Polaris (PII) Q3 2024 Earnings Call Transcript

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Polaris (NYSE: PII)
Q3 2024 Earnings Call
Oct 22, 2024, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Polaris third quarter 2024 earnings conference call and webcast. [Operator instructions] Please note, today's event is being recorded. I would now like to turn the conference over to J.C. Weigelt, vice president, investor relations.

Please go ahead.

J.C. Weigelt -- Vice President, Investor Relations

Thank you, Rocco, and good morning or afternoon, everyone. I'm J.C. Weigelt, vice president of investor relations at Polaris. Thank you for joining us for our 2024 third quarter earnings call.

We will reference a slide presentation today, which is accessible on our website at ir.polaris.com. Joining me on the call today are Mike Speetzen, our chief executive officer; and Bob Mack, our chief financial officer. Both have prepared remarks summarizing the third quarter as well as our expectations for the remainder of 2024. Then we'll take your questions.

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During the call, we will be discussing various topics, which should be considered forward-looking for the purpose of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projections in the forward-looking statements. You can refer to our 2023 10-K for additional details regarding risks and uncertainties. All references to the third quarter actual results and 2024 guidance are for our continuing operations and are reported on an adjusted non-GAAP basis, unless otherwise noted.

Please refer to our Reg G reconciliation schedules at the end of the presentation for the GAAP to non-GAAP adjustments. Now I will turn the call over to Mike Speetzen. Go ahead, Mike.

Michael Todd Speetzen -- Chief Executive Officer

Thanks, J.C., and good morning, everyone. Thank you for joining us today. Before we get started, I want to take a minute to acknowledge the immense devastation resulting from Hurricane Helene and Milton. Our team has been checking in with our dealers and impacted areas, and we've provided support, sending Polaris RANGERs to assist, search and rescue teams and traveling to hard-to-reach areas and we donated Polaris generators to those without power.

Polaris and Polaris employees have also donated generously to the Red Cross, Salvation Army and other organizations to help with the costs associated with the devastation from these massive storms. On behalf of the Polaris team, I want to send our thoughts and prayers to those impacted by the storm. Now on to our Q3 update. In July, we told you we were taking actions to lower production and shipments to protect our dealer network during challenging macroeconomic backdrop.

As a result, our third quarter sales dropped 23%. This included additional shipment cuts during the quarter in response to a lower-than-anticipated retail environment. While these actions negatively impacted our short-term results, they were a necessary move to support our strong partnership with dealers and to hold firm to our commitment to reduce dealer inventory. As I discussed on our Q2 earnings call, we continue to make prudent moves to manage profitability in this part of the cycle while remaining focused on our long-term strategy.

That includes delivering exceptional customer experience through a strong, healthy dealer network, investing in innovation to fuel future growth and maintaining agile and efficient operations. Our size and scale in the industry as well as our consistent focus positions us to outperform competitors as markets stabilize. I'm pleased with our progress through the third quarter on reducing dealer inventory as we are now below where we started the year. With lower-than-expected retail in the third quarter and the year, we again lowered our shipment expectations to ensure we meet our commitments to bring ORV dealer inventory down 15% to 20%.

We expect this challenging retail environment to persist into next year, and as such, we will continue to protect dealers through superior inventory management. I'll talk more about promotions in the following slide, but I want to note here that throughout the third quarter, we observed a higher-than-expected promotional environment as other OEMs continue to deal with elevated inventory levels and higher-than-normal noncurrent inventory. As a result, these other OEMs are aggressively promoting to move these vehicles in a challenging retail environment. Some of this promotional activity is driving unsustainable short-term share movements as these OEMs focus on cleaning up unhealthy inventory.

While we will not chase many of these aggressive promotional moves, the elevated level drove higher costs for Polaris as we targeted specific segments to protect. Our margins saw added pressure from the additional shipment reductions as well as higher promotional costs within the quarter. This resulted in a gross margin profit decline of 184 basis points and an adjusted EPS decrease of 73%. Elevated competitive dealer inventory, coupled with the promotional behavior I just spoke to has led to choppy market share results.

While share was down across our segments in the quarter, year-to-date and on a rolling 12-month basis, we've held share in ORV with strength in RANGER and Polaris XPEDITION. I couldn't be prouder of our team's continued focus on improving our operational effectiveness to position us to emerge from this period as a stronger, more efficient and better company. Outside of innovation, our largest focus is on continuing to enhance our overall operating effectiveness and to drive strong LEAN practices, improve supply chain, logistics and operations. Last quarter, I mentioned improvements in achieving our build schedules, and I think it's important for me to continue to provide you with proof points and evidence of our progress.

For example, within one of our largest plants, we've seen output increase by approximately 20% compared to historic levels with the same amount of labor input. At our largest plant, we've seen an almost 10% increase in vehicles coming off the line clean compared to 2023. We currently have the fewest number of ORV vehicles on hold in our factory since before the pandemic. This marks a 50% decrease in rework.

Lastly, we achieved a 7% reduction in our per hour plant costs at two of our larger plants. This past quarter, I spent time in Huntsville and Monterrey talking to our manufacturing leaders and teams on the line. I saw firsthand how much progress we are making to improve working conditions, making it easier for them to do their jobs and driving improved efficiencies. By eliminating redundancies and inefficiencies in our manufacturing processes, we've enabled a more productive and cost-effective use of our skilled labor force.

We're also recognizing savings in areas such as material and logistics, and we continue to closely monitor hiring and spending to align with the current demand environment. Innovation is the lifeblood of our industry, and we remain committed to strategically spending on key R&D investments. Polaris is and will remain the innovation leader in our industry, it is what we're known for, and it is what will enable us to emerge from these challenging times as a better positioned company. With the new product introductions we've made over the past 18 months, we have the most compelling lineup of products as we enter 2025, and we also have exciting new products set to launch next year.

Third quarter retail was down 7%, which was slightly below our expectations, driven by persistent inflation, elevated interest rates and financially stressed consumers. While it was encouraging to see the Fed take action with a 50 basis point rate cut in September, we're not seeing any immediate impact on retail, and we do not believe one cut will stimulate demand in this environment. Consumers remain cautious with discretionary spending, especially for larger purchases, and it will likely take more interest rate cuts and time to improve the financial position before spending returns on pre-pandemic levels. Specifically within off-road, utility was down low single digits with RANGER slightly outperforming ATVs.

While recreation was down for the eighth straight quarter, growth in crossover was a bright spot at over 25%, led by the Polaris XPEDITION. Feedback coming out of our dealer meeting in August was positive, with dealers appreciating our candor around the industry and our commitment to lower inventory. Dealers also responded well to the pricing updates we made as well as the new RZR Pro lineup. On-road retail in Q3 was driven by softness in the heavyweight segment given recent competitive launches in an overall weak industry.

Despite that, we continue to hold our number one share position in the midsized segment. We expect on-road retail to remain soft for the remainder of the year. In Marine, Pontoon retail was down high teens with better performance from Bennington. We were encouraged by orders coming out of our summer dealer meeting driven by innovation across all of our brands.

As I mentioned earlier, the promotional environment remains elevated as OEMs and dealers continue to face specific pockets of unhealthy inventory levels. To be clear, from the standpoint of current and noncurrent inventory, we are well within historic norms. This is not the case with other OEMs who have put increased pressure on dealers to move older noncurrent inventory which has been a burden on dealers profitability for far too long. As a result of investments we've made over the past several years, we were able to be surgical about where and when we allocate promotional dollars.

Where it makes sense from a retail and profitability standpoint, we've added promotions, but there are also situations where OEMs and dealers are running aggressive promotions and taking losses on vehicles to help correct their inventory position. In those situations, we have decided not to participate. We view these as extreme and aggressive promotional strategies as temporary and driven by both dealers and OEMs cleaning up noncurrent inventory as quickly as possible. Sentiment from dealers remains focused on their inventory position as they navigate a lower retail and higher interest rate environment.

We continue to work toward our goal of reducing inventory by 15% to 20% this year, and the actions required to get there are well underway. Fourth quarter shipments are currently planned to be well below retail. As we continue to work with dealers through this transition, they have stated that they appreciate the partnership and our willingness to offer several months of free flooring as we work toward our dealer inventory targets. Again, our goal is to provide a bit of relief for our dealers as we wait for a cyclical recovery in consumer discretionary spending patterns.

And while this effort is having a negative impact across our business, we view it as a crucial step in the long-term collective success of Polaris and our dealers. I'm now going to turn it over to Bob to provide you with more detail on our financials. Bob?

Robert Mack -- Chief Financial Officer

Thanks, Mike, and good morning or afternoon to everyone on the call today. Third quarter sales declined 23% versus last year. The decline was driven by our decision to actively reduce dealer inventory in the second half of the year by shipping less product to dealers. The drop in sales was slightly more than expected given lower retail in the quarter, which caused us to take out more shipments than originally scheduled.

Mix was negative and net price continued to be a headwind for our financials as the promotional environment remained elevated. PG&A sales were negatively impacted by the lower factory shipments and slower whole goods retail. We also continue to see pressure from snow inventory left over from last year's weak season. Gross profit margins were negatively impacted by our decision to cut shipments along with lower mix and elevated promotions.

Improvement in our factory operations and supply chain execution provided a benefit of six points to gross margin versus the prior year, but this was partially offset by a 3-point headwind from lower absorption. The workforce reduction that took place in July also had a positive impact on EBITDA. However, this was not enough to offset the headwinds I just referenced. Turning to off-road.

Sales were down 24% due to lower volume and negative mix. Given the snow season is just beginning, I will focus my comments on off-road vehicles or ORV, including ATVs and side-by-sides. North American ORV retail in the quarter was down 3% with weakness in RZR and ATVs, partially offset by strength in the crossover category. As Mike noted, Polaris Ranger retail was down low single digits.

We believe the ORV industry was also down low single digits and continues to deal with headwinds from higher interest rates, inflation and lower discretionary spending for big-ticket items. Share loss in the quarter was moderate and driven more by specific actions from other OEMs to manage their own inventory challenges than by fundamental share shifts. We do not believe these tactics to be sustainable. And therefore, if you look at share on a longer-term basis, we have held ORV share year-to-date.

Gross profit margin was negatively impacted by absorption at our plants due to lower volumes, mix and net pricing as we continue to see meaningful year-over-year headwinds from an elevated promotional environment. These headwinds were partially offset by the improvement in operations costs that I referenced earlier, which primarily benefited the off-road business. As we look to the fourth quarter, snow shipments will ramp as we ship into the season but we still expect total shipment volumes for the segment to be down meaningfully both sequentially and year over year, given the decisions we made in July and September to actively manage dealer inventory by shipping less product. While promotions are expected to remain elevated, we expect the year-over-year headwind to abate given this elevated promotional environment began in the fourth quarter of 2023.

Therefore, we expect gross profit margin to be flat to up slightly compared to last year, factoring in the absorption headwind, neutral net price and operational savings. Switching to on-road. Sales during the quarter were down 13%, reflecting the broader industry contraction of almost 10% in North America. Indian motorcycles lost modest share during the quarter driven by weakness in the heavyweight category, somewhat offset by share gains in midsize.

We saw good momentum exiting the quarter and expect modest share gains through the end of the year with momentum from the Summer Scout launch and targeted promotions on heavyweights. The drop in gross profit margin was driven by negative mix given the weakness on the heavyweight side and lower absorption, partially offset by operations benefit. I do want to remind you that in the fourth quarter of 2023, we booked a sizable onetime warranty expense in our European business, Goupil that is expected to provide a year-over-year benefit to the comparable gross profit margin in the fourth quarter of this year. This benefit is expected to be partially offset by headwinds from mix and price.

In Marine, sales were down 36% as the industry continues to be challenged by elevated dealer inventory levels and higher interest rates impacting consumers' decision to purchase. As we continue to reduce shipments in the quarter, we have brought marine dealer inventory down by approximately 35% versus the beginning of the year. As Mike noted, we did see positive momentum from our August dealer meetings with the innovation across our portfolio. Our current plan reflects fulfillment of these orders taking place in the next few quarters.

Gross profit margin was down given negative mix and volume pressure driving less fixed cost absorption. We also had some part shortages during the quarter as we shifted toward production of model year 2025 boats. We believe our challenges with these suppliers are resolved, and we do not expect further impacts in the fourth quarter. Moving to our financial position.

We are lowering our expectations for cash generation this year due to our updated business performance with less cash from earnings. We're driving working capital savings through reductions in inventory, specifically in raw materials. Our finished goods will take longer to normalize as we balance keeping our plants running efficiently based on committed levels of raw material inflow and dealer inventory level. We expect to end the year with our share count flat year over year and remain committed to our goal of reducing the number of basic shares outstanding by 10%.

Year to date, we use cash to continue to fund our investments in innovation and key strategic capital projects and returned over $190 million to stockholders in the form of dividends and share repurchases. We remain confident in our financial position and are driving our teams to improve working capital in this part of the economic cycle. Now let us move to guidance and our updated expectations for 2024. As we discussed last quarter, we plan to reduce dealer inventory by 15% to 20% for the fiscal year, better positioning us and our dealers for a continued challenging market environment in 2025.

This commitment requires alignment with current retail trends, our shipments and dealer inventory positions. Given this, coupled with softer-than-expected retail performance in the quarter, we needed to further reduce our shipments. This results in further pressure on our business heading into the fourth quarter and thus a reduction in guidance. Therefore, volume is expected to be a bigger headwind than we originally modeled for the fourth quarter.

We expect modest pressure on EBITDA margins as the volume and mix headwinds are mostly offset by the workforce reduction actions we took in July as well as easier comps due to onetime expenses we had last year in on-road, which I already discussed and product liability, which was elevated in Q4 2023. I want to make a point regarding our operations and the journey we are on to realize greater efficiencies through our own plants. We had a target this year of realizing approximately $150 million in operational efficiencies through lean and clean materials and logistics. What was not in our plan as we entered the year was approximately $140 million of negative absorption that we expect this year due to volume cuts.

I'm proud to say that our teams have done a great job finding opportunities to overcome this headwind with evidence provided by Mike earlier as well as within materials, logistics and other areas. We expect to end the year realizing close to $280 million of operating efficiencies, which more than offset the expected negative absorption that should help create greater earnings power as we emerge from this part of the cycle. The immediate of the hurricanes experienced in the last few weeks were immaterial to Q3 financially. However, we expect some longer-term disruption to impact the geographies that we will need to manage through from a retail perspective.

More importantly, we are doing all that we can to help the impacted communities recover. Our guidance reflects our team's current year-end projections and incorporates current retail trends, and our commitment to reduce dealer inventory by 15% to 20% relative to last year. I want to reiterate what I said last quarter and say that many of these headwinds are not traditionally experienced in an industry that has typically grown low to mid-single digits annually from a unit perspective. This is a unique period where we see our partnership with dealers as more important than short-term wins and believe the actions we are taking this year set us up for long-term success in the market.

We have a long record of driving innovation that leads to enhanced value for our customers and margin expansion for our business. You can see the improvements we are making this year on operating efficiencies, and this is just the beginning. It continues to be a meaningful opportunity to expand margins in future years. We've also been a strong cash generation business with low working capital requirements, allowing us to invest in ourselves as well as maintaining our record of consistent dividend payments and opportunistic share buybacks. Although the timing is uncertain, we have a positive outlook on our business from the perspective of sales growth, margin expansion, cash generation and attractive returns.

We believe the decisions we are making today are in the best interest of all our stakeholders, including customers, dealers, employees and our stockholders. With that, I will turn it back over to Mike to wrap up the call. Go ahead, Mike.

Michael Todd Speetzen -- Chief Executive Officer

Thanks, Bob. Reflecting on my 2024 forward-looking comments from last year at this time, I can't help but notice how many of the headwinds we discussed remain relevant as we enter 2025. We're staying true to our cautious approach regarding consumer trends, and we'll continue to remain agile to align with demand trends. We do not expect a significant change in demand as we move through the end of 2024 and into 2025.

While it's encouraging to see the Fed cut rates, we believe more needs to be done and to get consumers back into dealerships. With adjusted dealer inventory profiles and RFM, additional flooring support and reduced shipments, we are working hard to ensure dealers know Polaris as their partner of choice and that we have a vested interest in their success. We expect Polaris dealer inventory to be well below historical trends in terms of days sales outstanding as we head into 2025. This, coupled with lower interest rates means dealers should see reductions in flooring costs associated with their Polaris inventory.

I know many of you are building out your models for 2025, and I want to be clear that while it may be easy to think of all the headwinds this year will turn into tailwinds next year, it's not that simple. We are not predicting a retail rebound in 2025 at this point. As I said previously, we believe consumers need many more interest rate reductions, coupled with time to enable their improved financial position and confidence to spend on large, more discretionary items. Therefore, we will approach 2025 with caution, and we will continue to focus on the things we can control to position us to emerge stronger operationally and competitively.

We knew the second half of the year would be difficult given the headwinds associated with cutting shipments as a result of continued, macroeconomic headwinds. As we look into the fourth quarter and 2025, we do not expect a rapid recovery. As we continue to navigate the environment, our goals are simple: Stay close to dealers to ensure we maintain inventory at the right level and mix to meet demand, drive innovation and execute on new product launches in 2025 and continue to implement lean and expand our operational improvements. Our goals are within our control.

We will navigate through this environment and set ourselves up for '25, '26 and beyond to begin to deliver on our through-cycle targets for sales growth, meaningful margin expansion and attractive returns as the global leader in powersports. We have the best team in powersports. We have been through challenging economic cycles before, and I'm confident that we will continue to skillfully manage through the current environment. We have the right long-term strategy, and we are executing on initiatives today that will enable us to emerge an even stronger company on the other side of the cycle.

With that, we thank you for your continued support, and I'll turn it over for Q&A.

Questions & Answers:

Operator

[Operator instructions] And today's first question comes from Megan Alexander with Morgan Stanley. Please go ahead.

Megan Alexander -- Analyst

Hey, good morning. Thanks for taking our questions. I wanted to start maybe unsurprisingly by asking about dealer inventory. You didn't comment on where it was or I guess, where it trended versus last quarter.

But if I'm doing my math correct, I think based on your comments in the last two quarters, it would seem to imply dealer inventories up relative to the end of 2Q. So I'm just trying to understand why that would be the case given the commitment that you've talked about to reducing inventory in the channel. I understand it can take time to adjust shipment schedules and that can be driving some timing discrepancies. So if that's the answer, and that's the case.

Maybe you could just tell us where dealer inventory levels sit today on October 22 versus the end of the quarter? I think the concern is that optically, it seems like there hasn't been a lot of progress made on destocking, and retail is also worse than you expected. So just trying to understand whether this means destocking could actually continue into '25, if we don't see an acceleration in retail through the end of the year? Thank you.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean, look, it is a complicated process. We were -- as I talked about in my prepared remarks, we were with dealers in August in Las Vegas. This obviously was top of mind.

What we conveyed -- both Bob and I both conveyed is we can't shut this down overnight. We've actually seen a couple of our competitors who tried to do that. And what ended up happening is they cut off their current inventory, which was creating challenges for the dealers to actually move things that were under more current demand, and they were left with much older inventory. Now you see that turning into really high promotional levels and some of the dynamics that they're fighting through in the fourth quarter when most of this should have probably been somewhat cleared up.

As we look sequentially, Dealer inventory is down. We pull a couple of things out. One is youth because it's the prime stocking season. Last year, if you recall, we had all sorts of recalls on our youth products.

So we were delayed in shipping and very late for the season. And then obviously, the snowmobile business. When you look at core ORV, we have made progress sequentially. Our main points of progress relative to the 15% to 20% happen as we get to the end of October then November and then December.

And it's a pretty steady cadence as we adjusted RFM profiles and that's when the shipments really are brought down hard for the dealers. Obviously, the weaker retail in the third quarter presented some challenges. That's why we went back in and changed our production schedules. We are going to hit the down 15% to 20% period.

We were clear with dealers that it was going to happen later in the year because we had to be mindful of the fact that we had a lot of inventory on order coming over. You can't just slow this thing down overnight. The dealers, by and large, have been very supportive. I'm going to be with dealers again on Monday and Tuesday of this week and our dealer council where we have our top dealer representatives come in, and we'll obviously continue to reinforce our commitment to bring inventory down and continue to work through that.

Obviously, retail performance in the fourth quarter is going to be key. October results are encouraging, but we don't tend to get overly excited about one month because we've seen how volatile the environment's been. And I suspect, as we clear out of October, we're going to see dealer inventory have a meaningful move-down, and then we'll continue that progress into November and December.

Megan Alexander -- Analyst

That's really helpful. Thanks, Mike. And then, I mean, you just answered the question a little bit. But can you just maybe give us a more pointed answer on what's baked into your outlook for retail in 4Q? And then I wanted to just follow up a little bit on your comments on 2025.

Do you understand you're not predicting a retail rebound and it seems prudent to maybe think that way at this point. But do you see enough do you think that retail is at least stabilized such that retail can be flat in '25? Or you're trying to say that we could continue to see retail compound declines into 2025?

Michael Todd Speetzen -- Chief Executive Officer

I think it's probably a little early for us. I can tell you that based on what we're seeing right now, it feels like the trend is probably slowing in terms of retail reduction. But the fact that we've got our rec space continues to decline for the eight straight quarter, and we saw, albeit slight negative, we saw our RANGER business, the utility business, including ATV, go negative in the third quarter. And so we're obviously keeping a close eye on that.

That had been a more resilient segment up until the third quarter. We don't want to overreact to one quarter's trend. But when I step back and I look at the environment, we've had one interest rate cut. It really hasn't done much.

I think not just for our business but in the broader economic sense. Inflation, although it has come down is still running in the mid to high twos. And I think there's just a lot of economic uncertainty right now. I think certainly getting past the election is going to be helpful. But we're going to make sure that as we exit the year, we're going to have dealer inventory at an all-time low from a DSO standpoint.

We think that's going to position us well. And if retail continues to see negative movement, the volatileness between retail and shipments is going to be essentially out of the system because we've gotten ourselves to a point where we can match shipments and retail. Albeit maybe a little bit different by quarter for the year, it should be a much less volatile pattern. But we're going to keep a close eye on it.

And the health of the consumer is the primary thing that we're watching right now.

Megan Alexander -- Analyst

That's helpful. Thanks, Mike. I'll pass it on.

Operator

Thank you. And our next question today comes from Craig Kennison with Baird. Please go ahead.

Craig Kennison -- Analyst

Hey, good morning. Thank you for taking my question. It really has to do with RFM. If you just look from the outside, it feels like the right tool, but maybe a little too focused on units or DSOs without enough weight placed on like, actual, dealer floorplan costs.

And so I'm wondering, Mike, to what extent you can make changes to RFM to avoid, I guess, an inventory problem in the future, just reinforce that strong partnership you have with your dealer network.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean we've been having a fair number of conversations with dealers. And certainly, one of the things that we do now that we haven't historically because we haven't had to is we dollarize what the profiles look like. And obviously, bang that against with the interest rate, obviously, with Fed making the move, the October rate comes down, so the dealers are going to see a little bit of relief starting to flow through their statements.

And it is something that we keep front and center. It's why, by the end of this year, we're going to have our DSO well below where we were pre-pandemic because what that does is it allows for us not just to account for the box count, but also for the value of the inventory and the associated interest rate that comes along with that. I think the benefit we have is that it also makes sure that we're keeping inventory current. You heard in my prepared remarks, we've talked to you specifically a couple of times about the data that we have internally that we get through Lightspeed.

And we know that of all the OEMs, our inventory is the most current. And I think that's a direct attribute to RFM. It allows us to make real-time adjustments. And at the end of the day, that's really what the dealer needs is they need the inventory that's going to move the fastest and be the most current that allows them to preserve as much margin as they can and be able to avoid the interest costs.

As we look into '25 with the ending inventory that we're targeting and the flooring coverage that we provide the dealers, which averages out around 90 days, we believe we're going to be in a position where their risk for interest is going to be minimized significantly. And because they're going to be turning inventory faster, they've got flooring coverage that covers the majority of the time period that we're targeting the DSO at and then we're being mindful of the mix of inventory relative to the demand trends.

Craig Kennison -- Analyst

Great, Mike. Thank you. And then I guess the other side of that is, are you confident that dealers will reward Polaris with market share, even if you maintain more rational shipment levels. So you don't want your dealers just to be focused on dumping whatever brand is causing the most pain.

If you're not causing them pain, will they still focus on prioritizing Polaris?

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean it's a delicate balance, right? Because we certainly can't walk in and tell them not to focus on some of those other stuff because the financial health of that dealership, they need to get that inventory moved. The key is, once we get through, we need to make sure that, a, we're maintaining the floor space that we deserve and b, that we maintain a priority. That's why I referenced it earlier.

That's why we do things like our dealer council, where it's not just me, it's Bob and it's the other members of our ORV team that are listening and taking the feedback and there's a number of things that we did coming out of the last meeting we had with them in terms of simplifying the North Star Rewards program, making sure that we're communicating with them around the RFM inventory levels. New product is a key in making sure we've got product to address certain segments. And it's why we continue to reinforce that everything we're doing right now is we want to be the OEM of choice with the dealers. And when you're dealing with 70% or 80% of our network being multiline, it's really important for us to work the relationship.

And obviously, the financial side of it is really important but there's so many other aspects. And I think we clearly work harder and probably do a better job than most of making sure we're doing that. I think that's going to reward us when we get on the other side of the cycle.

Craig Kennison -- Analyst

Great. Thank you.

Michael Todd Speetzen -- Chief Executive Officer

Thanks, Craig.

Operator

And our next question today comes from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead.

Noah Zatzkin -- KeyBanc Capital Markets -- Analyst

Hi. Thanks for taking my questions. Maybe just one on the $280 million of operational savings that you guys realized versus the kind of $150 million prior. If you could just provide a bit of color on kind of what was the delta in terms of realized opportunities there? And then as we look out to next year, how should we think about the $280 million in terms of being recurring, meaning how should we think about like the extent to which that's volume driven or onetime? What's more permanently kind of out of the base? Thanks.

Robert Mack -- Chief Financial Officer

Sure. So if you think about the -- we went into the year, as we said, with a target of $150 million, we've been able to overdrive that. It's been a mix of different things. I would say the two largest areas have been spend at the plants, and that includes labor and then materials and logistics.

And the materials work has come from supplier negotiations, come from product design changes, things like that. Logistics, we've just been operating more efficiently and haven't had to do as many expedites and late shipments and things like that, that cost a premium. On the plant spend side, it's been just good efficiency on indirect labor, trying to move out temporary labor, reducing over time. So as you think about the $280 million, in terms of what stays and what comes back, there's probably about 25% of it that is tied more closely to production.

And so if that loss production came back, then some portion of that cost comes back because that's what it takes to get that production. But the vast majority of it, 70%, 75% will stay. And we're not out of opportunities here either. Mike and I were just down in both of the major plants as he said.

And while we've made good progress, we've only really been focused on one line at each plant, and those aren't even done. So there's a lot of opportunity left to go in terms of getting more efficient, and we'll continue to drive that into '25.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. And I think, Noah, I made a couple of comments about getting more output for the same labor input. And I think that's where we have the opportunity when volume eventually comes back that we would be able to add more into the production schedule and not necessarily have to add the labor in at the same rate. And those are the areas we're going to drive for more efficiency.

I mean, look, this is a huge focus for us. I mean we know we're in a down part of the cycle for powersports, and we are using this time to very quickly and rapidly move through. And it's not just our factories, it's every element of our operational supply chain logistics, you name it, as well as into our structure as a company. We talked about it at the last call where we took actions to really take down the complexity and things that we have as a company.

And we're going to make sure that those things remain permanent. It allows us to put the money into things like innovation and then be able to drive the margin improvement when we get on the other side of this cycle.

Noah Zatzkin -- KeyBanc Capital Markets -- Analyst

Thanks. Maybe just one more, and you kind of touched on this in terms of kind of talking about maybe higher levels of promo from some competitors. But if you -- when you talk to your dealers, maybe just your sense of kind of competitor inventory in dealerships and maybe tough question to answer, but what inning kind of dealers are in, in general in terms of getting their kind of overall inventory levels healthy? Thanks.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean it's actually not tough to answer because we have a lot of data. So we're able to see it across, call it, the top five OEMs. We know that we are in either number one or number two position when it comes to days sales outstanding.

And then there's a pretty substantial drop off after us and one other large competitor. And I think those are the areas that we know dealers are really working through. Those OEMs are leaning in and putting huge discounts and financing incentives around that inventory. A lot of that inventory is aged.

It's model year '22. And so they've really got a challenge in front of them. It's why I was very deliberate about saying that there are certain areas we're just not going to participate. I'm not going to go in and take the value of a general or an expedition down to try and compete with something that is two or three years older than our product, it doesn't make a lot of sense, and it's not sustainable.

We know that they've just got to work through that. And I think it's taken a little bit longer. I think the weaker retail backdrop has not helped. And I think some of these other OEMs probably had a lot more product produced and we're slower to make some of the cuts that we and BRP have made.

Noah Zatzkin -- KeyBanc Capital Markets -- Analyst

Thank you.

Operator

Thank you. And our next question today comes from Fred Wightman with Wolfe Research. Please go ahead.

Fred Wightman -- Wolfe Research -- Analyst

Hey, guys. Good morning. This is sort of a follow-up to Noah's question, but I guess if we think about the 325 that you guys have out there for this year now, can you just give us the big building blocks from a bridge perspective, just the puts and takes, knowing what you know now, sort of what comes back next year? I mean, 325, should we be thinking about that up, down, flat? Like how would you encourage us to model that?

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I'll let Bob give a little bit more. Look, I think we've still got persistent headwinds as we get into '25. I mean it's tough to know exactly where retail is going to go.

The good thing is, pretty much across our business. By the time we get out at the end of the year, we feel really good about where our inventory is. Flat is probably a good starting point. it's really tough to say.

I mean we have a lot of puts and takes in terms of certainly a tailwind of a lot of operational savings. It's no surprise that some of our bonus programs have been cut back, and so there will be some compensation expense that comes back into next year. And certainly, interest rates are going to be helpful from the standpoint of, it lowers the cost of our debt, it lowers the cost of borrowing for the dealers. It certainly helps our customers.

But I think it's a question. I mean there's no telling how many cuts. We're not going to prognosticate around what we think is going to happen. We do think it's going to take many cuts and time for our consumers to get out from underneath elevated levels of debt.

There's a lot of purchases that have been made. They've been dealing with high inflation. The good news for us is that a lot of these products are starting to get age, they're four or five years. And in some of these segments, we know that, that starts to hit the cycle when they're going to want to look for a new product.

And whether that happens in '25 or '26 as anybody's call at this point.

Robert Mack -- Chief Financial Officer

Yes. I mean, like, Mike said, we're not about to get into giving EPS puts and takes for 2025. But in terms of the positive, we'll have the carryover of the ops efficiencies, and we'll continue to focus on those. The carryover obviously, of the headcount actions we took in July, interest rates, which impacts flooring, impacts retail rate buydowns and obviously, our own debt.

So some positives, no question. But then the industry, I think, is going to continue to be challenged, at least into the first half of the year. And maybe we'll see impact of interest rate cuts, however they flow out through the year. I would think it would be -- the real impact of that is probably going to be more back-half weighted, but it's kind of early to tell.

And then, obviously, Mike mentioned the bonus, there will be some headwind from that normalizing hopefully next year. Commodities have been a little sporty the last couple of months. I don't know that that's going to be a long-term trend but there's probably some pressure there and a couple of other kind of general corporate things.

Michael Todd Speetzen -- Chief Executive Officer

Yes. I mean, Fred, part of the philosophy as we look at this is, given the uncertainty, the goal is let's get the inventories down to where we believe they should be. If things turn out better next year, I have more confidence and want to play more offense than have to be talking about cutting production schedules. And all the work we're doing to get the factories more efficient, leaning them out, we're going to be able to respond faster and see those patterns coming and be able to take advantage of them.

If they emerge, if they don't, then we've sized the business appropriately, and we'll be ready for the recovery whenever that happens.

Fred Wightman -- Wolfe Research -- Analyst

Make sense. And then just on the marine business quickly, another cut to the outlook there. I mean we've seen some other people in the space look to divest marine assets, given how long that recovery looks like it might take. Can you just talk about how important the marine business is to the platform going forward.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean, look, I know the news probably has everybody scratching their head and looking at us. Look, our business, we make really good money. The EBITDA margins in our marine business are pretty much right now on par with the company.

They're running it well. They've been able to react quickly. The market is down. There is some competitive behavior at the very low end of the Pontoon segment that we just are going to steer clear of because these are very low value, low-margin boats that are driving some shorter-term share moves that frankly, are probably not relevant for us.

When we look at the mid- to larger boats across Bennington and Godfrey, we're actually doing really well from a share standpoint. The market is just slow. I mean these are not -- these are not cheap vehicles. Interest rates are high.

A lot of people bought boats in '20 and '21. And I think it's going to be a little bit of time for that to work through the system. The good news for us is, we held two of our dealer meetings over the summer in August. We do one for Bennington and one for Godfrey and Hurricane.

The new product launch for Bennington is the largest we've ever had. Godfrey, we're now entering two new segments with the center console in the 32-foot day boat. The orders for all those products were very strong, which was encouraging because dealers really recognize the focus around innovation that we've got in that business. And we love -- so we're getting that business ready for when the market turns, and we think we'll be in a great spot given the top positioning we have with Pontoons as well as deck boats.

Robert Mack -- Chief Financial Officer

Yeah. And we've been aggressive taking inventory down all year and even starting late last year. So we'll be down quite a bit by the end of this year as compared to 2023 and even historic levels. So we think it's -- we'll ship the stuff that dealers want for '25.

So we think we've got a good mix of model year '25, '24 out there in the field or we will as we ship the '25s and then we'll see how the season develops. But we bought kind of a fundamentally different business, I mean we bought market leaders. They continue to be market leaders. We've improved our EBITDA margins on those products through the cycle compared to where they were when we bought them and the businesses generate tremendous cash flow.

I mean, we've gotten well in excess of $550 million back already on the purchase, just cash flow of the business since we owned it. So I think we have a strong marine business, and we haven't changed our commitment to that.

Fred Wightman -- Wolfe Research -- Analyst

Make sense. Thank you.

Operator

Thank you. And our next question today comes from Joe Altobello with Raymond James. Please go ahead.

Joe Altobello -- Analyst

Thanks. Hey, guys. Good morning. So I guess first question on off-road I'm a little surprised that you didn't gain share in the quarter given the launch timing of some of your model year '25 back in the Spring, which, in theory, gave you and your dealers the ability to discount model year '24s.

And it doesn't seem like that share -- and I know it's small, but that share went to Can-Am. So did the launch timing help at all? And did you see buyers trading down to lower price points? Or were they just chasing promotions?

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean, by definition, the last two parts of your question are the same. And your hypothesis is correct. Share gains came from primarily the Japanese.

And I would tell you that in some instances, it's share gains that are getting them back on par with where they had been a year or two earlier. And a lot of it had to be -- was really driven by moving noncurrent product with very heavy discounts. I mean we were talking about discounts that are up in the $5,000 range with financing offers, dealer cash, you name it. And I think those are areas we just are not going to participate.

The segments where we have new products. They're doing fine. The broader market backdrop is not great. But we have a lot of confidence in the innovation.

And I think when you look at something as simple as XPEDITION, I mean, XPEDITION is up 25% in an area that rec of all categories is probably most challenged. And I think that just speaks to the power of the new products. And we're going to stay focused on the things that add value to this company over a long term. We're not getting caught up in some of the short-term discounting and moving of noncurrent unhealthy inventory.

Joe Altobello -- Analyst

Understood. Maybe a question for Bob. You lowered your sales guidance for the year, not gross margin. And I think if my math is right, Q4 implies gross margin flat to up year over year.

What's driving that?

Robert Mack -- Chief Financial Officer

Yeah. So a couple of things. There's a chunk of it is mix, well just by nature, in Q4, we'll ship a lot of our snowmobiles for the season. And in Q3, you typically ship a fair amount of youth and ATVs as you're kind of going into both the holiday season and the hunting season.

So that will -- that has a positive impact from a mix standpoint. Also, we'll start to shift the boats that came out of the dealer shows and those tend to be higher option boats. So those tend to be good margin in those. And then also from a year-over-year perspective, remember, we had a $20-plus million warranty item at Goupil last year that doesn't repeat this year.

So that drives some of that GP improvement on a year-over-year basis.

Joe Altobello -- Analyst

Got it. Okay. Thank you.

Operator

Our next question today comes from James Hardiman with Citi. Please go ahead.

James Hardiman -- Analyst

Hey, good morning. Thanks for taking my questions. So hoping maybe you could just walk us through the third quarter retail environment, obviously, retail was down, but it was actually down a little bit less than the Q2 declines that we saw for both ORVs and overall. So I guess I'm a little -- I'm surprised as to the surprise that it was worse than you expected? Was it just merely a function of July was good and then things slowed from there? Or was there something that you would hope would sort of catalyze better numbers later in the quarter that just never came to fruition.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean I'd say a couple of things. One, I think we were surprised by the level of noncurrent inventory, the depth of the noncurrent inventory, I mean, obviously, we see some of the data. And I do think that the backdrop from a consumer standpoint, July looked OK and then things kind of progressively got worse from there.

That's why even though October looks good, we're very cautious because we've seen this game before. There'll be kind of volatility month-to-month around what we're seeing. Look, I think it's a lot of the stuff we talked about. I mean there's a lot of noncurrent inventory and some of the other OEMs, there's just a lot of inventory.

And so there's a heavy focus around that. And that's -- if I'm a dealer, I'm trying to get rid of some of that stuff because I'm paying interest on it. And even if I have to take a loss, I just want to get it out of the door. So I think there's some of that, but I mean the backdrop from a consumer standpoint hasn't gotten better.

Yes, interest rates moved a little bit given the Fed's action. It takes time for that to roll through. And as we said, I don't think one interest rate is going to do it. I think it's going to have to be multiple.

I mean if you look at the economic data coming out right now, credit card debt is at an all-time high, auto delinquency rates are up. I mean the good thing is we're not seeing some huge spike in delinquency rates for powersports. We're keeping a close eye on that. But the consumer is just not in a great spot.

And so I think for us, it's just we're going to focus on the things we can control. We're going to work diligently through October, November and December to get the inventory down. And at the same time, keep focusing on making the operations better than they have been.

James Hardiman -- Analyst

Got it. And then on the inventory front, I think the big concern among investors is that there's still going to be more work to be done as we enter 2025. Maybe, I guess, level of confidence that you're going to finish this year with the appropriate level of inventory. And Mike, you've a couple of times called out the DSO progress that you're making.

Maybe put a finer point on that, where is retail and where inventory is versus 2019. I guess I'm surprised to hear the comment that the starting point for next year is flat EPS, if we're not seeing significant inventory drawdowns, right? Like in a one-to-one wholesale to retail environment, I would be surprised if you didn't grow EPS given some of the tailwinds that I would think would come back, but maybe I'm not thinking about this the right way.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. Well, I mean, first of all, we're not going to get into a '25 guidance discussion here. I gave you guys what I think as a starting point for next year. And obviously, we're going to work to make sure we do everything we can to drive performance.

I think what it signals is that we don't see a rebound coming. There's nothing in front of us data-wise that would signal that. Inventory by the end of the year from a unit perspective will be substantially below where we were in 2019. We will be just north of 100 days of inventory.

And my confidence level around that is incredibly high. The fact that we pulled guidance down as much as we just did should be a direct reflection of our commitment to that. It's not that we don't care about meeting the financial commitments, but job number one is protecting dealers because when we get through this cycle, we need to make sure that the dealers are healthy. And as the preeminent partner to these dealers, making sure that we live up to that commitment is key.

We've got a very clear window into October, November and December. We know what we have to do. As we said, we're undershipping retail dramatically in the fourth quarter, and we've got a high degree of confidence we're going to land in that 15% to 20% reduction.

James Hardiman -- Analyst

Got it. Thanks, Mike.

Operator

And our next question today comes from Robin Farley with UBS. Please go ahead.

Robin M. Farley -- Analyst

Great. Thanks. I wanted to go back to the cost saves that you talked about. I know you said about 25% of it is tied to sort of labor and materials from what was the cut in production.

But for the other sort of $200 million or so, I'm assuming that's volume dependent that you wouldn't get all that back in 2025 EPS. Can you give us a sense of, well, first of all, I guess how much is volume dependent? Is it all volume dependent? And then also, would volume have to get back to looking at when you first gave the $150 million target. I think your top line outlook at that point was about 17% higher than where it is now. Is that where your shipments -- where your sales would need to be to hit the -- to see that cost saves show up in your EPS line.

Robert Mack -- Chief Financial Officer

Sure. So of the 280 -- what I meant with what I said about 25%. So 25% of it is of the cost -- the true cost savings is volume dependent. It's labor, it's direct and indirect labor consumable supplies in the plants that, that would likely come back, as Mike said, maybe more efficiently, so might not fully come back.

But it would generally come back if volumes went back to what was in the original 2024 plan. What would also come back, though, is the $140-plus million of absorption, which would obviously be a benefit. I mean, really the reason you don't see much of the benefit of the $280 million this year is $140-plus million of it was taken up by absorption. So we netted $140 million, and that's been offset by negative mix.

Mix has been a challenge all year last year, if you remember, we were filling the channel still with XDs and XPEDITIONs and some higher-end product. And so mix has been a headwind. So to get it all, to see all $280 million, you'd have to see the volume come back to where it would have been in this year. But we're going to continue to make efficiency improvements and investments.

And as Mike said, we think we can get some of that volume back at a more efficient level than it was taken out at, and we'll see how that plays out over the next couple of years.

Robin M. Farley -- Analyst

OK. So the sort of $210 million that's not tied directly to what was cut probably, it sounds like you're saying that would still take a couple of -- to get volume back to your original guidance to achieve that, we should not expect that $210 million in cost saves to show up in 2025 EPS. Is that fair?

Robert Mack -- Chief Financial Officer

Robin, the $210 million is already in the 2024 EPS. So the only thing that would carry over is any further improvement from there. The $210 million is already in this year, so it's not going to come back next year. It's already in the current year run rate.

Robin M. Farley -- Analyst

OK. And then the other piece for next year, and I know you're not guiding to it, but in a theoretical baseline, if retail were flat. And I realize that nobody is guiding to that or underwriting that outlook. But just if it were and you were shipping to that retail, your shipments could be up because of some of the cuts this year being about inventory reduction at dealers.

Is it fair to think that like close to $2 of EPS would come back, if you were shipping to a flat retail and getting back the shipments that were inventory reduction this year. Is that sort of a few bucks or so the right number to think about? Thanks.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean it's tough to comment on. And we're obviously still early in the planning process with our teams. I mean, obviously, this environment has us approaching things a little differently than we have historically.

But I answered Fred's question by saying flat. And I think what you can read into that is, if we're talking about shipments being flat, that means we anticipate retail could still be challenged through '25, albeit probably not at the levels we've seen historically, but we do anticipate that there could continue to be headwinds. I mean, look, we saw it in the third quarter. It's continuing into the fourth quarter.

There isn't a magic switch that comes January 1, and so we're planning accordingly. And then certainly, if we're in an environment where we've got the ability to start pushing shipments up, and I'm not suggesting that's in '25. But that is going to put us in a position to have much better incremental margins on the upswing. We've done a lot of work to keep those decrementals.

I mean, our EBITDA decrementals are at just over 20%, which has taken a lot of hard work from the team. And at the same time, we're going to lean out everything we can so that when margin -- when revenue comes back, we've got the ability to lever into those margins. I don't want to get into trying to make a call around '25. It's too soon.

We need to get through the next few months, come back to you guys in January with a view of where we're at. But based on what we're seeing today, we're just trying to set some expectations around where we think things are headed in '25, and we'll see how the consumer performs in the fourth quarter.

Robin M. Farley -- Analyst

OK, great. Thank you very much.

Michael Todd Speetzen -- Chief Executive Officer

Thanks.

Operator

Our next question today comes from Alex Perry of Bank of America. Please go ahead.

Alex Perry -- Bank of America Merrill Lynch -- Analyst

Hi. Thanks for taking my questions here. I just wanted to follow up on some of the retail questions that have been asked. I guess, is it fair to assume that you don't expect any significant deviation to trend from 3Q, so ORV continuing on that sort of down low single-digit trend? And then is there any reason that any of the other segments, as we look at marine or Motorcycle should have any significantly deviation in trend? Thanks.

Michael Todd Speetzen -- Chief Executive Officer

I think that's probably a fair way to think about it. I mean the one unknown at this point, which we haven't spent much time talking about is our snowmobile business. That's the one outlier. We're coming off of a really bad snow year from last year.

It's encouraging that there's some snow in the mountains right now, but we're sitting here in Minnesota and it's mid-60s, and there's still leaves on the trees. So we're certainly not seeing anything that's got everybody all encouraged. So outside of the snow business, I think those are realistic assumptions.

Alex Perry -- Bank of America Merrill Lynch -- Analyst

Really helpful. And then just on the promotional environment, a similar type of question. How promotional do you expect the fourth quarter to be? Are you seeing any easing in the promo environment that's baked into your guide?

Michael Todd Speetzen -- Chief Executive Officer

No. No. The encouraging thing is, from my standpoint, is we're in a pretty rough promo environment. And we're still -- we're kind of back to the same percent of revenue we were in 2019.

And if you think about the backdrop, it's not great. Now certainly, it's been helpful. I talked about in my prepared remarks, we made some pricing adjustments where we had products that quite frankly, we're almost always on from a promo standpoint, so it made sense just to adjust the MSRP and essentially eliminate the promo on those products so that when consumers looking at a website, they see the actual pricing that they can expect to pay on that vehicle. But outside of those types of adjustments, no, I don't see promo having any significant shifts in the fourth quarter.

Alex Perry -- Bank of America Merrill Lynch -- Analyst

Perfect. Really helpful. Best of luck going forward.

Michael Todd Speetzen -- Chief Executive Officer

Thanks.

Operator

And our final question today comes from Saba Khan with RBC Capital Markets. Please go ahead.

Sabahat Khan -- RBC Capital Markets -- Analyst

Great. I guess just maybe just tying off that entire discussion around promo and inventory. So it sounds like you are pretty confident in getting to that sort of inventory reduction range you've talked about but maybe more of it comes from reduction of the shipment versus maybe matching some of the competitors on the level of promotional activity they're undertaking. Is that sort of the right way to think about it?

Michael Todd Speetzen -- Chief Executive Officer

It's a combination. There's areas where we're going to be promotional to protect a segment. But in the instance that I was highlighting earlier, where we've got a competitor as inventory that's two or three years old, they're throwing everything at it. We just -- we're not going to go down that path.

I don't view that as high quality share and we're just -- we're not going to participate. But if we get to a point where we feel like interest rate buydowns start to move consumers off the sidelines because of the gap between the interest rate moves and where we're at are going to make a difference. There's things like that, that we will certainly lean into. But we're not going to do anything while we will pull shipments down where we need to.

And that's why we adjusted our guidance.

Sabahat Khan -- RBC Capital Markets -- Analyst

Great. And then just last one on the kind of the PG&A sales. Just maybe the resilience of those and where you're expecting sort of in that business line as we work through the macro cycle here? Thanks.

Michael Todd Speetzen -- Chief Executive Officer

Yeah. I mean certainly, the accessory side, we built that up substantially over the past decade. So there's a little bit more volatility there as we pull production down because substantial amount of the product that comes out of our factory is factory install of accessories. But when we look at our parts business, that is far more resilient as we see consumers hold on to vehicles longer and look to repair the vehicles or even add accessories to extend the life of them.

So it is far less volatile than the rest of the OEM side of the business, which is exactly what we've seen historically.

Sabahat Khan -- RBC Capital Markets -- Analyst

Great. Thanks so much for the color.

Michael Todd Speetzen -- Chief Executive Officer

Thank you.

Operator

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the management team for any final remarks.

J.C. Weigelt -- Vice President, Investor Relations

Rocco, this is J.C. We don't have anything else. Thank you very much, everybody.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

J.C. Weigelt -- Vice President, Investor Relations

Michael Todd Speetzen -- Chief Executive Officer

Robert Mack -- Chief Financial Officer

Mike Speetzen -- Chief Executive Officer

Megan Alexander -- Analyst

Craig Kennison -- Analyst

Noah Zatzkin -- KeyBanc Capital Markets -- Analyst

Bob Mack -- Chief Financial Officer

Fred Wightman -- Wolfe Research -- Analyst

Joe Altobello -- Analyst

James Hardiman -- Analyst

Robin M. Farley -- Analyst

Robin Farley -- Analyst

Alex Perry -- Bank of America Merrill Lynch -- Analyst

Sabahat Khan -- RBC Capital Markets -- Analyst

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