Good day, ladies and gentlemen. And welcome to the Q2 2019 Winnebago Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions]. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Steve Stuber, Director of Financial Planning, Analysis and Investor Relations. Please, go ahead sir.

Thank you, and good morning, everyone. Thank you for joining us today to discuss our second quarter earnings results. I am joined on the call today by Michael Happe, President and Chief Executive Officer and Bryan Hughes, Vice President and Chief Financial Officer. This call is being broadcast live on our Web site at investor.wgo.net, and a replay of the call will be available on our Web site later today. The news release with our second quarter results was issued and posted to our Web site 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 thank you all for joining us this morning. We appreciate your time and as always your interest in Winnebago Industries. We would like to begin today's call in a place where we usually end it, and this is by thanking the more than 4,500 team members at Winnebago Industries who work extremely hard every day to create lifetime advocacy from our end customers. They accomplish this through the delivery of high-quality, innovative, differentiated products and by working in collaboration with our hundreds of RV and marine channel partners to provide superior customer service and aftermarket support. Brian, Steve and I, have the privilege of being the messengers on calls like these, as we describe the team's tremendous progress on our journey to be truly a leader in outdoor lifestyle solutions around the globe. It is our people that make all the difference as we grow. And to those channel partners just mentioned, thank you for your support of our Winnebago Grand Design and Chris Craft brands. In many ways, you were the foot soldiers for our brands daily in the market. And it is your commitment to our mutual end customers that ensures an extraordinary experience as they travel, live, work and play in the outdoors. Thank you to our employees and to our dealer partners. Now this morning, we would like to begin the call with an overview of our second quarter results and our perspective on the balance of fiscal year 2019. I will then turn the call over to Bryan Hughes, our Chief Financial Officer, who will provide more detail on the related second quarter financial results. Then I will return to offer some closing comments before concluding the call with Q&A. Overall, we are pleased with the strong start in the first…

Thanks, Mike, and good morning, everyone. Second quarter consolidated revenues were $432.7 million, a decrease of 7.6% compared to $468.4 million for the fiscal 2018 period, driven by a decrease in RV unit sale and partially offset by the addition of Chris-Craft and pricing actions taken during the last 12 months across all of the RV business units. Gross profit was $66.4 million, a decrease of 1.8% compared to $67.7 million for the fiscal 2018 period. Gross profit margin increased 100 basis points in the quarter, driven by favorable revenue mix, pricing and motorized operational improvements, which more than offset inflationary cost pressures and heightened dealer incentives. Second quarter operating income was $28.9 million, a decrease of 18% compared to $35.3 million in the second quarter of last year, driven primarily by the decline in RV unit sales. Growth in SG&A during the quarter, partially driven by ongoing and one-time investments we are making in the business, also contributed to the decline at operating income. Some of the one-time investments we referred to is a continuation of the strategic project that was discussed as a driver of the SG&A increase in our first quarter. This combined with the Chris-Craft acquisition and associated amortization, contributed 12 percentage points of the 16% increase in SG&A in the quarter. Net income of $21.6 million, a decrease of 2.2% compared to last year was favorably impacted by discrete tax items, totaling $2.5 million or $0.08 earnings per share. Earnings per diluted share were $0.68, a decreased of 1.4% versus the same period last year. We have provided non-GAAP EBITDA and adjusted EBITDA performance measures in our press release, as a comparable measure to clearly illustrate our performance. The schedule accompanying the press release shows reconciliation between net income and adjusted EBITDA. Consolidated adjusted EBITDA…

Thanks Bryan. As you've heard us mention this morning, we are pleased with the progress we've made in our fiscal year 2019, but we also recognize that there remain significant potential within our business for the future. Each quarterly report is not the final grade but a quiz on the way to hopefully a successful attainment of an advanced degree. At Winnebago Industries, we remain steadfast in the pursuit of our vision around becoming a trusted outdoor lifestyle, our internal transformation efforts around talent, process, portfolio and capital allocation have not only advanced our competitive position in the industry but they have also made our company more resilient, hopefully more consistent and able to better navigate the headwinds affecting the RV industry without surprising or dire consequences. It is always two steps forward and one step back during these early stages, and we aspire to much more in the future. This resiliency is due in large part to our new enterprise platform approach, which is more diversified than ever before with active full line RV, luxury marine and specialty vehicle operations. Just three short years ago, we were largely a one division organization with Motorhomes, representing 93% of our overall sales. We are confident that over the next five to 10 years, there will be significant opportunities for organic share expansion and inorganic investment in each of those global markets. And as we said last quarter, we continue to search for premium companies with strong brands, great talent, value channel partnerships that deliver on the product and service promises they make to further leverage our strengths and expand our business. Next, I'd like to share with you my thoughts on some of the market challenges facing both the RV industry and its retail prospects for the remainder of 2019. Although,…

Thank you [Operator instructions]. Our first question comes from the line of Craig Kennison with Robert W. Baird. Your line is now open.

First one had to do with the Class B market. As you know there has been some disruption in that Class B market that, frankly may create an opportunity for Winnebago. How would you frame that opportunity, and what are you doing to get after it?

This is Mike, and I'll answer that question. We are certainly aware of some of the developments specific to the Roadtrek business in Canada. We are fortunate that Winnebago Industries and our Motorhome business have a significant share position currently in Class Bs. Depending on the share reports on a monthly basis you look at it somewhere in the neighborhood of 40%. Roadtrek, I believe, has been consistently number two in those same share reports. So certainly, the disruption to their business, at least in the short term and the unknown long term future of their business, certainly has many end customers and dealers asking questions in our industry. And we believe our brand Winnebago and our current line of Class B products and some new products that we have in our pipeline, are well positioned to compete for any shifts and share organically that could happen in the future as well. So our Motorhome team is very intentionally focused on that part of our business. They're engaged with our dealers about the opportunities for potential market share increases there. And we will continue to be very focused on trying to serve the market with what we believe is the best line in the business that being the Winnebago Class B line.

And second question has to do with 2020 plan that you outlined, I think in November of 2017 based on your market share trend recently, it appears you've achieved one of those goals. How do you feel about your plans to also achieve 10% operating margin and 10% of revenue from outside key RV segments?

As many of you probably recall in November of 2017 at our Investor Day in New York City, we did share four goals. Craig, as you mentioned, one of the goals was hoping to attain 10% North American RV market share by the end of 2020. We seem to be on good track to doing that. And as my comments alluded, we've even seen Winnebago Industries achieve that mark on a standalone monthly basis here just recently. So we hope to maintain that position and candidly exceed that in the future. The operating income goal is definitely a little bit tougher than we had anticipated in November of 2017. If you remember that was before most of or many of the tariffs were formally put in place, and some of the other material cost inflation had begun to impact our business. And so, I would say the 10% operating income goal is still one we will strive to achieve. We hope to make good progress on that in the back half of our calendar year, our fiscal year 2019, but that is definitely a tougher goal. So I would I would call that more of a stretch goal for the end of our fiscal 2020. But I can assure you it's one that we're still talking about on a daily basis. The 10% new business goal had to do with achieving 10% of our net sales by the end of F2020, on either new businesses that we were not in at the end of our fiscal '17 year or new product categories within our organic businesses that we were not in. And we've made good progress against that goal with the acquisition of Chris-Craft, but also the introduction of some new products in the new RV categories, such as the stick and tin business and Grand Design's entry into that. So we're not at this point going to share any thoughts on specifics around further inorganic business development opportunities but we have, I guess, 18 months here to try to achieve that goal as well. So stay tuned. We appreciate you reminding us of those. And we will do everything we can to make very good progress, if not attain both of those going forward.

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

Mike, in the press release you guys talked about I guess in your third quarter, you would expect the industry to be I guess in more of a state of equilibrium when weighing retail and wholesale. Maybe if you could just give us a little bit more granular your expectations there on a monthly basis when you would expect that to actually hit a bottom? And that would be my first question. Thanks.

I think the words we used in the press release were approaching an equilibrium in our quarter three. We've been, I guess over the last six months, relatively consistent that we had been hopeful that the shipments in retail levels would achieve some new normal and equilibrium in the late spring early summer of 2019. I think, specifically, we have talked about April, May. Candidly, it's really anybody's guess. I know different public companies in our sector have offered their own thoughts on this. But we're still hopeful that, especially for our business but increasingly so for the industry that you'll start to see that equilibrium happen again in late in our Q3, could it spill over into June of -- into early Q4, it probably could as well. I am personally pleased with the way spring is starting to break weather wise in certain parts of the country. We have seen some seasonally good retail in some of the warmer weather states, and we're waiting for that retail season to truly kick-off in the northern part of the country. And I think that last comment there will be probably the factor that will drive some of this tightening a bit more when the dealers north of let's say the Mason-Dixon lines start to experience some hopefully good retail here. So again, we're sticking too late spring early summer, and we hope that's the case. If that's not the case, our business is still well positioned to take retail market share at a minimum and hopefully outperform the industry.

And as far as discounting goes, I know you guys talked about that in the release and that's one of the reasons for one of the headwinds you had to go up against in the quarter from a gross margin perspective. But I know that you've talked about Grand Design has been steadfast about discounting or not discounting. I just wanted to make sure that we were still talking about that factor and that you guys are still holding your ground as we go into the selling season?

Yes, we are very pleased with the performance of our Grand Design business. They continue to do very positive things. And as we've stated since we've owned them that we remain committed to the business model that made them successful in their early years and attractive as an acquisition target to us more than two years ago. And we are pleased to report today that that business model is still in its entirety in place as they operate. And that includes the discipline of not discounting on a quarterly basis as some other companies in the industry do and in fact, some of our own Winnebago branded products still had to do so. So the strength of the Grand Design product line and their relationships with the dealers allow them to run a good, clean and pure business there. And we are working very intently to move our Winnebago branded Motorhome and Winnebago branded Towables businesses there in the future as well. And that will take some time. But we should be able to do that overtime as our product lines get stronger there and as our positions on those dealer lots improve as well.

And just one last question on the motorized profitability side with the closing of the Oregon facility. I know there's going to be some transitory costs in the next quarter. Could you just remind us of, I guess, what we should be modeling and also what some of the low hanging fruit will be a couple of quarters out once some of those cost savings come in? Thank you.

So in Q3, the costs incurred were immaterial. So, we didn't really speak to those -- in Q2, they were immaterial, so we didn't really speak to those as being a driver for the quarter. For Q3 and Q4, we expect them to be of the magnitude of $0.02 EPS for each of those two quarters. In 2020, we expect the savings and the costs to roughly offset each other. And then in fiscal '21 and forward, we expect about $4 million of savings in every year going forward. So those are the metrics that we've disclosed previously.

Thank you. Our next question comes from the line of Steve O'Hara with Sidoti and Company. Your line is now open.

Can you just talk about your expectations? You gave your retail expectations. And I think you said that you thought you continue to materially outperform, I think that that’s on the Towables side, but if you could just go into that a little more. Obviously, I think as you grow maybe that gap begins to narrow, just from a size standpoint. But if you could just talk about maybe how you expect Motorhome to play out as well as you continue to improve the results there? Thank you.

Our market share growth for most of the last several years has definitely been ignited by the Towables segment growth in our business, both the acquisition of a fast growing business in Grand Design, but also the acceleration of our Winnebago Towables business as well, which we're pleased to report over the last several years. The size of the business has more than doubled and the profitability of that business dollar wise on the bottom line has tripled. So both our Towables businesses have been contributing to the market share growth. But I think that's where you'll continue to see our industry outperformance happen, led by grand design, supported by Winnebago Towables as both of those companies continue to expand their product lines, introduce new products, strengthen their dealer relationships and even in some markets upgrade and/or find their way into new dealer relationships that position us better in those particular markets. I did mentioned in my comments this morning that we are extremely pleased that our Winnebago Motorhome business has had two consecutive standalone months of small but meaningful market share gain improvements at retail through the SSI resource. And we need to see a much longer streak to feel better about that business, but we are pleased to start to see some of the momentum there. And as the earlier question alluded to, a lot of that comes from the strength of our Class B business. The move or the shift to smaller Motorhomes here in the last probably 12 to 18 months in terms of retail demand certainly positions Winnebago in a positive fashion, especially around Class B products. But we've even spent a lot of time on improving our Class C line-up here recently with the introduction of the outlook a year ago and the new version of that being shown here recently at RVX, but also the numerous Mercedes Sprinter chassis product on our View and Navion being unveiled in Salt Lake as well. So we do intend and are optimistic that we can gain market share for sometime in the future. I won't put an end date on it. We'll work very hard to make sure that lasts as long as possible. But it will be driven mostly by Towables, but now we're starting to see Motorhome contribute to that as well, which is great.

And then maybe just a follow up to that, I think in the past you'd talked about not having the right product in the market on the motorized side for a number of years prior to maybe the new management team coming on. And I'm just wondering where you think that process is in terms of having the right product at right price point, and where that stands? And then relative to the dealer base, has that helped maybe improve your reception from the dealers? And I think there've been a number of dealers that have dropped the Winnebago brand at some point. And I am wondering if you're seeing them come back to you and maybe where that stands as well? Thank you.

The Winnebago Motorhome turnaround continues to be work in progress, and it starts with having a product line that end customers have strong appeal for and dealers that view those products favorably as well and will advocate for them on their lots against the other brands that they carry. Our Class B line up, I think is a market-leading and we will continue to work very hard to make that even stronger, the new Bolt and Travato product we showed at RVX are examples of us not resting on our laurels there. As I mentioned, we've been working on the Class C line as well with the outlook but also now the refreshed and now re-launched View and Navion, and our Class A gas line on the Winnebago Motorhome side has been repositioned with the intent the Vista and the Adventurer now positioned well in that line. So, we're better than where we were several years ago. We do have models that are still tired and still need both refresh. We have some new products in the pipeline that we'll unveil in the coming years that we can't speak about right now. I would say our opening price point Class A diesel product, the Forza is in good shape, and has performed well at retail here during this fiscal year. We need to strengthen our diesel lineup overall as we transition the production and assembly process from Oregon to Iowa. So, it's tough to come up with a metaphor, I guess, Steve, to say exactly where we're at in that journey. But I think we're feeling better and better every quarter and that's why you're starting to see both margins improve on a year-over-year basis but also the market share starting to stabilize and hopefully turn in positive direction. But we would have roughly 15% market share in that business and candidly, I'd like to see the market share for that line get to 20% in the future or more. And that's a goal that the team is clearly aware of from my perspective and working hard to that end, but that will still take some time.

Thank you. Our next question comes from the line of Garrett Johnson with BMO Capital Markets, your line is now open.

Thank you. Good morning, two questions here. First, when you guys say that wholesale shipments and retail sales equation will approach new equilibrium. What exactly does that mean? Does that mean retail and wholesale units will be the same, or does that mean a percent growth of each will be equal? So what precisely does that comment mean? Thank you.

What I mean by that comment is that the pace of dealer inventory destocking will slow, and reach a point where dealers are comfortable with the inventory on their lots as it pertains to their turns targets going forward, and that will probably vary by category of Towable's in Motorhomes and even by sub-categories within there. But on a macro basis, we will see the destocking of dealer inventory slow to a much more reasonable pace if not to a more stable a stable place. So certainly the math would have to be that at retail we'll continue to have to outpace shipments on a percentage basis over the next several months in order to get there. But that's what I mean by that, I'm probably not in the position here to give you specific numbers, but that's the intention of that comment.

The second question I have is, you guys said that in the quarter onetime investments for 12 points and 16% increase in SG&A. And it sounds like that does not include much Oregon cost if any. And you quantified that Oregon cost for third quarter and fourth quarter I guess $0.02 each quarter. How about those other onetime-ish investments, how much more of that where we have in future quarters and for how long?

So in Q2, we continue to have that project alluded to in Q1 as an investment. We're not going to commit to future quarters in terms of having or not having those types of investments. We reserved the right to invest strategically when we see the opportunity to do so. I will say that the specific strategic projects that we alluded to in Q1 and Q2 here is wrapped-up effectively. So as it relates to that specific item, we don't expect costs to be incurred again here in a material way in Q3. But like I said, we do reserve the right to continue to invest in other items as we see the opportunity.

Thank you. Our next question comes from the line of Michael Swartz with SunTrust. Your line is now open.

Mike just wanted to maybe flush out your comments around the retail backdrop for 2019. And I guess correct me if I am wrong, but it sounds like down low single-digit to down mid-single digits is how you're thinking about it now. And I think when we talked previously on your first quarter call you were thinking more low single digits. It sounds like maybe that got a little worse. But on the share gain side, I think I remember you were saying that you expected to outperform retail by 8 to 10 points. Now, you're saying by double-digit. So it sounds like your shares are actually getting better. So are those correct and maybe what have you seen in recent weeks that gives you more comfort that that 10 point share gap is the right way to think about it?

I do believe you stated our assumptions well in your question there. Industry retail has been a little softer in the last couple of months than I think we had projected earlier. And our over performance has, I think hung in there very well at that double digit over performance rate. And so that's really simplistically the genesis for modifying slightly, both our industry retail thoughts for 2019 as a calendar year but also, I guess, our over performance. Both of those, as you would probably agree, 2 points either way or probably within the margin as we sit here today. But I would hope that retail for calendar year 2019 for the industry is no worse than 5% down and again, hopefully, closer to lower single digits. I'm still not quite there myself in terms of being able to project a flat to slightly up retail year, I'd love to see that. But I'd still like to see a couple more months of evidence that that can happen. But our teams are very focused and whether it's the Class B market share gain potential that we think we have, but also the momentum of our Towables business, and specifically the Grand Design momentum, we think we can continue to serve dealers well, earn their business, satisfy their end customers. And we know our competitors are fierce and they will continue to serve their customers as well as they can. But I guess you are right, those are some of our latest assumptions.

And then one point of clarification, I think you said you lost the number of days due to weather in the second quarter, I think, specifically February. Did you quantify how many days that actually was maybe a year over year basis? Was it three fewer days, or how to think about that?

So Mike, I'll give you some numbers here. But I do want to make sure everybody takes them with a grain of salt, because it is hard to sometimes go back and calculate exactly what could or should have happened had you had a stable operating environment but we've roughly calculated that in the second quarter. We lost approximately 10 production days across our various facilities. Now, that's not 10 whole days calendar wise, but several facilities were down for the same day and other facilities were down just by themselves, but 10 production days, several hundreds of units. And we believe that had a potential value of $20 million in terms of possible shipments to the market. And so, you'll notice here I'm just a bit tentative in stressing that, because we're by no means are we going to use that as a crutch or an excuse, because the rest of the industry saw some of that as well in North Indiana. I will say that the State of Iowa and the State of Minnesota where we have some of our operating facilities, it was an especially harsh winter here. And so those are the numbers, 10 production days in total and approximately $20 million of potential loss revenue we attribute to weather. But we stand by our results and are so pleased with them for Q2.

And then one more and as we think about the inventory situation. Is there a way you think about it geographically just in terms of how we're progressing in this rebalancing act? Are there areas where inventory seems to be a little heavier than others, or are we across the board in the same position?

No, I would say that geographically the northern part of the country still appears to be lagging in terms of dealer inventory correction, meaning they probably have a little bit further ways to go. And the southern part of the country is ahead of the north, and that would seem to make common sense due to weather and spring coming earlier in the south than it does in the north. And that's just from some of our own qualitative feedback. But also candidly a number of you analysts do a great job in your own dealer surveys of looking at that inventory on a regional basis. And we read those reports as well and get some feedback from our inventory finance partners. But I don't want to get into further regional specificity. But I would just say that north is a bit behind the south, and we expect the north to continue to destock here over the next two or three months for sure as retail starts in this part of the country.

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

Following up on that last question, in terms of dealers have been going through a pretty -- sounds like pretty significant rightsizing process, just now that they're at least in the south, maybe towards the end of that. Do you think your dealers nationwide are relatively optimistic going into spring selling season and will incentives slow? Or do you think they're still pretty uneasy about the macro situation?

Well, I think in some ways, it's a mix of both. I don't think any RV dealers are predicting that the sky is falling and that there's going to be a massive retail correction here in calendar year 2019. I think it depends on the strength of the dealer, the lines that they carry their competitive position in their various markets that they may have a presence in. So my general dealer view is that, and especially coming off RVX in Salt Lake City that they are optimistic that they can have a solid retail season. They are seeing good foot traffic at some of their retail shelves. The Marine and RV industries are both noting, however, a more difficult environment to close sales, specific to retail shows in some cases, but also when customers are on their lots. And I think that that is due to a number of factors that I mentioned earlier in the formal comments, but just a general anxiety of where the economic conditions are. But again, I think your strong dealers continue to get stronger, and your dealers that don't have as good of a competitive position are probably more pessimistic. And again, I think it depends on the lines they carry and I know dealers that, for example, carry Grand Design are very bullish about their retail prospects in many ways, because of the Grand Design presence on their lots and we're glad that that's the case.

And on free cash flow generation in the second half of fiscal '19, first half really benefited from the inventory reduction on working capital. Do you think second half can still be robust even if there is an inventory tailwind?

We do feel good about second half cash flow generation. We've got a lot of working capital initiatives underway at the moment. And working capital as you can appreciate is always a challenge to manage as the market is shifting down, or as we're seeing headwinds on the wholesale shipments. So we've been struggling with managing it overall in the first half of the year as I'm sure our peers are as well, because you have to get ahead of that sales downturn. But we do expect with the initiatives we have underway to manage it well in the second half and that is our current expectation.

Thank you. Our next question comes from the line of Greg Badishkanian with Citigroup. Your line is now open.

Just a quick clarification. Last quarter, you had talked about dealer inventory concerns less than each month. And has that pattern continued since then?

Yes, I would say for our business, we had always maintain, Fred, that our business was probably late in the cycle in terms of dealer destocking. And then our brands were being impacted a little bit later than some of the other brands in the industry. Q2 definitely showed some headwinds in terms of dealers taking more inventory of our brands and I think you saw that on some of our top line softness. I would tell you that our inventories continue to drop on a year-over-year basis from end of Q1 to end of Q2. They are getting in I guess better shape as it pertains to position for future retail in terms of turns. Our Winnebago Motorhome inventory has always been in relatively good shape. I would tell you, I think that's more a function of the strength of the product line, but also the Motorhome space being a little softer here in recent months as an industry in several spots. So we continue to feel good about our field inventory. We have watched the aging very carefully, the turns. We have some spots that we are focused on working down. There are some dealers that we are working with selectively. And we always have an aspiration to drive our field inventory turns higher and we look to do that here as well in the next year or two, so not much of a change in terms of macro cost but our inventory position continues to improve on our brands as well.

And then just from a wholesale perspective, the RVIA data for February, down mid-teens on an overall basis. So down year-over-year but as not as much as last month. I mean is that consistent with what you guys saw from a cadence perspective? I mean should we really be thinking that we've seen the low point in terms of the year-over-year declines just at an entry-level and then it all continued to approach being more in line or similar to what you're saying into the late spring early summer?

Yes, I would hope that would certainly be the case. I would need to have to go back, Fred, and look at the numbers here for the next couple of months a bit more closely. But I would hope that most of your significant shipment declines on a year-over-year basis, I would hope many of those are behind us. And you start to see those numbers improve. Now, I don't think they'll turn positive here anytime in the next couple months at an industry level. But I would think that our chances for seeing better negative shipment conditions will improve here over the next several months, but will have to see. We are still only 10% of the North American RV industry, 90% of the RV history is in the hands of some other players. We will work to make our number larger and their number smaller but the rest of the industry is really still driving a lot of the shipment and the inventory pacing.

And then just finally, would you see retail pick-up in April and May? How confident are you guys that you can meet that demand from a wholesale perspective?

I would say we're very confident that we can turn things back on. Some of it depends on how quickly that you can ramp back up the supply chain. But we have good relationships with almost all of our suppliers certainly and we are not running anywhere near full production and in most of our plants at this time, with the exception, I would say at the Class B line that's probably the one production plant that continues to produce at a strong rate. And we still have more capacity there as well. So, I think we can respond. It'll depend probably series-by-series, line-by-line and in some cases supplier-by-supplier. But we are not talking about capacity constraints a lot in our business anymore. We have done a lot of investing in the Towables segment to address those. We've done a number of projects on the efficiency side in North Iowa around the Motorhome business. We've identified some new space in North Iowa for the diesel line. And I would tell you that the place where we're having capacity discussions going forward is really around our Chris-Craft business, because that is continuing to exceed the expectations that we had on our M&A model. And we bought that business thinking that we could grow it significantly and still maintain the luxury brand integrity that it has in the space. And those are our latest capacity expansion discussions around that particular brand and business.

Thank you. We have no further questions at this time. I would now like to turn the call back to Steve Stuber for any further remarks.

Great. Thank you, everyone for joining our call today. We certainly appreciate your time and look forward to speaking with many of you throughout the quarter. Have a great day, and thanks again.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.