Lillian Etzkorn: I’d say probably the biggest delta from the outlook that we had in August is the sales came in lighter and really that just dropped through to the bottom line and is the main driver of what you saw from our projections and the soft guidance that we gave. And I think overall the business did well in terms of the overall performance, maintaining the margin, aftermarket especially strong. It just was a matter that the volumes came in softer than expectations.
Jason Lippert: And we’ve been working quarter-after-quarter after reducing some of the higher material costs and freight layers we’ve got in our inventories. And obviously, the slower the volume moves along the longer it takes to get rid of that, but we’re slowly chipping away on them.
Michael Swartz: And then just on the quarter as well, SG&A costs were kind of in line year-over-year or actually in line with the last two years yet revenue was, I think, about $200 million lower. Is that a factor of just business mix, are there investments that are going through there? I’m just trying to understand why whether, I guess, there wasn’t a little more leverage or deleverage on that line.
Lillian Etzkorn: One of the things that does run through our SG&A here are the transportation costs, the outbound transportation for the aftermarket business. So while we have been making, I’d say, really good progress in terms of reducing kind of the G&A elements of the SG&A with various reductions and cost initiatives, people initiatives, et cetera. As the aftermarket business has increased year-over-year and continues to grow this year, we’ve incurred higher transportation costs and that’s really a lot of what you’re seeing coming through that line.
Michael Swartz: And then just final one from me, I think, you had mentioned for the fourth quarter you expect net income to be positive. Obviously, there’s a wide range of outcomes there. But is the expectation for the full year still to do the roughly mid single digit in EBIT margin or is it now lower?
Lillian Etzkorn: So what I’d say, I mean, obviously, with the third quarter coming in a little bit softer, we saw the lower margins and we’re not seeing much more to change in the fourth quarter right now to rebound there. So I’d say we’re looking at the lower end on the margins as we look at the full year. When you think of the different business segments and we’re obviously seeing some very strong performance on the aftermarket side with almost 15% margins there. When we look at the OEM segment that’s in the low single digits and frankly we need some volume there in order to be able to convert to more attractive margins.
Jason Lippert: And part of it’s been a choppiness too, in which we’re receiving orders on the core part of our business on the RV side. So it’s been a really inefficient way to do business the last couple quarters and we anticipate that it’ll be pretty similar the same in Q4. So if you take a low single digit positive number for Q4 on operating margins and look at the last three quarters, you can kind of see where we’re in now. But from a G&A standpoint and cost standpoint, we’re set up really good for next year assuming that the OEMs start to start to build just a little bit more and get more consistent on their production schedules and what they give this week-to-week.
Operator: Our next question comes from Fred Wightman from Wolf Research.
Fred Wightman: Jason, just to follow up on that sort of lack of visibility from OEMs. I mean, are you seeing an uptick in the competitive environment from suppliers just bidding for some of these contracts given that lack of visibility and [Technical Difficulty] today, has it gotten better, worse, sort of unchanged versus where it was last quarter? And does it vary across some of the core components like chassis versus some of the ancillary products?
Jason Lippert: I think that, I’d say for a lot of suppliers that are in the commodities segments of the business, on the supply side, I think, that that what — your statement’s probably pretty true. There probably is some elevated competitiveness. But on a lot of our products, whether you look at chassis or windows or awnings, you look at leveling systems and slide on mechanisms and furniture and all the complex systems that we sell and solutions we sell the OEMs, these things are year long commitments,they’re generally — the decisions are made in May, June, July, and they last for a full year, those commitments. So — on commodities, they’ll change kind of midstream, because it really doesn’t impact the buyer or the consumer.
But on components like ours where we’re making bigger commitments on raw materials and things like that, but they’re also more integral, complex solutions and components for the RVs, those tend to be at least a year-long in some cases more. And I would tell you that almost all the components we supply in the business are fit into that complex, sophisticated solution category that we’re getting longer commitments on. So for us, it’s not really, yes, there’s always talk of competitiveness and we always have to be ready for the next season of bidding, which will start springtime next year. But we feel really comfortable where we’re at and we’ve — you look historically and we’ve really done well growing organically, adding new innovation. And that innovation is part of what keeps our bundles together, because we’re always coming up with new product that the OEMs are interested in for the next season.
Frederick Wightman: And then just to come back to the wholesale expectations for 2024. Was that 325 to 350 number, an actual shipment number or was that a run rate comment? And then what do you sort of have baked in there for a retail assumption, are we getting back to one-to-one retail wholesale next year?
Jason Lippert: I think 325 and 350 is what we think actual is going to be next year. It could come in anywhere at that range. I think anything over 350 is a little bit ambitious. But on the retail side, we feel that at least for the next couple quarters, it’s probably not going to be a one-to-one replacement. We feel that just in talking to a lot of dealers, I mean, I’m talking to dealers every week or people are talking to dealers and OEMs every week, and it just doesn’t feel like they’re ready to replace one for one yet, which is good and bad. It’s going to put the dealers in a spot real soon where they need to reload in order some inventory for the spring selling season, because these customers are, they’re coming in today and don’t have what they need in the lots when they start coming in droves, and when it comes closer to spring and summer selling season, dealers are going to need products.
