Kevin Condon

Kevin Condon, in for Craig at Baird, asked for a breakdown of the 70-120 basis points margin improvement guide, specifically ranking the largest drivers such as operating leverage, favorable mix, and the net impact of tariffs. He also inquired about the single-axle mix of shipments for Q4 and expectations for 2026.

Answer

President and CEO Jason Lippert identified facility consolidations and restructuring efforts, leading to G&A and overhead reductions, as a major driver. CFO Lillian Etzkorn added that the full-year benefit of 2025 consolidations, cadence of 2026 consolidations, incremental revenue at roughly 25% margins, and improved fixed cost absorption from higher volume will contribute to margin expansion. Lillian Etzkorn stated that the Q4 single-axle mix was about 21%, with January showing a slight decrease year-over-year, while fifth wheels increased.

Kevin Condon sought to understand the drivers of the 70-120 basis points operating margin improvement, including operating leverage, favorable mix, and tariff impact. He also inquired about the single-axle mix of shipments for Q4 and expectations for 2026.

Answer

President and CEO Jason Lippert highlighted consolidation efforts and restructuring (G&A, overhead reduction) as major levers. CFO Lillian Etzkorn added the full-year benefit from 5 consolidations last year, the cadence of 8-10 new consolidations, incremental margins (roughly 25% assumption), and operating efficiencies from increased volume. Lillian Etzkorn stated Q4 single-axle mix was 21%, bouncing around 19%-21%, and it's yet to be determined for 2026, with Jason Lippert noting January single-axle was down and Fifth Wheels up.

Kevin Condon (Baird) inquired about changes in dealer sentiment regarding inventory uptake for the 2026 season and the company's strategy for inventory levels by fiscal year-end.

Answer

CEO Steve Menneto reported mixed but overall positive retail trends from early boat shows, leading to additional orders and meeting expectations, thus keeping guidance unchanged. CFO David Black confirmed an expectation for some level of destocking for the fiscal year due to anticipated market decline, with stabilization and potential matching of retail with wholesale in the latter half if market positivity continues.

Kevin Condon asked about any shifts in dealer sentiment regarding taking on inventory after the early 2026 boat shows and the company's strategy for inventory levels by the fiscal year-end.

Answer

CEO Steve Menneto reported mixed but overall positive retail trends from dealers at boat shows, leading to additional orders, and confirmed that the company's guidance remains unchanged. CFO David Black indicated an expectation for some level of destocking due to the market decline, but anticipates stabilization in the latter half of the year, with the potential to match retail with wholesale if market conditions improve.

Kevin Condon sought confirmation on the 20% year-over-year inventory reduction in fiscal 2024 and asked about the destocking target for fiscal 2025, including how the new Balise brand would impact the overall pontoon segment inventory.

Answer

Executive Timothy Oxley confirmed significant destocking occurred in fiscal 2024, at the low end of the 600-1,000 unit target range. He anticipates a similar level of destocking in fiscal 2025, likely weighted more towards the Crest brand. He clarified that the new, higher-priced Balise units would not offset the destocking focus on Crest, as they are distinct initiatives.