Alice Wycklendt

Alice Wycklendt of Baird asked for details on the strategy to retain new customers who purchase affordable entry-level units and encourage a faster trade-in cycle. She also inquired if the current used inventory level, up significantly per location, was comfortable and asked about market supply dynamics.

Answer

Chairman & CEO Marcus Lemonis highlighted the company's multiple customer touchpoints (Good Sam, F&I, service) as key to retention and upselling. He noted that the contract manufacturing strategy is designed to increase the trade cycle and secure used inventory supply. President Matthew Wagner confirmed that these entry-level models are the most frequently traded-in units. Regarding inventory, Lemonis conceded they are 'slightly over inventoried' on used units but stressed their ability to adjust acquisition spending in real-time to manage levels effectively.

Alice Wycklendt of Robert W. Baird & Co. inquired about the company's strategy for customer retention and accelerating the trade-in cycle for new entrants. She also asked if the current level of used inventory, which is up significantly, is comfortable for the company.

Answer

Chairman & CEO Marcus Lemonis detailed how multiple touchpoints like Good Sam and service engage customers to drive retention and trade-ins. President Matthew Wagner added that their entry-level models are among the most frequently traded-in units. Regarding inventory, Lemonis candidly stated they are "slightly over inventoried on the used side" but explained they can instantly adjust by toggling marketing spend for acquisitions, giving them real-time control over inventory levels.

Alice Wycklendt asked about the 2025 outlook for the Finance & Insurance (F&I) segment, specifically considering the expected growth of used units and any difference in F&I attachment rates between new and used vehicles.

Answer

Executive Matt Wagner acknowledged that F&I as a percentage of revenue is typically lower on used vehicles, and therefore he anticipates the overall F&I percentage might decline slightly to around 12.5% in 2025 as the sales mix normalizes. CEO Marcus Lemonis provided a counterbalance, noting that a modest increase in average selling prices should help keep the total F&I gross profit dollars per unit relatively consistent.

Alice Wycklendt of Baird focused on the manufactured housing (MH) segment, asking about the key drivers behind the strong content per unit performance and the outlook for that metric for the rest of the year. She also inquired about the current state of the M&A pipeline.

Answer

President, RV, Jeff Rodino attributed the record MH content growth to the team's success in identifying and capitalizing on new product category opportunities. CEO Andy L. Nemeth expressed optimism about the M&A pipeline, stating that the company is actively cultivating opportunities internally and expects to be in a position to opportunistically deploy capital in the second half of the year, supported by strong cash flow generation.

Alice Wycklendt inquired about the drivers behind the significant month-to-month retail volatility in Q1, trends seen in April, and the potential long-term margin benefit from improved warranty performance.

Answer

CEO Mike Speetzen attributed Q1 retail volatility to high consumer uncertainty, inflation, and interest rates, noting April trends were similar to March with no significant weakening but no "green shoots" either. CFO Bob Mack added that interest rate buydowns were effective but expensive. Regarding warranty, Speetzen confirmed it will be a tailwind for margins but not the largest contributor compared to factory efficiencies and sourcing. He emphasized that the primary benefit is improved customer satisfaction and dealer relationships, where Polaris is now considered top-tier.

Alice Wycklendt of Baird questioned the rationale for the 2025 outlook where retail sales guidance exceeds wholesale shipment guidance, which would imply further dealer destocking. She also asked for more detail on the company's M&A pipeline.

Answer

CEO Jason Lippert did not directly address the inventory implication but reiterated his confidence in the retail range of 345,000 to 360,000 units for the year. On M&A, he confirmed the company is now in a position to pursue deals after focusing on cash generation, stating, "we're having a lot of conversations right now" and that the pipeline is full with targets across all business segments.

Alice Wycklendt asked for clarification on the performance of the Dealer Services (CDS) business, noting that its volume was down just under 1% and appeared to be a slowdown from prior trends.

Answer

CFO Leah Stearns confirmed the figure and attributed the slight decline to a temporary pause in September related to specific accounts, which was in line with softness in the broader wholesale market. She indicated that volumes recovered in October and that she does not view it as a persistent headwind.