LCI Industries Price & Performance (LCII)

These factors are discussed in our earnings release and in our Form 10 ks and other filings with the SEC. The company disclaims any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur after the date as forward looking statements are made. Except as required by law. With that, I would like to turn the call over to Jason. Good morning, everyone, and thank you for joining us on our fourth quarter and full year twenty twenty four earnings call. Today, I will walk you through our highlights from the year, provide an update on the industry backdrop and how we will strive to continue to expand our market leadership in 2025. Then I will break down our business performance by market and outline our financial strategy before turning it over to Lillian for a deeper dive into our financials. Starting with highlights from the year, 2024 proved to be a good year for Lippert, as we showcased the resilience of our diversified business by delivering full year revenue $3,700,000,000 down only 1% despite a challenging RV and marine backdrop. As our presence in various end markets such as building products international and aftermarket helped offset some of our headwinds should effectively position us to reach our organic target of 5,000,000,000 in total revenue in 2027.

We expanded our market leadership across our top five product categories appliances, awnings, chassis, furniture and windows, which together accounted for 71% of our North America RV OEM sales. We experienced 7% organic growth in the automotive aftermarket, due to market share gains demonstrating our leadership in the towing and truck accessories markets. We also feel that our current and ranch hand acquisitions are really starting to gain momentum. We increased EBITDA by $89,000,000 despite a weaker sales and mix backdrop. By delivering cost savings and operational improvements, helping to pave the way for a return to [indiscernible] as we strive to deliver further operational improvements. We supply game changing innovations, especially our CURT touring coil suspension, our Furion Chill cube air conditioning technology and our Lipper analog brake systems for towables. We feel that these products clearly set us apart from our competitors and help drive organic content per towable RV, up 2% year over year We are successfully delivering on our new Camping World partnership. With product sales up 62% in their stores, We should be positioned to capitalize on more growth in 2025. Our goal this year is to upfit approximately 100 additional Camping World stores [indiscernible] Camping World has told us they are ecstatic with what we are doing as our partnering efforts are helping to drive their in store and online aftermarket parts sales.

And finally, we reduced net debt below two times EBITDA as we created cash flow from operations $370,000,000 as we exit 2024, we're in a really good position competing in what we believe are the right categories and markets to strengthen our leadership and drive continued margin expansion. None of our 2024 success or 2025 vision will be We are grateful for their hard work, dedication and relentless drive to push us forward. Our commitment to excellence and innovation is what makes our success possible. I couldn't be more excited to continue building with them in 2025 and beyond as we execute on our vision and help the business reach new heights. Moving to the industry and macro backdrop, we are cautiously optimistic moving into 2025 as we are seeing that the RV backdrop is Orders are starting to improve and the signs at many retail shows are more positive. Our January RV sales are up 17% as dealer inventories are at their lowest point in recent history. Which should create a favorable environment for demand. Also encouraging our reports that interest rate declines have helped the dealer floor planning outcomes. If you take these things and consider that the dealer profits are starting to improve, we believe there is a pretty good case to feel strongly that 2025 will hit its wholesale and retail estimates.

Broad mix is also looking like it will be in a much healthier situation and consumer optimism is on the rise. As a reminder, historically, when the industry comes off a two year downturn, we usually see three to seven years of industry growth. And if the same trend occurs as in the past, we believe we stand in a great position to capitalize on those So how will we expand our leadership position in 2025? First, I want to emphasize that our market leadership matters. Over the last three decades, the team and I feel as though we have built meaningful brand authority and trust with our customer base, which we believe has created a strong foundation for cross selling whichever products we decide to manufacture. This strategy should help to continue to drive scale and other advantages that we believe make us the low cost provider and go to for all things innovation. It also should give us a significant advantage as the supply side consolidates because we usually stand out when there are fewer choices because of our innovation and creativity. However, it is in our market position alone that sets us apart. We think our competitive moat is built on many advantages that make us a trusted partner.

I'll talk about seven of these that we believe position us to capitalize on industry tailwinds drive sustained market share gains and outperform the market in 2025. Each of the following points reveal our opinion of our place in the market and what should help us continue to succeed. First, our best in class manufacturing attracts new customers and expands wallet share. This expertise and the decades of investment behind our high precision manufacturing ecosystem should make it incredibly hard for others to replicate our manufacturing capabilities and speed on complex components across RVs, boats and other product categories. Second, our extreme product breadth should give us a natural advantage in cross sell bundling and expanding our footprint with existing customers. Third, we are the leaders in RV and marine innovation Innovation has been part of our DNA for over twenty five years. As we started launching products beyond chassis that our customers were asking for. We have so many new exciting projects in the pipeline in 2023 and in 2024, we launched some significant products like our glass patio systems, 4K windows, ABS, PCS and the ChillCube to name a few. With these products, we believe we have essentially created another $500,000,000 in addressable market. [indiscernible] Fourth, deliver unmatched dealer support through our robust technical support network.

Is a significant competitive advantage that most people don't realize because we are touching customers and forming significant relationships outside of the OEM channel. From our mobile service teams that bail out customers who have broken down on the road to our tech teams that travel to dealers every week for service trainings to our 200 customer service agents at our care center in South Bend, they handle over 1,250,000 customer interactions annually. The dealer body relies on Libert to help train and fix issues around thousands products that are constantly changing or being added to our portfolio. Fifth, we're the low cost producer. Decades of manufacturing expertise, along with our immense volume should give us the purchasing power, which allows us to deliver exceptional value while protecting our margins. Sixth, we are an effective consolidator. With a solid balance sheet and strong track record of strategic acquisitions, we should have flexibility to pursue any compelling opportunities that arise. With this team having done over 70 deals in the past couple of decades, acquisitions are in our DNA. Finally, our leadership team has seen it all. We've successfully navigated many economic cycles industry cycles, but most importantly over the last twenty to thirty years our team has developed a lasting and consistent culture built on trust, and long term meaningful relationships with our OEM partners and with each other.

In addition to expanding our market leadership in 2025, we will strive to drive operational leverage and optimize overhead costs, ensure our fixed cost structure remains as efficient as possible, supporting profitability and long term value creation as we progress back towards double digit operating margins. To prove out serious, we are about making sure our cost structure is optimal we have set a stretch target of an 85 basis point improvement for this year in our overhead and G and A cost structure. I'll now move on to our results by business. In 2024, RV OEM net sales totaled $1,700,000,000 for the full year, up 7% versus the prior year. Reflecting continued market share gains across our top product categories. This growth came despite mix shift towards smaller [indiscernible] and should be insulated from decontenting risk. At the Tampa RV Super Show, we showcase innovative products that are driving new business wins for 2025. Some recent innovations, as we mentioned earlier, continue to gain momentum are our CURT touring coil spring suspension, which has drawn significant interest from OEMs and dealers alike and opens a new addressable market worth more than $150,000,000 Currently, it has been launched by a few top 10 towable brands with more top brands adding it this coming model year.

Our anti lock braking system, which has been adopted by many leading towable RV brands, and gives us access to $150,000,000 of market opportunity. We also anticipate this product will emerge as a standard across utility and cargoes trailer segments in the near future creating even more total addressable market for this great product lineup. Our Kurt Elitz coil spring fifth wheel pin box was recently awarded best new exterior accessory at the CEMA show in Las Vegas, Nevada. Our Furion Chill Cube air conditioner by far the quietest and most powerful in its class amongst the other air conditioner brands has gained immediate interest from OEMs in consumers alike further strengthening our position in this category as the new leader in HVAC systems. We also continue to expand RV content with larger windows and glass entry doors for twenty twenty five models.

Which provide more natural light and integrated functionality. Brinkley RV has incorporated these square bonded windows with integrated shade systems in their high end units demonstrating the premium value that these products bring to the market. We have invested over $15,000,000 in glass processing [indiscernible] Looking ahead, we're confident we can capture additional content opportunities as wholesale shipments and product mix normalize and that organic content growth should return to 3% to 5% annually. For 2025, we project 335,000 to 350,000 wholesale shipments or more than $100,000,000 of additional RV OEM sales at current content levels to our top line as we strive to capitalize on the nearly $3,000,000,000 in addressable opportunities for their current products. Supporting these projections, Blue Compass, the second largest RV dealer in the country reported record sales of the Tampa RV Show, up 20% from their best prior year. Furthermore, LCI's January RV sales increased 17% year over year, which we believe are all signs that point to the improvement in the industry backdrop. Turning to the aftermarket, net sales were $881,000,000 for the full year, roughly flat year over year. Strength in the automotive aftermarket was off offset by some softness in the RV and marine aftermarkets.

Operating profit for the aftermarket segment remained strong at 12.6%. Kirk family of products including hitches, towing solutions and truck accessories delivered impressive growth with sales increasing 7% during the year, contributing 54% of the total aftermarket revenues. Curt's strong performance underscores our ability to execute meaningful acquisitions that ultimately contribute to sustained growth. Notably, our Ranch Hand truck accessories are featured on truck in the hit TV shows Landman and Yellowstone. Camping World's furniture business acquisition and accompanying supply agreement has continued to exceed our expectations as we have outfitted more than 14 Camping World RV [indiscernible] We delivered products in these stores increasing our sales with the world's largest RV retailers 52% year over year. We expect continued growth as we plan to further expand the selection of Lipitor products online and in camping roll locations. In addition, other dealerships have taken note and are asking for our help to upfit their stores. Our Veron suite of appliances acquired through another acquisition includes backup observation cameras, ovens, hot water heaters, refrigerators, microwaves, furnaces and air conditioners, It continues to help drive aftermarket revenue through the upgrade, repair and replacement cycle contributing $56,000,000 to our aftermarket group sales alone, for the year, a 22% increase over 2023.

Again demonstrating our ability to grow acquisitions. We feel that Furiana is a perfect example of how we can impact the aftermarket significantly by driving meaningful OEM volume with new acquisitions that have large product portfolios like To further capitalize on the aftermarket, as large numbers of vehicles transition out of their warranty periods, we've emphasized dealer tech training programs, strengthening a dealer's knowledge of and preference for Lipper products by equipping technicians with the expertise to service and install our offerings Effectively. Over the course of 2024, we trained 36,000 dealer service personnel We had 1,600,000 views of our tech support seminars. We had 65,000 technical product class completions and we had 2,100,000 overall page hits on our How to technical service pages. All in all, our aftermarket business represents more than $10,000,000,000 in addressable market. Our presence has grown substantially since our entrance in 2013 and we will continue to focus on organic and inorganic growth in this critical area for us. Turning to adjacent markets, net sales decreased 13% to $1,100,000,000 for the full year when compared to the prior year, largely due to weak demand in marine as dealers continue to optimize their inventory levels. Excluding North America marine sales, the Jason Endrew Series were $87,000,000 or only down 6%.

In the year, we feel as though we've made significant strides in several end markets In the utility trailer market, we've leveraged our core expertise in axle manufacturing, to supply leading brands like PJ Trailers, Diamond LCI, Innovae and Big Tex Trailers. Approximately 600,000 utility and cargo trailers built annually, we believe this market is a significant growth opportunity for LCI content. As we continue to gain share, we plan to introduce several advanced upgrades such as ABS and TCS further enhancing utility trailer suspension performance and safety for the end consumer. In the world of utility trailers, axles are the largest single content item. Additionally, our window and glass products are successfully adding to our content gains in areas like off road vehicles, school buses and transit buses, with our on highway and off highway transportation markets. This represents a significant content opportunity as approximately 70,000 buses of all types are built annually. For building products, we have gained notable traction in residential windows over the past Our entry level product has been so successful that we just launched a more premium residential product lineup. This represents only one of the many products we have that have been gaining share with builders.

Others include our chassis for manufactured homes, residential awnings and thermal form components for tubs and showers. Turning to capital allocation, our strong performance in effect inventory management generated $370,000,000 in operating cash flows over the last twelve months. Enabling us to pay down $89,000,000 in debt and reduce leverage to below two times. Our solid balance sheet should position us well to pursue a robust pipeline of M and A that aligns with our strategic goals in existing markets. We feel as though we have a proven track record for driving value through acquisitions focusing on companies with experienced leadership teams, exceptional products, and significant growth potential. In addition to M and A, we remain committed to funding an innovation and operational improvements to drive long term growth while maximizing shareholder returns.

This past quarter, we advanced our commitment to returning cash to shareholders by raising our dividend 10% to $1.15 per share. Providing this value to shareholders remains a key priority and reflects our confidence in the strength and resilience of our business in the short and longer terms. Closing with culture, it's intangible, but it truly drives results at Lipper as we remain committed to maintaining a great workplace where we have the best leaders driving on values consistently. When we create a great workplace, people tend not to leave very often, which helps create a lot of consistency and momentum in the manufacturing results. Even in a difficult year like 2024, our retention was better than industry average. Year, we probably surpassed our ambitious one hundred thousand hour volunteer initiative goal through our team members by holding events such as a Built to Serve event in Fort Wayne, Indiana, Lippert leaders supported Shepherd's House, a non for profit providing long term care for homeless veterans facing addiction and mental health challenges along with hundreds of other events put on by our teams to assist our communities where there is need. We are trying to set an example for many other businesses to follow because we believe by doing this, can be a greater force for good in the world.

Our inclusion on Newsweek's twenty twenty five list of America's most responsible companies highlights our continued progress in environmental, social and governance initiatives. We also advanced our sustainability efforts by implementing resource and waste monitoring, across some of the facilities and publishing our third year of Scope one and two greenhouse gas emissions data. These initiatives reinforce our focus on transparency and accountability supporting Leopard's vision of long term growth that benefits all stakeholders. In closing, I want to thank our dedicated team members once again for their incredible efforts We believe Lippert is well positioned for long term success as we continue to innovate deliver exceptional customer experiences, and create value for all of our stakeholders. Now turn it over to Lillian, who will provide more detail on our financial results. Thank you, Jason.

Lipard's strong reputation for best in class quality and service along with our robust portfolio of innovative products fueled share gains during the quarter. However, revenue growth remained constrained as persistent softness in retail demand across the RV and marine markets continued. Our consolidated net sales for the fourth quarter were $8.00 $3,000,000 a decrease of 4% from the fourth quarter of twenty twenty three. OEM net sales for the fourth quarter of twenty twenty four were $621,600,000 down 6% from the same period of 2023. RV OEM net sales for the fourth quarter of twenty twenty four three seventy six million dollars down 3% compared to the prior year period. Driven by a 24% decrease in motor home wholesale shipments In the fifth, in unit mix towards lower content single axle travel trailers. These impacts were partially offset by a 7% increase in North American travel trailer and fifth wheel wholesale shipments and overall market share gains. Content for towable RV units was $5,097 up 1% compared to the prior year period, while content per motorized unit was up 7% to $3,742 Content for Towable RV unit was up primarily due to increased adoption [indiscernible] Largely offset by a continued shift to single axle trailers, which have less content overall.

These trailers accounted for about 24% of production in Q4 of twenty twenty four compared to the prior year of 20%. Typically, we would see a mix range of about 16% to 19% for these units. Organic content increased 1% sequentially and 2% year over year, supported by the share gains we delivered in the top product categories we supply to the RV OEMs. Specifically appliances, awnings, chassis, [indiscernible] and Windows. Aftermarket net sales for the fourth quarter of twenty twenty four were $181,600,000 an increase of 1%. Compared to the same period in 2023. Primarily driven by continued growth in the automotive aftermarket, partially offset by softness in the RV aftermarket which has been negatively impacted by lower consumer discretionary spending. Adjacent Industries OEM net sales for the fourth quarter of twenty twenty four were $245,500,000 down 9% year over year primarily due to the lower sales to North American Marine and New [indiscernible] Marine sales were down 15% due to the impact of inflation and still high interest rates on retail demand and we expect softness in the marine industry to continue for the first half of twenty twenty five. During the quarter, this decline was partially offset by increased sales for building products As we continue expanding our footprint in this market, by capturing demand, for core products, supplying axles to top trailer brands and adding windows in off road vehicles.

School buses and manufactured housing Gross margins for the fourth quarter of twenty twenty four were 21.1% compared to 19.2% for the same period in the prior year period. Supported by decreased steel prices, lower inbound freight costs and the impact of material sourcing strategies we've implemented to lower input [indiscernible] Consolidated operating profit during the fourth quarter was 16,000,000 or 2%, a 170 basis point improvement over the prior year period.

Operating margin expansion was supported by operational improvements, such as further facility consolidations and overhead reductions. I would also like to highlight that our warranty costs reduced by $9,000,000 during the For the full year, warranty costs have decreased about $29,000,000 compared to the prior year period, driven by the implementation of product quality initiatives, The operating profit margin of the OEM segment increased to 0.3% in the fourth quarter of twenty twenty four compared to a loss of 1.8% for the same period of 2023. The aftermarket segment delivered a 7.9% operating profit margin in line with the prior year period. GAAP net income in the fourth quarter was $10,000,000 or $0.37 earnings per diluted share compared to a net loss of $2,000,000 or $0.09 loss per diluted share in the prior year period. EBITDA in the fourth quarter was $46,000,000 a 29% increase compared to the prior year period driven by higher earnings along with the 46% decrease in interest expense over the prior year period, reflecting our lower levels of debt, in 2024 and improved provisions for income taxes of about $6,000,000 Moving on to full year 2024 results. Full year net sales were $3,700,000,000 down 1% year over year.

Sales to RV OEMs increased 7% to $1,700,000,000 driven by a 13% increase in wholesale shipments of travel trailers and fifth wheel units in addition to market share gains. Partially offset by 24% decrease in motor home wholesale in a shift in unit mix towards lower content single axle travel trailers. Sales to adjacent markets decreased 13% to $1,100,000,000 in 2024, primarily due to lower sales to North American marine and utility trailer OEMs, driven by current dealer inventory levels, inflation and elevated interest rates, competing retail consumers Aftermarket sales were relatively flat when compared to the prior year at $881,000,000 as gains in the automotive aftermarket effectively offset impact from lower RV and marine Total company operating profit margin for 2024 was 5.8%, up from 3.3% The operating profit margin of the OEM segment increased to 3.7% for the full year. Compared to 0.6% for 2023 as we made significant operational strides.

The aftermarket segment delivered a 12.6% operating profit margin compared to 12% for 2023, which made up over half of our total operating profit despite only making up 24% of total sales. Demonstrating how our diversified business exposure has effectively supported Non cash depreciation and amortization was $125,700,000 for the twelve months ended 12/31/2024, while non cash stock based compensation expense was $18,700,000 for the same period. Anticipate depreciation and amortization in the range of $115,000,000 to $125,000,000 during the full year 2025. At 12/31/2024, our company's cash and cash equivalents balance was $166,000,000 compared to $66,000,000 at the 12/31/2023. The twelve months ended 12/31/2024, cash provided by operating activities was $370,000,000 dollars with $42,000,000 used for capital expenditures $20,000,000 used for acquisitions and $109,000,000 returned to the shareholders in the form of dividends Additionally, the company had net repayments of indebtedness of $89,000,000 As of 12/31/2024, our net inventory balance was $737,000,000 down from $768,000,000 at December 31, 2023. At the end of the fourth quarter, we had outstanding net debt of $591,000,000 1.7 times pro form a EBITDA adjusted to include LTM EBITDA of acquired businesses and the impact of non cash and other items as defined in our credit agreement.

For the month of January, sales were up 6% versus January 2024. With RV sales up 17% and aftermarket up 6%. Offset by softness in international and other adjacent markets. [indiscernible] We are anticipating an estimated full year wholesale shipment range of 335,000 to 350,000 units as lingering consumer demand headwinds begin to abate. As we think about Q1, we expect overall revenue to be about flat year over year We expect RV OEM sales to be up about 9% and we expect continued softness in marine and international markets. We also expect operating margin to be flat to a slight improvement over Q1 of twenty twenty four. Looking to capital allocation for the full year of 2025, capital expenditures are anticipated to be in the range of $50,000,000 We continue our aim to utilize our balance sheet to pursue strategic while maintaining a long term leverage target of 1.5x to 2x net debt to EBITDA. And maintain our commitment to returning cash to shareholders. Intend to further strengthen our financial profile by making consistent operational improvements to our business while supplying innovative products that result in market share expansion throughout the business, We expect to see industry recovery across the markets we serve over the next several years In addition to organic growth fueled by our market share expansion, We look forward to continuing this progress.

Driving sustained, profitable growth as we advance towards our $5,000,000,000 revenue target in 2027, while remaining committed to returning to double digit margins. That is the end of our prepared remarks. Operator, we are ready to take questions. Thank you. Thank you. Our first question is from Fred Whiteman from Wolfe Research. Your line is now open. Please go ahead.

Hey, guys. Good morning. I was hoping to I'll start with the tariff question. I'm hoping you could just level set sort of what you have contemplated in your outlook for the year as far as steel and aluminum tariffs, maybe where inventory levels stand, how you're thinking about pass through? I know in the past you sort of talked about a two quarter lag on the pricing front until contracts reset, but maybe just to start with tariffs. Thanks.

Yes, sure, Fred. Thanks. Well, we haven't put anything into the plan So our plan doesn't reflect anything for tariffs. It's obviously still fluid. There's a lot of things we can talk about here. I think the and most important thing is that chassis are our largest our largest product, their largest product on our portfolio and almost 99% of the steel from those products or for those products come from domestic sources. So our largest product line, we don't have any issues, but if you look overall, it's probably we're calculating with what we know today about 50 bps of impact. And we feel we we can mitigate most of that. Either through pricing, that's one time or or through our indexes. We certainly will get a lot of help from our suppliers Our suppliers don't want to lose the business. So there were with us to mitigate some of that. We've been through this before and and mitigated a good chunk of it and we'll do it again this time. It's just there's just a lot of moving parts and pieces, but Does that help? Frame it up?

It does. Yes. So just to confirm, when you're saying the 50 basis points is just the steel and aluminum tariffs or is that sort of assuming China is well [indiscernible] to clarify that's China, that's steel and aluminum the steel aluminum would be much less obviously because we're just not we don't have the kind of impact with all the domestic sourcing we have.

Okay.

And then I guess just And here Yes, sure. Go ahead.

Yes. So first to your comment on the steel and the aluminum, you're correct that we already have pass through mechanisms On those two commodities, those are commodities that historically we've passed through cost increases. We've and decreases at the same time. So I would expect that we would continue to fully execute on that model on a go forward basis for the tariffs to Jason's point to mitigate the impact there.

Okay. And then on comp [indiscernible] and then you gave the disclosure about the percent for single axles, which looks like it ticked up a little bit sequentially. So can you just help us think about maybe single axle mix is expected to trend this year and then maybe what that means for content per unit in towables specifically? Yes, it's obviously risen in the last couple of years.

I'd say that if you look at our our total chassis output on single axle trailers, in 2024 was about 12,000 units more than in 'twenty three. And we build most of those obviously, most of those units We saw a tick up a little bit for January about 1,000 units over last January. But our anticipation is that that starts to subside and normalize sometime in Q2. We've had a lot of conversations with dealers and they're very aware of the mix situation and feel that we've kind of balloon inventories on that product pretty well. Over the last year and a half. So there's a lot of brands making that single axle trailer where if you go back two or three years ago, there was only a couple brands making the trailer.

So yes, saw it tick up a little bit for January and might see a little bit of a a flat to uptrend this year, but I would say that we're going to going to see mix normalize here sometime after the start of Q2.

Thank you. Our next question is from Daniel Moore from CJS Securities. Your line is now open. Please go ahead. Thank you. Appreciate the questions, Jason Lillian. Just talk a little bit about, obviously, January started up the year strong. You expect dealers to continue to restock through kind of January through February, March, April timeframe into been ahead of the kind of spring selling season, just any additional color in terms of what you're hearing there would be helpful.

Yes. I think sorry, Dan, I got a frog in my throat. I think a couple of comments I'd like to make. If you look at Q4, we were averaging about 4,100 chassis a week.

Q3 we're about 4,400 a week. Q2 last year, we were close to $5,200 a week.

We're averaging 5,300 a week this year already. We have some pretty good visibility into February and March. February started out just a strong March feels pretty comfortable commentary from all the dealers including ones I've talked to just in the last couple of days, pretty strong January is for the good dealers. I'm sure there's dealers out there that are struggling, but the big players seem to be having decent shows and decent volume and retail traffic on their lots.

Through year to date, Is that helpful?

It is. It is. And just talk maybe a little bit more color about Penetration and acceptance rates for some of your more recent innovations obviously, you mentioned suspension systems, analog brakes, glass entry doors. Windows series. I know you don't have necessarily divulge hard and fast data, but just how do we think about how those penetrations might ramp into say model year 26s versus now '24, '25?

Yes. Yes, so if you look at like some of the products you mentioned, chill Cube, ABS, our TCS, our Windows, Helix, We've got close to a $500,000,000 total addressable market we've created with those products in the near term. I would just say you got to think about it as like TCS example. We're really excited about that product for a lot of reasons. Obviously, it improves the durability and the long lasting lot of the components that go in the RV by lessening the vibrations that the unit experiences going down the road. But it's an $800 to $1,200 piece. So those more expensive pieces take longer to penetrate. But how this market works it's a me too market and we've got it We've got that product starting out on the right brands. It's had great success at the shows. And ultimately, the consumers are going to want products that make the experience better. And and help lend to a better quality unit over time. So ABS is double digits up. From last year in terms of product placement for this upcoming model change in June. So windows not as pricey as LCI and ABS, but that's seeing progress.

We should be the largest air conditioner in the industry after this year with the launch of the ChillCube and the success that that's had. So We're having good success so far. And I would just look at an expensive product take a little bit longer time to penetrate, but maybe think of it that way.

Okay. And then just want to clarify, appreciate the commentary on tariffs potential 50 basis point headwind. Mitigated to some degree. Offsetting that get hopefully a better year in terms of RV shipments, a little bit more overhead absorption. So how are you kind of thinking about the range of operating margin for '25 relative to '24 when you put all that together? Thanks again.

Yes. Good morning, Jan. We're not putting out a specific margin target for this year, but how I would characterize it is as we're looking moving through the year, I would think about incremental margins at about 25%. So the leverage that we'll get from the volume increase will definitely help increase the margins. We're also continue to be very focused on cost reductions. You saw us from a nonmaterial perspective, we shared that we had over $28,000,000 of cost reductions in 2024. We're targeting to implement comparable types of levels as we're looking at 2025. Again, non material related, so looking to reduce the overhead costs, G and A related types of expenditures, which will also improve margin. So we're expecting a reasonable margin uplift this year.

Obviously, the tariffs are an overhang that the team needs to work aggressively to mitigate, but we are confident that we'll continue to expand the margins as we progress through 2025.

Not a puts and takes there, but I the only thing I'd add to what Lillian said is just the fact that as we come out of these cycles, and we're clearly seeing a little bit of an inflection at the present, we are going to lock down I mean, we have we have costs locked down. So it's a lot easier to control those out of the gate versus we're twenty four months into an upswing and we're having to open factories back up. But we've we're still closing a few factories and consolidating some some business units, which is really helpful and we've got costs locked down especially in G and A and overhead. So I think that's going to continue to play favorably for us. In the quarters to come. No, that is helpful. I'll let me jump back with a follow-up Sure.

Thank you. Our next question is from Joe Altobello from Raymond James. Your line is now open. Please go ahead.

Thanks. Hey, guys. Good morning.

I guess I'll start with operating margin. For 25%, LCI know you're not giving a target, but if we think about I guess the three buckets, you mentioned the 25% incremental margin On volume and then I think you mentioned earlier 85 basis points of improvement in overhead and G and A cost saves. And then third bucket would be the tariffs that would sort of offset that.

That how we should be thinking about the margin for 25?

From the first two buckets, yes, in terms of the incremental margins, at 25% for incremental revenues, the cost reductions and again the areas that we're focused on there, the J highlighted, it's continued facility reduction, which we did quite a bit in 2024. We're continuing on that journey It's reduced overhead with from an F perspective, again, just trying to really be as efficient as we can and continued reductions in general overhead costs and direct spend. From the tariff perspective, while based on what we know today and unfortunately things do seem to change every day and the team is being very flexible with the fluidity But based on what we know with the disclosed and implemented incremental tariffs for China, for the additional tariffs for steel and aluminum, we're saying from a China perspective, it's about a 50 basis point headwind that we're working to mitigate.

Steel and aluminum, we already have pass through mechanisms that have been in place for years. We'll continue to leverage those. So not necessarily anticipating the tariffs are going to be an overhang to the margins. That said, day to day, I wake up and I look at the news to see if there's something new. So things could change on the tariff front that we're not anticipating at this point. So just staying very flexible there and adjusting as we need to.

Yes. With what we know today, I think the clearest way to say it is that we feel pretty confident we can mitigate most of that. We don't know what we don't know coming in the near future, and we'll deal with that stuff as it comes. But with what we know today, we feel pretty confident we can mitigate most of that. Got it. Okay. And Jason, just kind of shifting over to your retail outlook for the year, Your commentary on the call has been pretty upbeat. But if you look at the numbers, I guess you're looking for kind of flattish retail this year. So maybe help us understand sort of the disconnect or the perceived disconnect there and maybe what the the variables are that would get you toward the lower end or higher end of that range? Yes. I mean, there's a lot of puts and takes and moving parts, but we feel we've been obviously stung in the last couple of years on retail. So I think we've we've tended to play it a little bit more conservatively, but I mean we can certainly make a case with the higher end of that $3.45 to $3.6 range.

I've got a lot of confidence in the industry. I've been around it for a long time. And we make a lot of great products that serve a lot of different areas, certainly with a mix happened in the recent years, we've got smaller units that can be used for a lot of different things. I think we'll still see some maybe some pickup on FEMA this year. There's been more talk about that recently as the new administration has gotten involved in had some conversations. We know there probably will be some FEMA orders this year to replenish the stock that they normally keep. So there's a lot of moving parts and pieces, but I think all in all, we feel pretty bullish that we'll be at the mid to high end of the retail spectrum.

Got it. Thank you.

Thank you. Our next question is from Scott Stember from ROTH Capital Partners.

Good morning and thanks for taking my questions. Good morning. Jason, if we talk about the aftermarket speaking specifically to Camping World, Can you just give us a frame of reference of how many stores you're in right now? And what do you expect to be? And I guess 100 more by the end of this year?

Yes. So we're going to have bring out some resources to do that. We kind of did the last 14 They come slow. We worked really closely with Camping World to make sure we were doing what they needed. Obviously, we completed the acquisition and the supply agreement and our new partnership there middle of last year and it took us a few months to get going. And then we we up into those stores toward the tail end of 'twenty four. They like what we've done. I think they're pretty ecstatic with what they've seen so far. It's really given a nice little facelift to some of their depart stores. And our goal is to bring on some resources here We're doing that as we speak and then start up fitting as many stores as we can. They'd like to do it on all of them, but we they've got a couple of hundred stores and we can't fight it all off that fast. So it's been great. Our products are getting a lot of FaceTime and frontage and good areas in their stores. So the customers that are coming in see our products right away and they've been very focused on helping us sell through those inventories.

So it's been really good so [indiscernible] other dealers are asking this today also to do some facelifts for their parts stores as well.

And going back to the RV side, of the equation for aftermarket, you talked about the current business being up How did the RV side do? And are you seeing at least in January any signs of break fix kind of repair demand picking up?

I haven't seen the repair pick up yet. We were down just a little bit on the RV side last year, but you you typically see those ebbs and flows on the aftermarket side like you do on the retail side, there's less people in the stores.

There is the argument there's a little bit more renovation and things like that when retail sales are down, but our aftermarket RV business wasn't down as much as our other businesses. So we expect that with the twenty one and twenty two mile years that we built over 1,000,000 units for, we're expecting those those RVs to come out of the warranty and into the repair and replacement cycles customer pay cycles here in the very near future. So we'll keep you posted. Got it. And then on the European side, can you talk about what you're seeing from the European OEMs on the RV side? Yes, I think they've struggled the last couple of months. If you just break it down simply, The European businesses feel very strongly that first half is down, second half is up. Over last year. So kind of flip flop of what they saw last year. Last year, they had a They had a really decent year last year though. First quarter was up in the the second half the first half was up and the second half was down and this year expecting the first half to stay down and depressed and see a little bit of an uptick in the second half still.

I think 200,000 total units, which is a still a reasonable year considering they're going to have a soft first half.

Got it. Thanks, Scott. Thank you. Our next question is from Mike Swartz from Truro Securities.

Your line is now open. Please go ahead.

Hey, good morning, guys.

Maybe just to start, I apologize if I had missed this, but just in the quarter, Lillian, what was the impact of, I guess, pricing mix on the towable content?

In terms the pricing mix It was pretty benign. Mean, really, I'd say less less than a point in terms of that. We really haven't seen the magnitude [indiscernible] What's driving it right now, it really is the the overhang. What's depressing it, I'd say is the overhang of the single axle that we've seen that up to that 24% level. We're still generating nice organic growth and that's expected to continue to expand. When we look at the number for the first quarter in comparison, I expect that to be closer to call it the 3% organic growth that we would typically like to see. Really is the single axle mix. That is depressing the content number at the stage. Now pricing.

Yes. When you consider how much single axle mix there is today, there's You have a few windows, you don't really have much furniture, one axle, no slide outs, small chassis, you consider those things and the fact that we're still doing as well as we are from an organic standpoint. I think that says a lot about where we're getting share and where we're innovating and placing new products that are creating opportunities for us on the top line side that we didn't have a year ago. Okay. Great. And just a follow-up on that. I think Jason you had mentioned on the call, the plan over time when When mix and production kind of normalize, you do expect to be in that 3% to 5% organic range. Is that safe to say that we should be within that 3% to 5% range for the full year for 2025?

Yes, I think it's reasonable. I'd say that's reasonable.

Mike.

Yes, mix were to really go the other way and then not get closer to normalizing than we'd have other conversations, but we feel pretty good about that. Okay, wonderful. Thank you.

Our next question is from Patrick Buckley from Jefferies. Your line is now open. Please go ahead.

Good morning guys. Thanks for taking our questions. The January results I guess within that 17% increase in RV OEM sales, how much of that growth was from underlying increase in demand at the retail level? And I guess any of that increase driven by OEMs trying to stay ahead of tariffs or in anticipation to potential rebound? The spring selling season.

Yes. I would say that I don't think that there was any buy ahead or anything like that from a tariff perspective or fears that the pricing was going to go up. In terms of what was driven by retail, demand, I think most of the again, I'll go back to Blue Compass. They I think they finished the month over 20% up over the prior year, which is really a good sign considering they're the second largest those guys and they're I'd say that the overall commentary is that retail is good. It's not great. It's not it's certainly better than last year. So I think that we're in a decent spot from a retail perspective.

Great. Got it.

And then I guess taking a look at the marine market, I think you include expectations for second half slides.

I guess what's the current sentiment with the dealers right now? Is Are you starting to see more willingness to take inventories or is that going to be destocking through the half? And I guess what gives you confidence in that second half rebound?

Well, I mean, they're kind of feels like they're a year and a half behind the RV. The RV cycle that we just went through and are now coming out of We do feel that the second half on the marine the marine retail will start to pick up and impact the wholesale demand. But I think that the dealers in general are trying to work through a lot of inventory.

And we're seeing it on the the production side right now. And when it does turn, it really impacts our Marine business positively. Obviously, obviously, because it's been last six months have been tough and there's one or two lounges out there. I think that there's both companies that are really struggling and there's some that are doing pretty well. Considering the environment we're in. So that's kind of how I categorize that.

Great. That's all from us. Thanks guys. Thanks.

Thank you. Our next question is from Brandon Rollay from D. A. Davidson. Your line is now open. Please go ahead.

Thank you for taking my questions. First, just on tariffs, I think recently you had disclosed your import mix is 30% imported What percentage is specifically China what percentage is specifically Mexico. And what percentage would any other major buckets be?

Yes. Hey, good morning, Brandon. So we have not and we're not anticipating to disclose the buckets by country. In our 10 ks. What you will see full transparency here is we we do publish the twenty twenty four ks later this month, you will see a slight uptick year to year in terms of the imports and just address that proactively. It's not that we're increasing our exposure to the international markets. It was more so managing the timing of one Chinese New Year purchases both for 2023 more of those purchases fell into 2024. And we pulled ahead some of the purchases from 2025 into 2024 in anticipation of the tariffs. So net net, you'll see a slight uptick in the 10 ks, but it's not from a resourcing. It was just supply chain management and how we procure the inventory. Again, from the overall tariff impact from what we know today, Brandon, is roughly a 50 bps exposure to the China tariffs that we're working to mitigate The tariffs on steel and aluminum that are global We have pricing pass through mechanisms already in place. With our customers that we've utilized through many years. We'll continue to utilize that And as the administration continues to evaluate incremental tariffs potentially, the team is poised to act as appropriate and continue to look to mitigate those going forward.

Most of our imports are outside of North America. So So we don't disclose the exact amount, but a lot of it's outside North America.

Okay.

And then on OEM revenue, revenues were down $37,000,000 but EBIT was up $14,000,000 Last quarter, you had said you didn't expect any inventory gains.

During the fourth quarter, but it does this dynamic does seem to imply there was some. In the quarter. How large were they if any in 4Q?

Without disclosing how much, we did once we knew the new administration was going to look at imposing tariffs we did do some buyouts on certain products just to make sure that we were covering ourselves there. We're certainly in a good cash position to be able to do that. And we want to protect our customers the best we can can from some of this pricing and be able to delay it as long as we can. So we did do some buy ahead. As Lillian mentioned a minute ago. And some of that came in Q4.

Okay. And just finally, I just wanted to touch on the volumes versus content per unit dynamic this year. The total entering this year, you had mentioned production versus shipments in 2023. Lagged production by about 30,000 to 35,000 units. Where you said production was actually two seventy five thousand to two eighty versus the industry at three thirteen. So by shipping in line with production, your volume should have been up in the 25% to 30% range.

I'm just trying to square the dynamic with total revenues only up 11.5% this year. Could you explain that disconnect?

Yes. Hey, good morning. So really the biggest driver there is going to be the shift in that we've been talking about with the single axle units being lower lower price points frankly compared to the prior unit. So that's going to be driving the biggest delta there that that would account for that?

There's a lot of there's a big content drops when you consider unit that might be built at two axles couple of slide outs, all the other furniture content and chassis content you'd see. I mean, your chassis goes from $25,000 $3,000 down to $400 on a single axle unit. So the mix shift is a big has a big impact on that.

Okay. Because it seems like content per unit almost 17% over a two year period.

But we continue to hear about share gains. So I was just trying to square that. So it's it's just all due to mix then. [indiscernible] probably a couple levers there and then we should move on to allow others to come through the queue. You had the pricing pass throughs, which related to the commodity cost reduction. So that's going to drive the price down, the content value down.

The mix, it's a tremendous impact as well. And that's offset and mitigated or slightly mitigated by the organic content increase. So you had two big drivers down that are unrelated to organic content growth in the unit.

As a reminder, content dollars are up 50% since 2021. So just an easy way to look at it.

Okay.

Thank you.

Thank you. Our next question is from Tristan Thomas Martin from BMO Capital Markets. Your line is now open. Please go ahead.

Hi, good morning.

Just trying to kind of wrap my [indiscernible] I think in 2024, right, steel pricing was coming down, so that was a tailwind. If we start to see sale prices go up, because of tariffs, after that kind of call it quarter to two kind of pass through does that mean it becomes headwind?

Just to make sure we're answering the question, the way you're intending, in terms of a content number or in terms of material costs? Because there's going to be a difference there, right? Your material costs, you'll start to [indiscernible] increases for steel due to tariffs, you'll see the material cost And then there can be a lag of up to one to two quarters for the pricing to take hold. So you'll have a little bit of a lag there if it's what you're trying to capture, Tristan, in your assessment. Net net, it neutralizes, but it can take a quarter or two to catch up.

Right. And I would say too that as steel pricing did fall as you explained a second ago, over the last year, we're more toward historical I'd say normalized historical lower lower steel costs. So I think that the the OEMs probably in their standard bills have baked in in maybe a little bit higher steel than what we're seeing today. At the lows. I'd be more concerned if we were jumping up 20% or 30% on costs and getting back up to $0.5 a pound or $0.6 a pound where we saw some of that land in during COVID, but it's we're back into the 30s right now.

Okay.

Yes.

Kind of trying to get out of theoretically there could be a quarter or two benefit before things kind of normalize, I think. Low end you answered. Yes. And then just typically you would then just one more quick question. The 2027 targets, what industry volumes is kind of underpinning that? Close to, I would say, close to 400,000 unit run rate Okay. Thank you.

Which is pretty normal. You look at the last decade of wholesale production.

Thank you. Our next question is from Alice Wicklund from Baird. Your line is now open. Please go ahead.

Yes. Good morning guys. Thanks for taking my question. I think if I look at your 2025 outlook, the range of retail sales is in excess of the range of wholesale shipments. What's the rationale for the expectation that dealer inventory might come down again in a time when the industry seems to think that inventory is pretty clean To your question, if we think inventory could come down, dealer inventory could come down, Yes. I mean, I think that's what's implied by the range of retail being higher than wholesale shipments. Wondering if you think that means that dealer inventory has to come down more?

I don't really have I mean, it's such a there's such small moves. I don't don't really have a feeling one way or the other.

A lot of it's I think retail is going to be decent this year and we can expect the range that we put out of $345 to $3.6 I'd bet on it. I'm answering your question, Alice.

That helps. That's great. And then maybe just I think you mentioned a robust M and A the market right now?

Yes. Obviously, we crunch cash last couple of years to get to our 1.52 times leverage. We're having a lot of conversations right now We've got acquisitions that were targets that we're looking at in all of our diversified businesses, including RV and marine, We had a couple that we're talking to right now. We're hopeful we're going to do some M and A this year. But it's been a couple of years of just kind of keeping quiet and say the conversations are we're having a lot of them and we're our pipeline is full.

Perfect. Thanks. That's it for me.

Thank you. This concludes our Q and A session. So I'll hand back to Jason for closing remarks.

Thanks everybody for joining the call. We're excited about some of the inflection we've seen in the volume and hope to report a good quarter next quarter. We'll talk to you then. Thanks.

This concludes today's call. Thank you for joining us. You may now disconnect your lines.