Good day and thank you for standing by. Welcome to the Third Quarter Fiscal 2022 Winnebago Industries Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Steve Stuber, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. And thank you for joining us today to discuss fiscal 2022 third quarter earnings results. I am joined on the call today by Michael Happe, President and Chief Executive Officer; and Bryan Hughes, Senior Vice President and Chief Financial Officer. This call is being broadcast live on our website at investor.wgo.net and a replay of the call will be available on our website later today. This news release with our third quarter results was issued and posted to our website along with the earnings supplement earlier this morning. Before we start, I’d like to remind you that certain statements made during today’s conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain in a number of factors, many of which are beyond the company’s control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which I encourage you to read. With that, I would now like to turn the call over to our President and CEO, Michael Happe. Mike?

Thank you, Steve, and good morning, everyone. We appreciate the time you are investing today to hear about our record-breaking third quarter results. I will start the call by summarizing our performance during the quarter. Then pass it to Bryan Hughes to cover our financial results in more detail. I will wrap up with a few closing remarks before we open the line for your questions. We have spent the last six years at Winnebago Industries transforming our enterprise portfolio. Today we have five premium outdoor brands and seven different businesses operating in two large outdoor recreation industries and in multiple market segments, which we believe have long-term increasing secular growth potential. As a more diversified organization, we are driving higher levels of operational excellence internally, which is leading to sustained stronger gross margins and we continue to deliver tremendous value externally to end customers centered around our golden threads of quality, innovation and service. Our strategic financial and cultural foundation at Winnebago Industries has continued to elevate and improve each of the last six years. We are committed to running a high-quality, disciplined and resilient organization, regardless of the market conditions which present themselves. Throughout this specific fiscal year 2022, our team at Winnebago Industries has executed extremely well, delivering consistently strong operating results and gaining market share in several key large segments, including Towable RVs and pontoon boats. Our team is focused on doing well by our customers and doing good for our communities. I am incredibly proud and grateful of all our team members. We sustained our fiscal year 2022 momentum during the third quarter, driving record results by taking full advantage of fulfilling on our RV order backlog and continued strong consumer demand in our growing Marine segment. We delivered record third quarter net revenues of $1.5 billion, which represents growth of 52% over last year and a growth rate of 41% on an organic basis. Our RV unit sales were up approximately 7% compared to last year, which is particularly notable since the third quarter of fiscal 2021 was during the height of the pandemic-driven demand spike. Our retail results also continue to outpace the industry, gaining share across both of our RV segments and pontoon boats and growing our overall pipeline of loyal customers. More specifically, on a fiscal year-to-date basis, our RV retail market share is 13.2% or plus 70 basis points versus last year. In the Marine segment, Barletta recorded another strong quarter, growing its retail market share in pontoon boats to 6.6%, which is 1.6 percentage points ahead of last year on a trailing three-month basis through April 2022. We are incredibly pleased with the performance and integration of the Barletta business since the close nine months ago. It has exceeded expectations. This overall affinity for our brands also enabled us to continue taking well-considered pricing actions to offset inflation during the quarter, which was a significant contributor to our record topline performance. Our business unit teams remain focused on partnering with our key suppliers to creatively manage continued cost pressure, and we frequently use the full scale and collaboration of our enterprise via our strategic sourcing function to further manage supply chain constraints. Smart pricing actions may remain an important lever in the future for us to offset higher materials and component costs, and manage our margins going forward. But we are equally focused on managing input costs and discretionary SG&A. While we remain confident in the resiliency of our brands, we are being extremely mindful of any impact those actions have on our ability to continue gaining market share. In terms of profitability in our fiscal third quarter, we also saw year-over-year improvements across our segments. This came in the face of previously mentioned supply chain-related cost pressures and disruptions we are still experiencing in various degrees across our portfolio, which I will talk about more in a moment. The broad-based improvements are entirely due to the incredible execution by the entire Winnebago Industries team. Their execution kept our operations running efficiently without sacrificing quality in service. As always, operational excellence will continue to be a primary focus of ours moving forward. As I have discussed in previous quarters, in this constantly evolving macro environment, the supply chains for each of our segments are experiencing varying degrees of disruption, and in turn impacting dealer inventory levels in diverse ways. Inventories in our Towables RV segment have returned to normalized levels, as parts supply stabilized and our second quarter and third quarter production output meaningfully addressed our backlogs, while Motorhome RV and Marine field inventories continue to remain below our targeted levels. The supply chain for our Marine and Motorized segments are most acutely impacted by disruptions currently, and dealer inventories are the most constrained in these businesses. While we will absolutely demonstrate production discipline in our Towables RV businesses and look to match output with dealer turn targets and retail demand, both of our Motorized RV businesses and our two Marine businesses have further runway to carefully drive increased shipment revenue in the short-term. Responsibly producing and maintaining appropriate field inventory levels remains a high priority for us and for the health of our channel partners and we are collaborating closely with our dealer partners to ensure they have the mix that they desire. I have confidence that the world-class Winnebago Industries team will rise to the challenge as they always have. Overall, we are incredibly proud of our performance this quarter, we delivered responsibly for our dealer partners and end consumers, our record results and share gains show that our business strategy is still relevant and working, while our team continues to navigate in the face of a continuously difficult secular and macro-economic environment. With that, I will turn the call over to our Chief Financial Officer, Bryan Hughes, to review our fiscal 2022 third quarter financials in more detail. Bryan?

Thanks, Mike, and good morning, everyone. Third quarter revenues were $1,458 million, reflecting an increase of 52%, compared to $960.7 million for the fiscal 2021 third quarter. Excluding Barletta, our organic growth for third quarter was 41%. As Mike mentioned, even compared to a very strong 2021 period, Winnebago delivered strong revenue growth in all three segments driven by a combination of pricing actions and increase in unit shipments. We also delivered another period of very strong profitability in the quarter driven by higher revenues and pricing actions that serve to offset an increase in material and component costs. Gross profit was $273 million, up 61%, compared to $169.6 million for the fiscal 2021 period. Gross profit margin of 18.7% was 100 basis points stronger than last year, driven by operating leverage, price increases and favorable segment mix, partially offset by higher material and component costs. Operating income was $176.7 million for the quarter, increasing 73%, compared to $102.4 million for the third quarter of last year. Note that our third quarter operating income includes $0.7 million in acquisition-related costs and $4.6 million of incremental amortization of intangible assets related to the Barletta acquisition. Fiscal 2022 third quarter net income was $117.2 million, an increase of 64%, compared to $71.3 million in the prior year quarter. Note that fiscal 2022 third quarter net income includes an $11.8 million of contingent consideration fair value adjustment related to the earn-out associated with the Barletta acquisition, which is included in the non-operating loss line. As a reminder, we are removing this adjustment from the calculation of adjusted EPS. Recall also that we included multiple earn-out periods structured in such a manner that the multiple on this acquisition is further reduced as the earn-outs escalate; as such, recognizing an additional $11.8 million of contingent consideration fair value adjustment this quarter is a result of Barletta’s continued strong performance, a maximum of $50 million in earn-outs can be earned for performance achieved in calendar 2022 and 2023, and are tied to the business achieving certain gross profit objectives in each year and in the aggregate. Reported earnings per diluted share was $3.57, compared to reported earnings per diluted share of $2.05 in the same period last year. Adjusted earnings per diluted share was $4.13, which represents an increase of 84%, compared to adjusted earnings per diluted share of $2.24 in the same period last year. I will now turn to our segment performance, starting with our Towable segment. Revenues for the Towable segment were $805.6 million for the third quarter, up 45% from the prior year, primarily driven by pricing increases across the segment in addition to solid unit growth related to producing and shipping units to fulfill a robust dealer order backlog. Segment adjusted EBITDA was $117.8 million, up 47% from the prior year period. Adjusted EBITDA margin of 14.6% increased 20 basis points over the prior year, driven by operating leverage and pricing, partially offset by cost input inflation. Backlog decreased as expected to $1.3 billion, down 14% from the prior year and down 30% sequentially, as Winnebago Industries successfully replenished dealer inventories in the segment. It is our practice to cleanse our dealer backlog on a monthly basis and accordingly we also continue to emphasize our practice of building units to fulfill dealer orders. Next, let’s turn to our Motorhome segment. In the third quarter, revenues for the Motorhome segment were $516.3 million, up 34% from the prior year, driven by continued strong unit sales and pricing increases across the segment. Segment adjusted EBITDA was $64.4 million, representing an increase of 72% from the prior year. Adjusted EBITDA margin was a strong 12.5%, up 280 basis points year-over-year, driven by pricing and operating leverage, partially offset by higher material and component costs. Our teams continue to do a great job managing ongoing supply chain inconsistencies in the delivery of chassis and other components, as well as executing pricing actions that continue to offset inflationary impacts. Finally, let’s turn to our Marine segment. In the third quarter, revenues for the Marine segment were $126.5 million. Both Barletta and Chris-Craft continue to perform well. In particular, the Barletta brand continued to outperform our expectations and deliver growth and margins accretive to the Winnebago Industries portfolio. Marine segment adjusted EBITDA of $19.8 million was $18.2 million higher than the same period last year and adjusted EBITDA margin was 15.7%, 620 basis points higher than last year, reflecting the addition of the Barletta business and improvements in the Chris-Craft business. Turning now to the balance sheet, we continue to maintain a healthy liquidity position of approximately $431 million, including an untapped ABL of $192.5 million. Our net leverage ratio is currently at 0.6 times. From a capital allocation perspective, we continue to prioritize investments in our business to fuel organic growth. On a fiscal year-to-date basis, our CapEx spending is $63 million, which is materially higher than last year’s year-to-date CapEx of $24 million. We continue to carry elevated inventory as a means of mitigating some of the supply inconsistencies that we encounter on a daily basis. We continue to view this as a prudent action to support our operations and believe that this cash investment will liquidate in the longer term and be available for other capital allocation priorities as the eventual drawdown in working capital occurs. As evidenced by our purchase of the Barletta business less than a year ago, we will also remain active in growing our portfolio strategically and we will continuously evaluate acquisition opportunities that we believe to be accretive and generate returns above our cost of capital. During the quarter, share buybacks totaled a record $70 million, and on a year-to-date basis, we have bought back $130 million of our shares, leaving $80 million remaining of the $200 million share repurchase authorization our Board approved in October 2021. Additionally, our dividend this year is running at a pace that is 50% higher than it was last year. Combining share buybacks with dividends, we have returned a robust $187 million to shareholders on a trailing 12-month basis through the third quarter of fiscal 2022. This is approximately 7.3 times the prior year’s fiscal third quarter trailing 12-month period. That concludes my review of our quarterly financials, and with that, I will now turn the call back to Mike to provide some closing comments. Mike, back to you.

Thanks very much, Bryan. With that review of the strongest quarterly results on our company’s history complete, we will turn to some specific thoughts on RV demand for the remainder of calendar year 2022. Recently the RV Industry Association published their view of wholesale demand for calendar 2022, with the midpoint being 550,000 units or negative 8% versus calendar 2021 shipments, with a range of 538,000 shipments on the low end and 562,000 on the high end. Given current retail trends in the unstable macro-economic environment, we subscribe to the lower end of the shipment range for approximately 530,000 units, which is negative 12% versus calendar 2021. This view reflects normalized Towable dealer inventory levels and a Motorized segment that is still witnessing supply chain constraints and dealer inventory levels that have not been fully normalized. As I mentioned earlier, we will continue to work closely with our suppliers to mitigate issues as much as possible and our dealer partners to keep their inventories at healthy levels. Turning to retail demand, I am confident that the appetite for our expanded portfolio of premier outdoor lifestyle brands will continue to outpace the market. Looking at the RV industry at a macro level, we continue to be optimistic about the long-term health of RV demand as record levels of U.S. households pursue outdoor activities. In the short-term, we are coming off a record level of demand in calendar 2021 and macroeconomic headwinds persist including fluctuations in interest rates, gas prices, inflation and declining consumer sentiment. With those considerations and a wholesale forecast of 530,000 units in 2022, we believe that retail sales for calendar 2022 will likely fall in the 475,000 unit range or negative 17% versus calendar 2021. We continue to follow those trends closely to ensure our production and shipments into the channel are aligned with retail sales. And to remind our audience this morning, five of our seven businesses at Winnebago Industries, our two Marine brands, our two Motorized brands and our Specialty Vehicles business continue to have real market growth potential ahead in the rest of calendar 2022 and into 2023. The modern complexion of our company provides increased stability and opportunity than most perceived. The unique strength of our brand’s position Winnebago Industries well to manage component and material cost inflation, and manage subsequent margin performance across our segments. We fully expect Winnebago Industries’ portfolio to continue gaining consolidated share behind our steadfast commitments to quality, innovation, and the customer experience. I am confident that our employee's relentless hard work and dedication will allow us to further translate these gains into profitable market share, despite supply chain constraints and inflation, which we are constantly monitoring and taking actions to offset. We are also focused on being the innovation leader in the markets we compete in. Many of you may have seen the latest news that our concept all-electric Class B van completed a nearly 1300 mile road trip from Washington, D.C., to our headquarters in Eden Prairie, Minnesota, just a week ago. While we are moving toward a prototype stage in this product's development pipeline, this recent accomplishment provided real-world validation that future consumers will absolutely be able to choose alternative power solutions to experience the outdoors someday. Each of our businesses is focused on driving valued product differentiation in the future to enhance the appeal of our brands. In summary this morning, these are uncertain times as macroeconomic trends weigh on consumers. Nothing we can say today will deliver any certainty relative to the possible risk of a formal economic recession. But we are prepared to manage our company through any turbulent times in the future just as we proved agility in managing the extremes of the recent pandemic. Our production schedules and spending patterns are being scrutinized daily by our teams to align with what we believe is in the best long-term interests of our company and our industries. Regardless of where the economy goes, we will remain relentlessly focused on the sound execution of our winning strategy to build on our strong momentum and outpace the markets in which we participate. As important, we believe we have built a more profitable, more resilient, high-quality premium portfolio over the years, such that profit degradation or any risk will be manageable and remain well above our historical profit margin levels. Finally, we continue to believe in the long-term health of our Consumer segments as more people continue to pursue outdoor lifestyle experiences. We look forward to touching on these topics and many others at our 2022 Investor Day being planned for later this fall. That concludes our prepared remarks this morning and I will now turn it back over to the operator for the Q&A session. Thank you all for your time.

Our first question comes from the line of Craig Kennison with Baird. Your line is now open.

Good morning. Hey. Thanks for taking my questions and congratulations on the quarter. I am trying to put into context for myself and others listening, what your stock price, I guess, is saying about the environment today, I mean, it’s basically trading at 12 times a quarter’s results here, just a spectacular quarter. And clearly, it’s really the outlook, and so you were super helpful in terms of providing calendar 2022 expectations, happens to line up with our expectations as well. But as you look into next year, I know you don’t have a crystal ball, you can’t predict any better than the rest of us I suppose but in terms of preparation, do you have a sense for your earnings power and a scenario where, let’s say, shipments drop to 400,000 units? Just trying to understand how you are preparing for a downturn and how your business may be different today than, let’s say, 2019 and the last time we were pre-pandemic?

Yeah. Good morning, Craig. This is Mike. Thanks for your questions. I will probably address maybe how our company is different than where we were maybe in past difficult economic times and I will probably hand the earnings potential question over to Bryan Hughes to answer. Tried to address this certainly in the script this morning, but over the last six years, we have really moved from a company that had one primary business that being Winnebago branded Motorized RVs to a company that really is much more diversified and balanced, that participates in the full recreational vehicle industry of products as well now as the Marine industry in a couple of different segments. And we really run the business on a day-to-day level with seven different business units at the company, and as I mentioned in my comments, five of those business units we believe still continue to have near-term growth potential in terms of both retail being decent especially on the Marine side currently, but also our ability to grow wholesale shipments probably even faster than the retail velocity on those businesses. And we won’t have been able to do that four, five, six, seven years ago. With now five brands and seven businesses, and being able to attack different market segments and different industries. And so that new complexion gives us the ability to arguably manage some of the headwinds by executing businesses that still have a few tailwinds. From a discipline standpoint, we certainly are not sticking our head in the sand and ignoring any of the macroeconomic geopolitical supply chain, inflation, interest rate concerns that exist in the marketplace. Rather, I think, our teams are doubling down on the sort of playbook that we pull off the shelf to make sure that we manage expenses, that we scrutinize dealer demand, that we monitor what’s happening with the consumer and then we use all of those inputs to subsequently make good business decisions on a daily basis in terms of what we produce and where we spend our dollars on to drive value going forward. So we are pleased with the leadership team we have and the leadership teams around the businesses and in our enterprise functions and we believe the maturity of those teams, the resiliency, the experience of those teams helps us have honest transparent good conversation. So Bryan, can you speak a little bit to the earnings resiliency as we face potentially even deeper economic headwinds in the future.

Yeah. And we have talked about this somewhat in the past as well. We have got a strong focus on maintaining a variable cost structure and have proven that out to ourselves and continue to make decisions on an incremental basis that help secure that variable cost structure. So we continue to maintain that our cost structure is 85% variable, 15% fixed across our P&L, which in a downturn certainly helps to insulate us from the deleverage that would otherwise occur will be more fixed in our structure. So that continues to be the case Craig and I think that that is probably the best guidance that we could give in terms of how you would think through, what a decline in the environment or in the market, rather would mean to us from an earnings per share perspective.

And thank you. Just to follow up on the Motorhome piece that EBIT down margin has improved a lot on a structural basis since, let’s say, pre-pandemic. How much of that is structural, how much of that is just a really good environment?

Well, I would like to think, Craig, that most of the profitability generation or improvement on the Motorized business is a result of the hard work of our teams and the good decisions they are making. We certainly recognize that we have got some momentum of post early COVID times with the record interest in the outdoors and consumers looking to get into new RVs. But our profitability improvement initiatives were well underway before them. We have rationalized our Winnebago branded product line. We have closed facilities that we are producing unprofitable product. We have walked away from unprofitable business in the market. We have invested in more profitable categories of products and introduced some significant product differentiation and innovation. We have improved our operational capabilities in our existing plans. We have improved our purchasing power and agility with our supply base and then when we bought Newmar in late 2019, we improved the profitability of our Class A business by making that acquisition. And so in addition to certainly some volume leverage that we were able to positively get in late 2020 and most of 2021, I would say, a high majority of the profit improvement on the Motorized business was generated by internal hard work. So that’s why we are probably confident that a good deal of that will remain sustainable into the future should the Motorized category have its own sustained period of challenge in the retail market.

Great. Okay. Thank you.

Thank you. Our next question comes from the line of Gerrick Johnson with BMO Capital Markets. Your line is now open.

Good morning. Thank you. I have two questions, and Mike, I want to focus on two words you mentioned in your remarks, and perhaps you could elaborate on them. The first is about sustained gross margin performance; you covered a lot of the details earlier. However, I am curious if you could share some long-term targets for sustainable gross margins and gross sustainable operating margins as well.

Yeah, Gerrick. Good morning. Thanks for being with us. We are going to have an Investor Day later this fall in 2022, and Steve Stuber, on our Investor Relations side will communicate those dates to the relevant stakeholders for that event. And I think we will be more specific about long-range goals and targets at that time as it pertains to, let’s say, the period through 2025. So we understand that there will be some factors that could challenge profitability at the levels that we just announced for third quarter fiscal 2022 in the near-term. Our ability to pass pricing on to the market as an example because of inflation continues to be more challenged obviously with consumer demand softening significantly today versus a year ago. And inflation is not stopping. It is decelerating on our business, but it is still meaningful in terms of its quarterly rhythm of inflation increasing every quarter. And so we recognized in the near-term that our profitability will be pressured a bit, but we are confident that the profitability that we can sustain here, the rest of our fiscal 2022 and into fiscal 2023 will likely be at levels that are meaningfully higher than you saw back in the 2018 and 2019 pre-COVID days. We have also added some businesses, not the least of which here recently is Barletta Boats, which is growing significantly, executing very well in the market, but is also generating accretive profitability for our portfolio. So as businesses like that grow, while some of our other businesses may be going on pause from a growth standpoint or slow down is probably maybe the right term, we think the mix will also be conducive as well. So I know I am not giving you a specific number Gerrick on this call. We will probably be a little bit more bold in that fashion later this fall as we get into early fiscal 2023, but we are confident that we can see post-COVID profitability even during difficult economic times be stronger than it was pre-COVID period.

Okay. Great. And my other question was, you talked about scrutinizing dealer demand, I am wondering what that securitization has been telling you in terms of maybe shifts, cancellations, trade-ins, new versus prior customer, stuff like that?

Yeah. We do scrutinize retail, dealer demand, production schedules and even obviously, as I said, our spending on a very regular basis. As it pertains to dealer demand, you will probably have noticed in this quarter’s results that our unit backlog on the RV side has decreased from the previous period. And we believe that that is a healthy indicator of demand coming in line with the reality of the retail marketplace and our ability especially in Towables to work through any supply chain issues and deliver product that the dealers did want to the market. So we cleanse our RV backlogs monthly. That’s what we ask our businesses to do and they go through a process in terms of new orders, closed orders and what we call adjustments or cancellations and that produces the backlog that you saw at the end of quarter three. So we work closely with the dealers to try to understand the desired turn levels that they would like to run their business at based on the retail projected for it. The one comment I do want to offer here at this time is the freshness of field inventory is significant in the market. Now that may not mean a ton to the retail consumer if they are pressured by inflation at the gas pump or the grocery store, but it is significant to understand for those who are wondering about pressures that the OEMs will face going forward. Almost 90% of the inventory in our RV businesses in the field is less than six months old, and 0.5% of the inventory is more than one year old. So we feel good that the units that are in the marketplace are relevant, they are fresh, they are what the dealers want in and we will certainly work with them in the future to try to make sure that those are obviously retailed as the market allows. But we do not have a significant aging inventory situation staring us in the face on June 22nd. We will do everything we can to prevent that from being the case in the next probably four to six quarters. So, Gerrick, I hope that answers a little bit of your question there. But on the towable side, you will see production be very similar to the demand that the dealer’s desire. And on our other businesses, the two Marine businesses, our two Motorized business and our Specialty Vehicles business, we have the ability to continue producing at a level wholesale wise that is probably a little bit higher than the retail environment.

Great. Thank you, Mike. Appreciate it.

Thank you. Our next question comes from the line of Scott Stember with MKM Partners. Your line is now open.

Great. Thanks guys for taking my questions as well.

Good morning, Scott.

Mike, could you share what you are currently observing in retail, particularly what feedback you are receiving from consumers and how it varies by type, such as Grand Design compared to the legacy Motorized, Newmar, and others?

Yeah. Thanks, Scott, for the question and for being with us. In anticipation of this call, I have in front of me the retail reports for the end of April, at the end of May and for the first couple of weeks of June, and I will share with you at a high-level sort of the trends we are seeing across the businesses. I will start with Marine. We are seeing Marine retail actually strengthen for our businesses from the end of April, through the end of May and through the first couple of weeks of June. The percentage comps and the units from a Marine standpoint continue to move in a positive direction for our two businesses Barletta and Chris-Craft from a consolidated standpoint. From an RV standpoint, we actually are seeing consolidated retail comps, so the year-over-year percentage stayed relatively the same between each of those three periods. So from the end of April, to the end of May, to the first week of June, we are not seeing a significant change in the comp percent in year-over-year, which means that the retail market on our brands, from RV brands from a consolidated standpoint seems to kind of have stabilized at a certain percentage down versus a year ago. In most of our RV businesses, we are still comping positively versus 2019. We are seeing a little bit of a mix change in terms of recent retail. Towable retail in the last probably two weeks to three weeks has actually gotten slightly better from a year-over-year comp standpoint and Motorized retail in the last two weeks to three weeks seems to have gotten a little worse on a year-over-year basis. So, Scott, I hope that helps with our businesses, but that’s what we have been seeing. Recently, obviously, I can’t comment on the industry until we see the SSI data for May, which will come out here in a couple of weeks.

No. That was very, very helpful. So from a production standpoint, if you could maybe just point us, obviously, production, it sounds like there will be some more downtime or just some downtime in general going forward, maybe just talk about how we should look at it for the next couple of quarters production versus what we saw on a year ago basis?

Thank you, Scott, for your question. I'll break it down into three categories: Marine, Motorized, and Towables, starting with Marine. We are facing significant supply chain challenges that are impacting Marine production; however, we plan to maintain steady production levels in the near future. The retail environment remains quite good, and as long as we can secure parts, we have confirmed orders from dealers who wish to buy from us. Additionally, we are still fulfilling retail orders, especially in the pontoon segment of the Barletta business. In the Motorized RV sector, we are also experiencing substantial supply chain issues across different categories, particularly with Motorized chassis. While we are keeping an eye on retail, Motorized retail has been performing slightly better than Towables retail for the first part of 2022. This trend seems to be declining, but we still see opportunities for inventory in several Motorized RV segments, which allows us to maintain production levels consistent with what you've seen this fiscal year, provided we can obtain parts. For Towable RVs, we are carefully managing our production to align with dealer demand, which is linked to retail demand. One measure of our discipline is the shipment share of RVs, which we track monthly. To illustrate, our shipment share for Towable RVs decreased slightly in April, indicating that we shipped fewer units than our competitors that month. We have been managing production effectively on the Towable RV side, despite strong output in our fiscal third quarter, and this approach will persist through the remainder of 2022. We have identified specific days or weeks for downtime, particularly during the summer months, and we will continue to assess our scheduling as we move into the September through December period. The leaders of our Grand Design and Winnebago Towables businesses are closely collaborating to ensure we are aligning our output with demand while being a responsible employer to our staff.

Got it. That was very helpful. That’s all I had. Thank you.

Thank you. Our next question comes from Mike Swartz with Truist Securities. Your line is now open.

Hey, guys. Good morning. Just wanted to touch on the Marine business and more from a margin standpoint, if we look at the margins in the quarter, obviously, a big jump year-over-year, a lot of that was Barletta, but even sequentially there was a pretty material step up and if we go back and look at some of the commentary the time that you acquired either Chris-Craft or Barletta, your margins are running well ahead of that. So, I guess, the question is, what you saw volume driven, is it pricing driven, are you starting to see some real operating efficiencies or enhancements since taking over those businesses?

Yeah, Mike. Good morning. This is Bryan. It’s very much all of the things that you just mentioned. As Barletta continues to ramp up production and refine their operations, they opened a new plant not long ago and so it takes some time to find the operational efficiencies when you do that. We have also had inflation in the business and they have done a great job at pricing ahead of that inflation. You don’t always get the timing just right, but I think in general, the team has done a great job of doing that pricing. The retail price protection is part of that equation. So as they catch up with retail sold orders that are in the backlog, we often do some price protection of those for a period of time and I know that that was a drag on margins in the past. I think we are starting to catch up with that and that is producing some incremental sequential margins and so I think it’s all that the equation of those factors. Clearly the Barletta team has done a superb job of introducing differentiated products that the market is valuing and that is, as we have talked about in the past, the most important part of that margin equation is having that differentiation. So all that about Barletta. I’d be remiss to not also mention the progress that Chris-Craft is making in some of their margin initiative, their pricing actions, their differentiation with the new models that they are introducing, as well as the operational improvements that they have made. So both Chris-Craft and Barletta are part of that sequential improvement.

Okay. Great. That’s helpful. And then just switching back to the RV side, I mean, just in terms of the dealer’s ability or appetite to restock. I mean, are you talking to dealers that are finding maybe floorplan capacities limit or maybe they are saving some of their floorplan firepower for restocking a Motorized, which could impact how much Towable would carry, just maybe give us some color on how dealers are planning with the floorplan?

Yeah. Mike, I think, that is a topic that is being mentioned more frequently by the dealers. I will offer a perspective that we hear from the inventory finance companies as well. But the dealers are certainly because of inflation primarily, less the units, more because of the cost or the price of the products being elevated versus a year or two ago are definitely citing credit lines is something that they are monitoring more carefully. I would argue though that we are not hearing that as a primary reason for the level of new orders that we get from dealers. They don’t say, listen, I can only give you an order for X units because that’s all I have left on my credit line. I don’t think that’s at the top of the list. Although, I think they are very much now paying attention to that. The inventory finance providers have signaled to us that they are not yet overly concerned about dealer credit lines or the utilization of being at elevated levels in 2022 versus 2021 or 2020. They do pay attention to the units and how the unit velocity is moving. And in some cases, the inventory finance companies are waiting for or engaging the dealers in a conversation about whether those credit lines can be appropriately adjusted in light of inflation as well. And so I think that’s an ongoing discussion between dealers and their inventory finance providers and while that’s becoming a more notable topic of discussion, we do not believe it is at the top of the list in influencing any near-term new orders that we receive.

Mike, I will just add a little bit on to that which is to the spirit of your question. I think it is fair to say that dealers will be paring back on their lower tier providers or the lower OEMs. We obviously are one of the more premier brands. Our brands are viewed as such by the marketplace and the dealers. If they are faced with an allocation of the floorplan, it will start to impact the lesser players in the industry.

Okay.

... with they have been us long-term in terms of market share.

Okay. Great. Thanks a lot.

Thank you. Our next question comes from the line of Fred Wightman with Wolfe Research. Your line is now open.

Hey, guys. Good morning. Thanks for the question. If we just sort of take a hypothetical approach and your retail and wholesale estimates that you outlined on the call, which are very much appreciated wind up being correct. Could you sort of touch on what you think that means for the promotional environment at retail and then also wholesale? Do you think that those both sort of get closer to normalized levels, do you think that they are still favorable for us as what we saw pre-COVID? What do you sort of think that those industry numbers get us from a promo perspective?

Thanks for the question this morning and for being here with us. The answer to your question largely lies with the dealers. They are adjusting their competitive and pricing strategies due to higher inventory levels in the Towable segment. We've talked to dealers who noted that, because of slowing consumer demand in the RV industry, they are currently operating on lower gross margins than during the peak COVID demand period. Many dealers mention their current margins on Towable RVs are comparable to historical levels, with some even slightly higher. However, we're not hearing many dealers discussing the need to lower their gross margins on new Towable RVs. This could be attributed to two main factors: they have managed their inventory effectively to avoid excess stock, and they have been successful in acquiring used inventory, allowing them to offer lower-priced options to price-sensitive consumers. Additionally, the freshness of the inventory is a significant factor. We are not observing any discounts, sales allowances, or promotional support that impact our financials. We have experience supporting dealers with aged products, but discounting affecting OEM profitability isn't occurring with our brands at this time. Our business model focuses on producing only those units that have confirmed dealer orders or retail sold orders. Once production is completed based on these orders, the units are shipped or invoiced to the dealers and then reach the retail market. We do not produce open inventory that requires discounting or rebates, a practice we adopted in some of our businesses when COVID began and now consistently applies across our entire portfolio. We do not offer significant rebates or discounts beyond the agreed-upon prices established with dealers at the time orders are confirmed.

Hey, Fred. We do hear noise of any kind of discounting of that lowest price point. We are hearing some at the stick and tin level. It doesn’t affect our product line as much. But I think if we start to see it as an industry it’s going to be done at those lowest price points.

Makes sense. And the backdrop that you guys just described, do you think that sort of carries over into calendar 2023 if we do wind up doing 475 retail, and call it, 538 wholesale.

I don’t have an answer to that yet, unfortunately, which is why we are hesitant to provide a formal forecast for calendar 2023 at this time. I think we will have a better understanding later this fall as we see how the rest of the summer selling season unfolds. However, I can tell you that we are definitely preparing our fiscal 2023 and calendar 2023 budgets under various scenarios, including one that assumes a significantly worse retail environment than we currently have. This is simply good planning and preparation to ensure we are ready for a more challenging situation. The numbers we shared for calendar 2022 regarding shipments and retail are what we currently believe to be accurate, but we must acknowledge that the figures we provided previously have turned out to be overly optimistic. Therefore, we need to keep monitoring the consumer side and the retail environment, and if those numbers decline and 2023 appears to be more challenging, we will need to adjust our plans accordingly.

Fair enough. Thanks, guys.

Thank you. Our next question comes from Bret Jordan with Jefferies. Your line is now open.

Hey. Good morning.

Good morning, Bret.

A quick question just being asked, but could you talk about the Marine supply chain and the cadence of product availability there, and I guess, as it relates to the seasonality in that space, at what point would you need, I guess, engines inventory to be able to manufacture for this season? And if they are not there, would those orders likely get extended or will those customers take them sort of into the fall/winter months?

Thank you for the question, Bret. The supply chain for engines, much like that of Motorized RV chassis, has faced significant constraints, particularly in the Marine sector. Over the past six to twelve months, we have refined our engine procurement strategy to align with market availability, considering not only the brands but also any necessary adjustments in power placement for our products and production schedule. I want to be upfront that many of our boats under the Chris-Craft and Barletta brands are powered by Mercury engines. The Mercury engine team has been incredibly supportive of our operations, assisting us with engine availability despite their commitments to other brands as well. As a result, we've managed to maintain good production levels and grow sales for both Chris-Craft and Barletta, thanks to the strong partnership with Mercury. We continue to collaborate with them to optimize our engine supply. Additionally, we recognize that Marine dealers are also working to secure engines for boats they receive from OEMs without them. While we do our best to ship boats with engines, there have been instances where we have shipped without, though that's not common. This situation remains a challenge we address on a weekly and monthly basis, but our relationship with our engine supplier is solid, and we aim to keep a smooth production flow in our business.

Great. And then a quick follow up, I guess, on your retail outlook of maybe 17% year-over-year decline, does that assume we do not have a recession in 2022, is that sort of just a slowing, but not dramatically slowing economic outlook?

Well, it’s a fair question. With the retail numbers we've seen recently from a year-over-year comparison on the RV side, I'm not sure we can distinguish between RV retail during an informal recession versus during a formally declared recession. I don’t want to predict when the U.S. economy will officially enter a recession. What we can focus on is what the outdoor consumer is willing to invest in today. Generally, outdoor recreation products tend to show signs of leading the economy into a downturn, and hopefully, we will also be among the first to signal an economic recovery. Directionally, we have been indicating where the U.S. economy has been heading for some time. Unfortunately, I won’t predict when a recession will happen, but we are currently seeing significant retail pressure in Specialty Towable RVs and Motorized RVs, and we need to adjust our business operations accordingly to manage through this.

Right. Appreciate it. Thank you.

Thank you. Our next question comes from David Whiston with Morningstar. Your line is now open.

Thanks. Good morning. Earlier, you mentioned that it has been harder to pass on inflation recently. However, you did achieve strong pricing during the quarter, as noted in your release, so I'm trying to understand that better. Additionally, regarding our dealers, for the units currently in backlog, are they committed to the prices they ordered a few months ago, or do you have the ability to increase prices on existing orders due to supply chain challenges?

Yeah. David, thanks for the question and good morning. The answer to that question generally resides by business. And this is why it’s good to have the backlogs be shorter and smaller in nature. The longer it takes for us to receive a dealer order and ultimately produce it and have it available for them to retail, the risk of inflation in that time period has really challenged us in the last year or so. And so it has been the case that at times the price that a dealer ordered the product at is different from the price that they get delivered, the product delivered at. And that was because we were seeing extraordinarily long lead times because of supply chain constraints in the time it took to fulfill that order. With those retracting and the supply chain continuing to be better in some cases, the risk of that price changing for a dealer is probably lower. And candidly, I think we are very well aware that with consumer demand retracting in the RV industry specifically that our ability to balance price increases, and obviously, competitive market share advances is more challenged today than it ever has been. So if I were to guess Q3 would probably be the potentially the current peak of the pricing power that we were able to demonstrate in the last year or two, and it will be more difficult and we will need to be smarter and more selective when passing price on in the future. And then the comments that we made in the script, we certainly mentioned that smart pricing will continue to be a lever, but again with slowing retail, we need to be much more careful about when and if and how to do that. And so that will play into some of the pressure on profitability probably facing us in the future as well.

And David adding on to that, this is Bryan. You asked the question from the perspective of the dealer. Historically, we have price protected as an industry, both Marine and RV for the retail buyer. So when they sign a contract, we would honor a price protection. Given the severity of inflationary pressures, that practice has fallen by the wayside in RVs. For the most part, price protection for the retail customer has had to be put on the sideline. The pervasive inflationary pressures have led to a change in that historical practice across the industry to ensure that the OEMs are protected from these inflationary pressures.

Okay. Thank you. And I am currently showing no further questions at this time. I’d like to hand the conference back over to our host.

Thank you, Operator, and thank you everyone for joining our call today. We really do appreciate you taking time out of your busy schedules to be with us this morning. Have a great day.

Ladies and gentlemen, thank you for your participation. You may now disconnect. Everyone have a wonderful day.