Earnings Call Transcript - LCII Q2 2025

Operator, Operator

Hello, everyone, and thank you for joining the LCI Industries Second Quarter 2025 Conference Call. My name is Lucy, and I will be coordinating your call today. It is now my pleasure to hand over to your host, Lillian Etzkorn of LCI Industries to begin. Please go ahead.

Lillian D. Etzkorn, CEO

Good morning, everyone, and welcome to the LCI Industries Second Quarter 2025 Conference Call. I am joined on the call today with Jason Lippert, President and CEO; along with 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 may be 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 the forward-looking statements are made, except as required by law. With that, I would like to turn the call over to Jason.

Jason D. Lippert, CEO

Thank you, Lily, and good morning, everyone. I'd like to welcome you all to LCI Industries' Second Quarter 2025 Earnings Call. We delivered strong second quarter results with $1.1 billion in sales, up 5% year-over-year, along with 2% organic toy hauler content growth despite RV mix headwinds. Our strong performance reflects the dedication of our teams, the strength of our diversified markets and products, and the durability and expansiveness of our competitive moat. While elevated interest rates and other macro factors continue to challenge RV retail demand, our strategic foundation effectively drives growth and resilience, keeping us firmly on track to achieve our $5 billion organic revenue target in 2027. Our 5% growth was driven by continued market share gains in our top five product categories: appliances, axles and suspension, chassis, furniture and windows as well as the continued traction of our five recent key innovations that have reached a $100 million run rate. Our recently completed acquisitions of Freedman Seating Company and Trans/Air contributed $32 million of sales in the quarter, while strengthening our position in the bus market. This market further expands our durability as it benefits from continuous and essential municipal fleet upgrades, providing $200 million in expected annualized revenues to Lippert unrelated to consumer demand. Early integration efforts have been very successful operationally and culturally engaging all 875 new team members collectively between the two new businesses within weeks of closing the acquisition. In addition, we are making good headway on synergies through consolidations of our transportation business units and teams. In addition, Freedman has just announced new product launches for heavy-duty commercial buses, an entirely new market for them. We remain focused on what we can control, reducing raw material exposure, mitigating new costs around tariffs and allocating capital with discipline across M&A, CapEx and shareholder returns. We are happy to announce that our tariff mitigation strategy of diversifying our supply chain with help from our vendors and other sourcing strategies enabled us to minimize the impact of pricing to our customers as well as support our bottom line in the quarter, in line with what we stated last quarter when tariffs were first announced. We're also making strong progress toward our goal of reducing China exposure to 10% by the end of 2025, down from 24% in 2024. We are achieving this by further diversifying our supply chain into more strategically favorable regions, including bringing some products back to the U.S. for manufacturing, renegotiating supplier agreements and leveraging existing inventory to further mitigate cost pressures. We also continue to drive facility consolidation, taking decisive action across multiple facilities to optimize our footprint. These actions, along with a lower indirect spend and reduced salaried labor, drove sequential adjusted EBITDA margin expansion of 40 basis points to now 11% in the quarter. To support ongoing cost reduction, we intend to continue to optimize our facility footprint in calendar year 2026 by targeting underutilized space for reduction. All our additional actions are helping continue our momentum toward the targeted 85 basis point overhead and G&A reduction for 2025. I'll now move on to the results by business. RV OEM net sales totaled $503 million in the second quarter, with North American RV sales up 5% and overall RV sales up 3% year-over-year, driven by market share gains across our top five product categories. This growth was partially offset by a decline in North American RV wholesale shipments as dealers remain cautious with inventory levels after the previous quarter's restocking. Nonetheless, long-term trends supporting the outdoor lifestyle remain strong. According to KOA's 2025 Camping & Outdoor Hospitality Report, over 11 million new households have entered the camping market since 2019 and 72 million Americans are expected to take an RV trip this year, reinforcing a solid foundation for future demand and favorable demographics. The successful adoption by OEMs of our recent innovations like our Chill Cube 18K air conditioner, anti-lock braking systems, 4K window series, SunDeck and TCS suspension system continue to drive share gains during the quarter. Recently, we engaged in a collaboration with Keystone Cougar, the best-selling fifth-wheel RV, where we highlighted the capabilities of our new Chill Cube. In this collaborative effort, Keystone and Lippert sent our marketing teams to Death Valley, California, where we showcased the Chill Cube's cooling power, energy efficiency and quiet operation in one of the most extreme environments in the U.S. The marketing and social media campaigns were released early last month. The Chill Cube and other market-leading innovations that are so critical to customers continue to drive adoption among OEMs, reinforcing our value proposition across all price points. Well-received innovations and continued market share gains increased organic content for travel trailer and fifth-wheel by 2% year-over-year, continuing our trend of organic content expansion despite stiff mix headwinds. Our ability to continuously grow content even amid this ongoing shift towards smaller single axle trailers underscores the strength and relevance of our portfolio. Many of our components such as axles, chassis, suspension systems and appliances are critical to the units, not to mention critical to safety, reliability and convenience for the consumer, making our products difficult to remove in any de-contenting environment. Combined with our large-scale procurement of the raw materials required for these products, low-cost manufacturing and strong OEM relationships, our offerings remain a solid choice for partners seeking reliable, high-value solutions and continued innovation in the space. Looking ahead, we're confident we can capture additional content opportunities and anticipate that organic content growth should return to 3% to 5% annually in a normalized wholesale environment. Turning to the Aftermarket. Net sales were $268 million for the second quarter, up 4% year-over-year, primarily driven by product innovations and the expanding Camping World relationship in the RV aftermarket. We continue to see strong demand for Furrion appliances, particularly in air conditioning, where the Chill Cube and the rest of our AC lineup continues to gain share in the aftermarket. We've already sold three times more air conditioners in the aftermarket through the first six months of 2025 than we did of all of 2024. This is a testament to our incredible Aftermarket sales teams and technical teams that assist dealerships with the service and winning sales programs. As our aftermarket products continue to see increased adoption in part through more and more OEM placement over the years, it helps fuel our long-term growth strategy in this segment. As OEM content grows and more RVs exit their warranty periods, demand rises in parallel. Further supporting this is the growing U.S. RV ownership base, ultimately creating a larger installed base, which generates recurring product and service opportunities for our business. Our partnership with Camping World also remains a key aftermarket growth driver with sales in their stores up over $7 million year-to-date, indicating strong retail momentum and customer demand as a result of our in-store collaboration with the Camping World team. This continued strength highlights the impact of strategic alignment and collaborative execution as we increasingly strengthen our retail presence with the largest RV dealer in the world, both in stores and online. In addition, we are also working on similar projects with many other dealerships across the country to apply our Lippert Parts in-store concept. We also continue to invest heavily in the long-term growth of our aftermarket by building on our service and training functions. Our dealer tech training programs are an important piece of our aftermarket growth strategy as they help to ensure that our products are supported correctly after the sale to retail, strengthening our pull-through with dealer service centers. Last year, we completed service on over 1,500 mobile service repairs, which adds to Aftermarket revenues. We are set to exceed that this year. And later on this year, we are adding new stand-alone service bays in Alabama, California and to our existing Indiana facility, which will help us attract even more customers for service and upfit of our new innovative products. We demonstrate the robustness of our technical service team that assists dealers and our other customers in the aftermarket. Through the first half of 2025, our service ecosystem had 600,000 views of Lippert-branded tech support seminars, 28,000 individual completions of technical training classes and over 1 million visits to our Lippert branded technical service pages, demonstrating our reputation as a trusted dealer partner. We plan to continue to foster these efforts to bolster service support as dealers consistently express their appreciation and tell us, we provide the most comprehensive technical support in the entire industry. Turning to Adjacent Industries, second quarter sales increased 10% year-over-year to $336 million, largely due to our recent acquisitions, Freedman Seating and Trans/Air, that expand our presence in the bus market as well as some nice organic growth in utility and cargo trailer markets with our axles and suspension products. This growth was partially offset by ongoing softness in the marine market as dealers continue to prioritize inventory rebalancing. We expect softness in the marine market to continue for the balance of the year. We remain committed to product innovation and recently launched a new line of modular replacement pontoon furniture for marine aftermarket consumers, giving boaters a cost-effective way to refresh their boat without purchasing a new unit. We also launched a brand-new pontoon ladder system this quarter, which has had great success already making its way into several key pontoon brands as the marine manufacturers enter all their key dealer shows this month. Utility trailers continue to represent meaningful long-term content potential. With approximately 600,000 utility and cargo trailers produced annually, we are well positioned through the strong relationships with leading OEMs to leverage our axle manufacturing and suspension products expertise as well as getting them to start considering advanced technologies and content such as anti-lock braking systems, touring coil spring suspension and tire pressure management systems. Axle and suspension components represent the largest single content category in these trailers and our leadership in this area remains a key competitive advantage. In the transportation industry, our window systems and glass products are contributing to content growth across on-highway, off-highway, school bus and transit bus platforms. The bus market, in particular, continues to demonstrate durability with approximately 70,000 units produced annually and a growing need for fleet replacement across states and municipalities. As mass transit continues to expand, we believe this will remain an attractive market and look forward to further expanding this portfolio in the quarters to come. Lastly, as I mentioned in my opening comments, Freedman is now entering the heavy-duty commercial bus product market with brand-new seating solutions that could have meaningful impact on the business. Turning to capital allocation. We remain focused on sustaining a strong financial foundation while driving growth and returning capital to shareholders. In the first half of 2025, we generated $155 million in operating cash flow, supported by improved working capital discipline. Additionally, as of June 30, we had $192 million in cash, $595 million of availability on our revolver and net debt of approximately 2x EBITDA, positioning us well to pursue strategic acquisitions, invest in innovation and navigate a dynamic environment with flexibility. We also returned capital through a $1.15 per share dividend. We are also excited to announce that we have executed $128 million in share repurchases year-to-date through August 1, with $200 million of remaining capacity under our newly authorized $300 million program. This continues our consistent and disciplined capital deployment strategy we've executed and balances long-term investment with near-term returns, driving shareholder value across market cycles. Moving to culture. One of our key competitive advantages has played a significant role in reducing employee turnover and fostering a more engaged, committed workforce. Retention is important, but retention combined with high engagement is where the true value lies. We believe helping our team members find meaning and purpose at work by supporting both their personal and professional goals creates an X-factor type advantage that contributes to long-term stability and operational excellence. To be specific, over the last four years, we have been working toward a bold goal. And that goal is by 2025 for every team member to have written personal goals and be actively pursuing them because we believe that when our people grow personally that the business will grow as a result of more engagement. We also believe that business can and should be a force for good, demonstrated by the hundreds of community service events organized by our culture and leadership team. Through these service events, thousands of our team members collectively have served over 125,000 hours of volunteer service each year. This effort reinforces a core belief at Lippert when people unite around a shared mission, their impact extends far beyond the bottom line. Not surprisingly, we found that retention rates in team members who serve is twice as high as those who haven't been involved with these serving events. So service is not only good for the community, it's good for business. As we look ahead to the second half of the year, we remain cautiously confident. While inflation and tariff uncertainty continue to pressure consumer behavior, we're encouraged by our ability to respond quickly and thoughtfully. That said, we remain confident in our ability to align our cost structure, capital deployment and production cadence with real-time market conditions, just as we have done successfully in past cycles while continuing to grow our market shares in all our end markets. July 2025 sales were up 5% year-over-year, and we anticipate that to be the trend for the rest of Q3. We also continue to maintain our full year 2025 forecast for North American RV wholesale shipments at 320,000 to 350,000 units, and we plan to remain steadfast to our approach to achieve growth in this environment grounded in what we can control. In addition, we believe the toughest part is behind us as the team has done an incredible job rightsizing the business and continuing to rightsize after the falloff in RV volume in 2023. We believe we are putting ourselves in a great position for success as we come out of the cycle and off the bottom as volume begins to get back to a more normalized level. In closing, we operate a diversified and durable business, supported by a rich history and culture rooted in servant leadership, operational discipline and strong execution from an experienced leadership team. While the external environment may remain somewhat volatile in areas, our strategy hasn't changed. We successfully navigated cycles like this before and have recently demonstrated that we have done it again. Our competitive moat is even more valuable in uncertain times, positioning us to continue driving market share gains and long-term growth. As always, and probably the most important thing I can say on these calls is that none of these results and accomplishments will be possible without the phenomenal consistency of our leadership teams across the business. The dedication, ingenuity, and passion of our people continue to move Lippert forward and provide outstanding results. I'm as proud as ever of what we're building together and even more excited for what's to come. I'll now turn the call over to Lillian, who will provide more detail on our financial results.

Lillian D. Etzkorn, CEO

Thank you, Jason. During the quarter, Lippert's industry-leading innovation, strong competitive advantages and successful M&A drove net sales growth, while our ability to mitigate tariffs and advance cost savings initiatives delivered resilient margin performance despite mix headwinds. Our consolidated net sales for the second quarter were $1.1 billion, an increase of 5% from the second quarter of 2024. OEM net sales for the second quarter of 2025 were $840 million, up 5% from the same period of 2024. RV OEM net sales for the second quarter of 2025 were $503 million, up 3% compared to the prior year period, driven by market share gains and an increased mix of higher content fifth-wheel units. These results were partially offset by the overall continued shift in unit mix towards lower content single-axle travel trailers. Single axle trailers do remain in an atypical portion of production, but we expect this trend to normalize once consumer demand recovers. Content per towable RV unit was roughly flat year-over-year at $5,234, and content per motorized unit was up 1% to $3,793. Towable RV organic content grew 1% sequentially and 2% year-over-year, supported by the share gains we delivered in the top product categories we supply to RV OEMs: appliances, axles and suspension, chassis, furniture, and windows as well as the continued adoption of recent innovations like our ABS, TCS, and best-in-class appliances. This growth offset the impact from the continued shift to smaller single axle trailers. Adjacent Industries OEM net sales for the second quarter of 2025 were $336 million, up 10% year-over-year, primarily due to sales from acquired businesses within transportation, which represents $32 million in the quarter. This was partially offset by lower sales in North American Marine as sales were down 15% due to the impact of inflation and still high interest rates on retail demand. And based on current visibility, we expect the softness to continue. Aftermarket net sales for the second quarter of 2025 were $268 million, an increase of 4% compared to the same period in 2024, primarily driven by product innovation and the expanding Camping World relationship within the RV aftermarket, partially offset by lower volumes within the automotive aftermarket. Gross margins for the second quarter of 2025 were 24.4% compared to 25.3% for the prior year period. The decrease was primarily due to executive separation costs related to the departure of our Chief Legal and Human Resources Officer and changes in product mix for both OEM and Aftermarket segments. Consolidated operating profit during the second quarter was $88 million or 7.9%, a 70 basis point contraction over the prior year period. Excluding executive separation costs, operating margin was nearly flat compared to the prior year. This reflects our successful tariff mitigation strategy where we offset $15 million in tariff and freight impacts through diversifying our supply chain, assistance from our vendors and pricing pass-through. Our operating margin was further supported by ongoing cost improvement actions, including facility consolidations and overhead reductions, demonstrating steady progress toward our 85 basis point target. These initiatives largely offset headwinds from lower margin product mix and contractual price decreases tied to commodity indices. The operating profit margin of the OEM segment decreased to 6.2% in the second quarter of 2025 compared to 6.4% for the same period of 2024. Excluding separation expenses, OEM margin improved 10 basis points to 6.5% year-over-year. The Aftermarket segment delivered a 13.5% operating profit margin, down from 15.5% in the prior year period, driven by mix and investments in capacity and distribution processes to support growth for the Aftermarket segment. However, on a sequential basis, Aftermarket margins expanded nearly 500 basis points, which was stronger than the prior year sequential improvements. GAAP net income in the second quarter was $58 million or $2.29 earnings per diluted share compared to net earnings of $61 million or $2.40 per diluted share in the prior year period. Net income in the second quarter of 2025 adjusted for executive separation costs was $60 million or $2.39 earnings per diluted share. Adjusted EBITDA in the second quarter was $121 million or 11% of net sales. Noncash depreciation and amortization was $60 million for the 6 months ended June 30, 2025, while noncash stock-based compensation expense was $11 million for the same period. We continue to anticipate depreciation and amortization in the range of $115 million to $125 million during the full year 2025. At June 30, 2025, our company's cash and cash equivalents balance was $192 million compared to $166 million at December 31, 2024. For the 6 months ended June 30, 2025, cash provided by operating activities was $155 million, down $30 million from the second quarter of 2024. Investing cash inflows included $22 million used for capital expenditures and $98 million used for the acquisition. We also announced a $300 million share repurchase program during the quarter, underscoring our commitment to balance capital allocation and shareholder returns. This authorization provides substantial flexibility to repurchase shares opportunistically while maintaining our financial strength for strategic investments and acquisitions. During the quarter, we returned to shareholders $38 million through share repurchases and $29 million through our quarterly dividend of $1.15 per share. Year-to-date through August 1, 2025, we returned $187 million to shareholders in the form of dividends and share repurchases. As of June 30, 2025, our net inventory balance was $710 million, down from $737 million at December 31, 2024. At the end of the second quarter, we had outstanding net debt of $756 million, 2.1x pro forma EBITDA adjusted to include LTM EBITDA of acquired businesses and the impact of noncash and other items as defined in our credit agreement. For the month of July, sales were up 5% versus July 2024 due to acquisition sales and pricing offset by lower North American RV production. As we think about the balance of the year, I want to remind you that historically, the second half tends to be lower than the first half, and we expect that to be the case this year as well, even with the addition of our recent acquisitions. For Q3, we expect overall revenue to be up 5% year-over-year, and this reflects total revenue, including our recent acquisition. We also continue to maintain our full-year 2025 forecast for North American RV wholesale shipments at 320,000 to 350,000. For Q3 2025, we expect RV OEM sales to be up about 4% to 5% over prior year. We also expect Q3 EBIT margins to be similar to 2024 levels. Looking to capital allocation for the full year of 2025. Capital expenditures are anticipated to be in the range of $50 million to $70 million as we continue to focus on investing in the business and innovation. We continue our aim to utilize our balance sheet to pursue strategic opportunities that help us capture profitable growth and deliver shareholder value while maintaining a long-term leverage target of 1.5 to 2x net debt to EBITDA and maintain our commitment to returning cash to shareholders. In closing, we remain on track to organically achieve our $5 billion revenue target in 2027 and return to a double-digit operating margin as our operational flexibility, strategic diversification, and effective cost management, along with a strong balance sheet, enables us to deliver sustainable and measurable shareholder value. That is the end of our prepared remarks. Operator, we are ready to take questions. Thank you.

Operator, Operator

The first question comes from Daniel Moore of CJS Securities.

Daniel Joseph Moore, Analyst

So I guess let's see a couple of things. I wanted to start with just first, inventory levels, dealer inventories, both RV and marine from your perspective, clearly, dealers remain cautious, had some significant destock in Q2. Just trying to get a sense for where you see inventories today and what the potential impact of a restock could look like once demand starts to improve in those two end markets? And then a quick follow-up.

Jason D. Lippert, CEO

Yes, thanks, Dan. The dealers have been cautious with inventories, and the OEMs have also been particularly careful. These factors have been building momentum over the past year and a half. Looking ahead, I believe this cautious approach will persist, and the discipline will remain in place. When there is an eventual lift, I anticipate it will be a slow and gradual rise rather than a quick rebound. In the marine sector, there is likely to be even more caution and discipline from the OEMs. They seem to be in the middle stages of destocking and inventory rebalancing, unlike the RV dealers. However, I've spoken to several major dealers recently, and companies like Blue Compass reported a particularly strong May and June, indicating it was the best they’ve experienced in those months over the last two years. This is encouraging, and they noted that July continued to show strong performance. Camping World also reported solid unit numbers. Therefore, while we remain in a cautious and disciplined position, which is beneficial for the industry, any eventual lift will likely be slow and steady.

Daniel Joseph Moore, Analyst

That's very helpful. I'm trying to understand the commentary regarding margins. You mentioned that EBIT margins are expected to be flat year-over-year for Q3. Additionally, you updated us on the tariff impact of 290 basis points before any mitigation efforts. Does this mean the tariff impact might be greater than we previously anticipated? Also, any insights on what the overall net margin target could look like for fiscal '25, considering we have one quarter left, would be greatly appreciated.

Lillian D. Etzkorn, CEO

Yes. Sure, Dan. So maybe some color around both the tariff impact and also just margins in general. When we're thinking about the tariffs, there's going to be margin compression from the perspective that we are not mitigating margin. We're mitigating the cost of the tariff with the actions that we're taking. So that does put pressure just mathematically on the margins as we go forward. The other thing I would call just in terms of some things driving some of the margin activity as we look to Q3 and it will be improving as we get to Q4 is we did just acquire some pretty significant acquisitions with Freedman and Trans/Air. So there is some cost associated with integrating and onboarding these organizations and streamlining to get the synergies. So that's also going to be a little bit of an overhead on the margin as we look to Q3 and a little bit, obviously, to Q4 as well. But we're continuing to work on the cost mitigation actions that Jason spoke of in his remarks, so targeting that 85 basis point overall improvement for 2025, but we do have some of those other factors overhanging on the margins.

Jason D. Lippert, CEO

Yes, you can include the mixed headwinds as well, along with the tariffs that have led to increasing steel and aluminum prices in the domestic market. As you know, we are indexed to many of our component prices for our customers, so we follow those prices upward until they stabilize. Once they stabilize, we hold until they either begin to retreat or remain at the peak. We have several challenges to navigate, but we believe these issues will adjust over time.

Daniel Joseph Moore, Analyst

Very helpful. I guess, did I hear correct that Q3 should be flattish on a year-over-year basis from an operating margin perspective? So I just want to clarify that.

Jason D. Lippert, CEO

Yes.

Lillian D. Etzkorn, CEO

Correct.

Operator, Operator

The next question comes from Joseph Altobello of Raymond James.

Joseph Nicholas Altobello, Analyst

Since we're talking about tariffs, I guess I'll start there. It looks like the impact went from about 180 basis points last quarter to now 290. So I guess, first, what was the biggest driver of that increase? And what's a good annualized number to use from a tariff standpoint?

Lillian D. Etzkorn, CEO

Yes. So Joe, the biggest change, if you recall, our last earnings call was second week in April. So it was right after the initial liberation day. We had assumed at that time that China tariffs would be at 20%. We've since settled or I should say the government has since settled at 30%. So that's going to be the biggest driver of change from the last time that we talked. And I think just kind of taking these and annualizing it is a fair representation from the tariffs on a go-forward basis. But again, we believe that through the mitigation efforts that we have, both from the resourcing, onshoring some of the product, resourcing to other nations and then pricing pass-throughs as appropriate, we do feel confident that we have mitigation plans in place so that we will not have an overall impact to the business on a go-forward basis.

Joseph Nicholas Altobello, Analyst

And just to shift over to sales, it looks like up 5% in the quarter, a little bit better than I think you had guided. Is there any impact either to Q2 or Q3 or both from the earlier RV model year changeover this year?

Jason D. Lippert, CEO

I don't think so. Can you be a little bit more specific there?

Joseph Nicholas Altobello, Analyst

Yes. It sounds like the changeover happened in June this year versus, let's say, July last year.

Jason D. Lippert, CEO

The start of the model change process is typically gradual. However, I can confirm that there was no impact from it. We expect to observe the effects over the next 12 months. That will be when we see the real impact.

Operator, Operator

The next question comes from Craig Kennison of Baird.

Craig R. Kennison, Analyst

Lillian, you mentioned the trend towards single axle towable RVs maybe close to a bottom. I'm just wondering if you can give us a sense for what mix normally is of single axle and where it is today and then confirm whether it's maybe based on your orders, whether that trend is back in a good direction.

Lillian D. Etzkorn, CEO

Historically, single axles made up a significant part of our overall mix, likely in the mid- to upper teens. Over the past 18 months, we've seen a gradual rise into the mid-20s, reaching 24% last quarter. In the second quarter, we experienced a slight improvement, dropping to about 20% to 20.5%. This uptick is encouraging, and we hope it continues. As we've discussed previously, the industry's general expectation is that we will shift back towards the larger multi-axle units, as they are more practical for consumers to use RVs effectively. Analyzing the past 12 months from a content perspective shows that maintaining a higher mix has put some pressure on content, but it was positive to see an improvement in the second quarter moving back towards multi-axle units.

Jason D. Lippert, CEO

And Craig, we track that every week. Just last week, it averaged under 20% for the week, which is a good sign. We've been monitoring this for a long time. If you look back 10 years, it was just under 10%. It has been gradually increasing over time. As Lillian mentioned, in the last 18 to 24 months, it has been creeping over 20%, with a high of 25%, and we're starting to see some decline there. That's what we want to see. We prefer fewer wholesale units and, of course, larger units and less single axles from a margin perspective.

Craig R. Kennison, Analyst

That makes a lot of sense, but I'm trying to understand the Camping World report where they're clearly performing well with the most affordable units, which I assume are also single axle. Is this simply a shift in what manufacturers are producing in anticipation of changes, or is this indicative of a trend change and improvement driven by consumer demand?

Jason D. Lippert, CEO

I believe there is some truth to that. However, I am uncertain about the feasibility of achieving good margins at the $89.99 or $12,999 price points. That's the key issue. Many of these single-axle trailers are being bought by first-time buyers. The ideal scenario is that over time, these buyers will upgrade to larger trailers that offer more features and stay in the lifestyle. Camping World has invested considerable energy and resources into this strategy, and we anticipate that in the coming years, some of the first-time buyers who purchased these smaller units will start to trade up.

Craig R. Kennison, Analyst

I guess, Jason, to that end, just looking at your Aftermarket business, I know you've got this view that pandemic era orders ultimately will lead to some reorders. How much data do you have that you can track aftermarket purchase activity among people who bought during that era because it does feel like you could get an echo effect benefit from all the activity at that time.

Jason D. Lippert, CEO

Yes. I believe that there is likely less opportunity in the aftermarket for single-axle trailers specifically because there isn't much to upgrade or repair on them. These trailers are quite basic when it comes to retail parts and customization options. For instance, they typically do not include recliners, while we add recliners to every unit we produce. There is essentially no furniture aside from a dinette, which consists of a wooden seat with some cushions. You might find a mattress occasionally, but the real aftermarket enhancements usually come with larger units. We don't have specific data tracking all those buyers, but our aftermarket segment continues to grow. We are also working on more store setups with Camping World, and there's a significant total addressable market in the aftermarket, especially in the RV and automotive sectors. Our focus will be on selling more products to dealers.

Craig R. Kennison, Analyst

And I guess just a follow-up. Are you seeing any aftermarket activity from people who purchased, let's say, 2020 or 2021? Is that consumer showing up to upgrade RVs through your Aftermarket products?

Jason D. Lippert, CEO

It's really hard to say. I believe they need to be repairing and replacing parts. That is a significant aspect of our Aftermarket business. When components fail, customers will likely need to take them to a dealership for repairs, although some might handle it themselves. Typically, when our components break, we have indicated that we have increased the content in OEM vehicles by 50% since 2021. The higher the number of components that require repair or replacement in the aftermarket, the more likely they are to choose ours since they will replace them with similar parts.

Operator, Operator

The next question comes from Patrick Buckley of Jefferies.

Patrick Neil Buckley, Analyst

Within the 5% growth quarter-to-date in July, how much of that was from acquisitions? And how much of that was driven by price?

Lillian D. Etzkorn, CEO

I'd say a good portion of it was from the acquisitions, probably 3% to 4% of that was acquisition-related.

Patrick Neil Buckley, Analyst

Got it. That's helpful. And then you touched a bit on this already, but as we try to think about tariff impact moving forward, are there any specific product categories where you see opportunity to move more of the sourcing domestic? Or I guess on the flip side, any categories that are structurally more weighted towards import?

Jason D. Lippert, CEO

Yes. I think that's always one of the first things we're trying to figure out with resourcing. If we're going to move a product, if we can move it back to the U.S., it's where we have the plants and capacity to do that. It's just a matter of do the dollars and cents make work and can we stay competitive. But I can't tell you how many resources we've put toward the resourcing initiatives with people. And on the quality side, specifically, incoming inspection because we've got a lot of new suppliers in the mix going to find new suppliers. And once we find them, we've got to validate them. And then there's a whole process when it comes to getting those first articles in and proving them at our place. So there's just a lot of activity there. It's a lot easier when we can do that internally in the U.S. But unfortunately, there's still cost incentives outside of the U.S. to reshore and resource to other countries outside of China.

Patrick Neil Buckley, Analyst

Got it. And then one last quick one from us. Looking ahead to the $5 billion in revenues in 2027, is there a wholesale shipment volume number assumed for that or maybe a range there?

Jason D. Lippert, CEO

Yes. Our assessment there is that we just return to a normalized wholesale range. And if you look over the last 10 years, it's averaged between 400,000 and 415,000. So I think that's the assumption there. And we do feel we'll get back there over the course of the next 2 to 3 years.

Operator, Operator

The next question comes from Tristan Thomas-Martin of BMO Capital Markets.

Tristan M. Thomas-Martin, Analyst

I just want to circle back to kind of the full year operating margin. I think last quarter, you kind of implied you'd see 85 basis points over 2024 is 5.8%. How are you thinking about that currently?

Lillian D. Etzkorn, CEO

I think we're still very confident in that from the perspective that we're tracking nicely for those cost saves, that 85 basis points, a lot of that's driven from footprint consolidation. We've already executed a good portion of that consolidation. There's still a little bit more to come as we continue to progress through the year. We're also continuing to focus, I think we talked on the last call, some pretty targeted efforts in terms of indirect spend and RFPs that we've been executing throughout the year. So I feel really confident that we are on track to deliver that for the year.

Jason D. Lippert, CEO

We've executed the closing of locations in California, Chesaning, Michigan, and Westville, Indiana. Those are three closures we've completed. There are costs associated with these closures, and we have a few more planned for this year and several lined up for the second quarter of next year. We have a plan in place for this.

Tristan M. Thomas-Martin, Analyst

Is the 85 basis points of improvement slightly offset by a higher expected tariff impact, or does it suggest that we might be slightly below the 6 point whatever?

Lillian D. Etzkorn, CEO

Yes. As I mentioned earlier in the call, because we are focusing on mitigating the dollar impact of the tariffs, there is some natural margin compression. We will not be adding margin on top of the tariff costs, which results in a percentage decline in margin as we prioritize reducing the dollar amount.

Tristan M. Thomas-Martin, Analyst

Got it. I have a two-part industry question. First, how are you assessing retail demand this year? Secondly, if we consider your wholesale range of 320,000 to 350,000 and factor in your RV OEM sales plus the 4% to 5% comment, which I assume includes some price and content share, does that indicate a very weak production volume for the fourth quarter?

Jason D. Lippert, CEO

In retail, we experienced some negative comparisons year-over-year last year and as we approached this year. However, it appears to be stabilizing. We believe that wholesale and retail performance will be quite similar this year. That's our current perspective on retail.

Tristan M. Thomas-Martin, Analyst

And then kind of like 4Q kind of implied wholesale production?

Lillian D. Etzkorn, CEO

Typically, that's pretty normal from a seasonality perspective. So we're not expecting anything unusual in that regard.

Jason D. Lippert, CEO

A lot of it is going to depend on these macro factors we keep talking about. If the environment starts to improve towards the end of the year, we could see some heavier restock by the dealers coming into the next selling season. We're hopeful for that. We're not banking on it, but we've been in this front for two years since the falloff in late '22. So we keep getting closer to the end of this, and the lift is coming in the next 2 to 3 quarters likely.

Operator, Operator

We currently have no further questions. So I'd like to hand back to Jason for any final remarks.

Jason D. Lippert, CEO

Yes. I just want to say I'm really proud of the teams. I just had mentioned that we spent the last couple of years really rightsizing the business and working hard to recover from the dip that we had in the industry. So I'm thankful to our teams, and it's good to see our ROIC and EBITDA in double digits now. We're going to keep working to improve that. So thanks all for coming to the call.

Operator, Operator

This concludes today's call. Thank you for joining. You may now disconnect your lines.