Tristan Thomas-Martin • BMO Capital Markets

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EVP & CFO Lillian Etzkorn confirmed confidence in achieving the 85 basis points of cost savings but clarified that tariff mitigation focuses on dollar costs, leading to natural margin percentage compression. President and CEO Jason Lippert stated that wholesale and retail demand are expected to be similar for the year. Both executives noted that a seasonally softer Q4 is typical and expected, with a potential lift in the market coming in the next two to three quarters.

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Executive Lillian Etzkorn reiterated that Q2 organic revenue is expected to be 'pretty flattish.' CEO Jason Lippert explained that a simple rule of thumb for tariffs is not possible due to multiple mitigation levers like pricing, decontenting, and margin adjustments. He confirmed that the planned production shifts out of China are considered 'pretty permanent' as the company has established alternative vendors.

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CFO Lillian Etzkorn explained that while there can be a lag of one to two quarters for price increases to take hold, the impact eventually neutralizes. CEO Jason Lippert added that current steel costs are at historically lower levels. Regarding the 2027 target, Lippert stated it is based on an assumption of a nearly 400,000-unit industry run rate, which he described as normal based on the last decade of wholesale production.

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CEO Jason Lippert confirmed that the company has been proactively de-risking its supply chain from China for several years, resulting in a significantly lower exposure than in 2020, though he did not provide a specific percentage. He described the new TCS product as a benefit for 2025 and beyond, noting that several top RV brands have already adopted it, which should accelerate its market penetration.

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CEO Jochen Zeitz confirmed a significant sequential improvement in North American retail trends from February through July. He stated that the company expects this trend to continue and to achieve positive year-over-year comps for the remainder of the year, aided by marketing initiatives and easier prior-year comparisons.

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CFO Jonathan Root stated that while the company is not providing specific unit guidance, the model year shift is not envisioned as an opportunity to ship excess inventory to dealers late in the year. He reiterated the importance of aligning wholesale shipments with retail trends. CEO Jochen Zeitz reinforced this by confirming the company remains committed to its full-year dealer inventory reduction targets, indicating the cadence shift should not dramatically alter year-end inventory goals.

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Chief Executive Officer Jochen Zeitz confirmed the 15% operating margin target remains achievable over time, contingent on a slight improvement in the retail environment and continued product innovation. He projected reaching double-digit margins in 2026. Chief Financial Officer Jonathan Root added that HDFS did increase its reserves slightly under CECL methodology to ensure adequate coverage.

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CEO Jochen Zeitz confirmed that the company is addressing affordability, stating they are looking at it "in particular with our RevMax products going into '25." He deferred providing specific pricing details until the new model year launch.

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CEO Michael Speetzen explained that while the Ranger 500's margin is not as high as premium models, it is 'very good' and serves as a key customer acquisition tool. For Marine, he attributed the strong shipments to successful new product launches, a price-protected entry-level boat that is selling well, and favorable year-over-year comparisons as Polaris had already rationalized its marine inventory.

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CEO Mike Speetzen declined to provide specific cost comparisons, stating it varies by supplier and that switching involves significant requalification and testing costs for critical components. He noted that the ultimate tariff level will determine the economic viability of switching for different parts. Regarding agricultural impacts, Speetzen and CFO Bob Mack stated they have seen nothing substantial or that could be called a trend, with premium utility products continuing to perform well.

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CEO Mike Speetzen and CFO Bob Mack clarified that the ORV industry is expected to be slightly down, but more stable than other segments. They explained that positive boat show feedback reflects sentiment on new products, not necessarily a strong retail conversion forecast. Speetzen confirmed that developing affordable, entry-level ORV products is a key focus, with new models expected later in the year.

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CEO Michael Happe deferred specific fiscal 2026 guidance to the October earnings call, acknowledging that the hoped-for market recovery in 2025 has not occurred. Regarding tariffs, Happe explained the risk is fluid and affects components like motorized chassis and electronics, but declined to provide a detailed breakdown of the potential EPS impact, emphasizing that mitigation efforts are ongoing.

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President and CEO Michael Happe explained that chassis are sourced from various partners with both U.S. and international assembly. The company is working to mitigate tariff impacts, which could include resourcing to U.S. facilities. He confirmed that all options, including both price increases and surcharges, are being considered to maintain flexibility in the fluid tariff environment.

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CEO Michael Happe confirmed the new Series F Super C will debut in January, with production ramping in Q2 and shipments impacting the back half of fiscal 2025. He reiterated the $100 million-plus revenue opportunity for Grand Design Motorized in fiscal 2025 and confirmed the Series F was included in the initial guidance, noting positive market reception for the new line.

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President and CEO Michael Happe attributed retail outperformance to new affordable products and share gains in Newmar and Winnebago Class C. SVP and CFO Bryan Hughes detailed towable margin pressures, citing deleverage (1-1.5 pts), pricing/mix (2-2.5 pts), a tough warranty comp (1.5 pts), and operational challenges (1 pt), particularly in the Winnebago brand.

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CFO Sebastien Martel responded that dealers will likely wait to see competitor inventory levels decline and for more stability in the economy and tariff situation before ordering aggressively. On credit, he noted no significant changes for prime borrowers, but said lower-tier financiers have become more selective, which has impacted acceptance rates for entry-level products like the Ryker.

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CFO Sebastien Martel confirmed the $40 million tariff impact would be in COGS and that consumer financing rates have been stable year-over-year. CEO Jose Boisjoli added that after COVID-era hikes, pricing is back to normal, and the company is making efforts to protect entry-level price points to attract new customers.

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CEO Jose Boisjoli attributed the high PWC inventory to a sharp, unexpected industry decline in June and July and greater-than-planned market share loss as a competitor cleared old inventory. CFO Sebastien Martel confirmed that additional floorplan support for dealers is factored into the guidance but declined to quantify the amount for competitive reasons.

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CEO Jose Boisjoli stated that May retail was trending a bit softer than anticipated, particularly for marine products, but cautioned it was too early in the season to draw conclusions. CFO Sebastien Martel addressed pricing, explaining that BRP prefers to use retail incentives to stimulate demand rather than cut MSRP, as cutting prices can negatively impact the value proposition for recent buyers. He emphasized that BRP prices its products based on the value of its innovation and features.

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President, RV, Jeff Rodino acknowledged that the aftermarket business is theoretically countercyclical but did not provide specific guidance on the potential tailwind. Regarding sourcing, he explained that Patrick has a rigorous qualification process for new international manufacturers to ensure product quality and pricing are comparable to or better than previous sources, especially considering the tariff landscape.

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President, RV, Jeffrey Rodino stated the transport business is seeing more product move to dealers, with a high mix of multi-hauls indicating smaller units. An executive added that a content inflection could occur in Q2 or Q3 as lifetime buyers return. Rodino explained that model year decisions are made between the October open house and the June 1 model changeover, depending on product lead times.

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CEO Andy L. Nemeth asserted that RV OEMs are extremely agile and would react very quickly to add content as the market inflects, rather than waiting for a specific model year change. President, RV Jeffrey Rodino identified RecPro's strongest aftermarket categories as furniture, air conditioners, and awnings, highlighting its broad product offering as a key consumer draw.

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CEO John Lai stated that the business maintains universal appeal across all income cohorts, with no specific segment showing disproportionate weakness. CFO Jedidiah Gold attributed the April moderation primarily to the timing of Easter, which created a headwind, and lapping a strong prior-year comparison, but confirmed that overall comps remained positive in the low single-digit range.

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CEO John Lai responded that while they don't have a fixed schedule, they continuously reevaluate their price-to-value proposition and will cautiously take price when opportunities arise. He stressed the belief that the company must 'earn' any price increase by consistently delivering a superior customer experience and great value, as they have to win the customer's business on every visit.

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EVP & COO Daniel Rivera confirmed that Autoglass Now's growth in 2024 came from both securing new insurance partners and expanding relationships with existing ones. He detailed Take 5's two-part marketing strategy: a broad, 'always on' brand campaign for top-of-mind awareness, complemented by data-driven local campaigns to target specific customer opportunities, a strategy that yielded positive results in Q4.

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