LCI Industries (NYSE:LCII) Q4 2023 Earnings Call Transcript

LCI Industries (NYSE:LCII) Q4 2023 Earnings Call Transcript February 13, 2024

LCI Industries beats earnings expectations. Reported EPS is $-0.09, expectations were $-0.11. LCI Industries isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello everyone, and welcome to the LCI Q4 2023 Earnings Call. My name is Emily, and I will be coordinating your call today. [Operator Instructions] I will now turn the call over to our host, Lillian Etzkorn. Please go ahead.

Lillian Etzkorn: Good morning, everyone, and welcome to the LCI Industries’ fourth quarter and full-year 2023 conference call. I am joined on the call today by Jason Lippert, President and CEO; and Kip Emenhiser, VP of Finance and Treasurer. We will discuss the results for the quarter in just a moment. But first, I would like to inform you that certain statements made in today’s conference call regarding LCI Industries and its operations maybe considered forward-looking statements under the securities laws, and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

These factors are discussed in our earnings release and in our Form 10-K, 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 of the forward-looking statements, except as required by law. So, with that, I would like to turn the call over to Jason.

Jason Lippert: Thanks, Lillian, and good morning, everybody, and welcome to our fourth quarter and full-year 2023 earnings call. Last year proved to be an eventful year for Lippert as we work to extend our position as an industry leader, while navigating a challenging environment around the RV and marine businesses. Despite continued softness in the RV industry throughout 2023, along with a slow-down in the marine industry in the second-half, our consistent execution on diversification priorities and steadfast commitment to operational discipline helped to lift our performance. As we face these headwinds, our teams took action by leveraging our operational expertise. These customer relationships and robust culture of innovation drive the business forward.

Looking at the full-year, we closed 2023 with $3.8 billion in revenue, declining year-over-year from last year’s $5.2 billion in revenues, due largely to lower RV going in and marine industry production levels as dealers work to right-size inventories in both markets. That said, it is important to emphasize the durability of our business. As many of you know, we have significantly diversified Lippert beyond recreational vehicles into transportation vehicles, marine, automotive, residential, and their aftermarkets, as well as into Europe. And that effort is now paying dividends. In fact, over the past five years, we have successfully executed our strategic playbook by growing revenues in new markets by nearly [50%] (ph), which has bolstered our diversification.

In this quarter, that growth was underscored by the strength of our growing aftermarket businesses. To be clear, these results would not have been possible if we focused our attention on the RV space alone. Instead, by applying our core manufacturing competencies to gain a foothold of adjacent markets, we have created a range of what we believe are countercyclical revenue streams with a combined $11 billion-plus in total addressable growth opportunity. We’re working hard to continue to grow these opportunities, both organically and through acquisitions. Net sales from acquisitions completed in 2022 and 2023, the majority of which are focused outside of North American RV, contributed approximately $74 million of revenue in 2023. Looking ahead, customer demand for our high-quality innovative content has resulted in new business commitments for 2024 of approximately $200 million net of any business losses.

Moving forward, we continue to prioritize, making improvements to our operations, and optimizing our cost structure to support the long-term profitability of our business. We believe we have invested more capital into automation than any other play in the space, filling over $100 million over the last few years. With the added benefit of 20,000 continuous improvement projects completed in 2023, we have improved our flexible and efficient manufacturing footprint through which we can quickly adjust production in line with constantly shifting demand levels in the cyclical markets. Additionally, we’ve worked through the last few quarters to consolidate certain facilities and decrease fixed costs. We believe that our advanced manufacturing capabilities service a major competitive mode for our business that would take decades for any competitor to replicate, while also positioning us to derive profitable growth as RV and marine and OEM production begin to normalize in the coming quarters.

Despite our great progress in reducing operating costs, we are constantly exploring opportunities to drive margin improvement. We also have been focused on strengthening our balance sheet, reducing inventories by $261 million this year, and delivering $527 million in cash flows from operations in 2023. This disciplined approach has further solidified our financial profile and balance sheet during a challenging period, establishing a stable foundation, which should allow us weather many near-term challenges and capitalize on growth opportunities that lay ahead. During the fourth quarter, content per total RV decreased from the prior year to $5,058, while content per motorhome RV for the quarter was $3,506. Similar to the prior quarters, these content declines can largely be attributed to index pricing reductions versus actual reduction as for any of our content.

Excluding the impact from index pricing, we saw market share content gains of 8.5%, largely driven by consistent focus on new products and market share wins. Looking at 2024, we anticipate that $130 million of the $200 million in new business I mentioned earlier will be RV, new market share, and content gains. While RV unit selling price declined, I want to again emphasize that we do not anticipate much, if any, impact from de-contenting trends as our stickiness is driven by several factors. From axles, chassis, windows, further, slide, leveling, and beyond, we have built our reputation on creating essential and innovative products for RVs that cannot easily be removed or replaced by another supplier. We believe that our domestic manufacturing footprint also add significant value per OEM, and sets us apart from other suppliers, domestic and international.

Our domestic factories typically require just a week’s lead time in order to supply product to our customers and our markets. For many customers, we often build products on demand for emergency needs, which products can be completed in a day or two. We’re easily able to provide inventory to OEMs on a just-in-time basis, where if they were to order these same products from overseas suppliers our customers would need to plan out much further than they do now as well as carry much more inventory which often leads to obsolescence. Additionally, we have a team of highly trained technicians that travel across the nation to help our dealers with service and train on all of our products, a unique capability not many other suppliers have. We have found that dealers value their servicing capabilities to the point that they will push OEMs to use Lippert content versus our competitors that cannot provide the same support.

This fact is even more relevant on some of our more complex products we build. There’s not a lot of talk about competition lately, as well as customer verticals. And our response to that is simply this, in the last 30 years; I’ve had the privilege to help lead this business. We’ve developed a great strategy with amazing teams, and we have a great track record of winning business; competition isn’t new for us. We feel we are great at beating competitors as our market share and history prove that we win more battles than we lose. And while we can’t predict the future, we do know that our strategy and teams have the special recipe to win competitive battles. We’re also confident in our ability to continue growing our market share, both in RV and across adjacent markets.

Our deep-rooted industry relationships, broad portfolio of innovative products, and reputation for best-in-class quality of service have helped us create value in a way we believe cannot be replicated. Despite lingering chatter around heightened competition and new entrants, these differentiators have and should continue to keep us positioned as an industry leader, while driving long-term market share expansion. Now, I’d like to highlight some of our recent announcements. First, we established Amerimax for Mobility, a new joint venture with Euramax for Mobility, Europe’s leading supplier of aluminum products for RVs. This partnership combines our well-established North American RV connections with Euramax’s vast manufacturing knowledge to provide one of the most diverse catalogues with industry-leading customer service to a broader range of recreational and transportational vehicle customers.

We will soon be announcing some exciting new products that this joint venture will launch of RV OEMs in an effort to change the game for metal siding on RVs. Secondly, we teamed up with Keystone Cougar, the best-selling fifth wheel in the country, to showcase our ABS break technology on Cougar RVs at the Tampa RV SuperShow, last month. Hosted on a racetrack in Tampa, we gave a live demonstration to RV ambassadors and Keystone RV leadership on how much of a difference ABS can make for safely towing both travel trailers and fifth wheels on adverse road conditions. We’re excited to continue find new ways like these to partner and collaborate with well-known brands and bring even more innovative content to the outdoor recreation markets. Now on to Aftermarket, our Aftermarket net sales were $881 million for the year, down 1% compared to 2022, yet up 10% in the fourth quarter as we continue to expand market share.

We are proud to have achieved a 370 basis point increase in operating margins for the full-year due to improved mix, along with tailwinds from continued operational efficiencies. With millions of vehicles entering the repair and replacement cycle in the coming years, our aftermarket will have some amazing opportunities. As our OEM market share has increased substantially over the last 10 years in all of our core product offerings, it stands to reason as more and more ageing units enter their repair and replacement cycle in the near-term, they will ultimately require more Lippert replacement parts in the aftermarket. Lippert, CURT, Ranch Hand, Solera, Furrion are just a few of our popular brands that are playing critical roles in fueling this bottom line strength and top line growth.

Our automotive aftermarket brand, CURT, sold just shy of one million hitches during the year, a 6% increase over 2022, and continues to account for just over half of our total aftermarket sales. Appliances remain a massive opportunity, and products like Furrion water heaters, refrigerators, and air conditioners have seen double-digit market share gains in the last 12 months. Looking ahead, we expect to see gains in mattresses, furniture, and awnings as consumer refurnish used RVs. Most people don’t realize that the used RV market sales are, on average, or 600,000 to 700,000 units per year, which represents a huge opportunity for our aftermarket products and services. Our steadfast focus on service has also continued to fuel our growth. In addition to providing support through our large dedicated service center, we are always looking for ways to engage customers and dealers, gathering feedback to improve our products.

We have had amazing success with using the Lippert Technical Institute to host maintenance trainings for technicians and RV owners alike, helping people to learn how to extend the life of their vehicle and fix issues so they can spend more time on the road and help others along the way. During the quarter, we also returned to the Stuttgart Retail Show connecting with European consumers to unveil some recent Furrion appliance and other innovation. Events like this, along with our other initiatives like Lippert Scouts, The Campground Project, The Lippert Ambassadors; they help us to build our relationships with the well-connected outdoor community, driving trust and long-term loyalty to the Lippert brand. Turning to the North American adjacent markets, 2023 revenues were down only 8% compared to the prior year.

This decline was primarily due to softness in the marine retail environment, particularly impacting pontoon sales, where we sell the majority of our marine content. Marine production dropped sharply in the fourth quarter as OEMs began working to right size inventory channels. We’re expecting this softness to continue into the next two quarters of 2024, with marine sales likely to decline for the year. That said, we do expect a shorter downturn in marine versus what we have seen in RV, and we will focus resources this year to continue to develop new marine products as well as tighten efficiencies and processes. This year alone, we expanded our marine product catalog with products like our shallow water anchor systems, glass systems, thrusters, new seating and electric amenities for many classes of boats.

We plan to continue these types of innovations in 2024 to bolster ongoing organic content growth. We’re seeing strength in our other adjacent markets like transportation, supported by acquisitions like [CURT] (ph) and MTP. Outside of these acquisitions, we continue to successfully expand into other adjacent areas by leveraging our existing manufacturing competencies from our other core businesses. Our residential windows as well as our axle products continue to gain share, and the recent launch of our first transit bus seating products and bus chassis stretching is off to a great start. We’re also making solid traction through our partnership with ATW, which is on the path of contributing 1 million axles annually. We’ve also nearly completed construction and rollout of equipment of our world class glass and acrylic processing center.

With approximately $65 million in automated equipment and building space under one roof, we soon will be able to process 100s of thousands of pieces of glass per month for the housing, RV, marine, power sports, and commercial glass industries. This fully automated facility is the future of our window and glass processing and should give us significant moat relative to any other competitor out there. This project is one of many that demonstrates our ability and willingness to invest in the future of quality manufacturing. Moving outside of North America, our international business grew 4% as supply chain headwinds decreased abroad, driving increased shipments to meet pent-up demand. Products like our pop top, acrylic windows, bed lift, doors, electronics and skylights continue to highlight how our international footprint works as an incubator for innovation across our brands.

These products have the potential to bolster our competitive advantage in the U.S. as they continue popularity with U.S. OEMs. We also initiated a new leadership structure in the Europe business, elevating four season leaders with extensive backgrounds in these recreation markets who will strive to take our international presence to the same leading position we have in North America. As you all know, innovation acts one of the primary drivers of our content expansion. We have invested in our R&D capabilities at what we consider to be an unparalleled rate that we believe will continue to help us develop world class products and keep our competitive edge. More importantly, we are also focused on making improvements to existing products, adding more content at a higher price point.

This gives us a massive long-term opportunity to drive content growth as there are numerous products in our portfolio that we’re able to improve upon. Further, these are typically unique products that are both integral to vehicles and cannot be commoditized, helping us avoid the contenting by OEMs. A prime example of our innovative capabilities driving our market share expansion can be seen in our transformational ABS system I mentioned earlier. ABS brakes were not readily available or affordable in the U.S. for RV production until we brought them to market. Since launching, we now have about 10 high profile RV brands using ABS with more in process of committing to it, growing our market share into the double-digit with a total addressable market of $150 million to $200 million.

We’re finding that RV vastly prefer having ABS on their vehicles due to the added level of safety and peace of mind it provides, helping us gain traction with the OEMs. In addition to ABS, we launched several products in 2023 that have great momentum heading into 2024. Some of the more notable developments were our 4K window series with integrated shades, a new high capacity, quiet AC, we call the chill pill, new leveling, bus seating, furnaces, a new line of electric and so much more. In 2024, one of our largest innovation announcements is that we are launching a brand new line of slide outs for OEMs. As we expand our portfolio, we plan to continue introducing innovative products that cater to a wide range of customer needs, which should drive long-term content growth while expanding our presence and impact across the recreational markets.

We believe that our enduring success all stems from our strong culture. This starts at the top where we have skilled empathetic leaders dedicated to fostering team members’ professional and personal growth. We’ve implemented several programs to foster development, leading to one of the highest retention rates in the industry. Over the years, we have found that higher retention has a direct and meaningful impact on quality safety, efficiency, and innovation all things that we believe are very critical for any good business. Externally, we are actively engaged supporting the communities where we work and live. In 2023, our team members contributed over 125,000 hours of community service worldwide, involving numerous charitable organizations. We are proud to note that around 75% of our 12,000 strong workforce participated in at least one of the service events throughout the year.

As we aim to enhance our collective impact, we hope to inspire other organizations to contribute similarly to their communities. We delivered what we consider to be an amazing cash generation of 527 million operating cash flow in 2023. Considering the challenging conditions we have been working through and we expect to keep up this progress in 2024. In turn, we have strengthened our balance sheet maintain ample liquidity while paying down 277 million in debt. While we’ve cut down capital expenditures we are continuing to prioritize spend in R&D, automation, operational excellence, M&A, and other high return investments to support profitable growth for our business. In closing, I would like to thank all of our team members across the globe for their dedication to overcoming significant challenges and moving our business forward over the last year and a half.

Any good business that experiences extreme cyclicality can’t make it through without great teams and I believe we have the best. I’m incredibly encouraged by the development I’ve witnessed in our teams over the past year, both personally and professionally. As we work together to serve customers and deliver value to all of our stakeholders. We look forward to continuing this progress as we position Lippert for growth in 2024. I will now turn to Lillian scorner, our CFO to give more detail on our financial results. Lillian.

Lillian Etzkorn: Thank you, Jason. Our consolidated net sales for the fourth quarter decreased 6% to $838 million compared to the prior year period, primarily impacted by a reduction in North American RV and Marine production, as well as decreased selling prices which are index to select commodities, partially offset by acquisitions. Our operational improvements and diversification strategy has personally mitigated the impact seen from lower wholesale segments in the quarter. Sales to North American RV OEM declined 11% excluding both North American RV OEM and marine OEM our business increased 8% compared to the prior year period. Our diversification strategy and continued pursuit of operational improvements have not only provided near term support, but a strong platform to drive long-term growth.

The decline in Q4 2023 sales in North American RV OEM was again driven by a decrease in wholesale shipments, which was influenced by current dealer inventory levels, inflation, and rising interest rates. Content for total RV unit decreased 17% to $5,058 while content per motorized unit decreased 14% to $3,506 compared to the prior year period. Again, these content declines are largely attributed to index pricing path-throughs versus elimination of flipper content. We have continued to increase our organic content and market share through our focus on innovation. In Q4 2023, our organic growth contributed approximately 5.4% year-over-year LTM content per unit. Sales to adjacent industries declined 9% versus the prior year driven by the 41% decrease in marine sale.

Marine content per powerboat decreased 27% to $1,244, primarily due to price decreases associated with year-over-year declining input costs and changes in product mix. However, sales were positively impacted by acquisition and pricing adjustments for our transportation products. Q4 2023 sales to the aftermarket increased 10% compared to the prior year period, driven by increased repairs and replacements and continued growth in automotive products, helping to illustrate the counter cyclical nature of the business. International sales increased 4% year-over-year as supply chain headwinds decreased abroad, driving increased shipments to meet pent up demand. This increase was also driven by an estimated 2% positive impact for exchange rates in the quarter.

Gross margins were 19.2% compared to 16.4% in the prior year periods, primarily due to positive mixture and lower sales volume partially offset by the timing of sales price reductions contractually tied to commodity prices. Operating margins increased compared to the prior year period, driven by decreased material commodity costs and effective six cost leverage. The aftermarket business delivered solid operating profits in the quarter at 8% which is an 860 basis point improvement over the prior year. GAAP net loss in Q4 of 2023 was 2.4 million or $0.09 loss per diluted share. This is compared to a net loss of $17.1 million or $0.68 loss per diluted share in Q4 of 2022. EBITDA increased 248% to $35.6 million for the fourth quarter compared to the prior year period.

Moving on to full-year 2023 results, sales to North American RV OEMs decreased 47% to 1.5 billion driven by decreased wholesale shipments, sales in North American adjacent markets decreased 8% to 1.1 billion in 2023. Driven by softens marine production, North American aftermarket decreased its total sales by 1% to 814 million, while international sales increased 4% to 414 million compared to the prior year periods. Acquired revenues were approximately $73.6 million for the full-year of 2023. Non-cash depreciation and amortization was 131.8 million for the year ended December 31, 2023. While non-cash stock based compensation expense was 18.2 million for the same period. We anticipate depreciation and amortization in the range of 130 million to 140 million during the full-year 2024.

For the 12 months ended December 31, 2023, cash generated from operating activities was $527 million with $62 million use for capital expenditures $26 million use for business acquisition, and $106 million returned to shareholders in the form of dividends. We have had a strong focus on generating cash and continuing to improve working capital with an emphasis on decreasing inventory. This has resulted in a decrease in inventory of $261 million in 2023. We make net repayments on our long-term debt of 277 million in 2023, including prepayments of 37.5 million under term loan principal. These term loan prepayments were applied to pay in full the scheduled principal amortization payments through Q1 of 2025 and are projected to save us approximately 1.9 million in annual interest expense based on the rates in effect at the end of 2023.

At the end of the fourth quarter, we had an outstanding net debt position of $781 million, which is 2.7 times pro forma EBITDA, adjusted to include LTM EBITDA acquired businesses and the impact of non-cash and other items as defined in our credit agreement. Overall, we are seeing positive signs in total revenue both sequentially and year-over-year. For the month of January sales were up 13% to 308 million versus January of ’23, primarily due to more RV production days in 2024 compared to the prior year. This was partially offset by significant decline in marine sales in the month compared to 2023. We are expecting marine softness to continue into the next two quarters of 2024. With marine sales likely to decline for the year, we are pleased to see February RV orders increase and anticipate that these positive trends will continue throughout 2024.

During the year, we will also continue to grow the aftermarket and adjacent businesses through both organic and inorganic methods. While the RV industry regains its footing. Regarding RV wholesale segments, we estimate a full-year range of 325,000 to 350,000 units. As we look forward, we are focused on maintaining a strong balance sheet and targeting a long-term leverage of 1.5x net debt to EBITDA. For the full-year 2024, capital expenditures are expected to be in the range of $55 million to $75 million. We are confident in Lippert’s ability to deliver long-term profitability and value for all of our stakeholders. Our strategic approach, coupled with investments in innovation, facilities, and our team will further drive our success and enable us to achieve long-term sustainable profitable growth.

That is the end of our prepared remarks. Operator, we’re ready to take questions. Thank you.

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Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from the line of Scott Stember with ROTH MKM. Scott, please go ahead.

Scott Stember: Good morning, guys, and thanks for taking my questions.

Jason Lippert: Morning.

Scott Stember: Could you remind us about how the indexing, the timing, all the mechanics work? How often do you go back to the OEMs to talk price? And what’s the tell here? How far into 2024 should we expect to see headwinds as you return price?

Jason Lippert: Yes, that’s a good question. We’re indexed on steel and aluminum, as you know, so those just happen without any conversations, and we just follow the indexes on those two commodities. So steel, we’ve seen a trending down in price last quarter and this quarter, and what we’re giving back to our customers, we’ll see that increase again where they’ll actually some increases on steel in Q2 as steel went down to low-30s and now it’s back up into the mid-50s. And aluminum stayed pretty consistent, so there hasn’t been a whole lot of movement on aluminum. And we might maybe index more than other businesses out there, so the good of it is, is we just don’t have to go and have those conversations with our customers on a regular basis with respect to the steel commodity-related products.

The rest of it’s just kind of as we see commodities moving up to need price or to give price back, then we have those conversations with our customers. But steel and aluminum, they’re fixed on the indexes.

Scott Stember: All right.

Lillian Etzkorn: Scott, so to add a little color also from this — from the content, as we’ve talked in the past couple of quarters, the index pricing is still materially impacting that change in content per unit on a trailing 12-month basis. The fourth quarter, kind of consistent with what we had talked about in the last call, was also mid teens in terms of percent give-back impact on the content number.

Scott Stember: Got it. And then my next question and I’ll go back into the queue, is on the first quarter, just trying to make sense of some of the puts and takes as far as sales. And will we be profitable in the first quarter?

Lillian Etzkorn: So, in terms of — yes, that’s the expectation here. In terms of expectations from a sales perspective, so as we’re starting the year, RV is coming back. As we indicated, January, we returned back, we had good production, up versus last year. Expect RV to continue to trend well as we move through the quarter. That said, marine is definitely a significant headwind. We had a very strong first quarter in 2023. We are materially off that in January, and expect that to continue. We’re down anywhere from 40% to 50% in marine when we compare it to last year. So, from a net-net perspective, I would expect revenue bottom line to be up sequentially from fourth quarter, but we will be down versus 2023 because of that marine softness.

Jason Lippert: And, Scott, we’ve had January results, and so we were profitable in January. We know January. February; revenues look very similar to January at this point in time, at least from an RV’s perspective. And if you look at March, and we’ve got certainly a visibility into March, we’re seeing RV OEMs increase some days production, which in some cases will be 20% for some of those, and others that are flat, and others that are just adding a few units a week to their production schedule. So, January and February look pretty consistent with one another, March looks like it’ll be up a little bit. So, it looks like, like we’ve said all along, that we know that what goes down must come up. And feels like we’re starting to come off the bottom, at least in March we’ll certainly see a little bit more volume in RV. That helpful?

Scott Stember: No, very helpful. So, just to be clear, profitability would be lower than last year’s first quarter? I’m just trying to understand.

Jason Lippert: Well, we’re not through the quarter yet.

Lillian Etzkorn: Yes.

Scott Stember: Okay. I’m just trying to get —

Lillian Etzkorn: So, what I’d say from a margin — yes, so —

Scott Stember: Sorry, go ahead.

Lillian Etzkorn: What I was saying from a revenue perspective, Scott, I would expect revenue to be lower overall because of the marine softness offsetting some of the —

Jason Lippert: Say, flat-to-lower.

Lillian Etzkorn: Yes, flat to lower, and then from a margin perspective I would expect us to be a little bit better than where we were last year in the first quarter.

Scott Stember: Okay, perfect. Thanks so much, guys.

Jason Lippert: Yes.

Lillian Etzkorn: Yes.

Operator: The next question comes from Fred Wightman with Wolfe Research. Please go ahead.

Fred Wightman: Hey, guys, good morning. I just wanted to maybe clarify something on the shipment outlook for ’24. And I believe it’s unchanged versus what you guys have talked about last quarter. But Jason, you’ve also talked about some of the disconnect between what the RVIA reports in terms of shipments versus what’s actually produced. So, can you just sort of level-set if we think about the 313 that the RVIA reported for ’23, what you think the actual production number was, and maybe how to evaluate that against your 325 to 350 outlook for ’24?

Jason Lippert: Yes. Yes, and that’s good, I’m glad you’re bringing that up because we wanted to make the point anyway. It’s just important, like you said, to consider wholesale production versus wholesale sales. So, they reported, last year, the 313 or whatever the number ended up to be. We feel the number in terms of units produced, because they sold a bunch of units in ’23 that were actually built in ’22, that we would have built components for in ’22. So, we feel that delta was a production number of maybe 280-275, somewhere in there. It’s clear enough to put it in a short range. So, we feel that even if the — even if, on the low end, you’re at the low end of our 325 to 350 on RV, we could see another 35,000 to 45,000 units of what we will product this year, from a wholesale perspective, different than last year.

So, I think that those are the puts and takes. We’re not seeing in — this January, it’s — January was up a little bit, but from a seasonality perspective I think that, like I said, March, April, May, June, these dealers are going to need product, and that’s where we’re going to see more of the bump to get us closer to that 325 and north number, whatever number you’re picking. But yes, from a production perspective, feels like at the low end of our scale, we’re 35,000 to 45,000 units more — more units that we’ll produce components for this year than last year, which is significant.

Fred Wightman: Okay, that’s helpful.

Jason Lippert: That helpful?

Fred Wightman: Yes, no, that’s great. Just thinking about the January and February commentary, I mean basically every other consumer company has talked about some impact of weather in January. Is there anything that you would call out there that we should keep in mind, either days that got cut that are reflected in that January number, incremental days in February, anything that stood out from a weather impact perspective?

Jason Lippert: There was weather impact for sure. There was a few days of shutdown, but the OEMs made some of that back, and then some of it they didn’t. Some of those days fell in inventory days, so there might’ve been a little bit of impact there. But I would say that, year-over-year, we’re always seeing weather-related impacts, a day or two here or there, and it’s usually in January or February, so.

Fred Wightman: Fair enough. Thanks a lot.

Operator: The next question comes from Daniel Moore with CJS Securities. Please go ahead, Daniel.

Daniel Moore: Perfect. Thanks, Jason. Thanks, Lillian, for taking questions. First, on the marine side, that down 40% to 50% that you described, is that all production? Are your customers managing down their inventories or is it [IV stuff] (ph) of that more just-in-time, similar to RV?

Jason Lippert: Yes, we’re for sure just in time. But I think that the downside that we’re seeing there is partially similar to what we saw with RV, where inventories are starting to be just at the dealer level, and OEMs just aren’t building. So, you’ll probably see a little bit more sell through on the retail side, which will impact both the OEMs and our production on marine.

Daniel Moore: Understood. That’s helpful. And then, maybe just, you talked about it in roundabout terms, but just your expectations for content growth in RV as well as marine kind of H1 versus the full-year ’24. Do you expect positive growth for the full-year and is pricing more likely to be a headwind at least for the first-half?

Jason Lippert: Yes, we maintain that if you eliminate the indexing puts and takes out of whatever the content number is that our ability to continually organically grow content of 3% to 5% to 6%, somewhere in there. It just depends on what we’re launching and how the OEMs adapt and bring in our new products. So, we feel like we can positively grow organic content on a consistent basis, and we’ve demonstrated that over history.

Daniel Moore: Okay. One more, little in the weeds, but the glass and acrylic factory, can you maybe a little bit about some of the newer end markets you’re targeting with that capacity and capabilities and what does the total TAM look like relative to the revenue you’re currently generating out of there? Thank you.

Jason Lippert: Yes, we don’t have just getting the last piece. We don’t have a TAM on there yet because we’re in early stages. But we’ve got probably three-fourths of the factory running. So, we’ve been kind of installing it in pieces and it’s pretty impressive if you come out next time. We’d love to take you through. Let’s see everything, but we’re doing housing glass for both manufactured housing and residential housing, we’re doing certainly RV glass and now our RV door glass. If you’ve been around RVs lately, we’re putting glass on the front doors of the units to make it look nicer and adding some content there. But if you look in some of the commercial markets we’re building for there, you look at solar glass, refrigerator glass and grocery stores we’re doing some of that.

A lot of garage door glass, if you look at garage stores these days, both commercial and residential, you see a lot of glass in the garage doors versus just an older type door that you’d normally expect. So, and then we get to acrylic. They can do some thermoforming there and we expect acrylic to be big RVs, I mean we’re going to certainly offer that as part of our mode on windows, which is second or third largest component in the RV business for our core products. So, we’ll have acrylic for windows, which nobody else has here, and then we also will do acrylic skylights and things like that. You’re seeing a trend with our RV OEMs that continue to put more glass and acrylic around the units to just let more natural light in the units. It sells units.

So, that’s where we’re at today; more of an update next quarter.

Daniel Moore: Very good. Okay. I’ll jump back if I have any follow-ups. Thank you.

Jason Lippert: Sure. Thanks, Dan.

Operator: Our next question comes from Mike Swartz with Truist Securities. Mike, please go ahead.