Good day ladies and gentlemen and welcome to the fourth quarter 2017, Winnebago Earnings Conference Call. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Ashis Bhattacharya, Vice President of Strategic Planning and Development. Sir, you may begin.

Good morning everyone, and thank you for joining us for Winnebago Industries conference call to review the company’s results for the fiscal 2017 fourth quarter, which ended August 26, 2017. 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 website at investor.wgo.net and a replay of the call will be available on our website later today. The news release with our fourth quarter earnings results was issued and posted to our website 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 and 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 said, I would now like to turn the call over to our President and CEO, Michael Happe. Mike.

Thank you, Ashis, and good morning to everyone. We are very appreciative of your interest in Winnebago Industries and for joining us this morning. I’ll begin today’s call with an overview of the key drivers behind Winnebago Industries fiscal 2017 fourth quarter and full year financial results. We’ll then turn the call over to Bryan Hughes, who will dive more deeply and specifically into those financial numbers. I will return to provide some further context on the dynamic environment unfolding here at Winnebago Industries, as our 4,000 plus team members worked feverishly to restore market and financial leadership to this almost six decade old company. While we are proud of our progress in fiscal 2017, as we speak we are already in our eighth week of the fiscal 2018 year and extremely focused on our future. More than 13 months ago we set out on our fiscal 2017 year, intent on accelerating our efforts to transform Winnebago Industries into a larger, more balanced, more profitable outdoor lifestyle company, providing a more compelling value proposition to our end customers, our dealers and our investors. The phrase outdoor lifestyle was intended to both remind our employees in the business of providing high quality, innovative products, that enable extraordinary experiences by our customers in the outdoors, but also to give ourselves the permission to think more broadly about growth possibilities in the future around both the RV and adjacent [ph] lifestyles. Our team responded in fiscal 2017 with a tremendous year of top and bottom line growth. Full fiscal year 2017 revenues increased 59% year-over-year on strong growth in our Towable segment, reflecting the transformative addition of Grand Design RV to our portfolio and the further acceleration of our Winnebago Branded Towable Fitness unit. As we ended the fiscal year consolidated revenues were…

Thanks, Mike and good morning everyone. Fourth quarter consolidated revenues were $454.9 million, an increase of 73% year-over-year, driven primarily by the Grand Design acquisition and strong organic growth from the Towable segment. Gross profit was $73.6 million, an increase of 131% year-over-year, with gross profit margins expanding by 410 basis points. This increase was driven by product mix, including the addition of Grand Design, and also included 60 basis points related to the positive trends in our Towable segment, material usage and associated efficiencies that resulted in a $2.9 million favorable inventory adjustment in the fourth quarter. Fourth quarter operating income was $43.5 million, up over 130% and net income was $24.9 million, an increase of 90%. Reported earnings per share were $0.79 per diluted share, an increase of 61% over our $0.49 of EPS in the fourth quarter of last year. We recorded amortization expense of $2.1 million in the fourth quarter associated with the Grand Design acquisition. For fiscal 2017 as a whole, consolidated revenues were $1.547 billion, an increase of 59% from fiscal 2016, also driven largely by the Grand Design acquisition. As a reminder, the acquisition took place last November of 2016 and as such, we will continue to have two months of annualization benefit in our first quarter of 2018. Operating income for the fiscal year was $125.1 million, up 90% and net income was $71.3 million, an increase of 57%. Full year earnings per share were $2.32 per diluted share, a 38% increase from $1.68 in fiscal 2016. Full year amortization expense was $24.7 million pre-tax. As illustrated in our consolidated statements of income, there were a few significant items related to the Grand Design acquisition impacting our fourth quarter and full year fiscal 2017. First, additional transaction cost related to the acquisition…

Thank you, Bryan. With fiscal year 2017 now behind us and already mid way through our fiscal 2018 first quarter, I would like to share some thoughts about our approach moving forward. With regards to the overall industry and macro economic trends, we remain cautiously optimistic that the positive RV industry cycle still has further runway to continue through much of our 2018 fiscal year. Industry shipments and retail remain solid and more importantly dealer sentiment and general consumer confidence remains strong. Economic conditions in North America remain steady and the key metrics we monitor, including such things as fuel prices, interest rates, the wealth effect, household debt, access to financing, field inventory, credit scores, while each has their own individual movement and characteristics, collectively they are showing an environment for positive further RV sales which is promising. We are encouraged by the statistics from the RV Industry Association showing more new users coming into the RV lifestyle and the widening appeal of the RV lifestyle due in large attempt to manufacturers increasing value within their products, but also using features to expand the use case appeal to new users to the lifestyle. The new Winnebago Class B 4X4 Revel is a clear example of that. And so we continue to invest in both projects that will enable growth, but also initiatives that should allow us to be more efficient and profitable as our company scales. At this time we now have three separate capacity expansion project underway at Winnebago Industries. Our new Motorized manufacturing and service facility in Junction City, Oregon has been in the process of being stood up throughout our fiscal 2017 year and fiscal 2018 should see a material increase in the number of diesel units being produced at Oregon versus their previous home in Iowa.…

Thank you [Operator Instructions]. And our first question comes from the line of Craig Kennison of Robert W. Baird. Your line is open.

Good morning. Thanks for taking my questions. Mike, the Towable backlog is massive. I wonder if you could just talk about your weekly production capacity, especially in Towables and how that might progress throughout the year as more capacity comes online?

Good morning Craig and thanks for the question. You know I’ll certainly speak directionally to it. I won’t share specific daily manufacturing numbers. But you know as I mentioned in my comments, I mean certainly it’s a double edged sword. We are extremely excited about the orders that the Grand Design and that the Winnebago Towables teams have essentially created through their good work, and the dealers are excited about those products and obviously have placed those orders. Our approach obviously working the backlog is coming through probably two or three different methods. One is, we continue to be more efficient and productive in output through existing facilities or resources, and a good example of that would be certainly within the Grand Design business. That team has done a tremendous job of improving their daily and weekly output on the same number of lines organically over the course of their first five years of existence. So we work very hard every day through their efforts to increase daily output and we continue to see that progress. Obviously the second approach will be the onlining of additional new manufacturing capacity through the building of some new facilities, but also the increasing capabilities of some of our vertical integration activities, such as I mentioned in the call, lamination capacity. And so it’s obviously a twofold approach. It’s something that we probably stress about everyday here, that we could be doing a better job of serving the dealers, and that there is even more retail that’s potentially there to be captured if we can increase that capacity. But the team is working at it and as quickly as we can get some of these manufacturing facilities and new lines onboard, you will start to see some stair steps and hopefully you know getting that backlog worked down. So it’s a good problem to have, but it is excessive to the degree that you know we are making more than $20 million now of capital commitments to the Towables businesses and working very hard to get those online as soon as possible.

Thank you. And then Bryan, you mentioned a $2.9 million benefit to gross margin including some material usage benefit. Could you just shed a little more light on that and whether it’s a one-time impact or something that would be more sustainable. I guess I’m trying to get a feel for what your go-forward margin outlook looks like?

Yes, of course. So here is how I would talk about it, as we have grown in the Towables business and as we brought capacity on and lines on, we established material usage factors that estimate the consumption of material through the manufacturing processes, right, of course. We did a 100% physical count in the fourth quarter and our Towables business that substantiated the more efficient usage of those materials or in other words lowered the scrap or waste in the process than had been assumed on these new lines. So, really nice performance by the Towables teams in the production areas to drive that efficiency. It’s a favorable lift for the quarter, but for the full year I view it as the true efficiencies being reflected in the numbers.

Okay, thank you.

Thank you, Craig.

Thank you. And our next question comes from the line of Seth Woolf of Northcoast Research. Your line is open.

Hey, good morning and thanks for taking my question. Mike, I just -- I guess I wanted to get your thoughts. I mean there has been talk in the marketplace about you know rising labor rates, and OEMs kind of having to adjust pricing you know to be compensated for the additional cost that they are getting from the suppliers, maybe keeping a little bit for themselves. So just as you think about the supply dynamics in the industry and then you got FEMA coming and buying some units from the dealers. Is there any reason to think that there would be any pushback on those, these price increases?

Well, first of all good morning Seth. Thanks for your question. Let me kind of break that down into a couple of pieces if I might. So material cost pressures you know coming either from the commodity market or through the suppliers, certainly we see some of that and I won’t get specific into some of the numbers as to how much and where, but we’ve had some pretty honest and straightforward and difficult conversations with some of our suppliers about some of the material cost increases that they are seeing, and as much as possible we certainly are trying to work those, work the impact of those cost increases down, and we do that through a number of ways. One, challenging the suppler as to whether they can be more productive; number two, we sometimes invite the suppliers into our facilities and say “hey, let’s try to find efficiencies together;” and then number three, we will combat that with some of our own sort of strategic sourcing initiatives that we’ve been working on for the last couple of years here. So I would say some of the material cost pressures you know have been real. They are in the noise within our sort of gross margin improvement. So we are still making tremendous headway in spite of some of that. The labor pressure and you see most of that in the Indiana market, where much of the RV talent is centralized. I would tell you we are in a really good position in labor and combating wage pressure for this primary reason. We have two of the fastest growing businesses out in that Indiana market and we are attracting employees who want to work for businesses that have current momentum and the runway that many prospective employee candidates feel…

Okay, thank you. I guess just one more real quick one and then I have a question for Bryan. But you emphasized more – you put more emphasis on the Open House this year, because of you know the growing presence of Towables and you had the new motorhome models that you introduced. But does that mean that – can we still expect to see some new model introductions at Louisville this year or have you kind of just put out everything into the Open House.

Well, I wouldn’t say we put everything into Open House, but I probably won’t tip my hand via this call versus you know anything will introduce or show the rest of the year. I think we will introduce new products when they are right to introduce. There may be a time when we are ready to make an announcement that doesn’t happen around a trade show, because we feel the timing is right, the product is right and we want to get started. We felt very good about our Open House week across all three of our business units in Elkhart at Open House. The teams did an excellent job showing strong product lines, our dealers were very excited about the new product that they saw from each of the business units, and in term of establishing sort of Winnebago Industries as a third anchor in the industry behind our two biggest competitors, I think we were successful there. So the teams met their order goals and we are now on to executing against those orders for the year, but by no means are we done introducing new products in our businesses. We will continue to unveil those when the time is right.

Excellent, and then real quick just Bryan, I know there is a lot of moving parts in OpEx line this year, but as we go forward, I mean it even looks like it’s all kind of elevated from what we’ve seen in the last three or four years. How should we think about you know what that looks like in FY ’18 and beyond and what’s – perhaps what’s the best leverage point with sales growth kind of going forward?

There is as you I think are alluding to Seth, there’s a lot of noise in SG&A, most notably from bringing on the Grand Design P&L and a slightly different makeup for the cost structure. You know most of the increases are obviously related to that. We also have personnel coast, including variable compensations/bonus that are up year-over-year because of the strong performance this year. We had the favorable legal settlement that we called out in our adjusted EBITDA last year, so that’s driving a year-over-year increase. So there is the new office building that we opened in Minneapolis, building out a team for a growing company and making those types of investments. There is a lot of things going on obviously that are frankly helping to contribute to our success. So we’ll continue to make the prudent investments where we need to and mange expenses aggressively as every good company should do. But there is a lot of things going on there and so that’s how I would answer your question for now.

Okay, thanks guys. Great quarter.

Thank you, Seth.

Thank you. And our next question is from the line of Scott Stember of CL King. Your line is open.

Good morning guys.

Good morning Scott.

Good morning.

Can you maybe talk about the Open House? You alluded to the fact that the deals were very excited Mike about the intent and some of the newer product. Can you maybe just talk about, granted its only one product, but how much of leverage with the Winnebago brand do you think you can get just from that to get more of your product on certain dealers’ shelves, before you even come out with a Class C model?

Well, I mean those conversations are certainly ongoing right now. We unveiled the Winnebago Branded Class A Gas Intent at third week of September in Elkhart and dealer reaction to it was positive and we collected a fair number of orders certainly that week against it, but we also come out of that week and for the last three or four weeks have been visiting with dealers in various markets about their intentions around that model and really some of the other new products. So that work is ongoing. You know this Motorized turnaround per se is, you know it’s very – the words are tough to chooses only because there is a lot of moving pieces and we are not – you know obviously new products are going to be critical to us starting to regain share on Motorized. We have to introduce not only more affordable products, but products that have more innovation and differentiation and stronger value around the line. We have to have better line structure. So really when we have a conversation with the dealer, it’s not just all about the Class A Gas Intent. We are really rationalizing our dealer strategy to try to find what we feel are the very best dealers in each market across the country that fit not only who we are today, but where we are going in the next several years, and so those conversations are usually much more comprehensive than any particularly new product. Is the Class A Gas Intent Scott helpful to those conversations, yes. We’ve had several dealers that we haven’t done businesses with for some time and have wanted to reinitiate some contact in part because of that product, but also because of I think some of the things they are seeing at Winnebago that they think over time are going to be positive. But you know I have been very clear and I think maybe not convincingly so always on these calls, but we are having to take at times one step backwards in Motorized to go two steps forward someday and believe me we are working hard at this thing and we were very excited in Elkhart at Open House to show some of the new products that the team’s been working on. So lots more to come on that and we’ll see how it goes throughout fiscal ’18.

Got it. You talked about Class C. It sounds like that’s in this logical area for us to look for some models, but what about a little bit further down on the Class C food chain. There are some competitive models out there that go for less than the intent, is that for a gain as well?

Yeah, I think one of the things Scott, anytime you obviously create business strategy is you have to decide who you are and who you aren’t. You know Winnebago’s reputation is certainly built more around the higher quality, more premium motorhomes and I think what you’re going to see over time from Winnebago motorhomes is we’ll have a much cleaner good, better, best product line structure within each of the four categories. It will make sense to our dealers as to where the different product names fit, so that they can qualify a customer to you know either good, better or best; the step-ups between those series will be more rationalized. And again, getting out of sort of the cloning business you know over time and we still do a little bit of that, but we’re not doing it with any new products going forward. You know that’s going to help dealers have a little bit more elbow room within the markets to make some more money and to again, not have to compete with sort of like product across the market. So lots of work going on there in all the product lines, but back to your question, it is not our intent to be the opening price point leader in every category. That’s not who we are and while we know there will be some volume there, we’ll have to find other ways to drive market share as opposed to focusing most of our efforts on solely the opening price point. There are larger, bigger competitors that are probably better suited to that. We want to be more offensive at the entry level price points, but I am not sure we want to be the best in the industry there. We want to be the best in the industry probably again in differentiation, innovation and really serving the dealer and the end customer with a total cost of ownership that is lower and ease of doing business that’s higher.

Got it. And last question is about margins, just two pronged. Maybe just talk about Oregon. I know that that’s weighed on your business this last year. Is there a way to quantify the level of cost that will start to peel off in 2018 as the ramp up takes place; and then on the other side of it, you know you talked about just you know on the Towable side of the business, you know these new facilities that are coming up. Maybe just talk about start up costs and what we could look for there and that’s it, thank you.

Well, so let’s start if you don’t mind with the latter part of your question first, the Towables facilities. So during the last call, I think after our Q3 results we announced the Grand Design capacity expansion and mentioned that that was a $10 million plus investment. Much of that work has been ongoing now for several months and as I mentioned on the call, you’ll start to see capacity coming online mid-way through our fiscal ’18 year, but it will be kind of staggered in terms of the way it comes online. So most of the capital investment or expense related to that will happen in our fiscal 2018 year and you’ll start to see the revenue benefits from the Grand Design capacity expansion in the back half of ’18 and into ’19 and ’20. For the Winnebago Towables Division, it’s a little bit more delayed story. You know similar to the question Craig asked earlier, we’re working everyday to increase our output there within the organic facilities. But really in fiscal 2018, that’s $12.5 million I reference, that will be spent in all of fiscal ’18 and then the revenue impact will really happen early in the fiscal ’19 year, and so it’s going to take us a little while there. We’ve built our plan for fiscal ’18 around organic productivity increases at Winnebago Towables. So the team is working hard to get there organically, but our ’19 numbers should be reflective of some increased capacity there. The Oregon stand up has taken longer and been more expensive than we have projected and you know I am frustrated at that; I know our team is frustrated at that, but we won’t rush this. These are you know products that $300,000 to $500,000. They are beautiful products. I think you’re going to see most of the start-up costs really start to fall off here in the next quarter or two and we should start to see really the revenue and hopefully profitability benefits at some point of that happen in the back half of the year, maybe into ’19. So that’s taken far too long versus our own internal projections you know from several years ago, but we’re nearing the end of I think those start up costs.

And just one follow-up, I thought you mentioned the $10 million for the Towable facilities. Just that this sounds like Grand Design alone. How much of that have you quantified would be expensed versus capital expenditures?

Its capital Scott.

Okay, got it. Perfect, that’s all I have. Thanks and congrats on a great year and a quarter.

Thank you, Scott.

Thank you. Our next question is from the line of Steve O’Hara of Sidoti. Your line is open. Mr. O’Hara, your line is open.

Let’s move on operator. He must have dropped.

Okay, the next question comes from the line of Gerrick Johnson of BMO. Your line is open.

Hey, good morning. I just want to follow-up on Scott’s last question about the CapEx, OpEx split. So the full $22.5 million that’s between Winnebago and Grand Design capacity expansions in Elkhart, that’s Indiana I should say, that’s all capital expenditure?

Correct, it is and we use a 20 year life on that.

Okay, and so those start-up costs associated with that, would we assume that OpEx would run a little higher for start-up costs or maybe the costs gets old?

You know there is not a lot of start-up cost you know related to that. Maybe some other expenses that you do, but I would say that there’s not a significant amount of those to be honest. It’s mostly capital and most of the other resources are already in the house.

Okay, great, great, that makes sense. On gross margin, you know a big increase there, a lot of it Grand Designs coming online. So if Grand Design were in your portfolio last year, what would sort of a like for like gross margin look like? Would you still be up significantly or maybe in order of magnitude what gross margin would look like if you add on Grand Design last year?

Yeah, we’re not going to get into that disclosure frankly, but there is improvement still going on as you probably would expect from the scale of the business, as well as just of the Towables business, as well as other efficiencies driven by the team performing very well. So we’re not going to quantify that. I can‘t get into that, but there are organic improvements that are occurring.

Okay, I have two more. One quick one, a little bit more open ended. How should we present your financials in our model going forward? Should we be pulling out the GDRV amortization and transaction costs or not or how would you like that presented?

For the purposes of your reporting?

Yeah, yeah you know when we’re putting out our numbers for you guys, your targets to hit on first, second quarter, do you want us to be pulling out the amortization or keeping that in. How would you like us to do that?

Yeah, as you think we’re showing the adjusted EBITDA which obviously excludes the amortization component and so that’s how or a big reason why we’re using that disclosure. Otherwise we intend to fully include in terms of if we have to disclose operating income, it would be fully burdened with amortization expense.

Okay, great. And my last one is a little more open ended. What’s up with Class A? That was up pretty significantly. Why was that up so strongly in the quarter?

Well, I mean that’s something we’ve been working on for a while now. You know we had done some work with the Vista line specifically and we had a very strong retail year in fiscal year 2017 on the Vista. I think most of the increase in shipments was there. We were pleased to see that because you know I think the rumors were pretty rampant in the market that we were coming with a more affordable Class A gas product. So to have a, you know really a positive you know shipment period in the fourth quarter on Class A prior to the launch of this entry level Class A Gas Intent, we were pleased with it. You know as we said in the call, you know we weren’t as pleased with what was – you know the Class C numbers were not very strong and that’s where we have work to do and we’re working on it, but its – you know the Class A gas side, we think we are in a better place than we have been in quite some time, but you’ve got to stay on it because the competition will continue to move on you.

Alright, great. Thank you very much.

Thank you, Gerrick.

Thank you. And the next question is from the line of Mike Swartz of SunTrust. Your line is open.

Hey, good morning guys. I just wanted to follow up on Gerrick’s question and you had professed or mention the Class C at the start of that and I think even in your opening remarks you had mentioned how maybe you had fallen a little behind in Class C due to some of the competitive activity in new products, etcetera. Is that something that you’re calling out that you just saw start in the fourth quarter? Is that something that’s been going on throughout the year?

Well, you know our retail on Class C for the full fiscal 2017 year was actually slightly positive, but that’s not as good as it needs to be because the market has been pretty hot there and so you know again, this RV market and for those of us that are still relatively new to the RV industry, you know things can move very quickly. You know competitors can embrace or introduce new models pretty quickly and dealers will embrace new products and customers will move to those. And so you know it’s funny, in the Motorized business we have a pretty wide product line up. You know one of the lightest Motorized product line ups in the entire industry belongs to the Winnebago brand and I would say our ability to work across the whole of the line and to try to keep all the balls in the air in a competitive fashion, we’ve not been very good at that over the last three to five years, and I think you’re seeing some hangover benefits – excuse me, impact of that within our business model. I can tell you very directly that that will change in terms of what we call multi generational product planning. Every product manager, every product team that we have in the Motorized business is responsible for being on top of where the market is going to go. The customer trends through the voice of customer, but really dictating over time the pace of competition and so that’s another example where sort of the legacy Winnebago product development model just was not keeping up with the market and so now we have to race to keep up. The good news is with the Class A Gas Intent new product development project, we got something to market in literally eight or nine months, which hadn’t been done in a long time here at Winnebago, and so we will really try to replicate that model on sort of white paper you know ground up product development across the rest of our businesses and we’ll certainly extend platforms in common parts where we can as well. So listen, you know that’s – the downturn is our issue not anybody else’s. We own it and we’ll fix it over time and you guys will hold us accountable to that but our teams will need to bring some stronger product to the market here.

And then just last question on I think Mike you talked about just being a little more strategic I guess on distribution within the motorhome business. Could you talk about what that exactly means? Does that mean more dealers, fewer product or fewer dealers and maybe a deeper product portfolio.

I think what we’re looking for Mike is that we want channel relationships that are largely strategic in a sense that we have a channel partner that is committed to the Winnebago journey we’re on with reenergizing and turning around this Motorized brand and that we can commit to them as well. So in some markets it means less dealers in terms of sort of the number of sort of principals in the market. That may not mean less outlets, but we’re just going to be very selective as to the dealers that we do do business with. In other markets it might mean that we made some wholesale changes and as I referenced in my call, there are a few other dealers that we’re going to begin doing business with again that haven’t been working with Winnebago for some time. So it’s really a mixture. We are just trying to emphasize that you know we want to pick the very best dealers that match our business strategy, not just in the Motorized business, but in Winnebago Towables and Grand Design. Each of the three business leaders is empowered to drive the channel strategy that they believe best fits their business model and then where there’s overlap, certainly you know we’ll try to take advantage of that with the dealers excitement around carrying a couple of pieces, but you know that’s why I mentioned some of the neutrality or slight reverse we’ve been in in Motorized is certainly due to us you know stepping back as well and rationalizing our dealer strategy and saying ‘hey, who do we truly want to be doing business with in the future?’ And then you know the transition to get to that point you know sometimes comes with some ups and downs.

Fair enough. Thanks for the color.

Thank you, Mike.

Thank you. Our next question comes from the line of David Whiston of Morningstar. Your line is opened.

Thanks, good morning. Just two questions, first is on the balance sheet. Your press release state your emphasizing debt pay downs and I guess I was under the impression you did not ultimately want to return to a debt free balance sheet. So can you just talk about how aggressive you want to be on that in fiscal ’18, assuming the economy stays where it is?

Yes, no your exactly right and you understand us right Dave. We do not aspire to be zero debt on the balance sheet, but we are still working towards what we would do as a more optimal structure. So we’ll share more of that at our investor day meeting, what our range that we’re targeting is. But suffice it to say in 2018 we’ll still be aggressively paying debt down.

Okay, and on the overall consumer environment, the talks your having with your dealers, are customers coming into the dealerships, are they just all cautioned to the wind, things are great or are they thinking well its good, but it’s not really going to get better. Is there any kind of apprehension there or there is really no fear right now?

Well, I’m not sure I’d ever label anything as no fear, but I would tend to say David that its still – we still believe that consumer sentiment around the RV market is healthy and so we continue to see new users come into the RV market. I believe a majority of the shipments this year were from new users into the RV lifestyle and so you know we continue to see people that want to get into the lifestyle, we continue to see customers that want to upgrade within the lifestyle and our dealers continue to place orders under the assumption that that will remain healthy for a little while longer for sure. So you know dealer turns, you know the field inventory levels and we focus on turns primarily because especially with our Towables businesses growing as quickly as they are, you are just going to naturally see the number of units going up in field inventory, but so long as our turns are healthy in those businesses or within the acceptable range that we monitor, then we feel confident that things are stable. So again, no canaries in the coal mine collectively. Every now and then you might see a data point that causes you to think a little bit more, but I would say the general sentiment from dealers and consumers is that you know they believe that this is a market that has some legs left in it and that’s one of the reasons why you see us continuing to invest, especially in capacity expansion.

Okay, thank you.

Thank you, David.

Thank you. And our next question is from the line of Morris Ajzenman of Griffin Securities. Your line is open.

Good morning. Just a follow up on Class C. You clearly highlighted the competitive pressures as it related to a lower price point product. How long do you believe you’ll be before the company can really compete effectively as a way for market share or any other metric you want to pick? Will fiscal ’18 show improvement or will it take longer for that to have traction when we can see better results as related to Class C?

Well Morris, good morning. Thanks for your question. Again, I won’t get into any specifics in terms of tipping off our competitors, but it took us several years on Class A gas to respond to the entry level momentum that was taking share from us. It will take less time than you know what happened on Class A gas. So all I can tell you is that we are actively engaged in that, but we’re also actively engaged in new products you know and the other parts of that particular Motorized business. So you know the Class C business also has some presence in the rental markets you know which Winnebago has good share of as well. We think the rental markets are continuing to do well and companies that are in those rental markets continue to expand. So you know it’s a combination of trying to gain back some of that share, but it will be – the answer I’ll give you is that it will be more competitive sooner than we were in sort of trying to fight the Class A pressures. So stay tuned, but we’re definitely working on something.

Okay, and as far as Class A is concerned, totally showing improvements there. This coming fiscal year will that improvement accelerate in your eyes?

Well, I can’t tell you what the market will do, but we certainly think with the restructuring of the lineup, with the new Class A Gas Intent, with repositioning the Vista above that and some of the other products, I think it’s fair to say that we have expectations for 2018 that are stronger that how we performed in 2017. So the team is aware of that and we wouldn’t have made the investments in a new product line if they weren’t expected to deliver those types of results. So yes, we hope to sustain some better momentum in Class A going forward and again, we’ll see how we do, but we defiantly have a new product to go to market with.

Last question; I think following Katrina there was a large order or many orders in FEMA for motorhomes and those sort of RVs. Are you seeing that? Will that be wrapping up in this quarter as an interim event?

I’ll speak very directly to that; you will not see really any material impact to Winnebago Industries financial results due to any actions from FEMA. You know they have certainly worked with dealers in the market to identify inventory that could be helpful. FEMA though has placed much more emphasis on alternate forms of temporary housing than just RVs during this particular fall late summer and fall process and while they defiantly have been engaging some members of the RV community, Winnebago in most of those storm recovery periods, it’s the Towable side of the business versus the Motorized and is targeted by agencies like FEMA for temporary housing for storm victims. We have not been a huge player in Towables and still relative to the broader market we are still a pretty small player in Towables. So the impact of any FEMA activities had been minimal in terms of benefiting us. We’ve engaged our employees; certainly they contribute to the Red Cross and other organizations, but really going forward we are not factoring in any significant lift from FEMA to our results. We’ll create better results with things that we control ourselves.

Thank you.

Thank you, Morris.

Thank you, and our next question is from the line of Mike Baudendistel of Stifel. Your line is open.

Thank you. You gave some good detail on when you think revenue is going to come online from new Grand Design products. Just taking out a few years, do you think the opportunity in Travel Trailers and Grand Design could be as be or bigger than the fifth wheel revenue for Grand Design?

Well certainly Travel Trailers are a bigger part of the Towables market than fifth wheels, primarily because they are more affordable and the price points are lower. So you know it’s really probably a question of dollars versus share. You know we have high confidence in the Grand Design team that’s showing the Winnebago family. They’ve continued to execute on an extremely high level since the acquisition and our commitment to them Mike is that we give them the resources they need to kind of fulfill the business plan that they have the road map that they have down on paper. And so whatever Grand Design decides to focus on and we certainly you know talk with from a corporate level on that, we think they have an opportunity to create you know share in the market and share probably will improve over time. And part of that just goes back to the overall business model that they operate the Grand Design brand under. We feel very confident that that business model is scalable and we’ve been pretty open and honest. You know we didn’t buy Grand Design just to be a fifth wheel brand. We bought Grand Design because we through it was a great RV brand and so we believe they have a great further.

Great. That makes sense and just was about to ask you, over what period of time do you expect to repurchase this shares and the authorization?

Yeah, we haven’t specified. Okay, so it’s a long term undefined term Mike and that’s kind of approach for now.

Great. Thanks very much. That’s all I had.

Thank you.

Thank you.

Thank you. And at this time I’m showing no further questions. I like to turn the call back over to Mr. Ashis Bhattacharya for closing remarks.

Thanks everyone for joining our call today. I hope your autumn is off to a great start and we look forward to seeing many of you at your Investor Day in New York City in a couple of weeks on the Second of November. Thank you very much.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everybody have a great day.