Hello, everyone, and welcome to today's conference, LCI Industries Q4 and Full Year 2022 Earnings Call. My name is Bruno, and I will be operating your call today. [Operator Instructions] I will now hand over to your host, CFO, Mr. Brian Hall. Please go ahead.

Good morning, everyone, and welcome to the LCI Industries' fourth quarter and full year 2022 conference call. I am joined on the call today by Jason Lippert, President, CEO and Director. We will discuss the results for the quarter in just a moment. But first, I would like to inform you that certain statements made in today's conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which would cause actual results and events to differ materially from those described in the forward-looking statements. These factors are discussed in our earnings release and in our Form 10-K and other filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. With that, I would like to turn the call over to Jason Lippert. Jason?

Thanks, Brian, and good morning, everyone, and welcome to LCI's fourth quarter and full year 2022 earnings call. Our fiscal year 2022 marked another record year for LCI as we reached all-time high revenues while continuing to deliver strong margins. As we got to the back half of the year, our diversification strategy proved pivotal to our performance, helping to partially offset the impact of RV OEM production shutdowns enacted during the fourth quarter to normalize inventory levels across the country. Thanks to the agility and operational strength of our veteran leadership teams, we were able to make necessary changes quickly in order to adapt to the volatile operating environment. These results are a testament to our cultural strength and long-tenured leadership teams, which we believe have been and will continue to be the cornerstone of our long-term success. We closed 2022 with a record $5.2 billion in revenues, up 16% year-over-year. This growth was supported by solid performance in our RV and Adjacent Industries, driven by overall growth in the outdoor lifestyle and aggressive content expansion and innovation. We completed four acquisitions throughout the year, adding two very strong industry brands to our portfolio, including Way Interglobal and Girard Products. Net sales from acquisitions completed in 2021 and 2022 contributed approximately $219 million in 2022. These acquisitions bolstered our innovative portfolio, which we have leveraged to continue our trajectory of record content growth. Looking at North American RV OEM, sales increased 17% during the year compared to 2021, reaching $2.8 billion despite lower production levels in the back half of 2022. Industry wholesale RV shipments for the year totaled roughly 490,000 units, and we expect some further softening in 2023 as demand continues to normalize and come off all-time highs. January and December were rightsizing months for the industry,…

Thanks, Jason. Our consolidated net sales for the fourth quarter decreased 26% to $894 million compared to the prior year period, impacted by a reduction in RV production, partially offset by growth in our other end markets. January sales were down 48% to $273 million versus January 2022 due to the continued decline in wholesale RV shipments, as we estimate the industry shipped less than 14,000 units in the month, many of which were produced in prior months. This was partially offset by continued diversification success with growth in Adjacent Industries, including Marine. Q4 2022 sales to North American RV OEMs decreased 42% compared to the prior year period, driven by a decrease in wholesale shipments, partially offset by record content expansion in towables and motor homes. Content per towable RV unit increased 45% to a record $6,090, while content per motorized unit increased 43% to $4,099 compared to the prior year period. Towable content growth can be attributed to organic market share gains of 15%, while acquired revenues contributed 7% of the year-over-year growth. We saw a positive performance from our other end markets, which helped to partially mitigate the impact of softened RV demand. In the quarter, North American Marine sales increased 4% with our estimated content per powerboat increasing 19% to $1,712, driven by market share gains. Overall, sales to Adjacent Industries grew 3% versus the prior year period, supported by the aforementioned growth in Marine sales. Q4 2022 sales to the Aftermarket decreased 17% compared to the prior year period, driven by a decline in automotive aftermarket sales, partially offset by strength in RV [Technical Difficulty] aftermarket sales. International sales decreased 1% year-over-year, representing 10% of our total company revenue, as exchange rates negatively impacted results by approximately 9% due to the strength of the dollar…

[Operator Instructions] Our first question is from Kathryn Thompson from Thompson Research Group. Kathryn, your line is now open. Please go ahead.

Hi. Thank you for taking my questions today. First, I'm going to focus on the OEM ramp up, and if you could give some cadence to that? And then, also just clarify that you're -- as you said in your prepared commentary, you're seeing some good strong demand for maintenance at RV dealers just for units that are already sold. Could you talk about what trends you've seen historically with maintenance versus sales? And is there a divergence in that trend that you're seeing in today's market that could be positive for the outlook?

Yes, I'll start, Kathryn. Regarding the ramp up or just where the industry is going from where we're at, obviously, we've been in ramp-down mode and just trying to get to a pace where the industry is -- where wholesale is being outpaced by retail. So, we've had a couple of hiccups here in November and December, but for the most part, it feels like the next couple of months will be retail outpacing wholesale hopefully longer than that by a pretty fair margin. Still getting -- still trying to find the bottom, I think, where we've got some customers that are taking weeks at a time down between now and into March, it feels like. We're kind of hoping after that in March-April timeframe things start to tick up. And certainly, all the retail outpacing wholesale that's going on today is just taking chunks out of dealer inventory, which is where we need to get to see some wholesale orders again. And on the aftermarket piece, I'd just say that we track all that activity by the minute. And January, just on parts orders from dealers, was up 65%, I think, as we said in prepared remarks. But that's dealers calling in, needing replacement parts and parts for service, and we just see that activity up significantly right now. And we know that trend will continue especially as they have more time to service units and more service base have come online over the last 12 months. So, Brian, I don't know if you want to add to the aftermarket piece.

I think maybe not so much on the aftermarket piece, but to give you some additional clarity around our expectations, I mean, obviously, Kathryn, there's a lot of uncertainty in the marketplace today. But as we said in our prepared remarks, we're expecting somewhere between 45,000 to 50,000 units for the first quarter. I mean, that's far off from when you think about Q1 of last year at 170,000-plus units. But as the OEMs hold production levels pretty -- well, hold them down or suppress here temporarily, as Jason said, to let the inventories deplete some, we would then expect that to start to come back up. And like we said, if you look more in line with 2019, from Q2 through Q4, you're certainly looking at 85,000 to 100,000 units a quarter is kind of what our current expectation is. I mean, we continue to hear a lot of positivity from a lot of the dealer base. There are retail sales occurring. So, at some point, as they continue to deplete inventory, there's going to have to be orders and production to follow suit and replenish inventories in the system.

Okay. That's helpful. As a follow-up to that, there's several larger retail shows that have occurred at the beginning of this year. Any color on trends from those? And what this could portends for the future?

Yes. We've talked to a lot of OEMs and a lot of dealers over the last a handful of weeks that they've had big shows since Tampa in January. All the traffic commentary around retail traffic and purchases have been really healthy. And I think we're seeing that take out of inventories to rebalance dealer inventories, like Brian said. There's been a lot of positive remarks, dealers seeing inventories come down to healthy level where we can see -- they're going to have to buy for the summer selling season. They know it. And I think everybody's just positioned to get dealers in the best position they can before they -- before that starts to happen. But I think we're on the shows, all signs and commentary have been positive. Retails seems to have stabilized. I just look at how bad Q4 fell, it's 77,000 or 70,000 units, retail/wholesale roughly. If you annualize that, that's 300,000 units. That's a layup. So that's where we feel 330,000 to 350,000 is a good number. And for a down year, that's a -- it's a pretty damn good number. I think it's -- I think that's healthy, and we can adjust our cost to get into a good position with those -- with that type of volume. So -- but retail staying healthy is the most important thing we have looking for our industry right now and it's preparing to stay that way.

Okay. And then final question for the day. On inflation, you said in prepared remarks, freight and raws were up in Q4. But what we're seeing in other industries, wide variety of industries, definitely you're having certain costs, natural gas, but other labor including pulling back. How do you think about the balance of inflation or even deflation as you look out in 2023? Thank you.

Yes. I mean, I'd start first with from a pricing perspective. To our customers, we've been saying throughout a lot of 2022, we've had some pretty meaningful price decreases, which I think is consistent with your commentary about what we're seeing in the marketplace for steel, aluminum, freight. We are seeing those costs come down from the all-time highs that we experienced these last couple of years. So, we've been given price decreases. But from a consumption perspective for us and our income statement results, we've talked that we were -- we've been heavy on inventories. Some of those costing layers or some of the all-time high costs that we're consuming today, that certainly was a headwind for the fourth quarter. And as we, I think, communicated at the end of the third quarter, we expected that -- I expect that to continue into the first quarter. We certainly are starting to see improvement in our inventory layers. But with the little volume that we're seeing here in the first quarter, it's taken some time to do that. So -- but I do expect that to be -- I expect us to be through most of that through the first quarter, and as we get into the second quarter, we should start to get back on par with where I think we would expect us to. So, from a margin perspective, because that's the biggest needle mover, I would say, as Jason said, obviously, we've had to respond quickly and take a lot of costs out of the business and we'll continue to do whatever is necessary from a fixed and variable cost perspective, but materials is the biggest needle mover. And I expect that as we move through that and get back to some more normalized volumes in the second quarter and beyond in 2023, we should be back into more of a high-single digit type -- or mid- to high-single digit type margin view for operating income.

Great. Thank you very much.

Our next question is from Scott Stember from ROTH MKM. Scott, your line is now open. Please go ahead.

Good morning, guys. Thanks for taking my questions.

Good morning.

Brian, from what you're saying about, I guess, the lag of getting that higher priced inventory through the channel and matching things up, it sounds like the first quarter could be challenged from a profit standpoint, or do you think it will be profitable in the first quarter?

I think that as we look at Q4 -- I'd contrast Q4 with Q1. Q4, you had the one-timers in there like we talked about $0.62 EPS impact. I'd say from a margin perspective, if you take those out, you're pretty darn close to breakeven for fourth quarter. I expect that given January's performance and we think that that's going to be a bit indicative of what the first quarter looks like, we'll see a little bit of ramp up here in February and a little bit more in March, but pretty consistent with the declines we saw throughout the fourth quarter. So, I think they're pretty similar from a quarter view perspective, once you take those one-time hits out of there. So, I think it'll be close to breakeven and possibly at least we would target a little bit better than that. But then once volumes come back in the second quarter and we really chew through these inventory layers, which as I've been saying previously, those -- that's anywhere from 4 percentage points to 5 percentage points of margin headwind that we've been experiencing these last couple of quarters as we consume those layers of inventory.

Okay. And then, back to the aftermarket. You talked about how the automotive side really drove the decline in the quarter. Can you maybe give a little bit more content on that? And the other side of the business, the RV, how did that perform in the quarter?

Yes. So, the RV business is exceeding expectations in terms of just volume. So, no problems there. And again, it's all service and repair parts related. I mean, there's some upgrade and just normal aftermarket business through all channels, consumer, e-tail, Amazon dealers and all the distributors that we do business with there. And we expect that to continue through this year. On the automotive side, it's largely driven by new car sales. So, as everybody knows, there's just a glut of availability for new cars. There just isn't being -- trucks aren't being produced like they were three years ago. So, when new cars are down, new automobile sales are down and production is down and our hedge business is impacted by that. But we expect that to start slowly coming back. And we've adjusted our business. We chased materials down all last year on steel, because steel is mostly the kind of content we have the current automotive side of our business. So, as all of the indexes adjust positively, we work through inventories, we'll see that positively impact margins through the whole course of this year.

And I'd add to that, Scott. If you look full year, we really started, I think, seeing the disconnect in the back half of 2022 between the automotive side and the RV Marine side of the business. But if you look full year, automotive was only -- it was off 3%, but the rest of the business was up 19%. So, you can certainly see there were -- there was a sharp contrast in the performance. When you look to the fourth quarter, as the automotive side began to slip more and more, it was off about 24%, almost 25% from the fourth quarter. So, you can see that, that's the side of the business which -- it was running about half and what we experienced in the back half of the year, it's now to less than half of our overall aftermarket business.

Okay. And then, in the first quarter or at least in January, you talked about that 65% increase. That's just from, I guess, orders from dealers for parts, service parts, what is the overall aftermarket doing in -- the whole aftermarket doing in January?

Yes, I mean, for January, everything is still suppressed. I would tell you the automotive side did get slightly better. We started to see some orders come in there. So, instead of 24%, 25% off like it was in the fourth quarter, it was only off 17%. The RV Marine side of the business was better than that, but still down slightly in January. I think that it's -- our expectation is on that side of the business, a lot of it, is our sales to wholesale distributors. Their orders are going to be a little bit spotty. So, we've seen from month to month some pretty meaningful variances when we're looking at how their orders are coming in, but at least it's not down as meaningful as what the automotive side is, and we expect that as we move through the winter months, and people get their units out for the season, that we'll start to see that continue to improve. So, when we get to the back half of the year, we're definitely anticipating all the aftermarket to be up -- start probably in the summer months at some single digit growth rates, but then be double digit -- back to double digits when we get towards the end of the year.

And the two other things I'd add Scott is automotive is about half of the aftermarket business. So, it weights heavy when it weights one way or the other. And then, we've got the -- on the RV side, it's just -- there's all sorts of opportunities with service parts, but that's through largely retail and dealers and the big chunk of our aftermarket business on the RV side is wholesale distributors and they've got inventories to work through as well. So...

Okay. Just last question on the aftermarket. There was a slight operating loss within aftermarket in the quarter. That was strictly related to the auto side? And it sounds like probably having to do with input costs as well?

Yes, you're correct. On both fronts, definitely as the -- at the volumes that we were experiencing on the automotive side and the seasonality, when you get into the fourth quarter and first quarter for automotive, it typically is extremely low margin. So, I would call that normally in the off season, low single digit type margin. So, to see that flip to a loss is not much of a surprise. And then, couple that with, like you just mentioned, consuming some of the high-cost steel layers in a lot of those hitch products, we've certainly seen -- very consistent with what we've seen across the entire business where it's quite a bit of a headwind through the back half of 2022 and into this first quarter or so of 2023.

Okay. Thanks, guys, for taking my questions again.

Thanks, Scott.

Our next question is from Fred Wightman from Wolfe Research. Fred, your line is now open. Please go ahead.

Hey, guys. Good morning. I was hoping you could just give a comment on the timing of the model year changeover as we see this depressed production level extend farther and farther versus where people might have planned? Do you think that your customers are just going to move to model year '24 products when they resume production or is it going to be continued production at '23?

I think there's a lot of talk around that. There's a lot of -- the biggest problem right now probably is just the 2022 model year. It was the largest produced model year in the history of RVs. And, obviously, volumes have been -- retail spend depleting since more or less July of last year. So, there's a lot of that product in the pipeline, but we've heard all sorts of stories over the last couple of months where the OEMs are doing what they need to do to blow that product out to the dealers and get it in the hands of the retail, so that it's just flushing through the system. On the other hand, the '23 is just -- there's not a lot of that product being built. So, I don't anticipate that's going to be a big issue. Certainly, you'll have some of what you're talking about, but I think that the OEMs and dealers doing a really good job working together to -- they both have the same common issue here and both have to collaborate to figure it out. So, I think in the past, they've done a really good job of that when there's been that kind of a headwind, but they'll get through it.

Okay. And then, Brian, you gave us the total number for the one-time costs in the quarter. I think, you cited it as a $0.62 headwind. Can you just break that down between severance and then the inventory hit?

I can, Fred. I got it right here. It's about the -- from an inventory perspective, there's a bulk of it, it's about $0.44. So, the remainder is the $0.19, which is severance.

Perfect. Thank you so much.

Our next question is from Craig Kennison from Baird. Craig, your line is now open. Please go ahead.

Yes. Hey, thanks for taking my question as well. I wanted to follow-up on Fred's last question. Regarding your cost structure going forward, how should we think about SG&A in Q1 and on a go-forward basis following the actions you took in Q4?

Hey, Fred -- or Craig, the -- so, I would say that we've continued to make adjustments to our cost structure. We really started having to make some bigger swings at it in November and December as we saw what production schedules look like. So, there's been additional adjustments that we'll continue to make as we rightsize and get better visibility into the coming months. I do think that, obviously, from a percentage of sales perspective here in the fourth quarter and first quarter to see our SG&A costs slightly elevated, it's certainly the expectation, and then resume or head back to the more normalized levels when we get the volume in the second quarter. So, I don't think it's going to vary too meaningfully, but we have taken some additional costs out of it. And, obviously, from a compensation perspective, as you would weigh things more with where -- when the profits are actually incurred given the expectations we have for the first quarter, that will be a much lighter quarter from that perspective. So, I think it will come down some from the fourth quarter, but probably not in a major meaningful way.

Thanks. And then, Brian, I think I heard you make a few comments around your margin expectations for the full year, and then you commented on maybe a breakeven scenario for the first quarter. Could you just give us a sense of the cadence of margin, and where you expect the full year margin to be, at least what range might you expect that to be in?

Yes. I mean, I think that -- really 2021 is a good year for comparison. When I look at -- and I'd say little bit by chance, when you look at top-line expectations and then look at kind of the what type of margin we were running throughout 2021, our expectations will be that that's pretty similar when we have the volume. So, once you take first quarter out, which as I mentioned, we're expecting breakeven to a small slight profit there. Once you move past that and we get volumes resuming to more normalized levels, we would expect mid- to high-single digit type margins. And I think that at least the way we're seeing unit production play out today, which there's a lot of uncertainty in that, Q2 would be, I would call it, 8% to 10% type margin, and then that improving throughout the remainder of the year with as volume increases. Fourth quarter normally would be a little seasonally different, but at least through the second and third quarter, which would be the meaningful quarters for the year, I would expect them to be in that range.

And our diversified businesses are really adding a huge lift to our profit improvement through the year. So, most of our businesses there are having really solid years, off to a good start and all those. So, the diversification is a big part of the story as well, Craig.

Great. Thank you. And then on content per unit metric, you mentioned giving some price back as your cost changes. Just curious, is that figure is something that would go down sequentially? Or is there enough innovation and other drivers to that metrics such that you could see continued growth?

Yes, Craig, if you look at it -- if you were to go back and contrast the past few quarters on a year-over-year basis, you certainly saw that grow to all-time highs in the 50%-plus range. We're at 45% today. When you start to dig into the details of that, our organic growth rate is some of the highest I remember seeing in my tenure here. So, at 15%, acquisitions adding another 7%. As you fast forward into the next quarter or two, I would expect those acquired revenues to probably not vary too much, and I think that we're going to -- we've won enough business and expect to continue gaining share during 2023 that I would expect that double-digit type organic growth rate for us to continue at least here in the near term, which is far greater than our historical 3% to 5% average. Now, if you look at the remainder of that, that's price. And as we've talked over the last couple of years to see the 35%-plus type inflationary numbers pushing through the system has certainly been the case. But that's retracted. If you look at the balance of it for the fourth quarter numbers that we saw, that's way down from where it was in the third quarter. And as you fast forward into the first and second quarter, I would expect that price number to continue to come down as we give those price -- the price adjustments back to our customers. To where that would be on a more normalized basis and you should be back by the first, second quarter to where you really just price is not a part of the picture and it's more about organic and acquired revenue growth.

Great. Thank you.

Thanks, Craig.

Our next question is from Mike Swartz from Truist. Mike, your line is now open. Please go ahead.

Hey guys, good morning. Maybe to start. Just on the -- I think, Jason you called out the $370 million cost reduction program that was put in place in 2022, maybe give us a feel for how much of that was actually realized in 2022 and how much, I guess, the remainder we'll see in 2023?

Yes, I mean, I'll jump in there, Mike. I'd say we realized most of it. We've had to make as you've watched the RV industry production rates decline really ever since the first quarter of 2022, we've been taken cost out of the business ever since that point, whether it's labor or adjusting our fixed cost structure to the best of our abilities. So, I would say that's what's been realized at this point. We probably have a little bit more to go, but probably not meaningful enough until we really see what sales levels are going to be I think here in the short term. Like I mentioned earlier, we've taken some additional cost out in January based on changing forecast, but we're really looking forward to the second and third, fourth quarter as to what levels, the cost structure we need to target.

Yes, I think just to add to that, it's -- when you get into cost-cutting mode, you just keep going. So, there's things that we're looking at every single day, we're on cost cutting mode right now all over the business. And we're just trying to make sure that we're not cutting too deep, because we do feel that we're going to be to a 400,000 unit-ish run-rate towards the middle of the year. That's what we feel we're going to get back to. So, we don't want to cut so deep that we can't sustain higher levels of production once we see it. And then -- that's what I'd add there.

Okay. That's very helpful. And then just on the Marine business, I think you made some comments that you think will be flattish in 2023. Is that including market share gains, or is that what you see just from industry production?

Yes. I think that starting now early in the year, at least what visibility we have from the manufacturers is that run rates aren't changing a great deal, some up, some down, so overall for us we're expecting pretty flat through the first quarter and into the second quarter. I think it's yet to be determined as to how much that varies throughout the year. Certainly, there is going to be some pricing adjustments that will see some declines there as aluminum costs have come down, et cetera, et cetera. But I think from -- our organic growth should help to mitigate some of those declines on the pricing side of things, but it's yet to be determined, I would say, on what the volumes will be on -- for the manufacturers as you get further into the year.

It feels steady right now. They've been running at a good click for a while. And we anticipate at some point in time, it will cool off, but we're not seeing at this point in time.

Okay, great. Thank you.

Our next question is from Bret Jordan from Jefferies. Bret, your line is now open. Please go ahead.

Hey, good morning, guys.

Good morning.

Quick question on -- you maybe you said this, but did you talk about your expectation on '23 retail and RV just sort of -- so we can line up what shipments might be versus clearing inventor?

Yes. We said on retail 370,000 to 390,000 is our expectation. Wholesale 325,000 to 350,000.

And then, on Marine, the same question, I guess. Are you seeing that retail demand is clearing the inventory or is inventory building on the Marine side? Obviously, there is a backlog there because of supply problems, but is retail still as strong as it had been?

Yes, I think they have been building some inventory and retail has fallen off just a little bit. But again, like I just mentioned a minute ago, we're not seeing the production rates change much on the OEM side. We anticipate that that'll happen at some point in time this year. But with the introduction of electric Biminis, lot of seating content, we got plenty of new business there to override any way the business might soften or the market might soften.

Okay. And then a really big picture question. I guess you commented in the beginning about the RVIA forecast of 63 million RV trips this year and I think you talked about peer-to-peer RVshare, because I'm just trying to do the math. If there's 11 million RVs in the population, we're going to have 63 million people using them, is this peer-to-peer sharing to get this utilization? And I guess at some point is peer-to-peer a risk to the industry and that one RV can service 10 people as opposed to 10 people buying an RV, does it impact demand at some level?

Yes. It's certainly both. When you look at the 3 million rental nights that RVshare and Outdoorsy have both have gone public with over the last -- talking about over the last few years, I mean that's a significant amount of rentals compared to what we would see in years pass before the marketplace existed. So, yes, but I don't -- I really feel that -- in talking to a lot of consumers and we talk to a ton of consumers, I feel that there -- they use rentals as a way to gauge whether or not they want to buy an RV. Certainly you'll have families that want to rent anytime they use it, but you're going to have families that jump into the lifestyle and want to have their own and not use somebody else's every time they take a trip, especially if you're going to use it often. So that's kind of the some of the feedback we hear from consumers -- from our customer experience team. I think it's really healthy for the industry. And then the rental individuals, the individuals that are running these RVs to the consumers, I mean some of these guys and gals are buying five, 10, 50 units and having a fleet and running them out and servicing them that way.

Right, okay. And then, one last question, I guess, on the cadence of pricing. Obviously, I think you talked about how we are going to be giving some of the price back that had been 30%-plus. Is it -- is most of the price decline already been seen or does it sort of staggered out through Q1 and Q2 on the RV OE price side?

It really depends on what commodities end up doing over the next couple of quarters, but we feel like most of it is there. We actually -- I was going to mention this on a comment a minute ago, but there is actually some price increases going on too. So, other areas where we didn't have indexes, we're holding price as long as we can. So, I mean we're going to manage margin the very best we can to hit the target numbers we talked about a little bit ago, which we feel for a really down year are pretty solid.

Yes, Brad, I would add, on the contractual one, July one, as we discussed previously, it was a very meaningful decrease for our customers. January one is another one. October was actually a slight increase, very nominal. But it's -- so given the volatility in that -- in this space, we've seen it move up and down, but some of the more meaningful decreases on a contractual basis have already been given at this point.

Okay, great. Thank you.

[Operator Instructions] Our next question is from Daniel Moore from CJS Securities. Daniel, please go ahead. Your line is now open.

Thank you. Thank you for all the color. Greatly appreciate it. Just maybe to crystallize for aftermarket, what are you thinking about for growth for the full year? You gave a lot of color and commentary about some of the buying patterns for January. But what are your expectations for growth? And second, in addition to the CapEx, just talk about how much working capital do you think you can take out this year? And what a free cash flow number might look like for '23? Thanks.

Yes, I mean from a full year aftermarket perspective, Dan, I would say after we work through these first -- the first quarter, we would -- like I mentioned, towards the back half of the year, we'd get into the double-digit percentage growth rates. I think overall, it probably averages out to high single digit type growth for full year. So, a little under what we've seen historically. But certainly, given the current headwinds we've been seeing, that we should see a lot of improvement there. From a cash perspective, I think that we'll have a better operating cash flow year in 2023 than we had in 2022 assuming we continue to bring inventories down. So, based on the guidance that were given on the overall expectations for the business, plus an additional $300-plus million type reduction in inventories for the year, you should be in excess of $700 million of operating cash flow, so -- which is actually slightly north of what we experienced in 2022. So, from a cash perspective, we're expecting really, really strong 2023.

Appreciate the color, again. Thank you.

Thanks, Dan.

Thanks.

Our next question is from Brandon Rolle from D.A. Davidson. Brandon, your line is now open. Please go ahead.

Thank you. I just had a quick question on your shipment outlook. Did that change at all since your pre-announcement a couple of weeks ago?

No, I don't think so.

Okay. And then on just the content per unit and de-contenting, given pricing seems to be the biggest impediment to retail right now, how much de-contenting are you expecting in this upcoming model year 2024? I think, a lot of people are expecting '24 to be cheaper than '23 and '22. I don't know if you're able to gauge that or if it's on a brand-by-brand basis, but on average I guess how much de-contenting do you expect to take place in this upcoming model year?

I mean, not a ton honestly. I mean, we expect some de-contenting to happen, but now it's time to show the value you got in your units. And I mean, we've got -- I mean, I'll just give you an example. ABS brakes, we launched this year. We've got a ton of interest in that. And that's actually doubling the cost of axle products in the units. So, as I've said on a lot of our prior calls, the innovative products that we supply to the industry due to the fact that they not really commoditized, they're really special. We tend to have more of these types of options and sell the stuff into the units, whether the industry is good or bad, they tend to take out the commoditized type products. The commodities of the units and replace them with better features and values and take cost out that way and we just don't supply a lot of commodity type products to the industry. So, while they may do that, it tends not to affect us much, because if you need an axillary slide out on the unit, you're going to use an axillary slide or leveling systems and things like that. You're not going to take that stuff that the consumer needs off the unit. So, that's a short answer.

Okay. All right, thank you.

Our next question is from Tristan Thomas-Martin from BMO Capital Markets, Tristan, your line is now open. Please go ahead.

Good morning. I just had a question on your industry production outlook for the first quarter, I believe is at 45,000 to 50,000 units. If in -- January was at 14,000 and it seems like production started to come back in February, it's probably going to ramp up little more in March, what are the odds the industry ends up coming in ahead of your expectation?

Well, there is always a chance. So, as we've said before, we usually don't have great visibility out beyond three, four weeks from an order perspective. So, it's a hard question to answer, but it's all going to depend. And at this point where we're at on February 14, dealers that have to be putting through a lot of orders, and that's going to take time for them to produce, that hasn't really been happening yet. So, I wouldn't expect it to vary greatly. But there's always a chance to...

Better -- our 325,000 to 350,000, we bet on. We feel that's what a good number is. But at the end of the day, there's a lot of positives out there. I mean, unlike '08, you go back to the last big dip we've had in production, we -- the economy was really unhealthy. I mean, this time around the economy is pretty healthy. The retail consumer is pretty healthy. The OEMs are consolidated and pretty healthy. The dealers are much more consolidated and pretty healthy. Unemployment is low. There's just a lot of good things. There might be some pieces of the economy that get hit over the next six to 12 months. But the fact that it's not getting hit all at once, I think is a good sign. And the fact that retail staying relatively healthy right now, consumers healthy, it's -- I think we're in a good spot. We're in a good spot to get at or above what we're talking. I don't -- I wouldn't bet on below.

Awesome. That all makes sense. Thank you.

We currently have no further questions. I will now hand back to our speaker for final comments. Mr. Jason Lippert, please go ahead.

Thanks everybody again. And again, on the second what I just get on talking about. We are in a difficult period in the RV cycle right now, but we've been through before, we've got solid leadership, and the business is also much more diversified today than it was 10, 12 years ago when we went through it the last time, and that's going to give us a nice lift on the business. This time around, it doesn't feel nearly as bad as the last time we went through a recession. So -- and as I said, the OEMs and the dealers and the consumers are relatively healthy. So, I think we're in a good spot. We look forward to updating you. We'll know much more about the market and where the RV business is headed the next time we have a call. So, thanks for joining us. See you next time.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.