Patrick Industries (PATK) 27 Apr 232023 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Patrick Industries First Quarter 2023 Earnings Conference Call. My name is Karen and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

the to turn now will call Mr. over I Investor O'Hara, Vice of President Steve Relations. Mr. begin. you O'Hara, may

Rodino, everyone, morning, I'm today CEO; of and the morning. to Vice Senior joined call Petkovich, President Jeff Matt Nemeth, Filer, Andy Good by welcome on and our Finance. Jake CFO; President; call this

statements. the a call which Certain forward-looking securities the in statements conference Industries control, number factors, its of regarding company's are many of made beyond cause the differ statements results today's operations could and are under events laws. Patrick and described year statements Securities Commission. events in We forward-looking materially the may considered date releases, which There the ended be those from actual to press XXXX update our undertake no and the the and forward-looking Exchange obligation other identified statements or factors made. the circumstances These to to in reflect in with that for our Form these after XX-K our are occur are filings

like now call Nemeth. to the would I Andy over to turn

Good Thank us and joining thank for today. you call the on ladies you, morning, gentlemen, and Steve.

As Patrick and service our and times. and inspiring we want appreciation morning, this customer is our exceptional continued unwavering member's our Their forward drive and goal express through for on team these commitment and sincere focus a take to begin dedication our energizing. providing quality to discussion moment I dynamic of

that markets. Patrick solutions our the make our as developing Through improve in component lifestyle to provider our the effort new solutions Better to product customers, a up and and leisure and continue innovative an drive performance provide us Together that brands housing to practices, leading value and the collaborate positioning best while culture, we to

reflect across our Today our our growth again first our markets, end quarter benefits is and of focus diversification. once strategic results more on the as portfolio balanced

first quarter. on particularly market remained strategy, the the in the made we've realizing which are resilient the marine returns through We investments in this

is wholesale sales this decline first the in RV consolidated Highlighting a XX%. net despite declined the XX% in our shipments fact that quarter,

Our was XXXX. of revenue XX% revenues XX% in the RV of quarter first the XX% to respectively, and and of compared XXXX and first total mix respectively marine quarter in XX%

this represents decline Additionally, first the shipment last comparison a of wholesale quarter pandemic. RV XX% XXXX, tally quarter versus purposes, for first the before the historical or

weighted $XX Despite in net was income of XXXX, this business are earned $XX the and in heavily our quarter EBITDA of than million, million RV. decline adjusted higher XX% when we towards shipments XX% respectively which same more much and

quarter the a have XX% with consolidated sheet much RV first short, our XXXX, was than more resilient XX% unit balance and model and revenue profitable were and although shipments lower in stronger higher business in higher. liquidity. Net our was XXXX content In same significant RV period per we

continue progress, diversified which made significant of see believe will to we even to Patrick's we've build company all While opportunity an stakeholders. we stronger more benefit

economic of younger inflation, the truly out the Although, markets Demographics begun and first headwinds markets remain our have face uncertainty, to our leisure buyers rates continue lifestyle. strong, economic of overall across benefits markets the into cycles. markets from rising leisure having enjoy with been end interest the to lifestyle and

we and promising general for housing healthy long-term a while remains be in affordable remains conditions Therefore, inventory housing low, will Additionally, with demand solid. these temporary overall believe trajectory.

numbers. the to Turning

XX-month XX% approximately on were consolidated a to trailing our $X.X decreased million revenues basis quarter $XXX billion. revenues first Our and

diluted our first in to $X.XX. Our quarter income million $XX per was net share net income approximately decreased XX% the and

enhance policies back in of financial strengthen implement tirelessly growth. software, North our and to and I'd the May share my foundation the worked Finally, to and for like moves procedures, home begins fell of our and stage chapter his significantly and as best well-positioning appreciation heart wishes Jake Carolina. he sincere processes, next overall to to us career He next and

While disappointed his depart, rate departure. and is team the together see will first after in continue continuous place leaves he toward to him long our we improvement are to work

begin finding as in are is we permanent we growth. the our next right abilities and individual find of and the in and both [indiscernible] interim we begin next CFO challenges opportunities the process on our take As the will that of expertise to ready phase that who confident come the we

more provide end the our turn now markets. who the will quarter over call to highlight I'll detail Jeff, and on

and everyone. good morning, Andy Thanks,

rising consumers has mentioned, uncertain across rates. demand As end heavier sensitive all to interest the environment our more on impacted economic with emphasis of markets

continue in diligently customer our needs constant our production of partners contact all markets. in and in remain our manage and these our We schedules business across flex to alignment with with

XXXX. RV retail registrations decreased units. by XX% first Our or dealer estimate volatility with levels. tremendous of We match most OEMs scalability production their from units quarter the XX,XXX quarter unit as first utilized wholesale inventory currently wholesale has market to experienced than approximately shipments of RV balanced of XX,XXX the XX,XXX more

As work larger as incentives based year. model a we are year the they themselves XXXX position than touch for selling model points back the half of to through the utilizing believe mix in on optimal into head dealers units year our change the the season XXXX upcoming we of

of a in X,XXX we the net to imply metrics inventory approximately units The quarter. have outlined dealer decrease

half quarter XX on Our weeks. hand that back of weeks weeks at end at XX levels the the approximately remained inventory in first the the estimates have XXXX of of with XXXX dealer to beginning TTM indicate consistent

four of below on the is to new XX potential weeks pre-COVID last level This for based historical approximately implying inventory a weeks levels quarters. XX trends normal

Our $XXX our $XXX total. of first million million consolidated from decreased XX% RV to represented XX% and revenues quarter

driven XX% a per market to acquisitions. on TTM basis $X,XXX content unit by RV gains, Our and unit share pricing per increased

with hand. side wholesale through our reached the are XXXX Staying or in remained dealers leisure as general retail Marine resilient inventory quarter reaching lifestyle. of business first The and of has have equilibrium basic on

half. as wholesale shipments approximately marine were the that range were approximately to unit units XX,XXX we quarter units. approach XX,XXX in year balanced to spring are We selling the estimate model inventories shipments in and to dealer the down up on of believe unit a further to retail XX,XXX season We second XX% XX,XXX XX% change

Pre-pandemic XX% production XX% produced XX% and spread seasonality the of units units produced the half of to to XX% the the of half year the in between year. generally was of first in back

to balance similar levels as expect cadence We demand. to keep in with fiscal marine continue OEMs inventory XXXX with work in dealers consumer

first marine market million share Our consolidated our quarter increased sales pricing. by and $XXX XX% XX% acquisition, represents driven which XXXX to revenues of gains

to of a OEM-focused Our marine upgrade to growing complement an products we replacement. where customization, and our aimed business portfolio offer is expanding aftermarket array

that to the significant much tap the allows boats and base cyclicality, lower In annually, margins market us higher generally hands used boat addition new to on than a unit market of aftermarket change larger basis. a into is that a

to estimate weeks on and Our on increased TTM a conditions. to unit. estimated fourth inventories increasing from quarter marine approximating approaching basis or weeks marine weeks. unit $X,XXX content hand hand approximated per to on We XX% a potentially are on levels XX economic Pre-pandemic the average current has dealer at based XX overall XX per has new wholesale XX weeks normal

first about and our business is XX% MH family, and and big of XX% declined single- multifamily which XX% starts of for primarily and down side unit manufactured the wholesale X%. increased decreased were approximated multifamily split housing residential box. multifamily single-family, starts quarter. single-family quarter housing to housing in big Total With an the The tied XX%, estimated MH box. an of starts XX% shipments

and XX% in our $XXX of consolidated to sales. million Revenues housing represented XX% market decreased

increased unit to per XX% TTM content MH estimated Our on $XXXX basis. a

will sequentially housing relevant Although remains a units consumers to quarter in OEMs quarter, higher highly and in manufactured believe rates. as improve grapple site-built we to with the viable remains alternative a that second production shipped and interest fewer the we expect cost-effective continue first housing

to efficiencies and On the and and our we processes how manufacturing the front, environment. enhance compete infrastructure. it innovation, continually boosting recognize technology our We improving in relevance invest in can of continue any automation are exploring our and operations ability to

We implement to technology satisfaction keen cutting-edge eye of our improving members. efficiencies and and with identify our the an are team towards

utility with end of and better directly our their to understand engage customer to consumers ensure satisfaction. continues and team on and RVs innovation preferences focus we Our needs

markets With continued automation in we come. and position for success and serve, will innovation our us leading investments our confident to that years culture of in the embracing we remain change

that an our efforts, of benefit our in example from those innovation systems of robotic As would deployment our cobot find team Patrick Brands to visits facilities.

labor integrators robotic output, We engage find have collaborated ways efficiency improve multiple safety, to utilization. within regional with to automation and applications organization our to with

interior of opportunity an recognized their RV major complex, for manual cells. and marine of automotive drilling the manufacturers and exterior One our markets, in subassemblies

efforts improve manual there like to operation. robots eager of robotic that control to remains efficiencies, precision upside from and throughput significant solutions cell their the consists and to The team high-speed complete our universal believe safety. implement We previous remains drilling these drill motors two

our flexibility will We with continue of our customer operations and needs. focus in to on scalability alignment

We to value aligned allocation return on and our our are business, capital return drive to in capital reinvest on strategy shareholders.

strong strategy end markets. our acquisition growth individual Our members, brands, and outpace brought team premium products potentially high-quality our has allowing to us

We and when market are flexibility ready business change culture. conditions and and prepared to and pivot of model our resiliency leverage the

chapter Jake career. great like you Finally, team for I best past years. wish next was you contributions X.X and over personally the to the the would thank his with to I tremendous your working our It in of

provide will will comments call over I our additional Now financial for turn the on time, Jake, who last performance. to the

good Jeff Thanks, everybody. morning, and

consolidated quarter $XXX Our net million. to first $XXX XX% or sales million decreased

inflation impacted significant level by production. economy and reduction and rates of markets addressing through a with the rising demand Our a were all softer interest RV OEMs end slowing retail headwinds at the in

resonate marine by markets. Jeff declined RV in offsetting As continued our declines revenue revenue strategy other the our partially to and noted, XX% increasing our diversification XX%, while with

Our housing XX%. declined revenue

declined production automation XX.X%, contributions in as the the and portfolio by the Gross coupled our realization decline RV diversification, shipments points was negative and the partially and initiatives. impact efficiencies margin of labor significant recent XX of acquisitions with of offset basis MH to

basis increase Warehouse the X% acquisitions. of and sales due a XX.X% to to due expenses for in in increased of sales, increase million and an to quarter $XX absorption as increase XX% amortization due our overhead, XXX distribution to in of basis expenses delivery operations. but SG&A declined XXXX XX a points primarily primarily in million QX Operating first of reverse percent $X points, were expenses

reflecting SG&A sales, recent as and increased our of mix. which higher gross percentage investments XXX carry a a points capital generate but also acquisitions, basis human tend margins, in to SG&A higher

SG&A Excluding on XXXX, SG&A the of included year-over-year. flat million of first quarter property essentially gain sale $X.X a in pretax in was

XXX Operating million, point income in the leading margin, primarily to factors driven previously decrease decreased by basis described. a $XXX operating

value long-term infrastructure operationally automation and operations excellence that automation, our and drive These insight our to to IT, invest as our initiatives enhanced technologies and improve to customers, while both to several We providing are provide continue efficiencies, ability administratively we cutting-edge our and in to streamline key bolster software and to expected and efficiency. shareholders. include leverage analytical seek initiatives to

in invest our to success. continue are we human capital pivotal also people, and our initiatives to our We training whose talent, committed culture, and to expertise remain as

XX% decreased net and equates $XX share. per Adjusting $X.XX. impact to which which X% notes, income share were our of adjusted fully diluted the our repaid Net matured million, $X.XX income for per convertible was to diluted February, in

related full which there year one our of no remainder adjustment, EPS will month these of XXXX year. the notes to from for the impact Aside the include will results, on be

tax compared to the in first quarter, Our overall was XX.X% year. rate prior for XX.X% effective the

share-based due low tax compensation, to to overall Although the XXXX tax approximately was the we to XX% of be continue for our benefit effective to XX%. first rate rate expect quarter

Looking prior operations used the in approximately year's to $X used compared $XX of in Cash in million approximately was flows. at cash cash quarter. operations million

on monetization a the working seasonal alongside cash. to We net of of collection focus of receivables continue in use resulted the Reduction timing income our capital. of the in

focused production, cash year and remain prior in inventory reducing inventory on outflow year-over-year levels X% we've the the the basis sequential on a our XX% note reduction is Given versus operating million seen down and to $XXX period. well, we as

capital which long-term automation, in In structure, $XX we boost invested in plant allow our variable $XX cost improved drive expect will us on seize and to equipment focused and have quarter, We of million to $XX efficiencies. million property This to XXXX. continue million tandem to highly to with will now growth. our on spend expenditures opportunities purchase investments intended

with a capital We focus well-run the that growth evaluate deploy and quality on continue continue to strategically champion to spirit on opportunities businesses to entrepreneurial and focus diversification.

in for us health the $X of may quarter to Our a strong repurchased acquisition to financial actively favorable quarterly of million total opportunities softer XX,XXX shareholders $XX valuation explore dividends. shares as lend million attractive allows approximately market the scenarios. and itself to We more a form in returned

comprised first total million. quarter, facility million end revolving net our of approximately hand of cash of capacity $XXX and million credit $XX the liquidity on on we had unused the At $XXX of

Our X.X total net leverage was times. ratio

major design, enables hard In us have addition, and profile environment We've uncertain liquidity through worked capital debt we by maturities XXXX. robust long-term no to structure, confidence. navigate this to until with the which build macroeconomic

to our to while allowed invest changing customers, quickly business has adapt being meet needs us flexibility the able of financial in Our still our effectively. to

long-term flow value to conditions. to a ability performance our to Our for commitment is and adapt cash changing long-term our to our shareholders testament market creating

Moving to our end market outlook.

seasonality appropriate economy the normal OEMs interest coincided of a macroeconomic are slowing our we rates the persistent to consumers remain on period by has to with channel as RV, dealers inventory fourth and continuing impacted quarter call, inflation. and with return the in industry's Starting noted As effects to work of with uncertainty. keep higher

is the start to registrations, parity sign. in means and remain off both OEMs remained wholesale and year disciplined for Although their production, slower close which positive a a retail wholesale have retail shipments to

approximately estimate we be on year retail will to XXX,XXX XXX,XXX XX%, down implying currently units. approximately RV to full XX% Based trends, recent registrations

consistent Assuming XX% shipments of wholesale XXX,XXX hand dealer implying as full estimates, from XXXX. discussed XX% unit current of decline approximately units to our remain a weeks retail XXX,XXX approximates XXXX year this based RV to on on Jeff

to low low will market, dealer to believe double-digits, continue higher-priced XXXX calibrated with leaner In single-digits categories are down inventories estimate be be generally We our high we wholesale Marine double-digits. on retail with retail inventory. Marine to down shipments

XXXX of On XXXX the In side housing production double-digits. residential wholesale for low housing expect expect market, be down end to retail absorbing available the will starts business, a MH XX% be housing real-time we wholesale we XX% shipments sales our on to new down basis.

up, our outlook we've on adjusted market wrap the most To end based recent trends.

for the the trajectory progress current to selling are we season our environment. end clearer expect to We markets as and and as year calibrate the the entering become XXXX financing retail through consumers

revenues We continue to XXXX capital million full year in excess resilience estimates. the current working relative $XXX which flow and is business year be implies of at our free CapEx generate $XXX will marine business operating to cash to over X.X% or estimate with our million aligns based our margin on expectations to cash expect slowdown. X.X% the flow Key between of for of in operating this RV our these RV as

Before Andy, Q&A, we to start like the the I'd and Patrick Jeff share to family. my entire thanks

has tenure working I While my and shorter than people I expected, brands. its the enjoyed with been Patrick of

facilitate as my them in to the highly in noted upon with and smooth to the a Matt confident assuming Although will will I'm continue we will put of strong and together place. confident be we've my the in interim May. have I'm chapter be role collectively next Matt's CFO begin I'm our very team's that abilities team departure done talented and the of working later work Feiler excited transition. career, that through

That my completes remarks.

ready for questions. now are We

Thank [Operator take Securities. first we'll our Daniel And Moore Daniel. Please CJS you. go from from Instructions] ahead, question

Thank I briefly I'm I'll help. you. by well. bigger Jake, for do help best just morning. sure of very very luck saying the thank Good much appreciate brighter. extremely you on and all and you'll the to start

walk continues unit volume to your see going with growth on forward? high-level growth me down Thanks. Maybe look acquisition, per and expectations start the across break starting organic gains content for in a RV with terms between pricing, through question what and growth healthy the board. Let just segments really like

appreciate agree. unit. seen It's We've in per growth Maybe there. content words Jake. -- the the our kind absolutely at And Hi, great I outset I Dan, thanks.

in just unit top very we've generally Marine, creating well strategic And towards As a overall $X been that and about line you sequential which shown as to year has and content per speaking our of experienced of. across last year-over-year a our very, growth as for and with end that Marine. business market lot markets revenues know we've in proud acquisitive specifically lifestyle purposes allocated spoken Marine business with we're we our leisure RV really directed capital billion as

to on take change shipments quarter-over-quarter significant back the the case. lead a we of indicated marine half about into but components on maybe this or our and step in overall the a in the over bright to up markets down aggregate most we you start with piece basis which across from it basis decline talk little a the buckets in on XX% of it think then growth of our usually so a wholesale way is revenue the So highly to in whether the XX%. way most on the down about is that RV end falls that spot or When and speak which change cases there. growth publicized down for related industry way net bit But and industry

Organic, our still to unit. see content per and resonates it through continue it

very focused a expectation you exceeded on years. growth of past As our have something couple X% that's and been that of consistent we're X% number and we've in know pretty to over on occasions of the

in the taking satisfy and on markets. gave the and down some this needs share us all continue grow only supply we across to and that inventory be that to of products provide have related and that quarter gain working in some of make chain partners are X% issues can sure strong even to ability customers to with we've able end to increased closely our customers' folks banking away with invest foresight though rebuild those off maintaining and our our a our liquidity our our we is really paid in but and we to position markets And that working to them we're from ahead capital

we've bit than over a time. seen growth, lighter little Acquisition

been you a As know, it's little quiet here. we've -- been

You that's and in others of still have Rockford rolling X% growth. Diamondback but and the

for on down, in basis. X% a a quarter-over-quarter on business, organic, up gets X% around, on just our around net which back bring So us that down up XX% it's industry XX% acquisitions,

bump you're at When the to in been these the a and as level. Alpha of RV over ago content I a here, we share and meaningful higher most that is think that acquisition content the mentioned unit typically per acquisition market gain down on Certainly per year content aware, per unit. probably as stay about comments lot of Systems, like basis unit don't well I a components about has the break to

it's doing then offerings share really, gains But pricing but mission-critical that about have the and taking we've products, partially customers. experienced we use, partially, our innovation higher our commodities, underlying feel best through just better our maintain better better higher stabilized and which to through to

Marine the activity certainly a of On side, acquisition there. lot

over to end XXXX leisure, gotten, CPU. forward the related some that's weight in continue time pricing that's acquisition a for towards of growth and share of there the that we've I billion across lifestyle revenue growth commodity and through of markets industry, the we $X and the our marine business But specifically made, move portfolio some frame. couple as of the and it our -- growth. greater rebalance primarily XXXX spanning of And time a overall have the up plus back kept a revenue to inputs, to of think ahead that bit in of little years to acquisitions over contributed contributed that's principal and

a a RV, to housing, and our of contributed end given few staying a a other lately, really related maintain whether having products, seen have markets the there activity But gains, we've now from here not solar lot there's well side up worth ahead On that or us materiality lot growth and inventory ability and share, CPU whether in side MH. that better a innovation across acquisitions technological lot marine mentioning. as or in to of finding to the little of of the a the here better share housing the our share build gain the then as there the and of has or lot there and tuck-unders and perspective housing not really products as business,

couple you've stone, which And color. killed very one with great That's helpful. a is birds, of

in seeing how March, the is year production QX of how Just relative April levels talk updated remainder that. appreciate your forecast, just about up Thank for and OEM kind to shapes color the of full terms of I shaping into QX. you. expectations the in of terms

Dan, is Jeff. this

move quarter weeks, we flat. stayed of and production for off But system dealers rightsize through relatively week as now shutdowns the March levels there an As seeing the really are year. their those into end we get through through We're occasional far see here OEM. that kind prepare of that or model as as for work April, an trying second XXXX the XXXX really to still four-day overall, three-day continuing inventory,

some So, shutdowns pockets in I to they continued as think those keep try we'll inventories line. see in

in held margins. for declines. looking Still RV last margins for shipment talk of And out the in terms just jump me, the Perfect. about just gross QX, I'll but X.X% Maybe up year. pretty despite X.X% nicely at

Your and relative those outlook operating QX levels. of again. gross QX operating margins, Thanks, for for -- income to margins kind

it's again. Jake Dan,

levels the at have production nonetheless. our on of a reduction is we relatively which greatest So fixed which the least the as of that picking where cost of that cost a of pretty we fixed at a gross about little great a previous like, balloon I end kind of have side Marine some bit against talked some our gross we're greatest base, profile bit losing calls, the of where that principal side concentration feel a but question. our And change of market just gross or typically we squeeze -- the margin mix, in absorption appreciate base due contributors, modest and just is RV little to resiliency one is in business, up lower that despite line. lot margin RV, meaningful we in margin And still we've

materials pretty that that, basis to think margin, ensuring basis. contribute helping holding of the well hold been quarter-over-quarter on and at these commodities the XX that what's talking up, customers down in we've cost with In partnered of about on our think to points -- stabilized we're product rebalancing inventory is we're kind I ability that really line and is some And and our to a gross pricing. our things of about

labor at where production intermediate we've to is bit to a little type A the of term. force side executed lot encounter rebalancing labor encounter activities to we savings the and the and cost over near our expect

a So, able up years hard really we've labor mitigate past the it to spoken to with the money slog over build automation that we've was of force couple some our spent even were on about. though we budgets pressures those larger the with CapEx of

that and But and starts starts on to of our new sure we're still fits we needs. that see spot as meet labor make some some make model to customers' in of want sure and a we good hang to build to year the up and continue

little hotter we some more to overhead on perfect that otherwise labor little of a related bit we is saw -- basis. business that decline been that if were apples-to-apples do might absorption on a the a rightsizing bit on and So we than

SG&A lot years. the SG&A operating over of talked We've years. investments a the two We've over the lot made two past as past Gross about margin is from in costs trimmed of also SG&A a we've past. in

basis highly And a basis. it's on $XX and but creating would a $XX go-forward annualized stronger on of an about you kind annualized leverageable an infrastructure. million million It's on down better basis tell I up and

side that margin down resiliency the trend you're at the between top we operating as up what we're differential that's a margin the at that that's margin bit pressure and little gross But side. on the seeing line where giving

we've deliberate the and trend infrastructure through once and we all and as cost ensuring again back business uncertainty. support structure this the period those we're we macroeconomic of very to this planned But in that's investments built get up

-- about what next think be similar same to very of story to first I it's quarter. saw going think quarters a in I couple you If the the

with we little in into for a came February. a anticipated somewhat out than First even quarter that particularly perspective, from the RV, some production into shutdowns December brands January slower extended and

and working Folks a got the about running with moments his the like ultimately in on guidance our business. are XXXXs as and lot those we're ago up XXXXs Jeff look what thinking to We've just what some But as schedules mentioned. accordance that production means back well. few through

And working here our of production real still X.X% would the I first towards the and X.X% expectations tight as it margins in and that mentioned but for operating remarks target to prepared feels quarter the margin tell those we you of year. with of

Extremely you week. next Thanks again. luck. of to helpful. see in best And New Hope York

Sure. Thanks Dan.

from question we'll next you. Thank our go Please from Scott. take And Stember Scott ahead ROTH.

luck Good morning echo working guys. of your great the questions new with was all comments, in Thanks I for you taking it Dan's Jake best my and and opportunity. I you wish

Scott. Thanks I appreciate that.

there face really June. I'm May there. There's out down just to starting some curtailments and trying is there out inventory dealers excess commentary about to drill to XXXX how still much in

your are was points hearing you. through you Thank I guys the from logistics through wondering dealers? So, touch what your just company,

far even among varying XX%. Really discussions of We've OEMs varies. varies upwards XX% it XX% as it XXXXs. Yes, heard with to of around maybe inventory have they as alike and to what type regards from dealers

line So, product on really it's is dealers and something really itself. that the the dependent

very with I know OEMs get they're working hard product. through diligently the to that

like the on it where that on really they're in feel that production model XXXX need to in I make new down focus XXXX really get bit that be alignment they so to not so into they a XXXX can little coming they up really bringing July. think sure the anything to going product they lots can slowed the year that's

trying very side, this some customers' the how chain your supply of organic work environment in of is sense just of on of then And being obviously, to how stuff much from through it. that Got X% within X% the coming is get is through range inability and and that? it to But it a to much crisis impressive. just like innovation

Andy. Scott, this is

brands is to I been bring customers to think between one about like environment organically. business excited our we're this things our really an we've especially really able that grow the to and in that of our solutions work

some the that we've that's date price new business have innovations content. our as there's bringing the fabulous. we've it been in relates been that on that the numbers bringing not rolling only solutions we've through able the because to to been bring TTM product been to So, opportunities But of

And after there's share then customers. out opportunity able to be look as we still there go our significant to with forward organic

through a disciplined be our it very, relates that bring the balanced value the we've here all very as pivoted certainly we we think to little kind focus of focused here being we've inward and acquisitions to on and able see of and our opportunities And kind more kind bit to more working have as of to customers. to and market and

that. So, organic transition our reflected a to which continue. think it's it's And numbers great expect in we I been to

The to the year, full All function number question to margins. right. then or that the And on in worry is trying should about for last towards the there I'm figure rest any maintaining next the the just that step-down the of for we out X.X% X.X% ramp-up quarter that year. two?

Andy. is Scott, this

see X.X% QX. to QX in of looking back I and we up and a in QX and into of look at of of think would as lift then estimate QX, full resuming normalization we kind X.X%, we're expect QX to to kind year and QX-ish some margin

stabilize. line So we've to that as coming next quarters, of in a lot of things relates we the it couple think seen about as commodities with just

would then to margin rise Our but QX to call the that's execute to typical and we've normalized in QX, I be on QX automation want would -- that expect coming levels. normalized, see the ability And we where done, more don't seasonality back to QX. it initiatives

Thanks have. all it. I guys. Got again That's

Scott. Thanks

we'll question Please from take our go And Zatzkin you. Thank KeyBanc. Noah from next ahead.

taking for my questions. Thanks Hi.

it might have the on hearing I March as bit terms in color to out on touched as And be in this are of or April would to relates shook little But a retail? kind seeing I think XXXXs. what you of touched know And relates of RVs, on lower shipment industry you in how there? it any you helpful, side. terms of outlook the kind

as well be on could target you flow operating cash color And inventory provide year Thank as any you. for then, second the cadence that helpful. if would

I'll start. is Jeff. This Noah, Yeah.

would touch country. hearing our traffic On remains it's positive. varying. and dealer-to-dealer pretty from again, the side, the throughout the retail I points, say, We're

change, lots. really out it being units the can as And where of speaking good does out for there. retail to eye the positive as but that shakes it vary far mindful we're Weekly, see on on it. very a And relatively But looking out. people keeping

and -- I OEMs seeing and the from is kind we're that of the that April. kind out fact really in between the production it's March think that flattened of reflected April and levels really

continue that pretty we'll on where keep brings and So, a eye retail the us close to see moving forward.

Andy. is This

field. are think out utilizing I you the in that's we think when tremendous XXXXs, their I inventory scalability look at as OEs about the really manage think it the to that

post-July And make look expect Xth QX, shutdown. very OEs to as would they're the positioned to production that XXXX very we at be we their see continue season sure disciplined model to the in for well

it. about thinking we're that's So how

we aggressively are think is very how the they them OEs their out calibration at about That's I utilizing that's managing QX again the good point think They're about mix scalability. that think so of XXXXs inventory very, it. as there. that

So season new of is model to July I that forward looking kind for everybody think XXXXs. the as

Noah, Jake. Hey it's

cash step in flow on me the that you Let question inventory had.

hit a in we're last production the where then year point spoke an we inflection levels RV. we the where about deliberate So build thinking of normalization inventory and the about are lot particularly overtime

see for another function wholesale a comes we our it range somewhat as of is down this our for but of expectation bit to had step RV you down shipments this When And know, year. expectation year, and our between in showing the inventory, of inventory. up out what balance we on in category XX over a inventory can from taken as what's you of sheet million have $XX we've now to December prepaid

of hard raw good working form products. of the XX% as and we the our on some a a we cases in through what put us feel purchases is we business our the we can pretty eliminating So racks distribution in the lot of on continue it our about which and purchases materials to monetize slowing have, just in takes monetization, where those position have about businesses

comes our various RV while kind that the spot raw shipments for as true great materials on serve commonality level traditionally weighted drop It units of across up where raw outlets, great of As housing that the sheet, this well. some see in you it us seen business lot a us side we're you'll There's which which end wholesale a of we off raw to some marine are balance our various and we've demand when on towards our there. they side gives we as at on still note, and persistent make the materials markets. are side out flex puts look materials and

a mentioned When cadence you typically burn looks and our much is that statement so I a how of we're and we're in as think flow cash cash was see inventory the than working where year that ago consolidated quarter quarter. it I speak same this $XX I is down can building capital million lower to think our about that

year. to monetization to expect inventory expect inventory cash quarter Not quarter generation third fourth We weighted Noah. through of happen from through in accelerate it towards sheet the really that balance and see and second that to half

I then of from in of million the as $XXX to remarks, mentioned expect prepared operations. a to lead flow we baseline And cash that

might rather million our on the on CapEx of So on a opportunities mentioned to there level the the -- cash year-over-year that production thoughtful shareholders. operations. Andy of business spot basis our acquisitions puts million perspective a free invest top balance line from when flow that to target to to pretty into be be the the for CapEx significantly $XX and capital cut reduced up sheet, us in flow still about that beyond from we're And expect even expectation $XX cash business an cash address great in flow to continue add a expectations to you or to and always return great being where either impact to the -- we on

on good XXXX to allocation to well-beyond. and strategy pretty through expect in execute capital continue our be we So spot a to

Very you. Thank helpful.

take we'll our And Please you. Thank next Baird. go question Craig. from from ahead, Craig Kennison

I I Thank working can of any a shed M&A pipeline? taking you about question, broader a Patrick the your opportunities, my guess, whereby, as you I you had I as focus on maybe drive Jake then good and been expertise brings some table to than think and to you think pipeline. just before wanted manufacturing more can as automation, of automation as on Hey, a you morning. light -- a an of whole as synergies And with do all entity buyer more M&A these maybe for pleasure some you could your well. guess? the expertise more question the ask you with it's to

Craig, this is Andy. I'll take this.

certainly that are it our M&A as the deal external relates in But and it. that And at making the that On pipeline I cultivating flow continually down sources the uncertainty very constantly are out, we pipeline sure would coming market. from we M&A potential we opportunity to in our slowed we're disciplined. I today front, think say being with it look has as

full We've to and on. of got pipeline a plenty execute opportunity as usual

as opportunistic mentioned. we're to I we as our as and being think that look as well want sure of in we acquisitions capital Jake markets, disciplined make deployment the at our

capital able to feel marketplace. returns we're come execute we the best So to most good opportunistic the value that this other deployment well drive and be in on like in to of as as -- spot acquisitions to forms a the

opportunity model. to continue on So to focus going staying overall. the good disciplined. we're return and we feel We're There's plenty of

as value my more to on at drive think M&A customers do Certainly today. at we brands, a the the we I that without see Patrick's independence which jeopardizing you amongst potential individuality We're answer and with them we as the so I are have harmonize question bring today, bring We're think there brands tremendous would that front. synergies buyer work made that special. internally be can and our look our can on without value. to working candidates to doing of where solutions to where

in that when really IT take our spot overall -- does I in believe and advantage are I So we made market off infrastructure, us believe in for able be good automation, We making it's we'll the of leverage feel that those investments positioning investments. and an today, a we're to like very our in that well we're our pivot. the

have So overall continue yes believe Patrick I a solid overall. as the buyer drive a proposition -- a but we also value answer as we to is

much. Thank great. That’s so you

[Operator Bank Please Instructions] Jadrosich go to of Rafe America. ahead, next And from Rafe. go we'll

bigger your side terms financial financial opportunities any -- of you ask related of Jake, from about about to what question Hi. chain, luck tighter create Good going forward. stress having on you're of challenges potential picture and you're potential credit like morning. across Thanks they're in for I what taking competitors? my the dealer wanted best to a if question of just hearing kind both terms anything in value on then can issues? about And the of hearing sort

Andy. Rafe, this is

general in as is but hearing just think are hearing we're a Certainly side environment today. retail seeing available lending not as Retail to that financing the not available. relates platform. tremendous pressure or and constraint we I rates across overall, are on financing higher it our is the really

the the of go land. matter the and used We just we look consumers kind of normal forward. of it's a getting really new new to We of environment where kind believe could rate normal kind as at

to we're relates seeing what it out pressure. that's think as today I there of sort So that

From really we're be as and really I to relates able our spot. a an spot. there. opportunistic good as financing a in liquidity sheet very think our a perspective, to good in perspective, positioning fabulous we're to of positioning opportunities balance done internal are be well, that from really, really it Jake's But a job structure

at we look cycles financing But opportunistic through going advantage it will again, to there be feel got in been our the we customers these think very out But opportunities where position overall, So overall, we resilient, as some competitors relates and that pressure we've there as play today. I seeing financial markets. way. of advantageous an our take create we're that think we could the we're stress with amount our we've sit overall that And today. are in of that that come environment to not a tremendous remain before. like we markets the And I it and

then Can a it like remarks, channel little just are growth. about on the color on mentioned margins a the very give the segment then initiatives in -- bit opportunity just in Could And you what interesting like just the helpful. sounds super you that That's bit sizing little in Great. for marine. you prepared more opportunity compelling and aftermarket spoke give a there? your

in the great description help that a for now houses Yes, out service that or lack Boat appreciate I RV running the the our vehicles we and able benefits manufactured levels the them that sure end housing of the all bring well that with OEM as the of of to as focused umbilical Rafe, cyclical connectivity Jake. ensuring we level park, we that our it's about have very have as out of these I otherwise. to and guess And with there's something on think years customers, couple lot we're to park park, want while almost there and better aftermarket pressures there to we it's a connectivity and make record markets can to question. production And great across

always spoken plus minus aftermarket or $XXX in little When pegged And we've around million revenue. basis it's lower our about past, run would annualized rate actual that rate a the I of we say, a as on bit we've exposure, about think today. run

XXXX. whether end kind of auto few lot complex years, aftermarket us markets into a about global If through for you for or it XXXX December otherwise momentum the the over had of think past our

aftermarket They A own lot things that spending, of time speculation who that of time The some in at type doing Sounds Rockford meaningful and was to from folks do. well, time are the significant by work. investments our of their invested Fosgate, Wet aftermarket were they through busy do participants stimulus And installers home. were and working that fueled had as since mechanic Sea-Dog, channel. we were kind that more that

something and for through end just cooled level. normalized. lot mentioned, of off see kind to $XXX business bit But that's strategically that of pretty a little under it XXXX we we into when markets million now, take I and us think that rate is and a the as Andy categorically normalized to deeper that product run opportunity base little our Aftermarket, where say, And would look for it's in in a installed And it's us. about again, there. exciting across of penetration bit

of it's to that year hard years XXX,XXX we out do there a that implies When to and before from it's which market, and if to an whole in about RVs that -- just market, there, had you addressable say that the how out we folks one million will touch quantify you a there's lot but follow that the years through -- think of can were boats aftermarket.

in time So, before of hard be up will us those actively. to have and quantify rate that we It run what so it is opportunities in front but space. much looking a long for we're ceiling we against bump the

and the margins products. You T-shirts what value-added see little offerings commoditized into going lower TurboSwings, it's distribution things typically direct-to-consumer perspective get many forth, in an goods, on than we're Sounds are that, the products like so if for be asked product bit about course Fishmaster trafficking to koozies as consumer. Sea-Dog, The you on in you're typically those bring our our and that But other soft profile it's better depending the margin so OEM offerings to from one-step to and Rockford Wet cases things looking of a beer -- like or margins.

want up really on to Wet we also to there sell, only but spend want put unit. the boat that a the they don't not to whether -- you us speakers to type code, their some end or think across it bring them R&R add Sound and when -- on a typical see or tower about it additive but a they someone in to very of that running has really from Rockford go that contribution, look we and it's put new markets as buy or in want its to housing basis to that it our margin So

focused stop disclosing far benefits us on these seen think about brings so going that after what probably and know like we with investments. profile margin it. We're market but lot we've So very it. we're We the of that's absolute how short of to there's a

force that, And kind a -- how was more That's want just your follow-up the of recovery? difficult this cyclical just where the really a having curtailments I sort pulled think on helpful. then to back perspective to through find comments we overall about to pretty the much relative helpful. Obviously, the everybody or Like, and Just turnover downtime it there of not with And one healthy. went manufacturing be downturn period too managing but level. like has would labor. a do eventual now labor you're is is labor during any you lot the market generally how managing job

is Andy. Rafe, this

feel we levels at about engagement our really think we've core look I and culture. our organization as the we got in talent talent good the in that the

fun think I are got aligned. great players much hard that part our with is and very We've and to team some work chargers be a of.

the talent culture the the and overhead is about So so feel our and kind there. opportunities business. good just managing there. the We then out And development about business workforce team not labor a of good foundation labor side has engagement really the from variable issues the done of of seeing job mentioned the well side as and as that's tremendous of our today. on We're you

to great matching with we're labor a doing sure, demand. customer flexing We of make are our job up

and incredible to supports continue front on engagement focus here. runway the in talent just and And that members focus think as we've team there's planning again, got think an we that we talent I opportunities and of

overall position. a feel good sit labor from we where we about So

of great tremendous that members. a done job remain has engagement something team a focused of amount with our but today flexing. we Our we're team seeing It's on on not pressure

That's helpful. Thanks.

question And Davidson. we'll you. Thank Bryan our Please from ahead. D.A. from go take next Griffin

Thanks, guys. Yeah.

currently We've overall one then holding and retail at. guess of marine we kind And May? I lagging had is into just OEMs currently you morning. are from dealers as So what then me. just categories can which up news negative of ones about maybe best? I talk this where some sense your for just pretty guess head are the And

-- Sure. I'd mix we retail sell of of do just it fiberglass, and what it look the at mix of wake pontoon. all relates to let's saltwater, aluminum and ski got marine, we across of components the kind to We environment This we as call our we've concentration say heavier spectrum a and is as than Andy.

And resilience fiberglass freshwater the we as still today we're in And there so market, well market the the too. strength see in even market. seeing saltwater

bit So higher-end a geared our -- little boats, which is mix I remained the say strong towards solid. would of the have and

we mix to inventories. they've out there it where as and we as today the are historically. we're in retail been inventories feel fall off And about good that's lower dealer expecting sit today. a to cliff than relates mentioned To-date, about talk fall we've think and be our will we've in softening market not I year balance retail. estimates do which expectations full into that built seen overall But our on model. some for tremendous off there think Dealer We there's our as not of pretty we've

more no I'd to And questions time. [Operator are this the at there call to closing remarks. Instructions] like Andy turn for

which we everything we as navigate guide to products values services do. providing and conclusion, committed us conditions, Together our the market through these of we quality dynamic In remain Better goal our in highest

diversification in strategically invest our will success. We pursuing to driving business our and ensure strategic continue scalability, to long-term

to resilient pivot our we year has over value challenges our deliver and the the confident term. and withstood shareholders to in the long ability model of Our past business remain

to We forward to create value who our joined has everyone for look continuing today, and long-term thank stakeholders. on the call us

today's and We Thank for you conclude you. Ladies gentlemen, thank this teleconference. does your participation.

time and at great day. You lines may disconnect a this have your