Scott Stember: Got it. And then just last question. There was a comment about expectations for operating margin growth this year. Did I hear 50 basis points. I just want to make sure I heard correctly?
Jeffrey Rodino: 30 to 50 basis points.
Scott Stember: Got it. All right. That’s all I have. Thank you.
Jeffrey Rodino: Thank you.
Operator: Thank you. Our next questions come from the line of Noah Zatzkin with KeyBanc Capital Markets. Please proceed with your questions.
Noah Zatzkin: Hi, thanks for taking my questions. I guess just quick on the RV industry. I noticed you guys kind of ticked down your expectations slightly on the wholesale side. So just wondering relative to a few months ago, what may have led to that? Thanks.
Jeffrey Rodino: Yes. Noah, this is Jeff. As we’ve gotten into 2024, we’ve seen production rates from the OEMs pretty stable through the first quarter and into the second quarter. We believe that on our model, we were looking at 330 to 350 prior. Interest rate is not going down or at least the Fed saying that they’re probably not going to go down as soon as we thought. I think it’s going to continue to constrain dealers from wanting to bring inventory in at those higher levels, especially in the second half of the year, where we saw — thought that maybe with some interest rate relief, we might see a little bit of that. So we just moved to a tick, not too much. We also note that going into the model change, the OEMs are being very, very disciplined with their production levels.
So — and as we get into June, they’ll start to ramp down the 2024 production and start to get into the 2025 starting in July. So we see a little bit of falloff there over those — over that time period. So overall, not much of a change, but we’re just being a little bit cautious on it.
Noah Zatzkin: Great. And maybe just kind of two-parter. Maybe if you could just kind of talk about how Sportech’s performing relative to your expectations early on as well as kind of appetite for other M&A in the nearer term? Thanks.
Andy Nemeth: Sure, Noah. This is Andy. Sportech is performing better than expectations so far. We’re really pleased with not only the team’s performance, but the cultural fit, the alignment, the collaboration we’re seeing today. As we noted, we’re really striving to execute on synergies very, very quickly and see a ton of runway there. So very pleased with Sportech, and it is performing better than expectations. I think as we look at our appetite for acquisitions, as we noted as well, we are in a position of strength from our perspective. We’ve got a ton of liquidity. We’re managing our cash flows extremely well. Our team is extremely disciplined and doing a fabulous job of working with our customers to manage our inventories and be very thoughtful about that.
So I would say our appetite, again, is a position of strength and to be on offense, and we are actively looking at the acquisition pipeline, continuing to cultivate acquisitions organically. And again, really prioritizing what could make sense at what point in time, but we are actively looking at acquisitions right now.
Noah Zatzkin: Great. Thank you.
Operator: Thank you. Our next questions come from the line of Tristan Thomas-Martin with BMO Capital Markets. Please proceed with your questions.
Tristan Thomas-Martin: Good morning. Can you just talk how RV content specifically trended in the quarter, maybe not on a trailing 12-month basis, both year-over-year and then quarter-over-quarter. Just trying to square the 9% shipment growth to your revenue being up 15%?
Jeffrey Rodino: Yes, Tristan, this is Jeff. Sequentially, RV was up about 1% from the fourth quarter of 2023 to the first quarter. So we are seeing that, and we believe that will — that trend will continue through the year.
Tristan Thomas-Martin: Okay. I guess just kind of the delta of how you outperformed the industry so much on a shipment standpoint, given there seems to be kind of the ongoing ASP pressure?
Andy Nemeth: Yes. We’ve — I would tell you, Tristan, over the last 15 months, our team has been really active in the marketplace and picking up business. Again, working with our customers, really making sure that we’re in the best position to be able to take care of them, both on the quality and service side, but as well on the pricing side. And as we’ve — again, managed our inventories, but also worked to push our vendors to bring commodity costs down as well. We are — as Jeff mentioned, we’re really active in pushing those prices through to our customers. So we maintain a great balance of pricing and quality and service with the customer base. And as a result, our RV teams have done a spectacular job of picking up more organic content in the RV space.
Tristan Thomas-Martin: Okay. And then just one more, 1Q RV retail to get to year, I believe it was down 14%. That implies a pretty big deceleration in March. Am I thinking about that the right way?
Andy Nemeth: Say it again. I really didn’t understand your question.
Tristan Thomas-Martin: Yes. So RV retail, I think you called out down 14%. But to get there, that would imply March was down more than both January and February year-over-year. Am I missing anything there?
Andy Nemeth: At this point with the estimates, we would tell you, it’s down a little bit more than January and February, correct.
Tristan Thomas-Martin: Okay. Thank you.
Operator: Thank you. Our next questions come from the line of Craig Kennison with Baird. Please proceed with your questions.
Craig Kennison: Hey, good morning. Thanks for taking my questions. You’ve addressed many of them, but maybe a follow-on. That last question on the month of March. Any color on April trends in terms of RV demand as we continue to see high interest rates impact the consumer?
Jeffrey Rodino: Yes, Craig, this is Jeff. From our perspective and what we look at are the production levels, I would tell you that through April, they’ve stayed pretty consistent with what we’ve seen so far this year. Like I mentioned earlier, looking ahead to May a little bit. We do see a little bit of time being taken off over the Memorial Day holiday. So we’ll lose a little bit of production level there. But overall, the levels — weekly levels of our customers have stayed pretty consistent.
Craig Kennison: Okay. Thanks. Then on the margin front, 30 to 50 basis points. I’m wondering if you can just share any color on the puts and takes to getting there. I know your marine business tends to be higher margin. You’ve got Sportech rolling through. I’m just wondering if you can help us understand how you get to 30 to 50 basis points with all the ups and downs in your individual businesses?
Andy Nemeth: Craig, this is Andy. There are definitely a lot of puts and takes in the model. When you look at the diversified business model and what we’re doing there, I think when you look at the housing business, which is a highly leverageable business, given the low fixed cost structure that’s there. That team has done a fantastic job as well really across our organization when we think about the team’s performance. They’ve done a great job of managing that business, but we’ve also picked up business there on the housing side and the MH of the business. So leveraging that model is certainly supporting the margin profile and really kind of helping offset what we’re seeing as it relates to a little bit worse performance on the Marine side of the business, just given what we’re seeing in our mix with the products that we’re selling through.
It is a higher engineered product, a higher-priced product. And so yes, that does have some impact on it. But when I think about just the puts and takes. There’s a lot that goes into our model. But when you look at the industries and the industry performance, it’s allowing us to be very, very resilient. And then when you look at the acquisitions that we’ve done, and I’m going to say over the course of the last 24 to 36 months, we’re buying margin-accretive businesses that are supporting the model as well. So we look at that margin resilience that we’re able to produce it’s a combination of a lot of things with the diversification, the acquisition strategy, the team’s performance, the automation initiatives that we’ve put in place, the increase throughput, and increased quality.
And then again, just the team’s execution in the marketplace and ability to really drive customer value as we strive to be that component solutions provider as a go-to for our customers have all played into the margin profile.
Craig Kennison: Thanks.
Andy Nemeth: Thank you.
Operator: Thank you. Our next questions come from the line of Daniel Moore with CJS Securities. Please proceed with your questions.
Daniel Moore: Thank you. Good morning. And Andy, good morning. Welcome to you. Covered a lot of ground — excuse me. But just on the content side, content per RV ticked slightly higher in Q1 and marine. I think you said flat sequentially. You think we found the bottom from which we can grow on either or both sides or consumers likely to continue to opt for more entry level units that might keep some pressure on that metric?
