Michael Happe: I think you can tell by some of the numbers in the earnings release that our retail has generally been in line with the rest of the industry during the quarter. We’ve actually felt better about trailing share results here recently in Q2. I would say retail to date on the RV side in Q3, which began with the month of March for us, has been sequentially better, obviously with the seasonal nature of our business, but probably still a little bit behind where most of the industry would like us to see. I know there’s been commentary in the industry about when we’ll start to see positive retail comps on RVs, and some have speculated it’s in the April to May time period. My guess, as we sit here today, is you’ll probably see that more in the May time period than the April time period based on what we’ve seen here in the first three weeks of March.
Tristan Thomas-Martin: Okay, thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Craig Kennison of Baird.
Craig Kennison: Hey, good morning. Thanks for the slides and commentary on the mid cycle targets I wanted to ask about — on Slide 15 you talk about profitability initiatives. Could you shed light on what those might be?
Michael Happe: Yeah. Good morning, Craig. This is Mike. Those will cover a range of activities, and I’ll offer some examples. We expect to see margin improvement based on certainly recovering volume as we indicated on Slide 15. But we also believe that some of the new products that we have in our pipeline will also demonstrate improved margin over the course of the next three to five years as well. We have ongoing, constant strategic sourcing initiatives in the business. I would say in fiscal year ’24 to date, we’re tracking somewhere in the neighborhood of $17 million to $20 million of strategic sourcing savings from that particular center of excellence. We anticipate continued success and contribution to margin from that area.
And then each of our manufacturing operations around the company are also focused on productivity and efficiency. And as we offered some of these mid cycle targets this morning, on the EBITDA side, we have some estimates internally as to some of the benefits of those productivity and efficiency activities from our manufacturing campuses. So we won’t get into specific details there, but it’ll be a combination of volume and a combination of new products and a combination of operational supply chain and manufacturing efficiency.
Craig Kennison: As a follow up, can Lithionics play a meaningful role in EBITDA margin expansion, or is it not large enough to matter In that context?
Michael Happe: Lithionics will and can contribute to incremental margin improvement for our overall business. The degree of how much that will be and the timing of that will certainly depend on the growth of Lithionics and the overall adoption of lithium-ion battery packs in the RV, Marine and Specialty Mobile Industry segments. But when we made the Lithionics acquisition now almost a year ago, April of 2023, we indicated that it was not only a strategic acquisition and a technology acquisition, but that we also expected it to have on the bottom line some meaningful financial contribution impact over time. Again, we’re not going to assign a value to Lithionics this morning. But yes, we do anticipate that it will begin to contribute a little bit more every year in terms of its bottom line impact.
Craig Kennison: And finally, as it relates to Slide 7, Barletta has had just an amazing run, getting almost 8% market share of the pontoon market. Your goal is 13%, which is not a small leap from here. Could you just give us some reasons behind your confidence in expanding share by that much?
Michael Happe: Well, first and foremost, our confidence begins with the team at Barletta. We feel we just have a tremendous team of passionate leaders and employees there who are focused every day on the end customer, our channel partners, and building the very best premium pontoons in the market. Craig, our recent market share results with Barletta have been very impressive. In fact, I believe the standalone month that we just received from SSI here recently on pontoons was double digit market share for Barletta in that particular month. And so while the 13% is a trailing 12-month number that we intend to shoot for, and that is aggressive versus what we have indicated here on Slide 7 for trailing 12 months here early in fiscal ’24.
The recent trailing three-month and standalone month market share numbers are actually approaching double digits. So the gap may not be as far away as we think, but we’ll remain humble and paranoid and stay focused on doing the right thing and driving to a top two or three position in that category over time.
Craig Kennison: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from James Hardiman of Citi.
James Hardiman: Hey, good morning, guys, and thanks for taking my questions here. So, wanted to dig in on inventories a little bit. I guess first, it looks like the absolute level of inventories for your business seem like they’re in pretty good shape. I think from an industry perspective, the bigger concern seems to be the aging of inventory. Maybe walk us through any numbers you have in terms of the model year ’24s versus ’23sat this point in the channel, and then any comparisons would be great? Where was that mix last year? Where is that mix historically and where you would like it to be? And then any thoughts on sort of how you compare to the industry would be great. Thanks.
