Jason Lippert: I think there’s a lot of talk around that. There’s a lot of — the biggest problem right now probably is just the 2022 model year. It was the largest produced model year in the history of RVs. And, obviously, volumes have been — retail spend depleting since more or less July of last year. So, there’s a lot of that product in the pipeline, but we’ve heard all sorts of stories over the last couple of months where the OEMs are doing what they need to do to blow that product out to the dealers and get it in the hands of the retail, so that it’s just flushing through the system. On the other hand, the ’23 is just — there’s not a lot of that product being built. So, I don’t anticipate that’s going to be a big issue.
Certainly, you’ll have some of what you’re talking about, but I think that the OEMs and dealers doing a really good job working together to — they both have the same common issue here and both have to collaborate to figure it out. So, I think in the past, they’ve done a really good job of that when there’s been that kind of a headwind, but they’ll get through it.
Fred Wightman: Okay. And then, Brian, you gave us the total number for the one-time costs in the quarter. I think, you cited it as a $0.62 headwind. Can you just break that down between severance and then the inventory hit?
Brian Hall: I can, Fred. I got it right here. It’s about the — from an inventory perspective, there’s a bulk of it, it’s about $0.44. So, the remainder is the $0.19, which is severance.
Fred Wightman: Perfect. Thank you so much.
Operator: Our next question is from Craig Kennison from Baird. Craig, your line is now open. Please go ahead.
Craig Kennison: Yes. Hey, thanks for taking my question as well. I wanted to follow-up on Fred’s last question. Regarding your cost structure going forward, how should we think about SG&A in Q1 and on a go-forward basis following the actions you took in Q4?
Brian Hall: Hey, Fred — or Craig, the — so, I would say that we’ve continued to make adjustments to our cost structure. We really started having to make some bigger swings at it in November and December as we saw what production schedules look like. So, there’s been additional adjustments that we’ll continue to make as we rightsize and get better visibility into the coming months. I do think that, obviously, from a percentage of sales perspective here in the fourth quarter and first quarter to see our SG&A costs slightly elevated, it’s certainly the expectation, and then resume or head back to the more normalized levels when we get the volume in the second quarter. So, I don’t think it’s going to vary too meaningfully, but we have taken some additional costs out of it.
And, obviously, from a compensation perspective, as you would weigh things more with where — when the profits are actually incurred given the expectations we have for the first quarter, that will be a much lighter quarter from that perspective. So, I think it will come down some from the fourth quarter, but probably not in a major meaningful way.
Craig Kennison: Thanks. And then, Brian, I think I heard you make a few comments around your margin expectations for the full year, and then you commented on maybe a breakeven scenario for the first quarter. Could you just give us a sense of the cadence of margin, and where you expect the full year margin to be, at least what range might you expect that to be in?
Brian Hall: Yes. I mean, I think that — really 2021 is a good year for comparison. When I look at — and I’d say little bit by chance, when you look at top-line expectations and then look at kind of the what type of margin we were running throughout 2021, our expectations will be that that’s pretty similar when we have the volume. So, once you take first quarter out, which as I mentioned, we’re expecting breakeven to a small slight profit there. Once you move past that and we get volumes resuming to more normalized levels, we would expect mid- to high-single digit type margins. And I think that at least the way we’re seeing unit production play out today, which there’s a lot of uncertainty in that, Q2 would be, I would call it, 8% to 10% type margin, and then that improving throughout the remainder of the year with as volume increases.
Fourth quarter normally would be a little seasonally different, but at least through the second and third quarter, which would be the meaningful quarters for the year, I would expect them to be in that range.
Jason Lippert: And our diversified businesses are really adding a huge lift to our profit improvement through the year. So, most of our businesses there are having really solid years, off to a good start and all those. So, the diversification is a big part of the story as well, Craig.
Craig Kennison: Great. Thank you. And then on content per unit metric, you mentioned giving some price back as your cost changes. Just curious, is that figure is something that would go down sequentially? Or is there enough innovation and other drivers to that metrics such that you could see continued growth?
Brian Hall: Yes, Craig, if you look at it — if you were to go back and contrast the past few quarters on a year-over-year basis, you certainly saw that grow to all-time highs in the 50%-plus range. We’re at 45% today. When you start to dig into the details of that, our organic growth rate is some of the highest I remember seeing in my tenure here. So, at 15%, acquisitions adding another 7%. As you fast forward into the next quarter or two, I would expect those acquired revenues to probably not vary too much, and I think that we’re going to — we’ve won enough business and expect to continue gaining share during 2023 that I would expect that double-digit type organic growth rate for us to continue at least here in the near term, which is far greater than our historical 3% to 5% average.
Now, if you look at the remainder of that, that’s price. And as we’ve talked over the last couple of years to see the 35%-plus type inflationary numbers pushing through the system has certainly been the case. But that’s retracted. If you look at the balance of it for the fourth quarter numbers that we saw, that’s way down from where it was in the third quarter. And as you fast forward into the first and second quarter, I would expect that price number to continue to come down as we give those price — the price adjustments back to our customers. To where that would be on a more normalized basis and you should be back by the first, second quarter to where you really just price is not a part of the picture and it’s more about organic and acquired revenue growth.
Craig Kennison: Great. Thank you.
Jason Lippert: Thanks, Craig.
Operator: Our next question is from Mike Swartz from Truist. Mike, your line is now open. Please go ahead.
