly positive at the at the end of June.
Speaker Change: And that run rate. The first three weeks of June is actually trending for us slightly better than what we saw in the month of May from a macro standpoint. So it's not it's not great in the sense that it's an across the board positive comp across all of our brands and category segments.
Speaker Change: But.
Speaker Change: It has gotten a little bit better with our internal information versus our internal may information.
Speaker Change: So.
Speaker Change: That's a good thing it's stable.
Speaker Change: To slightly better in June, but I will not suggest that.
Speaker Change: Things have turned incredibly positive at this time.
Speaker Change: Got it okay. Thank you.
Speaker: Got it, okay, thank you. Thank you.
Speaker Change: Okay.
Craig Kennison: And our next question will be coming from Craig Kennison of Baird.
Speaker Change: And our next question will be coming from Craig Kennison.
Michael Happe: Craig, your line is open. Hey, good morning. Thanks for your time today.
Speaker Change: Baird Greg Your line is open.
Speaker Change: Hey, good morning, Thanks for your time today, Mike I'm wondering if you would comment on some of the tax proposals finding their way through Congress, especially as it relates to interest rate deductibility.
Michael Happe: Mike, I'm wondering if you would comment on some of the tax proposals finding their way through Congress, especially as it relates to interest rate deductibility. Good morning, Craig. I will comment on what we believe is happening as of this morning. There are a number of things we're monitoring, one of which is the floor plan interest deduction for dealers on tollable products that was inadvertently omitted from previous legislation many years ago. We believe that the bill that's being debated and discussed on the Hill potentially resolves that issue of things, if things can continue forward as is here over the next week or so.
Speaker Change: Good morning, Craig.
Speaker Change: I'll comment on what we believe is happening as of this morning.
Speaker Change: There are a number of things we're monitoring one of which is the floor plan.
Speaker Change: Interest deduction for dealers on tolerable products.
Speaker Change: That was inadvertently omitted from previous legislation many years ago.
Speaker Change: We believe that the bill that's being debated and discussed on the Hill.
Speaker Change: Potentially resolve that issue of things if things can continue forward as is here over the next week or so.
Michael Happe: We also understand that and have been tracking What I'll call sort of auto loan interest deductibility, and that has been shifting between the House version that came first, and then later generations of now the Senate version of the bill. And as many of you know, some of that is limited in terms of types of categories. Right now we believe some of the motorized RVs on the smaller side could be included in that, but we're not sure that towable RVs or larger motorhomes may be a part of that. That could change. That interest deductibility also is tied to, I think, filer income and has some caps to it as well.
Speaker Change: We also understand that it had been tracking.
Speaker Change: <unk>.
Speaker Change: What I'll call sort of auto loan interest deductibility.
Speaker Change: And that has been shifting between the house version that came first.
Speaker Change: And then later generations of now the Senate version of the Bill and as many of you know some of that is limited in terms of types of categories.
Speaker Change: Now we believe some of the motorized rvs on the smaller size could be included in that but we're not sure that total rvs or larger motor homes may be a part of that that could change.
Speaker Change: That interest deductibility also is tied to.
Speaker Change: Filer income.
Speaker Change: And have some caps to it.
Speaker Change: As well so we'll watch to see what is finalized here over the next week or two.
Michael Happe: So we'll watch to see what is finalized here over the next week or two. And certainly if consumers can be supported or advantaged in any way, shape, or form to make the purchase of RVs a little bit more affordable, that's welcome news. And on the dealer side, we think it's incredibly important for dealers to get the benefit of towable floor plan interest deductibility back into their operating model as soon as possible.
Speaker Change: And certainly if consumers can be supported our advantaged in any way shape or form to make the purchase of RV is a little bit more affordable that's welcome news.
Speaker Change: And on the dealer side, we think it's incredibly important for dealers.
Speaker Change: To get the benefit of total Floorplan interest deductibility back.
Speaker Change: Back into their operating model as soon as possible.
Speaker Change: Great. Thanks, Mike.
Speaker: Great. Thanks, Mike.
Speaker Change: Okay.
Speaker Change: And our next question will be coming from Scott timber of Rob <unk>. Your line is open.
Scott Stember: And our next question will be coming from Scott Stember of Roth MKM. Your line is open. Good morning guys and thanks for taking my questions. Um, Mike, you were talking about some price increases going through related to tariffs already for the 26 product. Two questions there. Um, is this, um, the, I guess, below the mid-single digit?
Scott Timber: Good morning, guys and thanks for taking my questions.
Speaker Change: Good morning.
Speaker Change: Mike you were talking about some price increases going through related to tariffs already for the 26 product two questions there.
Speaker Change: Is this.
Speaker Change: I guess, the low to mid single digits.
Michael Happe: um you know bogey that you talked about earlier um does that include all of that and the other part is what is the reaction if some of these products have been retailing what has the consumer reaction been to these price increases Good morning, Scott. The model year 26 pricing that we have taken so far this summer varies from low to mid single digits by brand within our portfolio. That pricing in most cases does include some pricing as it relates to known near term tariffs and the cost that we're experiencing. So, that cost increase is a base plus what we know today to be some of our tariff exposure.
Speaker Change: Bogey that you talked about earlier.
Speaker Change: Does that include all of that and the other part is what is the reaction.
Speaker Change: Some of these projects have been retailing.
Speaker Change: As the consumer reaction been to these price increases.
Michael Swartz: Good morning, Scott.
Speaker Change: The model year 'twenty six pricing that we have taken so far this summer.
Speaker Change: <unk> from low to mid single digits by brand within our portfolio.
Speaker Change: Yes.
Speaker Change: That pricing in most cases does include some pricing as it relates to known near term tariffs.
Speaker Change: And the cost that we're experiencing.
Speaker Change: So.
Speaker Change: That cost increase is a base plus what we know today to be some of our tariff exposure.
Speaker Change: As you know the inventory there is there is ample inventory in the market on our product categories motorized RV sold those rvs and boats and the dealers probably have roughly.
Michael Happe: As you know, there is ample inventory in the market on our product categories, motorized RVs, towables, RVs, and boats, and the dealers probably have roughly half a year of inventory, maybe not the perfect mix, that allows them to continue to selling to consumers here for a while without showing the full impact of any tariff-related pricing that may be passed on to them by the OEMs. What Bryan alluded to this morning in terms of our exposure, potential exposure for fiscal 26 is tariff costs that are not yet mitigated from supply chain tactics and or have probably been fully priced for in our current model year 26 pricing.
Speaker Change: Half a year of inventory, maybe not the perfect mix.
Speaker Change: That allows them to continue to selling.
Speaker Change: To consumers here for a while.
Speaker Change: Without showing the full impact of any tariff related pricing that may be passed on to them by the Oems what Bryan alluded to this morning in terms of our exposure potential exposure for fiscal 'twenty six is tariff.
Speaker Change: Costs that are not yet mitigated from supply chain tactics.
Speaker Change: <unk> have probably been fully priced for in our current model year 'twenty six pricing and so that's just an acknowledgment that there could be another shoe to drop there.
Speaker: And so, that's just an acknowledgment that there could be another shoe to drop there, but our intention and hope is that we battle and reduce that exposure through good conversations and tactics from a supply chain and supplier standpoint before we have to price for it. What we don't quite yet understand is whether there will be any meaningful volume impacts from slightly higher pricing related to tariffs within our businesses. I think that is a topic that will show itself over time, and we'll see what happens. Got it.
Speaker Change: But our intention and hope is that we battle and reduce that.
Speaker Change: That exposure through good conversations and tactics from our supply chain and supplier standpoint.
Speaker Change: Before we have to price for it and what we don't quite yet understand.
Speaker Change: Is whether there will be any meaningful volume impacts from slightly higher pricing related to tariffs within our businesses I think that is a topic that will show itself over time.
Speaker Change: And we'll see what happens there.
Speaker Change: Got it and just last one on Marine you guys obviously.
Michael Happe: And this last one on marine, you guys obviously https://www.youtube.com.uk that is helping, you know, both brands just really kill it right now. Well, I think both brands, first and foremost, are led by quality leaders and teams, and their businesses are generally under control from an operational standpoint. ChrisKraft specifically has been working hard on stronger product values, lower in their lineup as well. Many of you know that earlier this calendar year, we introduced the Sportster series at ChrisKraft, which allowed consumers to get into that brand for somewhere at the low point of $175,000 to $185,000. And they have continued to introduce a few models that are pretty effective on the lower half of their product lineup.
Speaker Change: During the complete opposite of what it looks like the rest of the industry is doing particularly for <unk>, maybe you could talk about Chris Greg how things are trending there and just.
Speaker Change: Is this just totally idiosyncratic to winnebago or is there anything else that's going on.
Speaker Change: That is helping.
Speaker Change: Both brands, just really kill it right now.
Speaker Change: Well I think both brands.
Speaker Change: First and foremost are led by quality.
Speaker Change: Leaders and teams.
Speaker Change: Their businesses are generally under control from an operational standpoint.
Speaker Change: Chris craft, specifically has been working hard on.
Speaker Change: Stronger product values lower in their lineup as well many of you know that.
Speaker Change: Earlier this calendar year, we introduce the Sportster series at Chris craft.
Speaker Change: Which allowed consumers to get into that brand for somewhere at the low point of 175 to $185000.
Speaker Change: And they have continued to introduce a few models that.
Speaker Change: Are pretty effective on the lower half of their product lineup.
Michael Happe: They've also been successful with their dealer relationships and have been very, very disciplined on managing dealer inventory as well. So we're pleased with both the slight retail share pickup at ChrisKraft plus the dealer inventory discipline that they're showing as well. Barletta is just a really strong story and continues to be so. The number three brand now in aluminum pontoons. The May SSI for pontoons just came out yesterday. They picked up share both in the month of May, I think about 100 basis points more than a year ago, and also have picked up share on a calendar year-to-date basis as well.
Speaker Change: They have also been successful with their dealer relationships and had been very very disciplined on managing dealer inventory.
Speaker Change: Well so we're pleased with both the slight retail share pickup at first graft plus the dealer inventory discipline that theyre showing as well Violeta is just a really strong story and continues to be so the number three brand now in aluminum pontoons.
Speaker Change: May Ssi for pontoons, just came out yesterday, they picked up share both in the month of May I think about 100 basis points more than a year ago and also have picked up share on a on a calendar year to date basis as well again.
Michael Happe: Again, they continue to tweak their lineup in many ways, too many to list in my comments right now. But particularly that Aria lineup continues to do very well for them. This is the third year of the Aria lineup, which is their lower-priced series within their catalog. They continue to tweak that with some new hull redesigns and some other elements, and that continues to perform well. So we're very pleased with where the marine businesses are at today. They're battling successfully, and we just need to stay very focused there, do the right thing by our dealers, deliver great value and take care of our customers, and just be disciplined with the production and the adjustments we're making to the product line to stay in line with what the consumer wants.
Speaker Change: Continue to tweak their lineup in many ways too many to list in my comments right now, but particularly that ARIA lineup continues to do very well for them. This is the third year of the ARIA lineup, which is their lower priced series within their catalog. They continue to tweak that with some new haul.
Speaker Change: <unk>.
Speaker Change: Some other elements and that continues to perform well so.
Speaker Change: We're very pleased with where the marine businesses are at today, they're battling successfully.
Speaker Change: We just need to stay very focused there do the right thing by our dealers deliver great value and take care of our customers.
Speaker Change: Just be just be disciplined with the production and the adjustments, we're making to the product line to stay in line with what the consumer wants.
Speaker Change: Got it that's all I have thank you.
Speaker: Got it. That's all I have. Thank you. Thank you, Scott. Thank you.
Scott Timber: Thank you Scott.
Speaker Change: And our last question will be coming from James Hardiman with Citi. Your line is open.
James Hardiman: And our last question will be coming from James Hardiman of Citi. Your line is open. Hey, good morning. I just wanted to sort of unpack the inventory conversation. 1.8 turns coming out of the third quarter, that's flat with the second quarter, flat with a year ago, so love to see that. You talked about two turns being sort of your long-term goal. Do you think that's the number that we'll get to finish this year similar to where we were last year? And then I guess sort of more broadly, it seems like you guys are maybe doing a better job than some of your peers.
James Hardiman: Hey, good morning, just wanted to.
Scott Timber: Sort of unpack the inventory.
Scott Timber: Conversely Asian.
Scott Timber: One eight turns coming out of the third quarter, that's flat with the second quarter flat with a year ago. So so love to see that.
Speaker Change: You talked about two turns being sort of your long term goal.
Speaker Change: Do you think that's the number that will get to.
Speaker Change: Finished this year similar to where we were last year.
Speaker Change: And then I guess sort of more broadly it seems like you guys are maybe doing a better job than some of your peers.
Michael Happe: I don't know. Is that a good place to be, or do you still have to deal with maybe higher inventories on a relative basis from some of your peers? Thanks. Thanks, James, for the questions. A couple of things to unpack there. One is, is we are comfortable with two turns as an appropriate target. I would say if you talk to most dealers in the industry, that would be the minimum number that they're shooting for as well. And so we think that very much aligns with what our dealers would like from their OEM partners. We're not there yet.
Speaker Change: Is that a good place to be or do you still have to deal with.
Speaker Change: Maybe higher inventories on a relative basis from some of your peers.
James Hardiman: Thanks, James for the questions.
Speaker Change: A couple of things done pack. There one is as we are comfortable with two turns is an appropriate target I would say if you talk to most dealers in the industry that would be the minimum number that they're shooting for as well and so we think that very much aligns with what our dealers would like from their OEM partners were not there yet but.
Speaker Change: But we are potentially sacrificing a little bit of shipment share.
Michael Happe: But we are potentially sacrificing a little bit of ship and share in the spirit of trying to remain disciplined and, and try to target that two turn level for most of our brands and businesses. It does vary by category. Toll, those tends to be a little higher in some cases. Turns wise, motorhomes tend to be a little bit lower. But we think that's the right number. I don't think you're going to see that number by the end of our fourth quarter, fiscal 25. But it is something we'll continue to pursue during fiscal 26. I'm not sure our larger competitors are sharing that intention through behavior lately.
Speaker Change: In the spirit of trying to remain disciplined and try to target that to turn level for most of our brands and businesses. It does vary by category told those tends to be a little higher in some cases turns wise motor homes tend to be a little bit lower but we think thats. The right number I don't think youre going to see that number by the end of our fourth quarter <unk>.
Speaker Change: 25, but it is something we will continue to pursue during fiscal 'twenty six.
Speaker Change: Im not sure our larger competitors.
Speaker Change: Our sharing that intention through behavior lately.
Speaker Change: We have been a little bit surprised by the shipment velocity before.
Speaker Change: Before this morning's RV industry Association shipment summary shipments earlier in the calendar year, we're a little bit more aggressive than I think we thought the market needed.
Speaker Change: But thats, our competitors' prerogative to do what they think they should do.
Speaker Change: It does increase.
Speaker Change: Some of the competitive discounting.
Speaker Change: Elements in the market when that happens.
Michael Happe: And you run the risk of seeing, you know, aging inventory down the road if the retail side of the business doesn't keep up with that shipment supply. So this morning's May shipment report by RVIA was not unexpected to us. We just continue to think dealers will be appropriately disciplined going forward and that you likely won't see field inventories rising much in total, in net, throughout the rest of the calendar year. So we're going to try to stay focused. At times, you know, we debate internally about, you know, whether we could force some more units into the market.
Speaker Change: And you run the risk of seeing.
Speaker Change: Aging inventory down the road, if the retail side of the business doesn't keep up with that shipment supply. So.
Speaker Change: This morning's may shipment report by RV IAA.
Speaker Change: Does that not unexpected to us.
Speaker Change: Our preliminary earnings announcement on June 5th.
Speaker Change: Pretty much essentially inferred that the later parts of our Q3 period, where pressured from a from an industry shipment standpoint, and I think this morning's report validated that we just continue to think dealers will be.
Speaker Change: Appropriate discipline going forward and that you likely won't see field inventories rising much.
Speaker Change: In total and net throughout.
Speaker Change: Throughout the rest of the calendar year, so we're going to try to stay focused at times.
Speaker Change: We debate internally about whether we could for some more units into the market.
Speaker Change: But for any of our dealers that are listening here on this call. We're trying to do the right thing by you.
Speaker Change: And we're trying to make sure that our inventory from a quality and quantity standpoint is in good shape.
Speaker Change: And and if but when the market recovers in the future and we get some wins behind our back our brands and businesses will be better off in a number of ways for the hard work. We're doing we're doing now to be disciplined.
Michael Happe: So that's the way that we look at it. It probably contributes to some pressured financial performance here in the short term, but we think it's simply the right thing to do to sustain a healthy business over the long term. Got it.
Speaker Change: So thats the way that we look at it it probably contributes to some pressured financial performance here in the short term but.
Speaker Change: But we think it's simply the right thing to do to sustain a healthy business over the long term.
Speaker Change: Got it and just maybe as a follow up there. So the $3 25 call. It the midpoint of your wholesale assumption for the industry, what's the retail assumption.
Bryan Hughes: And just maybe as a follow up there. So the 325, call it, you know, the midpoint of your wholesale assumption for the industry. What's the retail assumption that's that's built into that? Is it you think there's going to be an inventory build and inventory drawdown this year? And then maybe if I could just sneak in just a big picture tariff question, not even big picture, the 50 to 75 cents that you called out for those of us that are that are sort of math challenged, what what kind of a price increase would would you need to offset that 50 to 75 cents?
Speaker Change: Built into that you think there's going to be inventory build and inventory draw down this year.
Speaker Change: And then maybe if I could just sneak in just a big picture question Big picture.
Speaker Change: The 75 that you've called out.
Speaker Change: For those of US that are that are sort of math challenged.
Speaker Change: What kind of a price increase would you need to offset that 50 to 75.
Speaker Change: Yes.
Bryan Hughes: Yeah, first, I'll address that one. You know, it varies depending on whether we're aiming for dollars or percentages, right? But there's probably another 30, $40 million of costs that we're trying to mitigate through pricing. So you can convert that into percentage terms pretty easily. All right, and then the first question, again, Thank you for your time. Relative to the 325 midpoint of how you're thinking about wholesale, what's your what's your retail Yeah, right now it's it's very close to that, if not reflecting a little bit of a D stock still in the current year, just to, you know, help further the the dealer's desire for, you know, higher turns that Mike was just talking about.
Speaker Change: First.
Speaker Change: I'll address that one.
Speaker Change: It varies depending on whether we're aiming for dollars or percentages right, but theres, probably another $30 million to $40 million.
Speaker Change: Of course that we're trying to mitigate through pricing.
Speaker Change: So you can convert that into percentage terms pretty easily.
Speaker Change: Alright, and then the first question again.
Speaker Change: Okay.
Speaker Change: Relative to the $3 25 mid point of how Youre thinking about sale, what's your what's your retail countries.
Speaker Change: Yes, right now, it's very close to that if not reflecting a little bit of a destock still in the current year just two.
Speaker Change: Help further the dealers' desire for higher turns that Mike was just talking about.
Speaker Change: Got it.
Speaker: Got it. Appreciate it, guys. Thank you.
Speaker Change: I appreciate it guys.
Speaker Change: Thank you Jay.
Speaker Change: Thank you we do have a follow up.
Tristan Thomas Martin: We do have a follow-up from Tristan Thomas Martin of BMO Capital Markets. Your line is open, Tristan. Hello again.
Speaker Change: Thomas Martin of BMO capital markets. Your line is open interest.
Speaker Change: Hello again.
Michael Happe: Just wanted to sneak one in there on kind of motorized, I mean, Newmar has done pretty well in a pretty challenged backdrop, kind of curious if you could flag what they're doing specifically, and then how If it's possible, maybe port some of those kind of changes over to the core Winnebago motorized brand. Thanks. Yeah, Tristan, we agree that the Numar business has been driving some good results, both from a retail share standpoint, but candidly, also from a profitability contribution standpoint. We don't share, you know, specific brand profitability contribution, but I can just tell you that the Numar business is as healthy today, profitability-wise, yield, from a yield standpoint, as at any time since we have owned them since 2019.
Speaker Change: I wanted to sneak one in there kind of motorized newmar has done pretty well in a pretty challenged backdrop.
Speaker Change: I'm kind of curious if you could flag, what's again, specifically and then how.
Speaker Change: Yes. It is possible. They report some of those kind of changes over so the core Winnebago motorized Brian. Thanks.
Speaker Change: Yes, Chris and we agree that the Newmar business has been driving some good results both from a retail share standpoint, but candidly also from a profitability contribution standpoint, we don't share specific brand profitability contribution, but I can just tell you that the newmar business is healthy today profitability.
Speaker Change: <unk> wise yield from a yield standpoint as at any time since we have owned them since 2019.
Michael Happe: And that emanates from, you know, primarily having a very strong product line. Their Class A diesel business continues to be very healthy. I think their Class A diesel share, the latest numbers are up to somewhere in the 33% plus range. We've seen Class A diesel share increases now for, I believe, at least four consecutive years. So it's a good team. It's a great brand. It's the products in the right place. They're taking care of the dealers and the consumers. And we're going to stay very focused to try to make sure that that behavior continues.
Speaker Change: And that emanates from primarily having a very strong product line.
Speaker Change: There are class a diesel business continues to be very healthy I think there are class a diesel share. The latest numbers are up to somewhere in the 33% plus range. We've seen a class a diesel share increases now for I believe at least four consecutive years.
Speaker Change: They have expanded their supersede lineup the Super C category has been growing in popularity over the last five years to 10 years.
Speaker Change: Newmar entered that about five or six years ago with a model or two but they've continued to tweak those legacy models and add some new Super C elements to their product catalog here as of late.
Speaker Change: And then they've recently just introduced a compact luxury class C called the freedom are at their April dealer meeting that as we said in our prepared comments, they're taking orders for here shortly and we'll be shipping to the market most likely in Q1 of fiscal 'twenty six.
Speaker Change: <unk> also done a really good job from a dealer inventory management.
Speaker Change: Field inventory at Newmar.
Speaker Change: Half of what it was unit wise when we when we bought them in 2019, but the business is healthier.
Speaker Change: And I just spoke to a large newmar dealer yesterday, who reiterated that the newmar team was doing the right thing by the dealers in many ways.
Speaker Change: And that they remain committed to that brand so.
Speaker Change: It's just it's a good team it's a great brand.
Speaker Change: It's the products in the right place Theyre, taking care of the dealers and the consumers and we're going to stay very focused to try to make sure that that.
Speaker Change: That behavior continues.
Michael Happe: The Class A category has not been growing in size, as many of you know, but that's one of the reasons why we're expanding the Numar catalog. They have permission to play in the motorized space, and the way they do their business will allow them to win in the market over time. So we'll just have to stay focused and disciplined there. But it's a really nice story sort of underneath the surface here within our portfolio. Thank you.
Speaker Change: The class a category has not been growing in size as many of you know.
Speaker Change: But thats one of the reasons why we are expanding the newmar catalog they have permission to play in the motorized space and.
Speaker Change: And the way they do their business will allow them to win in the market over time. So we'll just have to stay focused and disciplined there, but it's a it's a really nice story sort of under underneath the surface here within our portfolio.
Speaker Change: Thank you.
Speaker Change: Okay.
Ray Posadas: And I would now like to turn the call back to Ray Posadas for closing remarks. Thank you, Tanya. That is the end of our third quarter earnings call. Thank you to everyone for joining us. We look forward to further updating you on future calls. Enjoy the rest of your day. And this concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: And I would now like to turn the call back to <unk> for closing remarks.
Speaker Change: Thank you Tanya that at the end of our third quarter earnings call. Thank you to everyone for joining US we look forward to further updating you on future calls enjoy the rest of your day.
Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Yes.
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Speaker: Thanks for watching!
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