Winnebago Industries Inc (WGO) 2024 Q4 法說會逐字稿

Good day. And thank you for standing by. Welcome to the Q4 and full year fiscal 2024 Winnebago Industries Financial results conference call at this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded after the speaker's presentation. There will be a question and answer session. I would now like to hand the conference over to your speaker to today. Ray Posadas, Vice President, Investor Relations and Market Intelligence.

Thank you operator. Good morning, everyone and thank you for joining us to discuss our fiscal 2024 fourth quarter and full year earnings results. This call is being broadcast live on our website at investor.wgo.net and the replay of the call will be available on our website later today.

The news release with our fourth quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor relations section of our website under quarterly results.

Turning to slide 2 certain statements made during today's conference call regarding Winnebago industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain and a number of factors, many of which are beyond the company's control could cause actual results to differ materially from these statements.

These factors are identified in our sec filings which we encourage you to read. In addition on today's call management will refer to GAAP and Non-GAAP financial measures and the reconciliation of the non-GAAP measures to the comparable GAAP measures are available on our earnings press release. Please turn to slide 3.

Joining me on today's call are Michael Happy, the President and Chief Executive Officer of Winnebago Industries; and Bryan Hughes, senior Vice President and Chief Financial Officer, Mike will begin with an overview of our Q4 and full year performance.

Bryan will discuss our financial results at a strategic level, provide some further comments on our overview of the market and discuss our fiscal 2025 guidance. Mike will conclude our prepared remarks with the business outlook and management will be happy to take your questions with that. Please turn to slide 4. As I hand the call over to Mike.

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

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

Although a difficult retail environment made fiscal 2024 a challenging year for the RV and marine industries, the collaborative culture and commitment to excellence at Grand Design, Winnebego Newar Barletta, Chris Craft and Lits all serve as the foundation for a return to growth as market conditions improve in the future.

Before we get into the details of our Q4 and full year results, there are several key messages I want to convey on this morning's call first. While the retail environment remains challenging. In the short term, we anticipate gradual market improvement over the next 12 to 15 months, we would expect this to occur more materially as we move into the second quarter of calendar 2025. Our third fiscal quarter factoring in the projected easing of interest rates and decreased inventory levels in the motorhome RV category.

Second, we have made substantive leadership changes at Winnebago Motorhome and Winnebago Towables to remedy the operational and financial challenges that have affected the performance of those businesses. In recent quarters. Third, we are delighted by the enthusiastic consumer and dealer response to the lineage series M Grand design's inaugural entry in the motorhome RV segment.

The new vehicle was featured at last month's Hershey RV Show and RV dealer open house and a small number of units began shipping in Q4. The Grand design team with support from the businesses across our portfolio have created an RV with benefits that we believe set a new standard for excellence in a class C coach.

And finally, today, we are providing annual financial guidance for the first time. In light of the continued market uncertainty, we are being appropriately cautious out of the gate. But at the midpoint, we are forecasting modest improvement on the top line and adjusted eps growth of 10% compared to prior year.

There are several positive takeaways from the quarter worth noting including initial shipments of lineage series M while not a meaningful contributor in Q4, we expect lineage to gain momentum as production ramps in the first half of fiscal 2025 in our marine segment, Barletta continued to take market share in the US aluminum pontoon market.

In addition, August marked the fifth consecutive month of year over year retail growth for Chris Craft on a trailing six month basis. This iconic brand has grown its retail volume by 32% compared with the same period in fiscal '23 driven in part by its new launch 27 Chris Craft's retail share in the 20 to 40 ft fiberglass market has increased in the most recent 36 and 12 month periods as well.

Despite the weak retail market environment, our strong balance sheet and positive free cash flow enable us to maintain a thoughtful and balanced capital allocation approach. In Q4, we generated free cash flow of $30 million and returned to combine $19 million to our shareholders in the form of share repurchases and dividend payments underscoring our confidence in Winnebago industry's long term growth prospects. Turning to slide 5, the RV Industry Association now estimates calendar 2024 wholesale shipments at a median of about 324,000 units and we are aligned with that projection.

We anchor calendar year 2025 RV. Industry shipments in the range of 320,000 to 350,000 units.

Wholesale total RV. Industry shipments were up 10% year over year for the month of August and up 14.5% year-to-date through the first eight months of calendar 24.

This reflects continued progress towards rightsizing inventory and in addressing the growing consumer demand for affordability. The motor home portion of the industry remains in destocking mode with wholesale shipments down 31% year over year in August and down 24.2% year-to-date within our universe of RV. Dealers. Inventory turns were down very slightly in the fourth quarter compared with the year earlier period. Inventory for Winnebago industries was down 4.5% from Q4 of fiscal '23 which underscores our focus on continuing to aggressively manage production amidst what remains a challenging macroeconomic environment.

Turning to slide 6 for the trailing 12 months ended August 31st, our total market share was 11.1% down 50 basis points from the same period in 23.

As I noted on our Q3 call, we have introduced new products over the past two quarters that we believe will contribute to stabilizing our market share in the coming months. We believe this deliberate approach is crucial for fostering strong long term relationships with our dealer partners. As a result, we were pleased to see positive share gains for our Winnebago brand class C motorhome and Newmar's full motorized product lines.

Both of which showed year over year growth across the trailing 36 and 12 month periods through the end of August slide, seven showcases. Barletta's continued momentum in the marine segment for the trailing 12 months through August 2024. Barletta's market share increased 200 basis points year over year to 9.1%.

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

Turning to recent highlights on slide 8 during the quarter, we made some strategic changes to our executive team and the leadership in our Winnebago motorhome and Winnebago to those businesses, Chris West who previously served as senior Vice President of Enterprise Ops and Barletta Boats was named President of our Winnebago branded motorhome and specialty vehicles business.

Chris, an eight year veteran of Winnebago industries. In addition to previous oversight responsibilities of the enterprise's manufacturing and supply chain operations, also successfully led the integration of Barletta and played a vital role in the boat brands, achievement of double digit market share growth.

His broad experience will be invaluable as we further enhance the Winnebago brand's influence impact and market share.

Our Winnebago branded tools business has underperformed our expectations and it is imperative that we have two strong tolls brands to compete successfully in the marketplace to enable the Winnebago branded Towables business to reach its full potential. Don Clark has been promoted to group President of our Towables business.

Effective November 1, Don will expand his responsibilities to oversee Winnebago Tools. In addition to his role as President of Grand Design RV, this chain centralizes our Tole's expertise in Indiana. His insights operational acumen and extensive knowledge of what it takes to win in the space will make Don the ideal and logical choice to lead the team. During their next evolution, both Chris and Don will continue to report to me.

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

Turning to our product innovations. I am excited to highlight our bold and innovative model year 2025 lineup, much of which we recently showcased at the Hershey RV Show across our Winnebago Grand Design and Newar brands. We introduced nearly 150 new models and floor plans demonstrating our commitment to technology design and comfort as expected.

One of the highlights of the Hershey Show was the class C lineage series M Grand design's first ever motorhome model from its thoughtfully designed interior to its superior payload capacity and driving performance lineage. More than lives up to the high expectations and exacting standards of our loyal grand design customers.

These product innovations across our portfolio of premium brands underscore our dedication to elevating every moment outdoors for our customers. Now let me turn the call over to Bryan 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 starting with the consolidated results on slide, nine retail demand continued its sluggish performance in the fourth quarter.

Operating expenses increased in the fourth quarter, primarily driven by a $30.3 million impairment charge associated with the Chris Craft reporting unit start up costs associated with the launch of the Grand design, motorized business and strategic investments in engineering, digital asset development and increased data and information technology capabilities.

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

These factors resulted in adjusted e at the margin that was down from the prior year period.

Note that adjusted even at thus shown, excludes the impact from the Chris Craft impairment.

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

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

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

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

As previously disclosed, this adjustment was made to represent the economic offset of dilution risk from the call spread overlay on our 2025 convertible notes.

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

There was no impact from the call spread overlay in fiscal Q4 of 2024 you'll note that we have included a table in the appendix of our earnings presentation that shows the historical adjusted EPS excluding this adjustment.

Next, we wanted to give you early notice that starting with our first quarter, fiscal 2025 results, we will no longer be providing segment backlog information as previously disclosed backlog may not necessarily be an accurate measure of future sales due to the fact that orders and backlog generally can be canceled or postponed at the option of the dealer at any time without penalty.

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

Therefore, we do not believe that backlog is a meaningful measure of future performance to provide our analysts with more relevant financial and operational insight into how we are thinking about the future. For the first time, we are providing quantitative annual guidance on what we consider to be our key financial KPIS consolidated revenues and adjusted EPS.

I'll have more on this shortly.

Turning to our performance by segment starting with total RV. On slide, 10 revenues were down from last year's fourth quarter, reflecting a reduction in average selling price per unit related to product mix, partially offset by an increase in unit volume segment adjusted, but the margin was down versus last year which was attributable to higher warranty expense due to a favorable prior year trend.

The leverage from a reduction in average selling price per unit related to product mix and operational challenges in our Winnebago branded Tobal business.

These issues in the Winnebago brand are related to a shift in plant production whereby we consolidated activities under one roof rather than two and the inefficiencies of making this change poor inventory management practices for several of the products that led to inventory write downs and write offs as well as sales incentives to push these products through the dealers and customers and higher warranty expense in this business due to some elevated quality issues in this brand.

We also want to highlight that warranty as a percentage of net revenue in our grand design business remains at or below our pre 2023 rates turning to slide 11, revenues for the motorhome RV segment were down from the same period last year, year over year change was attributable to product mix. The decline in unit volume related to market conditions partially offset by price increases related to higher motorized chassis costs, segment adjusted EBIT that was down from last year. Attributable to de leverage operational challenges and higher warranty expense.

The operational challenges in the Winnebego brand include higher cost per unit produced as we navigate online supply challenges and issues related to quality sales challenges and higher incentives and promotional activity. As we position our premium product portfolio in a very cost conscious and competitive environment and costs associated with the manufacturing line consolidation and write off of inventory related to product lines that we are discontinuing or easing back on.

We are looking forward to improved performance of our Winnebago branded motorized business following the appointment of new leadership for this business. And we are also excited to see the contributions from from Grand Design entering the motor home business and the accretion in market share and profits that this should bring.

Moving to our marine segment on slide 12, revenue was down in the fourth quarter, primarily due to product mix and a decline in unit volume related to market conditions and dealer de stocking partially offset by targeted price increases to support dealers and moving inventory and create stronger incentives for customers discounts and allowances remained elevated in the quarter.

Also net revenue in the fourth quarter was affected by a mix shift toward product offerings such as the Barletta Aria, as well as a reduction in Chris Craft volume year over year segment adjusted but the margin was down from the prior year due to volume leverage and higher discounts and allowances partially offset by targeted price increases.

Moving on to the balance sheet on slide 13, at fiscal year end, Winnebago industries had a net debt to keep the ratio of approximately two times which is slightly above our targeted range of 0.9 to 1.5 times.

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

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

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

In fiscal 2024 we returned $106.8 million to shareholders consisting of $70 million in share repurchases and $36.8 million in dividend payments.

Wrapping up on slide 14. Let me discuss our financial expectations for fiscal 2025 and the assumptions underlying our outlook as a starting point, our calendar 2025 outlook for RV, wholesale shipments is 320 to 350,000 units industry wide to put this in context. Our midpoint represents about 3% growth from the RVI A median wholesale shipment forecast in calendar 2024.

With this important assumption in mind, we expect fiscal year 2025 revenue in the range of$ 2.9 billion to $3.2 billion.

We also expect fiscal year 2025 adjusted earnings per share in the range of $3 to $4.50.

The midpoint of our adjusted EPS range would reflect growth of 10% from fiscal '24.

Lastly, we anticipate full year interest expense of approximately $25 million to $30 million based on current trends. And due to normal seasonality, we anticipate that revenue and adjusted EPS in the first half of fiscal '25 will be lower than the prior year period with growth in the second half of the year compared with the same period in fiscal '24.

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

We anticipate that the Grand Design RV. Motor Home Entry will experience fiscal '25 sales of $100 million and could even exceed that amount that said we believe that motor home dealers are expecting to further reduce inventories across the board during our fiscal year 2025 meaning our existing brands and those of our competitors.

Grand Design's motor Home business will be diluted to the motorhome segment profit measures initially particularly in the first half of the year as Grand design begins ramping up production and the associated costs in the start up business are not paired with revenues that are at scale, but we have confidence that this new business will be accretive to our Motor Home profit metrics as we cross into fiscal '26 and beyond.

As a reminder, the costs associated with the start up of this business have been included in our corporate segment to our Q4 of fiscal '24 and amounted to approximately $5 million in the fourth quarter.

Please note fiscal '25 sales guidance for Grand design RV. Motor Home is being provided to help size the initial opportunity only and Grand design motor home sales will not be broken out going forward but will be included in our motorhome segment results in closing as macroeconomic conditions improve and the RV and marine industry stage the recovery, we remain confident in our mid cycle organic targets we shared in March specifically, we target sales in the range of $4.5 billion to $5 billion with even the margins in the range of 11% to 11.5% and free cash flow of $325 million to $375 million.

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

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

Thanks Bryan. As we look to the future, I am confident in our company's strong positioning and long term growth potential. Let me highlight the key factors that underpin my optimism.

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

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

At our core, we're powered by a robust technology engine that we believe sets the pace for the end markets. We serve our unyielding commitment to quality and continuous product innovation ensures we maintain competitive differentiation in an ever changing economic landscape. Our flexible integrated operating model and highly variable cost structure are key assets.

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

Our strong balance sheet and healthy free cash flows are not just numbers on a page, they represent opportunity. We have ample dry powder to invest smartly in growth initiatives while simultaneously returning capital to our valued shareholders. Finally, I want to emphasize the strength of our management team. They bring deep operational experience to the table coupled with a proven track record of executing a creative M&A.

This expertise will be crucial as we navigate future opportunities and challenges. Now, Bryan and I will be happy to take your questions this morning operator, please open the line for Q&A.

(Operator Instructions)

Our first question will come from the line of Joe Altobello from Raymond James.

Thank you. Hey guys, good morning. So a couple of high level questions on guidance, obviously breaking with tradition here in giving guidance. Can you give us a sense for why you decided to provide it now? And maybe your general philosophy around it? Should we view this as realistic or perhaps conservative?

Good morning, Joe. This is Mike. You know, the decision to provide guidance at this time was one of a thoughtful deliberation and certainly a move that we thought was in the best interest of you know, investors being able to understand future business expectations as well as the company contributing more intentionally to you know, the the broader street narrative around our future in a more formalized way.

You know, I think Bryan reflected appropriately the the midpoint of our guidance reflecting, you know, modest expectations on both revenue, but also, upside possibilities on the earnings per share. And I won't comment on whether I think the guidance range is neither conservative nor aggressive, but we were very thoughtful about the numbers we included for this morning's call.

Okay. That's helpful. Maybe just to follow up on that, the EPS range is fairly wide, which I can certainly understand and probably do the same thing if I was in your shoes, but maybe lay out for us the scenarios that would, you know, have to happen to get you to the high end and the low end of those ranges. Is it largely volume and, and, and revenue based or are there other factors impacting margin? And maybe what are you assuming in terms of market share in FY20 five.

Joe, this is Bryan. Good morning. I'll take that the, you know, the, the EPS range is largely just the flow through of the, the market at the 320,000 in the low end of the 350,000 on the high end. You know, we run a number of different scenarios then somewhat to your point, your question as it relates to market share as well as margin, you know, a lot of the margin assumptions, we look at highs and lows based on the leverage equation as well as what we think the market will allow in the form of pricing. Inflation is certainly incorporated into some of those margin views.

And then similarly on the market share, we look at things like the entry of Grand design into the motor home business, which we think should certainly be a creative but balanced with all the other forces going on in the market, including current trends on market share. And we factored all those things and and weigh them appropriately to come up with a downside and an upside as well as the midpoint.

Okay, super. Thank you.

Hey, before we move on, I just want to point out to the audience here. We are going to be intentional in the time we allow for Q&A we received a lot of feedback in the past that our call can get a little lengthy. So we're going to draw the line at 10:00 AM.

If that means that one of you don't get a chance at a question, we'll certainly weigh that on our next quarterly call. And as always, we'll follow up with the sell side in one on one calls today and tomorrow. So I wanted to just point that out up front. So no one's surprised when we cut the call off at 10. It is intentional and by design.

Thank you. Our next question will come from the line of Scott Stember from ROTH. Your line is open.

Good morning guys and thanks for taking my questions.

Hey, good morning Scott.

Could you guys talk about what you're seeing at retail as we speak right now? There were some positive vibes coming out of open house regarding the Hershey show just trying to get a sense of what you're seeing across the entire enterprise for rvs mainly. You know, with rates having come down and secondarily, are you seeing any signs or green shoots that the lower rates are helping dealers to become more constructive on taking 25 product?

Good morning Scott. This is Mike. I'll start with the second half of your question. I believe it's a little early for us to see the impact of the FED funds rate move several weeks ago with either our channel partners, or at the retail level. So at this time, I cannot point to a significant and material impact in the retail volume nor wholesale volume solely related to, the move by the Fed here recently, concerning your question about recent retail activity.

My only comment there would be that, you know, re retail continues to be challenging. You know, sluggish would even be probably the right word in a comp year over year context. And we have not seen a meaningful change in overall retail conditions. You know, since the end of our fiscal year, including the, the open house period in late September.

Got it. And then just the last question on motorized, you know, even do margins. They had climbed up to double digits or low double digits before the recent, you know, you know, fall off in profits. But with Grand design in the mix, can you maybe just give us a broader view of where you expect margins and motorized to come back to at some point when we have a more normalized market. And then once you know, obviously, Grand Design is really hitting full steam with, with their new products.

Scott, Good morning. This is Bryan. Our expectations for motor home have not changed. I think we feel more bullish about them broadly in the long term with Grand Design in the market. And, and believe that longer term that we can return to that double digit range of ebida margin.

Got it. Thank you.

(Operator Instructions) Craig Kennison from Baird. Your line is open.

Craig, your line is open.

All right, we'll continue one moment for our next question.

Our next question will come from the line of Michael Swartz from Truist. Your line is open.

Hey guys, good morning. Maybe just to start on, on guidance. I think there were some caveats in the press release just talking about, you know, your, your assumption is there's no changes in current market conditions, macros, etcetera. But I'm just wondering, are you embedding any additional interest rate cuts in your current or your initial fiscal year? 25 guidance?

Good morning Mike. This is Mike. You know, I, I would say that our planning process taps into a variety of sources from a, an economic projection standpoint. And as, as you know, there's not necessarily a consensus on the number of, or the, the amount of basis point wise cuts in the future. You know, I, I think we all realize that the fed will probably take that on a, a meeting by meeting basis as they look at the broader health of the US economy.

But I would say that our planning would generally factor in, you know, an average consensus of cuts. The, the reality though is, is that it's, it is probably most of you on the call, know, it's quite difficult to correlate a singular element. Even one as important as retail interest rates to the trajectory of the future business. And so, you know, we have projected here in the, in the call this morning, that we, we do project that based on a combination of factors, easing field inventory, the likelihood of a maybe a more retail friendly environment in the second calendar quarter of 2025.

That conditions for retail in the outdoor recreation economy could improve in that time period. Which as we mentioned would actually be probably more so our third fiscal quarter of this 25 fiscal fiscal year. So no specific number of cuts, you know, included in our planning. But, you know, you know, general alignment with probably the average, you know, economic consensus and that would be reflected in the high end most likely of the RV wholesale shipment range that you know, Bryan referenced in his comments this morning.

Okay. Okay. Fair enough. And then just on the grand design business and, and appreciate you sizing that out for us $100 million plus in in revenue opportunity for for fiscal '25. But trying to understand what, what exactly that is based on is that just some kind of, you know, base stocking level at the dealers that will be stocking. This is that based on initial orders you've received from consumers. I just just any, any, you know, clarity that you can provide there.

Yeah, Mike, as you would expect the grand design team has been busy launching the lineage series m both at the wholesale and retail level for many, many months. We have been signing up motorized dealers, some who are existing Grand design tollable dealers and some who are not yet part of the grand design family of dealers. That dealer list has been built here.

Over the past number of months and we will continue to be built out into fiscal year '25. We've also begun to take retail orders through the dealers, whether they're at retail shows like Hershey or Dallas or you know, the against the stocking inventory that's beginning to flow into the field. And we have a projection on both wholesale and retail for the lineage series. M.

The other comment I will make, although we are not providing any details yet at this time, of any specificity is that we've stated consistently that the Grand Design Motor Home Line will be multifaceted in terms of the number of models in the line. And you can expect by the end of fiscal year '25 for us to potentially be in the market with more motorized models from Grand Design as well.

So it's a combination of factors in the 1st year of any new business strategy like this. There is inordinately a heavier emphasis on stocking inventory which the team has a good handle on based on their conversations with dealers, some in the in the form of firm orders and some candidly you know, in the form at this point still of forecasted future orders.

Okay, great. Thank you.

Craig Kennison from Baird. Your line is open.

Okay. Hopefully you can hear me.

Yeah, we can this time, Craig.

All right, thank you. Mike, I was wondering maybe if you would share any, any mandates or KPIS that you've discussed with Chris West or Don Clark.What should investors expect in terms of a change in performance? And where are you focused?

Good morning, Craig. Thanks for the question. II, I won't get into any KPIS in a, in a short term time frame, but I'll, I'll talk at a, you know, at a higher level, certainly in this way. I'll start with Tollable.

We believe that it's a strategic imperative that Winnebago industries has at least two strong tollable brands to compete in the North American Tollable R the market segment in the future. We are very pleased with the, the, the performance of the Grand design to business over time and continue to feel that there's significant runway there.

So one of the mandates to Don Clark Candidly on the Grand design, Tollable side is to continue with his team to do everything possible to grow their share and profitability of that business in the future. On the Winnebago branded Towable side, this is a business candidly that's probably running at about 1.5% market share of the Towable space today. We see no reason and why. Long term that can't be a brand that is at least double that size in the future.

And potentially could challenge 5% someday. I'm not putting a time line on that 3 to 5% range. But that is the expectation you know, internally is that, you know, we can build a business of that significance to complement the grand design tolls business. You know, listen, Chris West has been around the company for eight years. He had a number of different roles. He understands our expectations on Winnebago branded Motor Homes in terms of share and and profitability.

Bryan's talked about some of the profitability expectations on our different segments over time. So I'm not sure they're much different than historically, what we've targeted for in the past. So in, in the short term, Chris is expected to stabilize the consistent performance of that business quarter to quarter. Probably we will probably take a couple quarters for Chris to be able to do that.

But then he will begin to build profitable share in that business with his team over time as well. We, we are very fortunate now to have three brands of motorized product in the market with Winnebago Newar and Grand Design. And we have a market share goal for those three brands in the motorized segment that would contribute to our overall North American RV market share goal of 13% that we communicated last March with our mid cycle targets.

Thanks Mike.

Thank you one moment for our next question.

Our next question from the line of Tristan Thomas Martin from BMO Capital. Markets, your line is open.

Hey, good morning in the morning because it looks like just according to my math out at a retail level, you outperformed the broader industry in the quarter, maybe. Talk to what drove that performance on a relative basis.

Good morning Tristan. You know, we are starting to see some early signs of progress on some of the more affordable products that we've introduced into the marketplace. Whether that's the Reflection 100 series a grand design along with the imagine aim some of the transcend models that they've introduced. Yeah, we, we are starting to see some traction.

You know, here in the past month or two that those products will indeed potentially hit the mark and be able to both stabilize our tollable share and potentially, you know, take it back in the right direction. The other thing I will note is that all of nar's motorized product categories are gaining share class A luxury diesel, class, a main, you know, sort of mainstream die diesel, class A gas and Super C, all four of those categories.

Newar continues to gain share on here in the in the US and we have gain share recently as well on Winnebago branded class C product. Our echo branded product has been a hit in the marketplace with the retail consumers. And so we are pleased with some of the retail performance here recently on, you know, in that RV business one last comment, I know you didn't ask this, but I'll just offer it up.

We, we noted pretty explicitly in the materials that Barletta continues to take significant share as well in the aluminum pontoon space. Now reaching on a trailing 12 month basis, you know, 9% share. So, while the macro market share, story has been certainly slowed or impacted from a number standpoint because of some of the towables and class B math. You know, we we are seeing some very positive signs of market share growth in a, in a number of our brands and categories now around the company.

Okay. Got it. And then just quickly on the towable margin headwinds you break out how much of that was when they were towables, how much of that was Grand Design and then kind of what is the transitory nature next?

Yeah, just and there's, there's a lot of moving pieces here in the tollable margin. I'm not going to necessarily break out or quanti quantify, you know, the the business unit pieces. I'd I'd say that you've probably got just to give a little bit more substance, a point to a point and a half of the leverage. 2, 2.5 points of pricing and mix.

I'd say that that is overweighted to the Winnebego brand as it relates to the net pricing that we're able to achieve in the market right now in that brand and the discounts and the allowances that are necessary. I would also state though that there was an overweight of transcend in the Grand design line up in the quarter.

You know, as a mix that was shipped into the market, some of this is just the success Mike was just talking about on the retail expectations as well as, you know, some channel fill. So we had overweighted transcend, which drove some of that pricing slash mix in the quarter. There's about a point and a half of warranty year over year. Remember we cited that we had favorable warranty in the prior year.

So it's really a tough comp that we're facing that's causing that and then probably another point of just call it overall productivity and operational challenges. We cited the Winnebago brand specifically as it relates to some of the profit challenges from an operational standpoint, the consolidation under one roof, some of the inventory write downs or write off that we took in that business and just some inefficiencies that we're experiencing there that we expect to turn around under Don's leadership.

So a lot of things in play there that impacted total margins. It was a disappointing quarter from our vantage point on that profitability and we're taking steps to address it.

Thank you one moment for our next question.

Our next question will come from the line of James Hardiman from Citi. Your line is open.

Hey, good morning. So on the fiscal '25 guidance, I don't know which of these you'll, you'll sort of get into, but I'm curious about how you see inventory turns finishing the year. You talked about continued de stock of, of motorized. I'm curious about that. ASP S for the year and then I think there was a question about market share. I, I didn't know if you had any, if we assume that sort of the midpoint of your guidance, if that assumes any share gains or share losses. Thanks.

Yeah, several, several points. I'll touch on the AP S first. James, I'd say ASP S we're expecting, you know, modest increases in ASP S on an apples to apples basis within the motor home segment. I think tollable will continue to see some headwinds as it relates to myths and the affordability preferences that we had. In this past year, I think some of those will persist into the coming year and you'll see some modest ASP declines from a mixed perspective on the tolls business. And then similarly, you're probably not too differently, modest headwinds on the marine side of the business as it relates to ASP S. Can you repeat for me that last question? You have James release to the, the guidance.

Yes. There was the inventory turn question for the year and then the market share assumption.

Yeah, in terms of turns, I think there's still some improvements that dealers will be looking for. On the motorized side specifically, I think broadly speaking, the towables business is, is in a pretty good shape as it relates to dealer inventories on towables. A little bit of work left to do on the marine side of the business as well in terms of bringing inventory levels down.

But we really like our position on the Barletta business in particular. We're increasing our position on dealer lots, some of that enabled by the full line up. Now that we have in the area, we still don't touch the, the lowest price points in that aluminum pontoon segment. But we have reach into the biggest sizes or biggest size segments of the pontoon market now with the R included. So we're continuing to improve.

Our, our lot. Share on the Barletta brand. So that's in in good shape, market share, assumptions that we're making. I would, I would characterize them as is no dramatic changes from the current state, you know, as we looked at our low end of the range and the high end of the range.

There's just modest assumptions that we factored in most notably, just to reiterate the Grand Design Motor Home Entry, we certainly expect that to be net accretive. We know that there's going to be some cannibalization of the Winnebago brand. But because of the approach that we're taking in the market there, we think that most of the market share gains from the grand design entry there will come from competition.

We're also assuming that Barletta will continue to improve the market share as they continue to penetrate dealer lots and have success on the retail side. So those are the, I'd say the most notable market share assumptions that we are making as we put together that guidance.

Got it. And if I could, if I could sneak one more in the marine business, you know, it seems like you're telling us how great Chris craft is doing, but there was a big write down there. And then I guess more broadly, you know, one of your peers is getting rid of their marine business. So I guess, you know, what's your commitment to the marine business at this point? And if it's, you know, if, if it is a sort of core competency for you guys going forward, would you potentially be interested in those assets?

James, a few comments related to those questions. Number one, we are committed to the marine business. We are very proud of both the Barletta and the Chris craft businesses. You know, the the impairment that was taken on Chris craft, both Bryan and I would probably characterize as somewhat of a cyclical trough impairment.

You know, the size of the the total addressable market for Chris Craft, Chris craft products combined with our very intentional efforts to make sure that dealer inventory is right sized in that business, you know, really led us to a almost an analytical place there on the impairment that was taken this quarter. We still believe that that's a a very solid business for us in that particular segment.

As we mentioned in the call, Chris Craft has had, I believe five straight months through the end of fiscal '24 Q4 of positive retail comp year over year. And as Bryan just commented here recently, you know that we feel the Barletta business is in as good a shape as any other pontoon brand in the marine industry at this point in time in the marine cyclical trough.

And and we've gained share consistently each month throughout the sort of the, the decline of that market. And we believe we are really well positioned going forward into the future. So I will not make a public comment on the assets that are in the possession of any other company at this time. We just simply have an ambition as we've stated in our mid cycle targets to increase the size and profitability of our non RV business in a very smart, intentional and decretive way for shareholders.

And so we will continue multiple efforts to do that including broadening sort of the, the strength and quality of our marine business over time at the right times. But again, should not read anything into the impairment in terms of our confidence in the Chris craft business going forward.

Thank you one moment for our next question.

Next question from the line of Brandon Rowe from DA Davidson. Your line is open.

Good morning. Thank you for taking my question and a couple of questions ago, you had mentioned increased transcend shipments and we have picked up one change in the chassis provider for those units and also transcend, changing to bal products or Norco. Could you talk about the pricing benefits that you might have received from changing the provider there or maybe any other diversification efforts that you might be looking into? Maybe given the success of your market share during the recent quarter. Thank you.

Thanks, Brandon. Good morning. We will not comment publicly on the construction of our bill of materials and individual supplier relationships. I can just tell you that each of our business unit and branded teams are very rigorous in the, you know, their decisions about what suppliers to work with. Just as we have to earn the business of our channel partners on a daily basis.

Our suppliers need to earn our brands business consistently as well. So, but I will not get into the the specific construction of a bill on any one of our particular brands. I will tell you that because the Transcend line, particularly the Transcend one and the Transcend Explorer are vital from a pricing standpoint to be able to hit certain targeted price ranges.

You know that in instances like that our teams probably more than ever keep all options open on the table in terms of supplier choices to use. You know, on, on those, particularly those opening price point type of products. So that's all I'll comment on this morning.

Great. Thank you.

One moment for our next question.

Our next question comes from the line of Fred Whiteman from Wolfe Research. Your line is open.

Hey guys, good morning, Mike. You made a comment about expecting a gradual improvement in retail over the next 12 to 15 months. And I'm wondering if that's an RV.

Only comment if it includes marine and maybe if you could just help us think about when each of the different subcategories or sectors would start to see better retail.

Thanks, Fred, good morning. The comment was probably intended to, to, to simply project that you know, 12 to 15 months from now, retail conditions should be better than they are today. The timing of when that happens, you know, we've hinted that from a planning standpoint, you know, we are projecting some favorability in retail conditions beginning next spring of calendar 2025 you know, second, calendar quarter, third fiscal quarter.

And you know how that varies by, RV, sub segment and marine sub segment. You know, it's, it's, it's difficult for us to, you know, be very accurate on that. And so even as we sit here today, you know, 67 weeks into our fiscal first quarter of fiscal '25 we've got some businesses that are positive from a retail comp standpoint year over year and we've got several businesses that are negative. And so they are already moving, you know, both in terms of market conditions and our share.

They are already moving at slightly different paces as we speak. So we just, you know, we just feel that the dealers need some more time to manage, you know, inventory al although I will tell you our aging inventory, as, as we sit here at the end of fiscal '24 is in meaningfully better shape than it was at the end of fiscal '23 but it still has a little bit of room to go.

I'm sure in the dealers' minds and they'll use the winter and the early spring months. As Bryan said to, you know, take care of that and possibly be stock a little. And we anticipate once we get past the general election in this country, the Fed has several more meetings to make some decisions on what they're going to do that the the possibility for a a healthier retail and wholesale environment could exist in that second calendar quarter. So I would say that's where we're hinging a potential upswing, but really won't get into specific details as you know, as to brand by brand or segment by segment.

Thank you one moment for our next question.

Our next question, Noah Zatzkin from KeyBanc Capital Markets. Your line is open.

Hi, thanks for taking my question. Most have been asked and answered but just hoping you could provide kind of an update on kind of the state of, of your dealer base health, both in RV and and marine. Just kind of any any thoughts on sentiment as well. Thanks.

And all this is Bryan. No big news on that front. You know, we continue to monitor our dealer channel. I think broadly speaking, there's been some, some specific dealers public, most notably that that people are keeping an eye on, on their cash flow generation, which is clearly the focus right now versus, you know, just the P&L focus. It's very much a cash flow environment right now for dealers as they you know, manage through the higher interest rate environment and the impact that that has on floor plan financing. But I'd say no notable change from the prior quarter as it relates to the dealer network.

Thank you.

Thank you one moment for the next question.

Next question line of Bret Jordan from Jefferies. Your line is open.

Hey, good morning guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Are there any notable recent trends to call out in the competitive environment within RV? Are you guys seeing more aggressive strategy, pricing strategies from anyone looking to take share of things been relatively rational despite the challenging backdrop.

Well, good morning. You know, the the retail marketplace continues to be aggressive. I wouldn't call it irrational per se, but I would just suggest that, you know, the the focus on affordability and price points that you know, consumers are open to engaging with, you know, our, our high volume lower cost competitors.

You know, innately probably have more of an advantage and an, and an appetite to compete aggressively in those price points. You know, I won't call out the specific names, but, you know, one of the larger O EMS has been a share gain winner in the industry and one of the larger dealers in the industry appears to have some share momentum as well.

So, but you know, as, as Bryan alluded to in his financial comments, discounts and allowances are elevated across the board to Motorized Marine. And that's a reflection obviously of competition, you know, being you know, aggressive as well in, in key spots in our, in our respective segments. So, but that's, that's my comment there.

Great. I'll keep it at one as we hit the the end here. Thanks guys.

Thank you. We've reached the end of the call. I'll turn it back over to Ray Posadas for any closure marks.

That is the end of our fourth quarter earnings call. We look forward to seeing some of you at the upcoming Fort Lauderdale Boat Show later this month. Thank you for joining and enjoy the rest of your day.

Thank you for your participation in today's conference. This does include the program. You may now disconnect everyone. Have a great day.

Thank you.