Good day and thank you for standing by. Welcome to the First Quarter Fiscal 2023 Winnebago Industries Financial Results Conference Call. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to Ray Posadas, Vice President of Investor Relations and Market Intelligence. You may begin. Morning, everyone, thank you for joining us today to discuss our fiscal 2023 first quarter earnings results. I am joined on the call today by Michael Happe, President and Chief Executive Officer, and Bryan Hu ghes, Senior Vice President and Chief Financial Officer. 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 first quarter results was issued and posted to our website earlier this morning. Before we start, I'd like to remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under security 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 I encourage you to read. With that, I would now like to turn the call over to our President and CEO, Michael Happe. Mike? Thanks, Ray. Good morning, everyone. As always, we appreciate your interest in Winnebago Industries and spending time with us to review our fiscal 2023 first quarter financial results. I will initiate the call with a broad overview of our performance during the quarter and then pass the conversation to Bryan Hughes to cover our financial results in more detail. We will then offer some closing thoughts before turning to your questions. Winnebago Industries' first quarter results are a testament to the strength, diversification, and resiliency of our brand portfolio amid more difficult industry and macroeconomic conditions. As we expected, demand for our premium RV product lineups continued to normalize in the first quarter, lapping a period of tremendous growth for the RV lifestyle in our fiscal 2021 and 2022 years. While we believe many of the underlying drivers of this record-setting period are secular and likely to have a significant and positive impact in the long term, including the introduction of thousands of new, younger, and more diverse RV families that could remain customers of our premium brands for many years to come, Winnebago Industries will continue facing difficult comparisons to our fiscal 2022 results as the RV industry stabilizes throughout fiscal 2023. Our performance was also challenged by several macroeconomic factors that we expect to impact our near-term results. This includes a broader economic slowdown, general inflation that while trending lower, is still meaningful, higher interest rates, and as a result, lower consumer confidence. That said, our outstanding Winnebago Industries team nimbly managed these challenges in the first quarter. I am immensely proud of our teammates for their arduous work to enhance the agility of our supply chain, increase the efficiency of our operations, and drive an increasingly more balanced portfolio of profit streams that are at various places in the outdoor economic cycle. The result was reasonable revenue stability and solid bottom-line results that exceeded most external expectations. While we certainly cannot control the overall size of the outdoor recreation market in the immediate near term, we can stay focused on strengthening and investing in our golden threads of quality, innovation, and experience that will drive our profitable growth for years to come. Winnebago Industries achieved $952 million in net revenues in the quarter, a decline of 18% from the year-ago period. We realized a consolidated gross margin of 16.8%. While consolidated gross margin was down year-over-year, it remains well above pre-pandemic levels, up 240- basis points when compared to fiscal 2019 first quarter. We delivered adjusted earnings per diluted share of $2.07. While down compared to historic record high levels last year, these results remain strong and reflect the resilience of our operating model, the vibrancy of our products, and a more robust organization that we are today. Our results were driven by a few key factors. First, the strength of our premium outdoor lifestyle brands and our innovative product portfolio. Some of you saw our products in action at our Investor Day last month. The best current example of this formula is the Barletta lineup of pontoons. They are simply some of the best premium pontoons on the market today in function and feel. The marine customers are voting with their purchase decisions. Barletta, which was founded just five years ago and acquired in August of 2021 by Winnebago Industries, has seen its market share begin to approach almost 7% of the market. The growth and profitability of our marine segment is now a material chapter to our story in becoming a more well-rounded outdoor recreation mobility leader. We remain incredibly focused on the organic competitiveness, health and growth of our business. Our three RV brands, Winnebago, Grand Design and Newmar all received the recent Dealer Satisfaction Index Awards from the RV Dealers Association, which places a special emphasis on quality. We recently began full production and shipments of our new HIKE 100 FLX travel trailer, which was named the Model Year 2023 RV of the Year by RVBusiness Magazine. This product is part of an initiative to expand into differentiated customer segments and drive innovation with off-grid and off-road capabilities. A second key driver of our results in the first quarter was our flexible operating model that complements a highly variable cost structure and our commitment to operational excellence, which enabled Winnebago Industries to maintain strong profitability despite market pressure on our top line. Our operational excellence initiatives are another example of the shared enterprise capabilities that our individual business units leverage across our enterprise. These initiatives include an outstanding strategic sourcing function, manufacturing best practices, company-wide focus on consumer insights and the consumer experience, and the benefits of an overlapping dealer network with deep long-term relationships. Finally, certain external factors had meaningful impacts on our first quarter performance as well. The most significant was our supplier Mercedes-Benz AG's recent recall of all model year 2019 to 2022 Sprinter Chassis. As we discussed during our Investor Day last month, this recall prevents Winnebago Industries and all industry OEMs, upfitters and retail dealers using that chassis from currently shipping, selling or delivering any of the affected products until a remedy is implemented sometime in the first calendar quarter of 2023. This issue negatively impacted our first quarter top and bottom-line results, including inventory levels and cash flow. Notably, despite this impact, we grew our motorhome segment revenue in the first quarter and delivered solid profitability, reflecting the continued fundamental strength of our operations and margin profile. The second external factor we are actively managing is the dealer demand for our wholesale towables RV inventory. As I have mentioned previously, each of our reporting segments is experiencing varying forms of channel stocking behavior, which in turn impacts dealer inventory levels, backlog and production schedules in diverse ways across our portfolio. We are especially and closely managing towable RV production levels to align with normalized dealer inventories in this segment. While our motorhome and marine businesses work carefully to replenish dealer inventories that remain low in various subsegments. We are focused on exercising further rigor and a focus on sustainable long-term value by adjusting production across our businesses to calibrate to the needs of our dealers and in consumer demand levels. Our operating model allows us to do that profitably despite some disruption in our supply chain as we adjust our manufacturing to real-time market dynamics. We are proud of how our results in the first quarter demonstrate that Winnebago Industries can and will deliver strong profitability and performance through challenging cycles. The benefits of our diversified and more balanced portfolio were evidenced by the growth in our motorhome and marine segments, helping to offset the decline in towables. Our marine segment revenues grew 66% year-over-year in the first quarter and accounted for 14% of our revenue, highlighting the tremendous success of our initiatives in that segment and benefiting from continued strong momentum, specifically in the Barletta brand. At the same time, as I mentioned, our motorhome segment continues its growth trajectory with revenues growing 10% year-over-year as consumers continue to see the value of our products in the market. Our broad portfolio, enterprise synergy and capabilities and commitment to quality, innovation and experience enhance our resiliency and ensure we are well-positioned to create long-term value. With that summary, I will now turn the call over to our Chief Financial Officer, Bryan Hughes, to review our fiscal 2023 first quarter financial results in more detail. Bryan? Thanks, Mike, and good morning, everyone. First quarter revenues were $952.2 million, reflecting a decrease of approximately 18% compared to $1.2 billion for the fiscal 2022 period. Our top line performance was driven by a number of factors which Mike mentioned, including the expected cooling of demand, driving lower unit sales, particularly in the Towable segment. We were also impacted by the Mercedes-Benz AG chassis recall, which prevented us from shipping, selling, or delivering any products included in the recall and resulted in an estimated negative impact of approximately $50 million in first quarter net sales as well as related impacts to profitability and working capital and is expected to have a similar impact in second quarter. Gross profit for the quarter decreased 30.1% to $160.4 million, compared to $229.4 million during the first quarter of 2022. Gross profit margin of 16.8% was 300- basis points lower than last year, driven by operating leverage, chassis recall related production inefficiencies, a normalization back to seasonal trends within our Towable segment after extraordinary performance during the prior year period when dealer inventories were at all-time lows and comparing against the strong first quarter last year where pricing was taken ahead of inflation. Operating income was $85.9 million for the quarter, a decrease of 41.3% compared to $146.4 million for the first quarter of last year. Fiscal 2023 first quarter net income was $60.2 million, 39.6% lower than the $99.6 million recorded in the prior year quarter. Reported earnings per diluted share was $1.73 compared to reported earnings per diluted share of $2.90 in the same period last year. Adjusted earnings per diluted share decreased 41% year-over-year from $3.51 to 2.07. Consolidated adjusted EBITDA decreased 42.0% to $97 million from $167.2 million in the first quarter of 2022. I would like to call out that we adopted a new accounting standard in the first quarter of 2023, which impacted the accounting treatment for our convertible notes. As a result of this required accounting adoption, we no longer recognize a non-cash discount or related non-cash interest expense from the convertible notes. The new standard also requires the earnings per diluted share calculation to assume conversion of the entire amount of shares underlying the convertible notes and interest charges to be added back to the calculation. Prior year results were not adjusted or otherwise affected by the new accounting standard. Our adjustment following adoption of this new accounting pronouncement results in adjusted EPS to be on an equivalent basis with how we have been doing the adjustment previously by removing the dilutive impact of the convertible note. In this way, we recognize the economic benefit of the call spread overlay that we implemented when we issued the convertible note. Accordingly, we will adjust the diluted shares outstanding in the calculation of adjusted diluted EPS until our share price exceeds the strike price of the warrants, which is at $96.20. Now I'll turn to our segment performance, starting with our Towable segment. Revenues for the Towable segment were $347.3 million for the first quarter, down 46.7% compared to the prior year. This was primarily driven by declines in unit volumes as a result of the ongoing softening of consumer demand, as well as the impact of our adjusted production schedules due to normalized dealer inventories. Segment adjusted EBITDA was $36.3 million, down 67.6% from the prior year period. Adjusted EBITDA margin was 10.5%, down 670- basis points year-over-year, but only 30- basis points sequentially and similar to historical levels. As we discussed in our fourth quarter call, we reinstated our traditional fall programming and are comparing against pricing ahead of inflation last year in first quarter. Backlog decreased to $434 million, down 76.9% from the prior year when dealers were focused on increasing their inventories. Turning to our motorhome segment, we delivered solid first quarter revenue growth of 10.1% to $464.2 million compared to the prior year. Our year-over-year growth was the result of the pricing actions we took in fiscal 2022, which more than offset the negative impact from the chassis recall. Segment Adjusted EBITDA was $50.3 million, representing an increase of 0.2% from the prior year. Adjusted EBITDA margin was 10.8%, down 110- basis points, primarily due to production inefficiencies tied to the chassis recall. Let's turn to our Marine segment. In the first quarter, revenues for the Marine segment were $131.4 million, up 65.7% from the prior year as a result of strong unit growth across both Barletta and Chris-Craft. Adjusted EBITDA for the Marine segment was $18.5 million, 74.5% higher than the same period last year, and Adjusted EBITDA margin was 14.1%, 80- basis points higher than last year. Dealer inventories continued to build towards more normalized levels in the Marine space. Our backlogs were up 23.8% compared to the first quarter of the prior year, reflecting the strong demand for our brands. Moving now to the balance sheet. As of the end of the quarter, we had roughly $590.4 million in outstanding debt, representing a net debt-to-EBITDA ratio of approximately 0.6x. Our healthy balance sheet has continued to allow us to execute our balanced capital allocation strategy, which prioritizes strategic investments in our business to drive growth while returning capital to shareholders. For example, we reached a number of exciting milestones this quarter that will enable future growth across our portfolio. In November, we announced plans to develop a new Advanced Technology Innovation Center. We also continued to expand our manufacturing capacity for both of our Marine businesses to help meet the pent-up demand for those products. As always, we balance these investments with returning capital to our shareholders and continued to pay our quarterly dividend for the quarter which, as a reminder, was increased 50% to $0.27 per share during the fourth quarter of fiscal 2022. I will now turn the call back to Mike to provide some closing comments. Mike, back to you. Thanks very much, Bryan. At our Investor Day last month, we unveiled fiscal 2025 strategic targets on net revenue, RV and pontoon market share, gross margin, adjusted EBITDA yield, free cash flow, and our community giving levels. We believe those targets are appropriate and achievable, even as the distractions of the near-term market conditions are present. While there will likely be RV industry shipment contraction in calendar year 2023, we do believe market tailwinds will be present again in that segment by the time we reach the fiscal 2025 year. However, a dramatic rebound in RV shipments is not a dominant assumption in order for us to achieve our 2025 financial targets. We also have stated a clear intent to complement profitable organic growth with strategic inorganic investments and continued operational excellence initiatives that cumulatively drive accretive profitability and competitive differentiation during this three-year period. As it pertains to calendar 2023 RV shipment projections, we now generally agree with the recent RV Industry Association forecast, which anticipated a mid-range estimate of 391,000 wholesale sales. This updated expectation is slightly lower than our previous 400,000 to 410,000 forecast we offered in October. In the meantime, we are continuing to execute our strategic priorities and invest in the areas of our business that will create new growth engines. As Bryan stated, we are expanding our capacity in both of our Marine businesses to accelerate our market share potential. We announced last month that we have signed a lease for our ATG Innovation Center, which will be dedicated to applying emerging technologies for next-generation products in all our businesses. This includes the strategic imperative to execute a measured but intentional electrification roadmap within our brands that balances scaled adoption opportunities, superior customer experience, and competitive differentiation. Looking ahead, we are confident that Winnebago Industries has significant long-term opportunity for sustained market share gains and profitable growth across our portfolio, leading to enhanced value for our end customers, dealers, employees, and shareholders. Before we open up the line to questions, I want to touch on the continuing progress we are making on our commitment to corporate responsibility. In fact, this traction was recently validated when we were named one of America's most responsible companies by Newsweek, a first-time honor for Winnebago Industries. On the environmental side, we are working actively on waste, water, energy, and product lifecycle targets that we have set for the years 2030 and 2050. On the community side, we are passionately engaged in making the communities our employees live, work, and play in better as well as the health of and the access to the outdoors overall. We are doubling down on our fiscal 2025 giving targets compared to our fiscal 2022 actual philanthropy. We are off to a great start with our recent Community Go campaign this fall, collecting $1.2 million, supporting 270 different nonprofit organizations. The heart of our company shines through these types of initiatives. Lastly, we just released earlier this week the fourth edition of our corporate responsibility report. Our most substantive report to date, this publication outlines our aspirations on our ESG priorities and shows specific base levels, frameworks, and progress to achieve those ambitions. I am humbled and inspired by the enthusiasm and commitment of our team to both do well and especially do good. That concludes our prepared remarks this morning. We hope all of you have a safe and joyous holiday season. I will now turn the call back over to the operator, who will open the line up for your questions. Thank you. As a reminder to ask a question, simply press star one, o ne on your telephone. One moment while we compile our Q&A roster. Our first question comes from the line of Craig Kennison with Robert W. Baird. Please proceed. Hey, good morning. Thanks for taking my questions. A question on retail for this year and next year for the industry. I'm wondering where you think 2022 will finish for the industry and what is required in 2023 at retail, in order to hit the RVIA range that you think is attainable. Good morning, Craig. This is Mike. Let's start with 2023 and then I'll move back to 2022, which obviously has very little time left in it in terms of a calendar year. From a 2023 standpoint, we believe that retail will probably be very similar to the RVIA wholesale shipment forecast for that particular year. Our hope is that it is slightly above. If I were to put a range as of today, it would be in that 390,000 to 400,000 retail range for calendar year 2023, with the goal being that the industry can, particularly on the towable side, take out a little bit more inventory over the course of next year. That is our thinking As you might imagine, those thoughts are subject to updates, obviously, as we see the market conditions play out in front of us. I would say for calendar year 2022 retail, again, the period that we're gonna be completing here in a few weeks, you know, we're probably in that 440,000-to-450,000-unit range with the retail that is left. Obviously, SSI has not reported yet on November. We have a decent idea of, you know, November for our business, and then we're a couple weeks into December. We're probably in that 440 to 450 range for calendar year 2022 RV retail. Great. Thanks, Mike. A question on ASP, for both categories. It looks like, you know, your average selling prices are trending up around 20% or a little bit more. How much of that is mix versus pricing action that you've taken? If you could just address the affordability impact for your consumer and whether that weighs on your retail outlook. Craig, I'll address the latter part of that question then and ask Bryan Hughes to give you his thoughts on the ASP elements. We certainly are, you know, thinking a lot about the affordability of the lifestyle today. My first message would be that the RV lifestyle still compares economically favorably to other forms of travel, particularly for, you know, singular trips or longer journeys. You know, the cost of airplane tickets, hotels, rental cars certainly is not going backwards. In fact, those are experiencing some inflation as well. You know, an RV road trip continues to compete very favorably cost-wise for the American consumer with, you know, trips of other means. You know, the affordability is something we're watching, both in terms of the retail prices that are in the market and now, the higher interest rates from a consumer financing side, that are in the market today for consumers to take out a loan to acquire those products. Certainly, as a premium branded, you know, parent company with, you know, five great brands, but all of them, you know, arguably positioned in the sort of the better, best part of the market, we are watching that, watching that carefully. Something that, you know, I'm sure we'll talk more about as we get more into the spring 2023 period, where I think we'll have a better handle on how the consumer is reacting to the prices at that time. Yeah, I guess, on the ASP side of your question, Craig, if you look at our segment-level information, you'll see that, as you pointed out, the ASPs are up 22% to 23% for both towable and motor home. That's largely driven, as we've talked about in the past, you know, the inflationary pressures that we've been facing. We did price ahead of inflation a bit in last year's first quarter, as we commented at that time. There's not a lot of mix. If you look at underneath or within those segments, it's largely net pricing, and mix plays a relatively much smaller role in that ASP increase. Very helpful. Thank you. Our next question comes from the line of Tristan Thomas with BMO. Please proceed. Hi. Good morning. Good morning, Tristan. I just wanted to kind of follow up on Craig's question. Your dealer inventory is up quite a bit year-over-year. Thor's was as well when they reported. I don't think November, December is gonna remove too many units from the dealer channel. Do you think that would you prefer wholesale outpace retail, or would you prefer maybe wholesale came in a little bit lighter? Yeah. Good morning, Tristan. This is Mike. You know that question really has to be answered, you know, in an it depends framework. What I mean by that is obviously, as you're well aware, we have different moving pieces of our business. In the marine and the motor home RV segments of our business, there are still some subsegments where dealers may be interested in continuing to add to their inventory position. And we have, as you know, and Bryan and I both mentioned on the call a very rare situation here with the Mercedes-Benz recall that has a lot of that sprinter inventory stuck in place at the present time. On the towable RV side, I think it would be fair to say that, you know, we think both the dealers and probably the OEMs would see little harm in field inventory being reduced a little bit here over the course of the next, you know, three to four months. You know, I won't get further than that because I don't have a crystal ball to anticipate the market, you know, conditions. You know, if you look at Winnebago Industries' RV dealer inventory, you know, at the end of our first quarter fiscal 2023, compared to, you know, the end of our first quarter fiscal 2019, you know, our turns today, you know, on a trailing basis are higher. The real question is, on a forward basis, you know, are we in the right position? Our business has grown meaningfully over the last three, four years, and our inventory actually has not necessarily on the towable side, you know, over, you know, over-exceeded that retail growth, you know, at all. You know, we definitely feel there's room for towable inventory in the field to get a little bit lower, and we'll see what happens here over the next, you know, three, four months as we head into the Spring 2023 selling season. Okay. Thank you. Just a question on the spring recall. I think you said remedy in first quarter of next calendar year. Is that a little bit longer of a timeframe than you expected? If it is, what are you gonna do to offset that? Yeah. A little bit of history on the Mercedes-Benz recall. You know, this was something that came to our attention, you know, it, you know, late in the October 2022 time period. You know, it took us a little while, you know, around a week or so to understand even from Mercedes, you know, exactly what the issue was and what, you know, what the implications were to our business and a potential timeframe for resolution. I don't really wanna, you know, share, you know, many specifics about, you know, the challenge Mercedes is facing here, other than the timeframe for the specific resolution of the, you know, the product issue, you know, has been something that has moved around. The estimate that we provided, you know, in my script, you know, today, of resolution projected to be sometime in calendar first quarter of 2023 is our best estimate at this time. You notice I'm not saying, you know, whether that'll be January or whether that'll be March. The timeframe for resolution is still not, you know, as specific as we'd like it to be. We continue to work with Mercedes as a good OEM customer of theirs to see what we can do to help. You know, from a long-term standpoint, we don't view this as a systemic issue. We believe Mercedes, you know, will continue to make quality chassis, you know, for their OEM and retail consumers. We'll get back to business operating smoothly at some point in the future. The biggest concern with that issue is retail being frozen or lost while they pursue the resolution. Whether that comes back to have a material impact on the total number of wholesale shipments that OEMs like ourselves can ultimately deliver to the market. We've been transparent with the financial community as to the first quarter impact, certainly this morning. You know, also that we project there to be a similar impact in second quarter. What we cannot tell you, Tristan, this morning is what that means for third quarter and fourth quarter once the issue is resolved. That will largely depend on the retail environment at that time. It doesn't sound like we're going to try to transition everyone over to ProMaster Chassis. We're just going to kind of stay the course and hope it resolves itself? Again, we continue to partner with Mercedes, technically on the issue. We continue to work with our dealers, to try to provide them, you know, other products that they can, you know, retail to their consumers that are interested in similar-sized platforms. But the, you know, the final details of the resolution program, and ultimately the financial impact to ourselves or our dealers is still, you know, still a work in process at this time. Okay. Got it. Thanks so much. Thanks. Thank you. One moment for our next question, please. Console line of Scott Stember with MKM Partners. Please proceed. Good morning, everyone, and thanks for taking my questions as well. Good morning, Scott. Mike, you were talking about one of the bigger headwinds is dealer inventories for towables and the whole right-sizing process. Could you maybe expand on that a little bit as far as 2022 models that are in the field, and if you guys are feeling any need to have to discount more than normal, notably on Grand Design? Yeah, Scott, thank you for your question. I'll break my answer down into two parts. First retail, and then second, wholesale, and I'll start with the latter, wholesale. You know, our two businesses, Grand Design RV and the Winnebago brand of towables in this segment, have not provided what I would consider to be, you know, abnormally steep discounts to our dealers from a historical perspective to move product at this time. We came to the open house in the September to October timeframe with, you know, fall programs that we stated at the time were, you know, similar to our pre-pandemic fall programs in terms of benefits to the dealers. We generally used the structure of the fall programs on both of those businesses, throughout, you know, the rest of first quarter, you know, through November, you know, to, you know, to ship product to the market. From a retail standpoint, we are certainly watching retail inventory carefully. The good news is that the market, you know, was pretty healthy in 2021 and, you know, the first, you know, probably, you know, 1/3 to 40% of, you know, 2022. Subsequently, you did not have significant piles of excess or old inventory, you know, that were stuck at retail when the market started to slow down. As, you know, inventories, as we've admitted, in the towable segment are healthy and ample, we do watch the aging inventory on our products. You know, we have the ability, through reporting here to look at inventory in different age brackets in the field, and each of our businesses then determines whether they work with the dealers when aging inventory is excessive. I would not say that at this particular time, the aging inventory in our towable segment is a major problem. It could certainly turn into that over the course of 2023 if retail conditions are not as we imagined, and we would then have to deal with it at this time. From a historical standpoint as we sit here today, we do not have overly excessive aging inventory on towables in the field. I can tell you that dealers and OEMs certainly have a sense of anxiety with the uncertain economic conditions, and we'll be monitoring that carefully. First quarter did not include any significant retail support programs for aging inventory from our towables businesses. Got it. Regarding 2023 orders, we know coming out of open house that there really wasn't a lot that took place. Dealers are gonna have to have some 2023 product on their lots. Can you just talk about it, whether the order activity has picked up and also, you know, in second quarter, you know, sequentially, what are you looking like, particularly on Towables from a production standpoint? Order activity, like a number of other questions, varies by category. Order activity in the marine and the motorhome space has remained reasonable. What I mean by that is, as dealers are adjusting to the retail conditions in the motorhome RV and the marine markets, they are ordering in what we would call a rational, reasonable level. On those two businesses, you still see a healthy backlog as projected by our dealers, which again, we attempt to cleanse as regularly as we can to make sure it has integrity for our production planning purposes. From a Towables RV standpoint, Scott, we have not seen a meaningful difference in probably order-taking, you know, here in the last 60 days. It remains lower, you know, than, you know, certainly the last couple of years at this time, which would be expected. Dealers are, you know, very cognizant of the inventory they're sitting on, you know, the economic conditions around them with inflation, general inflation and rising interest rates. They continue to be conservative with their Towable RV ordering pattern. We really don't share specific information on production planning for current or future quarters that we're in. I can just tell you that, you know, daily, if not almost hourly, we continue to discuss with all of our businesses and brands, the right sizing of our production schedules to the market conditions and the wholesale appetite that our channel partners have. We are acting accordingly in all of our businesses, certainly some more aggressively than others, Towable RV at the top of that list, to make sure that we do not overproduce in the future. Got it. If I could just slip one last one in. Looking at the Towable backlog, it looks like units in an absolute value are down about the same amount. Is it fair to assume that on what is being ordered that the pricing is reflecting the realities of what's going on in the market right now? Yeah, I would tell you that, you know, this is a good opportunity, Scott, to talk about inflation that we're seeing or not seeing and how it relates to our pricing. Certainly, historically, you know, we adjusted pricing, you know, preferably one time a year at the model year change. As we got into conditions in 2021 and 2022, with unexpected and rapid inflation, as all of you know, we were forced to take multiple price increases during a model year in order to try to keep up. As Bryan Hughes has explained many times, there's been a sort of a timing element to that as to whether you're ahead of or behind the inflation that you're facing. We are seeing generally very moderate inflation in our business today. With the exception of motorized chassis, which is where we're seeing our most significant inflation still. Sequentially and overall, in most of our other categories, our inflation is pretty moderate right now. I would not call it deflationary, but it has moderated to a meaningful degree. Subsequently, our pricing actions, outside of the model year changes from 2022 to 2023, our businesses generally across the board have not felt the need to have to take price increases here recently above and beyond what they've priced, you know, at the model year change. We don't share a ton of information for competitive reasons on this call about our pricing behaviors. I won't comment on anything we have planned. I would tell you the, you know, the wholesale programs, particularly around Towable RVs, continue to be sort of framed in the fall program context that our businesses took to Open House. Got it. Thanks so much. Thank you. One moment for our next question. It comes from Michael Swartz with Truist. Please go ahead. Hey, guys. Good morning. Just wanted to talk about Towable margins. I think you've said a number of times it's kind of you're seeing a return to normal seasonality. I guess I'm trying to understand in the quarter, just maybe the year-over-year change in margins. I think you benefited last year from price cost. Maybe talk about the moving pieces and kind of bridging that gap. I think there was a 600 to 700- basis point contraction year-over-year. Maybe how to think about that over the next couple quarters, whether that's, you know, sequentially or year-over-year. Good morning, Mike. This is Bryan. I'll address that one up front, and Mike can add on. I'd go back first to our comments last year for first quarter. You know, the really strong EBITDA margins we had in towables, you know, in excess of 17%, was certainly an outlier relative to the more typical lower seasonal first quarter t hat we would report on. At the time, we had referenced pricing that was probably a little ahead of anticipated inflation. That was certainly s omething that elevated the prior year. you know, on top of that, if you take just the deleverage equation, you know, when you're faced with the top line reductions that we were faced with in first quarter and using that 85% to 90% variable cost structure, that explains the bulk of the difference, you know. We probably had, a little inflationary impact, year-over-year relative to pricing because of the timing that we've talked about. Then, largely the rest was that, deleverage that we would experience. Those are the two primary drivers. You know, the end result in EBITDA margin for Towables is a more typical first quarter EBITDA margin if you look back into our history, and pretty similar to fourth quarter, you know, so sequentially, more in line with each other as well. Okay, maybe to clarify, I mean, going forward, the way to think about maybe the margin progression would look similar to what we saw pre-COVID. Is that I mean, maybe not in terms of magnitude, but just in terms of quarter-to-quarter flow. Is that the way to think about it? That's our current expectation. Mike, you know, as Mike was alluding to earlier, you know, we're obviously gonna be keeping a very close eye on how retail performs and how dealer inventory is performing as well, including aging. Our current expectation, though, is that we'll follow a similar seasonality or quarter-by-quarter flow at EBITDA margin. That's our expectation currently. Okay, that's great. Thank you. Another question on margins, just in the quarter, I'm trying to understand. SG&A, as a percentage of sales did come in a little above what I had modeled and I think what most people on the street had modeled. Was that a factor of just segment mix, i.e., marine and motorized outperforming towable? Was there something maybe investment related or just cost related in the quarter that elevated SG&A expense? Yeah, it's really both. You know, I think it's fair to say that our motorhome businesses have, in general, a greater SG&A fixed component than does the towables. You do have a mix dynamic going on there. We would certainly also call out, as Mike did in his comments. You know, we continue to make strategic investments that we know to be the right thing to do for the business long term, and doing our best to hold on those that are most important, while obviously managing SG&A as aggressively as possible on those things that are less strategic in nature. I think you hit the two main points that I would've provided in my answer within your question. Okay, great. Thanks a lot. Thank you. One moment for our next question, please. It comes from Fred Wightman with Wolfe Research. Please proceed. Hey, guys. Thanks for the question. I just wanted to follow up on some of the ASP conversations. I get that you guys have been pricing to offset rising inputs, but as some of those bigger material costs potentially move favorable, would the plan be to pass that through to the consumer, to the dealer? Sort of, I guess conceptually, how would you look to treat that? Fred, this is Mike. I'll respond to that. Again, we generally don't share, forward-looking, you know, pricing, strategies or intentions. We respect that at times, maybe some of our competitors choose to do so. We've always maintained through the years, that, you know, we are not a cost plus, you know, pricing, business, that we are a market-based, you know, pricing business. That market-based pricing is, you know, is ultimately set on a number of elements. Hopefully long term, you know, based on the differentiation and innovation, you know, we bring to market that consumers are willing to pay for. You know, certainly if we were to see significant deflationary elements within our, our build materials and our, and our cogs, you know, we would consider what that means, not just in the context of those, of those costs, but also, you know, what our competitors might be contemplating as well, and retail, you know, conditions. We won't share specifically this morning any pricing intentions, but you can be assured that our businesses are certainly talking about a variety of scenarios depending on how inflation or lack of affects our business in the future. Our ambition is to always balance market share and sustainable profitability. You know, we're neither overly focused, I would argue, on one to the negative dilution of the other. We try to find that sweet spot where we can drive market share that we think is right for who we are. We also want to be candidly one of the most profitable OEMs, you know, in the industries we compete in as well, so that we can reinvest in our future and continue to create strength. Fair enough. You guys gave us the chassis recall impact on the top line. Is there a way to sort of frame up the margin impact in the quarter? I mean, you guys still posted double-digit adjusted EBITDA margin in the motorized category despite the chassis. I assume that there's a drag baked in there too, but could you size that for us? You know, Fred, we don't want to... [crosstalk] I'm sorry... [crosstalk] We prefer not to disclose, you know, by chassis or by, you know, model there, for competitive reasons, as you can probably appreciate. Okay, fair enough. Thanks. Thank you. One moment for our next question, please. It comes from the line of Bret Jordan with Jefferies. Please proceed. Hey, good morning, guys. Good morning, Bret. On the marine side, could you talk a little bit about the supply chain? I mean, obviously, power availability has been a big issue in the last 18 months. Is that something that is opening up? You know, I guess is marine gonna see a better first half of calendar? From a supply chain standpoint on the marine side, you know, over the last couple of years, we've certainly seen issues across different categories. Bret, as you're probably aware, you know, one of the most important but also one of the categories that experienced some constraints was the actual, you know, engine side of the business. You know, over the last year and a half, we made a very conscious decision to put most of our eggs from a motor/engine standpoint on the marine businesses into the Mercury basket. That's for a number of reasons. You know, first and foremost, the supply chain challenges that we had with Mercury's primary competitor were very disruptive to our business. Secondly, we really think Mercury has done an excellent job from an engine technology, and innovation standpoint, continued to candidly set the pace of competition, particularly on outboards, that's the category I'm really talking about here, you know, outboard engines, versus the others. We have seen Mercury, you know, continue to improve as a supplier for a number of different reasons. As we enter calendar year 2023, we have, you know, a higher level of confidence that the supply chain rhythm related to those components is gonna be much more stable than it was in the past, you know, year and a half. you know, obviously we'll take as many engines as the market though is willing to absorb from us in terms of wholesale shipments, relative to retail. Your question does give me an opportunity to state again, how pleased we are with the Barletta pontoon business that we acquired now about, you know, you know, 15, 16 months ago. how well it's performing, and just the reaction that we continue to get from retail consumers to that brand's product line compared to the other choices they have in the market. The profitability of our marine segment, particularly around Barletta's growth, Bryan and I have been very pleased with as well. you know, around 15% of our revenues this quarter came from the marine segment. I think the profitability was probably closer to 20%. That is a meaningful step forward versus prior first quarters and prior fiscal years in terms of the balance and diversification of our portfolio. The two things I think, you know, outsiders continue to underestimate about our business, is our profitability resilience across our entire business, but also our strategic intent and execution to diversify our portfolio. This was another quarter where the, you know, hard work that we've done in the last three, four years, has, you know, paid off in terms of having a solid quarter in light of market conditions. Okay, great. A quick housekeeping. Do you know if the RVIA forecast includes a recession? Bret, I think you'd have to talk to somebody, you know, at RVIA on that. I know they produce a range. You know, we chose the midpoint here as what we generally align to during this particular release period. You know, we have representation on the statistics committee, but I can tell you their 391 number for calendar year 2023 is probably not connected to any sort of hard recession in the US economy. Okay, great. Thank you. Thank you. One moment for our next question, please. From the line of Joe Altobello with Raymond James. Please proceed. Thanks. Hey, guys. Good morning. Just going back to the marine side for a second. It looks like you added about 1,100 units into the channel here in first quarter. How long would you expect that pipeline fill opportunity to extend here in fiscal 2023? Joe, good morning. This is Mike. You know, there's gonna be a number of factors which ultimately result in answering that question. On this call, I won't be able to give you a precise answer, and I'll explain why. Certainly, the overall macro conditions around the marine industry are things we're watching carefully. While the marine industry has been a little healthier than the RV industry in the last year, and certain categories like pontoons have been trending much healthier as of late than the towable RV segment specifically. We do not believe, as you would expect, we do not believe that the marine industry, nor some of its subsegments are immune to any of the, you know, the macroeconomic pressures that consumers are facing. Inventory is building in the marine industry across a number of different categories, and that is similar on the Barletta side. The positive elements which make it difficult for me to answer your question are the following. Barletta is a five-year-old business. We have not put the Barletta brand in all of the markets around the country that we believe that we can have a presence in. There are dozens of open markets that we have documented that we believe the Barletta brand can have a presence in today that they still do not have a presence in now. Partly because we prioritized our existing dealers when the supply chain constraints were very real, as opposed to setting up new dealers. The other element that's difficult for us to put, you know, timing on your question is we are introducing two new lines to the Barletta business. Today, we only go after about 40% of the addressable pontoon market, and yet that business has grown to a top five player with only three existing lines or brands underneath the Barletta umbrella. We are adding a new lower priced, still premium lower priced, line called the Aria, and we are also adding a line on the high end called the Reserve, both of which have been introduced to the dealer base for the future. And as we stated, we have invested in capacity expansion for, you know, for that brand, which is ongoing. We believe that Barletta, and we'll have to do this in a very disciplined way, can swim a little bit against the tide as the marine industry normalizes as well, because of their market share momentum, their line expansion product-wise, and their dealer expansion. We're gonna be very disciplined, though. You know, we have to watch obviously the temptation to overbuild and overstock, but that timing is gonna be different than what you'll see in our other segments for sure. That's helpful, Mike. I appreciate that. Then maybe moving over to RVs, it looks like, you know, your dealer turns, you mentioned this earlier, about 2.8x. You're running about 2x pre-COVID, running about 4x post-COVID. It sounds like you expect that to stay within that, you know, 2.5x to 3x range here in 2023. Is that a fair assessment? If you look at those numbers on a trailing basis, I would tell you that Bryan and I, we really have thought, you know, for some time now that as dealers came out of the frenetic sort of pandemic-inspired retail period, that they got used to great margins and low working capital. We have felt for some time that they would try to run their business on the RV side at probably somewhere to a half turn higher. I think your range is right overall. It does vary by segment, motorhome versus towable. If the industry was running 2x to 2.5x in the past, we do believe dealers are gonna try to run at 2.5x to 3x in the future. That will be dependent to some degree, as you know, Joe, on the volatility of the retail market. Yeah, I mean, we expect about a half turn higher when the dust settles and, you know, we have to adjust our production, you know, planning processes to be able to, you know, fulfill the dealers adequately when turns are a half turn higher. It's still very chaotic today. I'm not sure it has settled yet. Okay, great. Thank you, guys. Thank you. Ladies and gentlemen, as a reminder to ask a question, simply press star one, one to get in the queue. A moment for our next question. Comes from the line of James Hardiman with Citi. Please go ahead. Hey, good morning. Thanks for fitting me in here. Really appreciate the comments on both wholesale and retail. I think everybody at this point sort of agrees, you know, earnings power for fiscal 2023 is gonna be down materially as the industry sort of normalizes versus the last couple years. I guess my question is, if retail and wholesale for the industry play out the way that you expect, do you think that sets the stage for you to again grow the top and bottom lines as we look to fiscal 2024? Obviously, there's a lot of moving pieces there, right? Where are inventories as we finish 2023? How are you thinking about ASPs, promotional environment, all of that. Ultimately, do you think we're gonna exit the next year in a healthy enough place that you'll be able to grow again? James, first of all, good morning. Thank you for the question. As you saw at our Investor Day a month or so ago, we absolutely have ambitions to grow. You know, we certainly put both net sales and market share targets out for our overall business at higher levels than they are today. The path to overall growth will still continue to be a combination of organic growth and, you know, we believe some smart, well-considered inorganic growth as well. The timing of both of those, you know, will be very interesting to see how it plays out because the organic growth will be tied largely to two factors. One, market conditions, and second, our ability to create growth opportunities in the business. I mentioned how we could do that on Barletta. I would say on the RV side, it'll have to be through new products and innovation, as much as anything. The inorganic timing is James, I know you know, is hard to predict. We certainly have higher market share ambitions, as we've stated during our investor day presentation. In order to reach those by the end of our fiscal 2025 year, we will need to make steady progress over the next three years. You know that element has been a little bit of neutral here as of late, for a variety of headwind factors, but we do anticipate that turning back positive, you know, some point down the road. I just can't comment on sort of when some of that can happen. You know, we're a very financially healthy company as well, although we stay paranoid about that status. With Bryan's leadership, we make sure that we're structured in a very careful way. We have the capability to make some more inorganic investments as well, strategically, to match who we wanna look like, you know, three to five to 10 years down the road. You'll see that happen as well. That's helpful. Maybe to one of the last points, you just made there, the sort of market share environment. Obviously, market share has been a big part of your, you know, growth algorithm for a number of years now. That's maybe stalled out a little bit here as of late. Maybe an update. I know a big part of that is this whole sort of clearing out of tier three product. Where do we stand with that? Is there an opportunity this fiscal year to sort of move beyond that and maybe outgrow the industry or under decline the industry? I guess this is a better way to put that. Yes. No, no. Our expectations for our businesses, you know, is that over time, you know, we continue to take, you know, reasonable market share gains for who we are as a premium, you know, OEM. Most of the pressure we've been seeing on market share has been in two spaces. You know, towable RVs with what you cited, James, with the second and third-tier inventory in the field, but also some of the affordability questions that were raised earlier. You know, in the very near term, you know, consumers are, you know, very price conscious. And on the RV side, we've also obviously seen other competition come to the market with Class Bs. We had been predicting that for years that it was gonna be hard for Winnebago Industries to hold 45% to 50% share when most of our other competitors years ago were not candidly engaged in that category to the degree they are now. Each of our brands and businesses, both on the RV and the marine side, you know, have product plans, distribution plans, and candidly, marketing and digital plans to make our brands more relevant, more appealing to our end consumers, and then hopefully, obviously, with our dealers as well. Again, you know, we watch market share carefully. We don't talk a lot about dollar share because it's very difficult to track. I would suggest that our dollar share, candidly, is probably, you know, doing better than our unit share here in the more recent past because of our ability, you know, in the last year to pass through, you know, the pricing increases that we were able to do. You know, again, it's a balance of market share and profitability that we continue to pursue. Got it. I appreciate the candor here. Obviously, it's a difficult time to predict much of anything, given the macro uncertainty, but good luck navigating it. Thanks, guys. Thank you. One moment for our next question. It comes from the line of John Healy with Northcoast Research. Please proceed. Thank you, and thanks for taking my question. Wanted to just get your big-picture thoughts, Mike, just when I look at your comments that you talked about retail of 390 to 400 or so for 2023. You know, you look at that shipment number, you take the low end of the range. To me, that doesn't imply that there's a, you know, ton of inventory that is worked down in the industry. Would just kind of love to understand your logic and, you know, if those numbers kinda shake out, are we still somewhat elevated going into 2024? I'm just trying to understand kind of some of the logic that kinda goes behind that thought process. Yeah. Good morning, John. I would say the logic emanates from a bottom-up point of view in this way. You know, we really look at the towable RV retail, we look at the motorhome RV retail, we break it down into fifth wheels and travel trailers, Class A, B, and C. There will be categories that we believe over the next year if a stable, you know, relatively healthy retail environment, you know, persists, which could see some actual inventory climb. I've mentioned many times before, we haven't dwelled on it during this call, that we've been under pressure, as an example, on certain parts of our Class A business from a supply chain standpoint. We have not been able to be as competitive as we would like to be on shipment share on Class A because of challenges around some certain key components. As that relieves itself, we have a choice in the future to work with our dealers to continue to raise some field inventory on certain elements of that subsegment. As the Class B business grows, as electric products are introduced to the market, there are various spots where we believe field inventory can actually, in the RV industry, rise carefully. That then is offset by places particularly around sort of the mainstream, you know, towable RV segments where we believe, you know, dealers would prefer to probably have less of those. Just a reminder that the numbers we give you are always macro, and there's various moving pieces, you know, to them and that's our best guess at this time. You know, we'll see how it plays out. Understood. Just capital allocation question. When you look at kind of a 400,000 retail environment, does that make you comfortable? Is that environment comfortable enough for you that you guys would look at acquisitions or look at buyback, or do you scale back those things given the retail environment for the next 12 months or so? I'll ask Bryan to take that. Yeah. Excuse me. Great question. You know, it's gonna be a dynamic environment as we've been talking about throughout the call. I have stated before and I'll reiterate it, our capital allocation priorities really don't change, you know, given the environment. We're gonna continue to focus on growth organically and inorganically, make sure our liquidity is sufficient, particularly at times like this where there's a higher level of uncertainty. We'll target that range of 0.9x to 1.5x in terms of our leverage ratio and then return cash to shareholders. It's all dependent on the environment that we're in and our forward view of the environment, which we've talked about throughout the call, as to how we, how we, you know, allocate. I think that's, you know, the primary comments that we would make. We did pay a cash dividend that was up 50% in this quarter. We held back on share repurchases for a couple reasons. First, first quarter is historically a seasonally low cash-generating quarter. Last year was the strong exception to that. Historically, first quarter's relatively lower, and it was this year. Second, as we've talked about, our free cash flow was impacted by working capital increases, driven by continued supply disruptions, the Mercedes-Benz recall specifically. Our free cash flow generated in first quarter was certainly something that influenced our decisions around share repurchases in first quarter here. I think that's the context that I would provide as it relates to capital allocation. Mike, I'll turn it back to you if you wanna add anything further. No further comments. All right. Thank you, guys, and have a great holiday season. Thank you, John. Thank you. One moment for our last question in queue, please. Comes from the line of Brandon Rollé with D.A. Davidson. Please proceed. Thank you for taking my questions and sending me in here. Just quickly on margins, I think you had talked about the margin progression earlier in the call. Historically, it seems like there's a with the exception of last year during second quarter 2022, seems like there's a step up in margins for the towable and motorhome segments. Do you think margins have bottomed there? You know, we feel good about the increases that we've made to the motor home business over time, Brandon. We've talked about that in past quarters and how our current expectation is to maintain that double-digit EBITDA margin. You can see that over time. Over the last several quarters now, we've been able to accomplish that. Even in, you know, more challenged times like what we're seeing now, we were able to maintain that double-digit EBITDA margin in the motor home business. That's where we've seen the most notable change over the last three years now. On the towable side, I talked about that earlier, and our expectation that the seasonally low first quarter here is in line with what we've seen historically and, you know, in line with really our expectations. A bright side to the margin story is certainly marine. As you saw in first quarter, marine is performing very well relative to the portfolio. We're liking everything that we're seeing in the marine and really in line with what we had expected to see when we brought Barletta into the portfolio. That has played out in line with our expectations and what we anticipated. Good story there. Great. Just one last one. On the motor home side, you had talked about orders being reasonable. It looks like, you know, just from the data you provided, implied orders might have been down about 80% versus 2019 levels. You know, kind of how do you feel? Is that reflective of kind of where demand is right now, or is the channel filling up quicker than expected? Thanks. Yeah, Brandon, this is Mike. I guess the term reasonable is in light of, you know, the volatility in the world around us. You know, again, certainly dealers are paying close attention to their overall inventory levels. I would tell you, in the month of November, we got no new orders on Mercedes chassis, as an example. That was certainly different than, you know, than a year ago. You know, almost 1/3 of our field inventory on Winnebago-branded motor homes is on Mercedes chassis. It's hard to take orders, when the dealers essentially know that, you know, that's something that they can't really see forward to. Yeah, I mean, it is, it is chaotic in the way that a small dealer or a large dealer is looking at a variety of these categories. Again, relative, you know, in this order from, you know, positive to less positive, you know, marine orders, motor home orders, towable orders, is the way that I would rank those. We'll see what happens as dealers get into the retail selling season. We are coming up on show season here over the next three, four months. That begins in earnest after the holidays with a number of different shows, including the Florida RV SuperShow down in Tampa, I think the third week of January. We'll learn a lot, you know, in many ways over the next 60, 75 days about our prospects for the rest of fiscal year 2023 and calendar 2023. Subsequently, I think orders will definitely respond to whatever the retail activity is as we make the turn of the calendar year. Great. Thanks so much. Thanks. Thank you. This concludes the Q&A portion of today's conference. I would like to turn the call back over to our host. Thank you, everyone, for joining our call today. From the Winnebago Industries team, we wish you and your families a happy holiday season and look forward to connecting in the new year. Thank you. Thank you, ladies and gentlemen. This concludes today's call. Thank you for participating, and you may now disconnect. Speakers, please stand by.