Joseph Altobello: Thanks. Hey, guys. Good morning. Just going back to the marine side for a second. It looks like you added about 1,100 units into the channel here in Q1. How long would you expect that pipeline fill opportunity to extend here in fiscal 2023?
Michael Happe: Joe, good morning. This is Mike. So there’s going to be a number of factors which ultimately result in answering that question. And on this call, I won’t be able to give you a precise answer, and I’ll explain why. Certainly, the overall macro conditions around the marine industry are things we’re watching carefully. While the marine industry has been a little healthier than the RV industry in the last year, and certain categories like pontoons, have been trending much healthier as of late than the Towable RV segment specifically. We do not believe, as you would expect, we do not believe that the marine industry nor some of its sub-segments are immune to any of the macroeconomic pressures that consumers are facing.
Inventory is building in the marine industry across a number of different categories. And that is similar on the Barletta side. But the positive elements, which make it difficult for me to answer your question are the following. Barletta is a five-year-old business. We have not put the Barletta brand in all of the markets around the country that we believe that we can have a presence in. There are dozens of open markets that we have documented that we believe the Barletta brand can have a presence in today that they still do not have a presence in now. And partly because we prioritize our existing dealers when the supply chain constraints were very real as opposed to setting up new dealers. The other element that’s difficult for us to put timing on your question is we are introducing two new lines to the Barletta business.
Today, we only go after about 40% of the addressable pontoon market, and yet that business has grown to a top five player with only three existing lines or brands underneath the Barletta umbrella. We are adding a new lower-priced still premium lower priced line called the . And we are also adding a line on the high end called the reserve, both of which have been introduced to the dealer base for the future. And as we stated, we have invested in capacity expansion for that brand, which is ongoing. So we believe that Barletta, and we’ll have to do this in a very disciplined way can swim a little bit against the tide as the marine industry normalizes as well because of their market share momentum, their line expansion product-wise and their dealer expansion.
And so we’re going to be very disciplined, though. We have to watch, obviously, the temptation to overbuild and overstock, but that timing is going to be different than what you’ll see in our other segments for sure.
Joseph Altobello: That’s helpful, Mike. I appreciate that. And then maybe moving over to RVs. It looks like your dealer turns, you mentioned this earlier about 2.8x. You’re running about 2x pre-COVID, running about 4x post-COVID. It sounds like you expect that to stay within that 2.5x to 3x range, here in 2023. Is that a fair assessment?
Michael Happe: So if you look at those numbers on a trailing basis, I would tell you that Bryan and I, we really have thought for some time now that as dealers came out of the frenetic sort of pandemic inspired retail period that they got used to great margins and low working capital. And we have felt for some time that they would try to run their business on the RV side at probably somewhere to a half turn higher and so I think your range is right overall. It does vary by segment, Motorhome versus Towable. But if the industry was running to 2.5 in the past, we do believe dealers are going to try to run at 2.5 to 3 in the future. But that will be dependent, to some degree, as you know, Joe, on the volatility of the of the retail market.
So yes, I mean, we expect about a half turn higher when the dust settles and we have to adjust our production planning processes to be able to fulfill the dealers adequately when turns are a half turn higher. But it’s still very chaotic today. I’m not sure it has settled yet.
Joseph Altobello: Okay. Great. Thank you, guys.
Operator: Thank you. It comes from the line of James Hardiman with Citi. Please go ahead.
James Hardiman: Hey, good morning. Thanks for fitting me in here. So really appreciate the comments on both wholesale and retail. I think everybody at this point sort of agrees earnings power for fiscal 2023 is going to be down materially as the industry sort of normalizes versus the last couple of years. I guess my question is, if retail and wholesale for the industry play out the way that you expect, do you think that sets the stage for you to, again, grow the top and bottom lines as we look to fiscal 2024. And obviously, there’s a lot of moving pieces there, right? Where are inventories as we finish 2023? How are you thinking about ASPs promotional environment, all of that. But ultimately, do you think we’re going to exit the next year in a healthy enough place that you’ll be able to grow again?
