Michael Happe: We put our management plan together for our fiscal year back in the July, August time period. And we felt at that time that the back half of fiscal year 2024 had an improved chance of an upward swing, especially on shipments than the first half. And as we’ve indicated, I don’t think that stance has changed. Although I would say a couple of things probably are working to maybe balance themselves out. One is, dealers appear to be probably even more disciplined than we anticipated on bringing inventory in, in advance of the spring retail selling season. And particularly, and we haven’t talked about it much yet in the Q&A, but the pontoon dealers are being very disciplined as well. Even though we have probably the most preferred brand of choice right now in that category, the dealers are still taking care of their businesses by managing inventory.
So that has been a little bit bigger of a headwind versus our management plan expectations. To your point, though, we did not factor in any rate cut specifically into our fiscal ’24 planning. And so the comments, obviously, that the Fed delivered a week or so ago about probably an increased chance of rate cuts in calendar ’24 certainly is a positive sign. I think the relation of a rate cut to retail will depend on the degree of the cut and the frequency of cuts quantity wise and just the general economic view by consumers going forward. Certainly, the equity market bouncing back helps with certain consumers in terms of spending power in the future. But as of this point, I think we’re still generally holding to what we believe our management plan is in the third and fourth quarter, but watching carefully, given that Q2 is going to be more pressured than we had hoped.
Operator: Our next question is going to come from the line of James Hardiman with Citi.
James Hardiman: So I just wanted to clarify a previous line of questioning. Bryan, last quarter when we talked about sort of the ASP changes, I think we were saying that all in, Towables are going to be down mid to high single digits. Motorized, we’re going to be up modestly in terms of ASPs. Where do those numbers stand today if I’m factoring in both the apples-to-apples changes and then the mix shift?
Bryan Hughes: The like-for-like one product price today versus what it was a year ago on the Towables business, I’m seeing like-for-like of down low to mid single digits right now. All in, we had — it was, I think, a 13% decline in ASP for Towables so the large portion of that reduction in ASP driven by mix. I think that, that’s probably the right go-forward assumption sitting here today, knowing what we know. As I mentioned, we’re seeing some stability quarter-to-quarter in our bill of material or our cost. And so we’ll see what the consumer shift might be as it relates to impacting that mix. I’m not intending to provide any commentary sitting here today that we expect a mix shift. I’ll let Mike comment on his expectations for mix.
But that’s kind of what I’m saying on the Towables side. For Motorhome and Marine, I think we’ll continue to see some increases related to specifically motorized chassis cost increases that we continue to need to price for and likewise, some inflationary pressure still on motors within marine. So I guess those are the clarifying comments I’d make. Mike, anything to add on?
Michael Happe: James, I would say our business has not yet seen the full impact at retail or certainly at shipments of the new products that our Towable businesses are introducing. And so the Winnebago brand with the Access stick-and-tin trailer with the M-Series travel trailer, Grand Design with the Reflection 100, the Influence Fifth Wheel with the Serenova trailer, all of those are really in the very early stages of being produced and shipped to the market. And so from a mix standpoint, we will be putting into the market products we’ve never had before in our line at ASPs and price points and ultimately, retail that are more competitive than some of our historical products. And so I think we’ll have to watch that trend over future quarters. And that’s why we’re reasonably optimistic about our ability to continue to hold and fight for market share in the future, our new product launches like that on the Towable side.
James Hardiman: But just to clarify the clarification here, I apologize. Bryan, when you say the all-in Towables down 13% ASP, is that the right go-forward assumption? Are we saying that for the full year, we should expect something down double digits in terms of ASPs or should I think about that as, call it, a $42,000 ASP is a decent assumption for the rest of the year? Just making sure we’re on the same page.
Bryan Hughes: I think a double digit decline in ASP is a reasonable assumption going forward for the Towables business at this stage, considering the mix shifts as well as the like-for-like pricing.
James Hardiman: And then Mike, you’ve mentioned that when you look at the Street models, we were not modeling SG&A correctly. That’s certainly helpful. And then obviously, with a lot of your commentary where you’re directing us for Q2 is substantially beneath where the Street was. I guess as we look to the second half, and I don’t expect guidance here per se, but the Street is, after what sounds like it’s going to be about $2 of earnings or less in the first half, the Street is modeling $4 roughly of earnings in the second half. Is there anything that jumps out of you in terms of where the Street is positioned? Do you think that’s too high, too low, just right? Any help with how the Street is currently positioned for the second half?
Michael Happe: James, we appreciate the question. At this time, we’re not going to offer commentary on the full year at this point. We may choose to change our position in the future on annual guidance commentary. But at this time, we’re going to focus our comments to you all on Q2. There’s a bit more certainty, certainly considering timing around that period. And so I just won’t offer any additional comments at this time about the back half of the year and subsequently what that full year would then mean.
