Operator: Our next question is going to come from the line of Tristan Thomas-Martin with BMO Capital Markets.
Tristan Thomas-Martin: Has your view on ASPs for the full year changed since last quarter?
Bryan Hughes: On the Towables side, what we’re seeing is probably a stronger shift in mix, Tristan, at least in the near term in Q1 and probably to be continued in Q2 towards travel trailers versus fifth wheels as consumers migrate to a more affordable product. I think mix will continue to have a bigger impact on ASP than what we have conveyed, and I think as recently as last quarter, we conveyed a number. On the Motorized and Marine side, pretty consistent still from what we’re seeing in terms of ASPs. The Towable ASP being much more influenced by mix versus a like for like rate reduction, we still see that probably on the rate side in the low to mid single digit decline for ASPs on Towables. So that’s on like-for-like So the mix impact that drove the reduction here in Q1, that was much larger.
Tristan Thomas-Martin: During last quarter, didn’t you say down mid to high single digits on a mix-neutral basis? So now is it down low to mid, is that what you were saying strong…
Bryan Hughes: I’d say it’s moderating. We’re seeing inflation that’s quarter-to-quarter pretty neutral at this stage.
Tristan Thomas-Martin: And then just one more thing to square. Your total shipments were much greater than the industry, at least over the two months of reported industry data. What was kind of the delta there, you versus the industry?
Michael Happe: I think we continue to — I’m assuming you’re referencing the RV industry. We’re continuing to see some benefit from the Towables business, particularly Grand Design reestablishing, I think, a solid lot share foundation. We had talked for several years, it seemed, on this influx of second and third tier brands that dealers took on during the COVID frenzy. That issue has largely gone now. And a brand like Grand Design has really worked hard with its dealers to reestablish the right share of lot from that standpoint. I would say our Newmar business has also done a good job working with its dealers to make sure that stocking inventory levels are where we think are appropriate. And so I don’t think our lot share has swung in an unhealthy way based on shipments the last couple of months.
I think it’s back to where we think it needs to be. And we’re starting to see some retail share benefits as well, we think, from some of that activity. As I mentioned on the call, particularly with Grand Design RV, their retail has not just stabilized but started to take some small ticks up in the right direction, which we think is a sign of more positive things to come in on that brand.
Tristan Thomas-Martin: I’m going to sneak one more in if that’s okay. Can you remind everyone your stance on building open orders?
Michael Happe: Well, our stance on open orders has certainly evolved through the years. Many, many years ago, the Winnebago brand of motorhomes used a predominantly open order position. But as we’ve added quality businesses and as we’ve improved our production planning processes, as most of you on the call know, we shifted to largely a non-open order production planning cycle. Now that’s been challenged in a number of different ways as the cycles have happened and supply chain challenges have happened. At this current time, our intention is still to minimize the number of open production units that we build to a reasonable number. So each of our business probably still builds a small percentage of their production that is open but we are working hard with our sales teams to stay far enough ahead of our business to have orders when we begin that unit on the production line.
As you saw from our backlog working its way down, our sales teams have to work hard and effectively to make sure that we have orders that we can match to the production process. So we’re going to be as disciplined as we can, both in terms of quantity of production but also trying to manage open order production to a reasonable amount. We are not building lots full of open units waiting for spring to happen and dealers to take those units, that’s not generally been our approach. And that’s why we have some extended downtimes here over the holidays in some of our plants.
Operator: Our next question is going to come from the line of Joe Altobello with Raymond James.
Joe Altobello: First question on travel trailers and the mix shift away from fifth wheels. How does that, coupled with the improvement in your expectation for base pricing on Towables overall, impact segment margins? Do you guys still expect to see margin expansion in Towables this year?
Bryan Hughes: I think as I mentioned, the Towables business will continue to show, in the near term here, Q1, Q2, will continue to show growth that outpaces the fifth wheel. I think that’s just where the consumer is at right now and their preference for a lower priced unit. I think that as we continue to see some of the positive developments, and some of them have been mentioned already on the call, interest rates perhaps showing a more dovish approach, consumer confidence improving, fuel costs that seem to be on a downward trend, certainly moderating inflation, both broadly speaking and the impact that has on consumer wallets as well as specific to our products. I think as we continue to see those things, some of that will normalize in the go-forward periods.
In other words, we’ll see a more consistent growth pattern between towables and fifth wheels. So that’s the current expectation. I think your question really gets to the does gross margin defer materially across our price points. I guess the message I would send there is no, it really doesn’t. There’s a little bit as there is in all product categories and other industries, ours is probably not an exception there. But we really build units from a bill of materials perspective and price them to deliver a pretty consistent margin from the lower price at the higher price. I’d say we’re always striving for innovation and differentiation. And in products where we think that we have a better position than our competition, we might realize some higher margins than the average, some more differentiation or innovation driven versus price point driven.
