Tristan Thomas-Martin

Tristan Thomas-Martin asked about the Total Addressable Market (TAM) for composites, current penetration levels, future cadence, and how composite margins compare to traditional wood products.

Answer

Jeff Rodino, President, stated that the long-term TAM for composites is estimated at $1.5 billion, with a short-term attainable market of about $500 million, constrained by current capacity. He declined to provide specific margin comparisons between composites and wood products but assured that margins are closely managed.

Tristan Thomas-Martin asked for details on the Total Addressable Market (TAM) for composites, current penetration levels, the expected cadence of adoption, and how composite margins compare to traditional wood products.

Answer

President Jeff Rodino indicated that the long-term TAM for composites is estimated at $1.5 billion, with a short-term attainable market of approximately $500 million, primarily limited by current capacity. He declined to provide specific margin comparisons between composites and wood products but assured that margins are closely monitored and managed.

Tristan Thomas-Martin of BMO Capital Markets followed up on the RecPro discussion, asking about its potential to act as a tailwind if tariffs lead to higher new RV prices, encouraging consumers to upgrade existing units. He also inquired about how product quality and pricing compare when sourcing from new countries versus China.

Answer

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.

Tristan Thomas-Martin inquired about trends in the RV transport business, the long-term outlook for content per unit, and the typical timeline for model year decisions.

Answer

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.

Tristan Thomas-Martin asked when OEMs might feel confident enough to add content back to units, suggesting a model year '26 or '27 timeline, and also inquired about RecPro's strongest own-branded product categories.

Answer

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.

Tristan Thomas-Martin asked for clarification on the financial impact of the Indian Motorcycle separation in 2027, specifically if the incremental $0.20-$0.25 in Adjusted EPS would be the only remaining effect after Transition Service Agreements (TSAs) conclude. He also inquired about the drivers behind the projected 7-9% organic sales growth (excluding Indian Motorcycle and the $400 million alignment benefit) and the expected performance across off-road, on-road, and marine segments.

Answer

CFO Bob Mack confirmed that most TSAs would drop off, with any minor remaining IT costs being immaterial, and the full annualized benefit of the Indian separation would be realized in 2027. CEO Mike Speetzen explained that the $400-$500 million revenue increase (ex-Indian) primarily stems from aligning build, ship, and retail after significant dealer inventory reduction. He anticipated continued strength in the utility segment offsetting challenges in the recreational side due to macro factors. Mack noted they are not factoring in a significant rebound from COVID-era buyers for recreational products.

Tristan Thomas-Martin sought clarification on the Indian Motorcycle separation's impact in 2027, specifically if TSAs would largely drop off and if the $0.20-$0.25 incremental EPS was accurate. He also asked what was driving the implied $200 million at the midpoint of the 7-9% organic sales growth (ex-Indian, $400 million tailwind) and how off-road, on-road, and marine segments were expected to perform.

Answer

Bob Mack (CFO, Polaris Inc.) confirmed the 2027 Indian impact, stating TSAs would mostly drop off with minor IT exceptions. Michael Speetzen (CEO, Polaris Inc.) explained the $400-$500 million revenue increase (ex-Indian) primarily results from aligning build, ship, and retail after a 17% overall reduction in dealer inventory (9% down in ORV). He anticipates utility strength will offset recreational challenges due to high interest rates and consumer uncertainty, noting strong PG&A sales and continued product usage.

Tristan Thomas-Martin sought clarification on whether Polaris's comment about planning to 'ship in line with retail' applied solely to the off-road segment or to the consolidated Polaris business. He also asked about levers Polaris has, beyond product innovation, to protect the market share gains achieved in recent quarters, given a conservative industry outlook for next year where many competitors also expect to gain share.

Answer

CEO Mike Speetzen clarified that while there are seasonal timing differences, the 'build equals ship equals retail' principle broadly applies to the full-year macro picture for Polaris in 2026, with Q4 2025 specifically focused on ORV. He emphasized that beyond product innovation, the strength of Polaris's dealer network, including the North Star program, is a critical lever for protecting share by enhancing customer experience from sales to service and financing. CFO Bob Mack added that Polaris is focused on optimizing its existing dealer structure and profitability rather than just adding new dealers, which further strengthens their market position.

Tristan Thomas-Martin sought clarification on whether the 'plan to ship in line with retail' comment applies only to off-road or consolidated Polaris, and asked about levers Polaris has to protect market share gains in 2026 beyond product innovation, given a conservative industry outlook.

Answer

CEO Mike Speetzen stated that broadly, on a full-year basis for 2026, build equals ship equals retail should hold across the business, despite quarterly seasonality differences. CFO Bob Mack added that for Q4 2025, it's primarily an ORV comment. Mike Speetzen emphasized continued innovation and the strength of the dealer network, highlighting the North Star program's effectiveness in driving customer experience. Bob Mack added that there's a focus on optimizing the existing dealer structure, improving dealer profitability, and working with strong multi-dealer operations.

Tristan Thomas Martin asked about the margin profile of the new Ranger 500 compared to premium products and the reasons for the strong shipment performance in the Marine segment despite a weak entry-level market.

Answer

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.

Tristan Thomas-Martin asked how the cost of alternative, non-Chinese sourcing compares to Chinese sourcing on a like-for-like basis (excluding tariffs) and if there has been any noticeable impact on utility ORV demand from China's pause on U.S. agricultural product orders.

Answer

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.

Tristan Thomas-Martin of BMO Capital Markets sought clarification on the 2025 retail outlook for the ORV segment, questioned the contrast between positive boat show feedback and a downbeat marine forecast, and asked about plans for more affordable ORV products.

Answer

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.

Tristan Thomas asked about the retail-wholesale relationship for the rest of the year, given that Winnebago Industries shipped above retail in the quarter due to new products. He also requested an update on the operational and margin improvement initiatives, particularly on the motorized side, and the remaining opportunities.

Answer

CEO Michael Happe stated that Winnebago Industries aims for a trailing 12-month inventory turn rate of around two times across its businesses, while maintaining discipline in managing dealer inventory, especially for new products. He noted that the percentage of aged inventory is lower year-over-year. Michael Happe detailed operational initiatives including consolidating the Winnebago Motorhome footprint, rationalizing vertical discussions, consolidating assembly lines, and supply chain efforts to mitigate tariff pressures and centralize strategic sourcing for better purchasing and harmonized component specs.

Tristan Thomas asked about the retail-wholesale relationship for the remainder of the fiscal year, given that Winnebago Industries shipped above retail during the quarter due to new products. He also requested an update on the operational and margin improvement initiatives, particularly on the motorized side, including their scope and remaining opportunities.

Answer

CEO Michael Happe stated that the company targets a trailing 12-month inventory turn of around two times across businesses, maintaining discipline except for new products and brand reinvigoration efforts. He highlighted that the percentage of aged inventory is lower year-over-year, indicating good inventory quality. Regarding operational initiatives, Michael Happe detailed efforts such as consolidating manufacturing footprints, rationalizing vertical discussions, consolidating assembly lines across the RV portfolio, and supply chain improvements (tariff mitigation, strategic sourcing, engineering efficiency). He indicated that these efforts are ongoing and expected to contribute to future gross margin improvements.

Tristan Thomas Martin of BMO Capital Markets asked for an outlook on the first half of fiscal 2026, given the commentary on a pressured market for the rest of calendar 2025. He also requested a breakdown of the potential $0.50 to $0.75 EPS impact from tariffs by business segment or component type.

Answer

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.

Tristan Thomas-Martin asked about the manufacturing locations of motorized chassis (like Sprinter and ProMaster) and how sourcing might change given potential auto tariffs, and also inquired if the company would consider using surcharges instead of direct price increases.

Answer

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.

Tristan Thomas-Martin requested an update on the Grand Design Motorized business, including progress toward its $100 million annual sales target and the production ramp timing for the new Series F model.

Answer

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.

Tristan Thomas-Martin asked what drove Winnebago's retail outperformance relative to the industry in the quarter and requested a breakdown of the headwinds affecting towable margins between the Winnebago and Grand Design brands.

Answer

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.

Tristan Thomas Martin of BMO Capital Markets sought clarity on the full-year operating margin outlook, asking if the previously guided 85 basis point improvement is now being offset by higher tariffs, and questioned if guidance implies a weak Q4 production volume.

Answer

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.

Tristan Thomas-Martin sought to confirm if Q2 organic revenue would be flat or down, asked for a rule of thumb on offsetting incremental tariffs, and questioned if the planned reduction in China sourcing represents permanent production shifts.

Answer

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.

Tristan Thomas-Martin from BMO Capital Markets asked how rising steel prices from tariffs would affect margins given the pass-through lag. He also inquired about the industry volume assumptions underpinning the company's $5 billion revenue target for 2027.

Answer

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.

Tristan Thomas-Martin sought to quantify the potential tariff impact, asking if 30% of raw materials are still imported and if China accounts for over 15% of that. He also asked if LCI is taking proactive steps to mitigate this risk and whether the new TCS suspension system is a 2025 or 2026 benefit.

Answer

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.

Tristan Thomas-Martin of BMO Capital Markets asked whether the noted increase in consumer traffic during July had translated into improved retail sales performance.

Answer

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.

Tristan Thomas Martin from BMO Capital Markets asked if the recent pickup in consumer traffic during July had translated into improved retail sales performance.

Answer

Chairman, President & CEO Jochen Zeitz confirmed a significant sequential improvement in North American retail trends since February and stated he expects the positive trend to continue through July. He expressed confidence that the company could achieve positive retail sales growth for the second half of the year, citing new initiatives and easier year-over-year comparisons.

Tristan Thomas Martin of BMO Capital Markets asked if the recent pickup in consumer traffic during July has translated into improved retail sales performance.

Answer

Chairman, President & CEO, Jochen Zeitz, confirmed a significant sequential improvement in North American retail trends since February and stated he expects the positive trend to continue through July. He expressed confidence that retail sales could turn positive for the remainder of the year, citing new marketing initiatives and easier year-over-year comparisons.

Tristan Thomas-Martin from BMO Capital Markets asked how the plan to launch some model year '26 bikes in the fall of 2025 would impact the company's quarterly wholesale shipment cadence.

Answer

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.

Tristan Thomas Martin asked how the shift of some model year '26 launches to the fall of 2025 will change the expected quarterly cadence of shipments and sales.

Answer

CFO and President of Commercial Jonathan Root stated that while the company is withdrawing unit guidance, they do not envision the shift being used to load up dealer inventory late in the year. He emphasized that the change is not expected to have a 'tremendously meaningful impact' on the volume cadence for 2025. CEO Jochen Zeitz reinforced this by reiterating the company's commitment to its full-year dealer inventory reduction targets, suggesting the overall shipment volume will remain disciplined.

Tristan Thomas-Martin of BMO Capital Markets asked if the long-term HDMC operating income margin target is still 15% and also inquired if there was a CECL accounting change embedded in the HDFS guidance.

Answer

CEO Jochen Zeitz reaffirmed that the 15% operating margin target is still achievable over time, projecting a move to double-digit margins in 2026, assuming a slightly improved retail environment and continued product innovation. CFO Jonathan Root confirmed that HDFS did adjust its reserves up slightly under CECL methodology to ensure it is well-positioned, reflecting a lifetime loss valuation.

Tristan Thomas-Martin of BMO Capital Markets asked if the long-term HDMC operating income margin target is still 15% and inquired if there was a CECL accounting change embedded in the HDFS guidance.

Answer

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.

Tristan Thomas-Martin of BMO Capital Markets asked if the long-term HDMC operating income margin target is still 15% and inquired if any CECL accounting changes were embedded in the HDFS guidance.

Answer

CEO Jochen Zeitz confirmed the 15% long-term margin target remains achievable, contingent on a return to slight volume growth and a more favorable macro environment. He projected reaching double-digit margins in 2026 if 2025 targets are met. CFO Jonathan Root added that HDFS did adjust reserves up slightly under CECL lifetime loss valuation to ensure the portfolio is adequately covered.

Tristan Thomas-Martin from BMO Capital Markets asked if the company is considering revisiting more affordable motorcycle models in light of consumer affordability concerns.

Answer

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.

Tristan Thomas-Martin from BMO Capital Markets asked if, given consumer affordability concerns, Harley-Davidson was considering revisiting more affordable motorcycles, such as those under $10,000.

Answer

CEO Jochen Zeitz stated he would not discuss specific pricing for next year's entry-level products but assured that the company is addressing that segment, particularly with its RevMax products, for 2025. He indicated that details would be available with the new year's price lists.

Tristan Thomas-Martin of BMO Capital Markets asked if the company is considering a return to more affordable motorcycles, such as those under $10,000, given consumer affordability concerns.

Answer

CEO Jochen Zeitz did not comment on specific future pricing but stated that Harley-Davidson is addressing the entry-level segment for 2025, particularly with its RevMax-based products. He indicated that more details would be shared in the new year.

Tristan Thomas Martin of BMO Capital Markets asked about the outlook for product mix and pricing in calendar year 2026, and what conditions would prompt the company to become more aggressive with dealership M&A.

Answer

Chairman & CEO Marcus Lemonis responded that for 2026, the company will adapt to consumer demand but expects ASPs to grow. He emphasized that entry-level units are designed to bring customers into the ecosystem and accelerate the trade cycle. Regarding M&A, Lemonis clarified they are "never on a pause" but are currently prioritizing deleveraging and optimizing existing stores, which offer a better return on capital. However, he noted they are still evaluating deals.

Tristan Thomas-Martin sought clarification on whether the anticipated mid-single-digit price increase for model year '26 applies to both towables and motorized RVs. He also asked about the historical range for vehicle gross margins.

Answer

EVP Matt Wagner confirmed the price increase is a blended average across all product types. He stated that historical new vehicle margins are in the 13-14% range, while used margins are typically 20%+. He also noted the growing role of consignment sales, which yield lower margins but require no capital investment, impacting the overall used margin profile.

Tristan Thomas-Martin asked about the company's assumption for 2025 industry-wide retail demand and whether OEMs are shifting their model year '26 focus away from affordable units toward higher-content models.

Answer

Executive Thomas Kirn stated they anticipate industry retail demand to be relatively flat year-over-year, in the 350,000-unit range, with wholesale shipments needing to be slightly higher to replenish inventories. Regarding model year '26, Kirn expects like-for-like pricing could increase by 3-5% due to potential tariffs, rather than added content. CEO Marcus Lemonis added that manufacturers are more likely to value-engineer products, which could benefit Camping World's retail parts and accessories business.

Tristan Thomas-Martin followed up on new RV margins, asking about the expected cadence for next year. He also questioned if the reemphasis on Class C motorhomes was a strategic plan for a future mix shift upmarket.

Answer

CEO Marcus Lemonis advised anchoring 2025 new RV margin models in the 14% range, noting margins tend to improve in a mid-cycle environment. He clarified the Class C focus is not about moving upmarket but about driving affordability and value to hit key monthly payment points. Matt Wagner added that their exclusive brands are key to filling product gaps in the Class C segment.

Tristan Thomas-Martin of BMO Capital Markets asked if Brunswick had updated its full-year industry retail assumption for boats. He also requested the current channel inventory level in weeks on hand and the company's target for year-end.

Answer

CEO David Foulkes responded that the company had not specifically updated its full-year industry retail number but reiterated the ongoing trend of solid performance in premium and core segments versus weakness in the value category. CFO Ryan Gwillim stated that boat channel inventory is currently in the low 30s weeks on hand and is targeted to be around 40 by year-end, emphasizing that absolute unit levels are at historical lows, excluding the COVID period.

Tristan Thomas-Martin asked what signs dealers are looking for before ordering ahead of a retail inflection and whether there have been any changes in buyer credit availability.

Answer

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.

Tristan Thomas-Martin asked about the accounting for the tariff impact, BRP's strategy on pricing for entry-level products, and the current trend in consumer financing rates.

Answer

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.

Tristan Thomas-Martin asked about the carryover inventory in Personal Watercraft (PWC), inquiring if significant dealer floorplan support is included in the guidance and if that amount could be quantified.

Answer

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.

Tristan Thomas-Martin of BMO Capital Markets asked for an update on May retail trends and questioned whether BRP would consider cutting vehicle prices, following the actions of a competitor.

Answer

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.

Tristan Thomas-Martin requested more detail on the moderation in April's comp trends, asking if there were any specific patterns related to consumer demographics or geography.

Answer

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.

Tristan Thomas-Martin asked if the planned base price increase could signal a shift to a more normalized, regular cadence of price adjustments in the future, rather than once every 15 years.

Answer

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.

Tristan Thomas-Martin sought clarification on whether Autoglass Now's insurance partnership growth came from new or existing partners and asked for more detail on Take 5's marketing initiatives for 2025.

Answer

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.