Winnebago Industries, Inc. (WGO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Winnebago Industries conference call. [Operator Instructions] I would now like to turn the call over to your host, Steve Stuber.

Thank you, Kevin, and good morning, everyone. Thank you for joining us today to discuss our agreement to acquire Barletta Pontoon Boats. I'm 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 the announcement of our agreement to acquire Barletta Pontoon Boats 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 security laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain in a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which I encourage you to read. With that, I would now like to turn the call over to our President and CEO, Michael Happe. Mike?

Thank you, Steve, and good morning to everyone. Thank you for joining us on short notice to discuss the next step in our plans to continue to transform Winnebago Industries into the premier outdoor lifestyle company. As many of you know, over the past several years, Winnebago Industries has made tremendous progress building a premium portfolio of brands and products united by our golden threads of quality, innovation and service and advancing our ambitious strategy to drive enhanced growth and value creation. We developed a strong acquisition and integration track record as we have expanded our portfolio with the addition of Towables leader Grand Design RV in 2016, Newmar's luxury Motorhomes business in 2019 and our first venture into the Marine segment, Chris-Craft in June of 2018, which enabled us to enter the marine space with an iconic brand. All of these acquisitions expanded our enterprise and brought tremendous value to our company customers and shareholders through an increasingly diversified and most importantly, differentiated offering. Today, we are excited to announce the next addition to our portfolio through the acquisition of Barletta Boats, a rapidly growing manufacturer of premium pontoon boats. Acquiring Barletta further advances our broader growth, our diversification and value-creation strategies. Barletta's premium pontoon boat offering will increase our presence in the broader marine market and expand our reach into one of the most attractive highest growth marine segments. In keeping with our guiding strategic priorities, this transaction also further diversifies our portfolio beyond RVs into a natural and strong adjacency, where Winnebago Industries can and will leverage our unique expertise in nurturing leading premium outdoor lifestyle brands as well as expanding our customer base and driving profitable growth through operational excellence. Beyond the inherent value we see in the broader marine market and the pontoon boat segment, Barletta specifically is a superb fit for our portfolio. In just a short time, Barletta has built a premium, innovative pontoon boat portfolio and a reputation for unparalleled quality and service that has propelled its segment-leading growth. We are uniquely positioned to support and as we have with other acquisitions, accelerate Barletta's growth as part of our broader portfolio, and this transaction immediately contributes to our promise to drive growth and create value. I'll be referencing the slide deck that is available to our investors and analysts, as I walk through the rest of my comments. Turning to Slide 4. We summarize how our acquisition of Barletta presents a compelling opportunity for Winnebago Industries to build on our strategic growth trajectory. The addition of Barletta just isn't about expanding our marine platform, it's doing so profitably with the fastest-growing brand in one of the most rapidly growing boating segments, meaningfully enhancing Winnebago Industries' growth profile and profitability dimension. Since its first year of production in 2018, Barletta has achieved a compound annual revenue growth rate of over 60%, becoming a top 10 pontoon manufacturer by market share in short order. Barletta's growth has been fueled by its high-quality premium products, a strong dealer channel, and most importantly, its talented employees, all of which provide us with a great platform from which we can drive future profitable growth. Beyond the numerous strategic benefits of this transaction, Barletta shares Winnebago Industries' focus on quality, innovation and service. And we see opportunities to leverage the similarities in Barletta's design, manufacturing and operations processes with other Winnebago Industries brands to share best practices. We also share a common focus on establishing deep intimate relationships with our dealers and strategic suppliers. We look forward to welcoming Barletta to our collaborative culture while maintaining their unique brand identity and the talented team that has made Barletta so successful. From a financial perspective, we expect this transaction to be accretive to Winnebago Industries' cash, EPS and margins in the first year after closing. And finally, the structure of the proposed transaction, which Bryan will elaborate on later this morning, enables Winnebago Industries to maintain our financial flexibility and preserve liquidity. Now with that context on this transaction, I want to take a step back and discuss why the opportunity to expand our presence in the marine market is so compelling. Just as Winnebago Industries' performance over the past year has been fueled by widespread consumer embracing of the RV lifestyle, overall secular growth in the marine market remains strong, with robust backlogs and persistent tailwinds driving demand, many of which we anticipate lasting far beyond this pandemic period. 100 million Americans go boating every year, creating a large and growing secular demand. The broad marine market has generated steady growth over the past decade, including more than 7% growth in total U.S. water sport retail unit boat sales over the last 5 years. Now looking ahead, it's anticipated that the global recreational boat market could grow at an 11% compound annual growth rate through 2025. So we believe there is a strong tailwind that will extend and accelerate market growth for the foreseeable future. At the forefront of the overall marine market growth is the pontoon segment. Year-to-date, industry-wide pontoon sales have increased 58% compared to 38% for all U.S. powerboat retail. Expanding our presence in this adjacent and attractive marine market has been a focus for us. We entered the marine category with the acquisition of Chris-Craft in 2018 and focused on nurturing the iconic and ultra-premium exclusive brand and learning quickly about the industry. As I mentioned earlier, acquiring Barletta significantly expands our marine platform with the addition of the fastest-growing brand and one of the most rapidly growing boating segments, offering much broader consumer accessibility and appeal. Now as you can see on Slide 6, pontoon boats represent the largest segment of marine market unit sales. The growth of the segment is driven by the unique consumer appeal of pontoon boats as they are highly versatile and well suited to a variety of outdoor lifestyle activities, including water skiing and tubing, swimming, fishing and simply sometimes spending time with family and friends on the water. As a result, demographics ranging from young families to baby boomers choose pontoon boats. Pontoon boats are also accessible, not just from a value perspective, but also from an operating perspective. They have powerful but efficient and quiet engines and handle easily. These features are uniquely appealing to new entrants to the marine market, an important pipeline of consumers that Winnebago Industries excels at in capturing and building lifelong relationships with as families upgrade their products over time. As a result, pontoons, we believe, are a natural adjacency to Winnebago Industries' existing outdoor lifestyle product portfolio. They have similar customer demographics and family-oriented appeal and clearly support our strategic initiative to further diversify the outdoor lifestyle market. They also have an operational value chain that is very similar to our recreational business. Just as we do with our premium RV brands on land, Winnebago Industries is well positioned to leverage our unique expertise and support Barletta boats in providing more families with great outdoor experiences. And in turn, Barletta will meaningfully enhance Winnebago Industries' growth and profitability profile. The pontoon segment is experiencing sustained growth that outpaces the broader marine market. As shown on Slide 7, the Marine segment has grown at more than 10% annually over the past 10 years, outpacing the rest of the combined marine market. Clearly, the pontoon segment has a long and exciting runway for continued growth and expansion. And our acquisition of Barletta will enable Winnebago Industries to capture an oversized and outsized portion of that opportunity. Now in the context of the growth trends of the overall marine market and that pontoon segment specifically, Barletta represents a truly unique and compelling opportunity for Winnebago Industries. For those of you not familiar with Barletta, I'll take a few minutes now to introduce you to their story. In contrast to our other brands, Winnebago, Newmar or Chris-Craft, with long-storied histories and heritage in each of those, Barletta is a relatively new company that in a very short time frame, much like Grand Design, has built a stellar reputation with consumers and dealer partners and have experienced extraordinary growth. Based in Bristol, Indiana, just a few miles candidly from Winnebago Industries' other facilities in the Elkhart, Indiana area, Barletta manufactures a 3 model line of premium pontoon boats. They were founded in 2017 with a focus on high-quality innovative products, unrivaled service and strong dealer relationships, which has allowed the company to establish a strong differentiated position in the market, a very similar model and story that we saw and have experienced with Grand Design. As I mentioned, Barletta is the fastest-growing boat manufacturer in the industry, having generated full year 2020 revenues of $120.6 million and 2020 EBITDA of $10.5 million. And we expect to deliver full calendar year 2021 revenues at Barletta of approximately $214.6 million in 2021 calendar year revenue of $26.4 million. We have a sizable order backlog combined with the fact that the company recently opened a new larger manufacturing facility, with enhanced capacity giving us the confidence in Barletta's near-term productions. Barletta's strong performance, deep industry relationships and remarkable brand reputation are a testament to the hard work of a very strong and passionate Barletta team. Their principal and operator, Bill Fenech, and the entire Barletta team brings extensive marine experience that we look forward to leveraging on the Winnebago Industries team as we work to create enhanced value for our customers, dealers and shareholders. Turning to Slide 9. Let's drill down more deeply into their offering. One of their core principles of Barletta is its focus on innovation, those new features that meet the needs of today's customer while providing consistent superior quality. Barletta's focused line prioritizes products built with more standard amenities than any other pontoon boat on the market. Barletta's models the L-Class, luxury pontoon; the Corsa, mid-level sport pontoon, and the C-Class pontoon offering uncompromised value, range in price points from -- retail price points from $55,000 to as much as $140,000. Each one of these products and series reflects Barletta's dedication to experience focused innovation and appealing deeply to their customers' needs. Barletta stands out to its dealer partners and consumers with its focus on quality. They're known for performing a 100-point fit-and-function inspection, ensuring every boat is ready for peak performance when it arrives at the dealer. In addition, Barletta has been a leader in innovation, developing unique construction enhancements that provide a smoother ride and luxurious custom features like integrated dog dishes and care-resistant furniture targeted to pet owners and an option that allows owners to expand their boat based on the size of their party. What we're excited about as well with Barletta is that their future product pipeline looks strong as well. Once Barletta, is part of Winnebago Industries, we look forward to leveraging our supply chain relationships, resources and proven operational expertise in nurturing and growing outdoor lifestyle brands to further fuel the organic expansion of Barletta's product line, including both more premium and more accessible value options to further extend the customer lifetime value runway. Barletta's top-tier network of 125 dealer locations brings its products to consumers across the U.S. and Canada. Barletta's relationships with its dealer partners are a key differentiator and core to Barletta identity. The company has placed significant focus on ensuring it builds deep win-win partnerships with expert high-quality dealer partners to drive success. Under Barletta's unique model, the company grants exclusive territories to handpicked top marine dealers to drive loyalty and mind share and ensure a collaborative strong network. Further, dealer partners are well supported by an internal Barletta sales team focused on expanding into new markets and a comprehensive online portal that serves as a one-stop shop for dealer information. As you can see on the map on Slide 10, the network is expansive, but opportunities remain to expand penetration into either untapped or underserved regions. We see a lot of opportunity given the very limited overlap between our Barletta's current dealer network and Chris-Craft dealers. After the transaction closes, we expect to work together with Barletta to identify areas where they can continue to expand their presence, leveraging our own expertise and existing dealer relationships, driving share growth and further enhancing Barletta's brand equity. Turning to Slide 11. The core differentiating elements that have propelled Barletta's success so far are well aligned to our golden threads of quality, innovation and service. In addition to Barletta's own quality and innovation focus and established dealer relationships, the final differentiating pillar of Barletta is their commitment to delivering an unrivaled consumer experience, especially after the sale. Barletta's focus on service has proven to be a true competitive advantage and one that we at Winnebago Industries understand is very powerful in building strong brands and lifelong customer relationships. Barletta has invested in building knowledgeable professional sales and service teams that can quickly engage with dealers and retail customers to address their needs. Barletta also employs owner specialists that are specifically focused on facilitating effective resolutions and supporting consumers. Barletta consumers are also supported with a 24/7, 365 service hotline to ensure they're never far from support. These service capabilities are a significant differentiator for Barletta and appeal directly to the needs of that pontoon boat owner who values accessibility. As shown on Slide 12, Barletta's differentiated approach has led to differentiated results. Within the pontoon boat segment, which is already the largest and most rapidly growing in the marine market, Barletta is delivering outsized growth and quickly establishing strong market share in the industry. While the entire industry has seen a substantial pandemic-driven surge, Barletta's unit sales have significantly outpaced other competitors, dating back to pre-pandemic periods. And that market share gap has only grown wider in recent months. As we look ahead, we are confident that Winnebago Industries is uniquely well positioned to harness and accelerate Barletta's outstanding growth and success. We see significant opportunities to leverage our core competencies in RVs and apply them to the pontoon boat segment to drive enhanced value for consumers, dealers, employees and shareholders. Slide 13 illustrates some of the ways we expect to exploit that expertise. First, our RV and marine consumers have similar lifestyles and demographics, and we'll leverage our insights with a broader population of consumers across both businesses. Our consumer insights impact our marketing as well as our product development processes. We look forward to supporting Barletta in delivering experience-driven design and innovation as it expands its product line both into more premium and entry-level models. We also see significant opportunities to implement our toolkit for operational excellence at Barletta, in particular, given the largely similar shared manufacturing, supply chain and operational processes between RVs and boats. On the distribution side, we look forward to continuing our track record of supporting unique go-to-market strategies as Barletta continues to scale and expand its differentiated dealer network. And finally, overall, we believe our differentiating focus on quality, innovation and service can be similarly applied to Barletta's performance in Marine and support the brand to become a true industry leader over time. Now with that strategic overview, I will turn the call over to our CFO, Bryan Hughes, to walk through the mechanics and the financial impact of the transaction. Bryan?

Thanks, Mike, and good morning, everyone. As you can tell, we are very excited about this acquisition of Barletta, and we feel strongly that it is a superb business that will continue to differentiate our portfolio and advance our growth profile. Slide 14 outlines the structure of the transaction, beginning with the consideration. At closing, Winnebago Industries will pay approximately $255 million, comprised of $230 million in cash and $25 million in newly issued Winnebago Industries shares. At the end of calendar year 2021, Winnebago Industries expect to issue up to an additional $15 million in Winnebago Industries stock to Barletta ownership upon their achievement of calendar 2021 performance milestones. The $270 million initial consideration values Barletta at approximately 8.5x its estimated 2021 EBITDA of $26.4 million included within that valuation of significant tax assets totaling $29.7 million that will provide a meaningful cash benefit in quarters and years to come. Separately, the valuation excludes approximately $15 million of real estate assets that Winnebago Industries is acquiring as part of the transaction. A complete walk-through of our multiple calculation is included on Slide 19 in the appendix. Notably, our evaluation of Barletta and the multiple we are disclosing does not take into consideration any potential cost synergies. To be clear, we will be pursuing cost synergies, leveraging the strength of our portfolio but this deal is more about the strategic merits and the growth opportunity it represents than it is about cost synergies. As part of the transaction, we have also agreed to pay an additional cash consideration totaling up to $50 million upon Barletta's achievement of certain profitability performance milestones in calendar years 2022 and 2023. The structure of the transaction is aligned to Winnebago Industries' financial impact priorities. The acquisition is expected to be accretive to Winnebago Industries' cash earnings per share and EBITDA margin in the first year after closing. Barletta has a rapidly expanding margin profile, and we see healthy opportunity for continued meaningful expansion as Barletta continues to scale and meet growing demand. Pro forma to the transaction, Barletta is expecting -- or expected to contribute $215 million in calendar 2021 revenues to our top line. That's $215 million. Owing to the transaction structure, Winnebago Industries expects to maintain our strong financial flexibility and balance sheet with a pro forma net debt to adjusted EBITDA ratio below our target range of 0.9 to 1.5x following the close of the transaction, allowing us to continue to invest in our business and return capital to shareholders in keeping with our balanced capital allocation strategy. The close of the transaction is expected early in the first quarter of our 2022 fiscal year. After closing, Barletta will operate as a distinct business unit within Winnebago Industries, continuing the successful integration model that Winnebago Industries has executed through our acquisitions of Grand Design, Chris-Craft and Newmar. The Barletta team, led by Bill Fenech, will continue to operate out of their facilities in Bristol, Indiana. And finally, following the close of the transaction, Winnebago Industries will shift our public reporting structure to include a new marine reporting segment comprised of Barletta and Chris-Craft, alongside our Motorhome and Towables reporting segments. Assuming the transaction closes in line with our expectations of early in the first quarter of our fiscal 2022, we will disclose results with this new reporting structure as part of our first quarter 2022 10-Q. Moving to Slide 15, a snapshot of our pro forma revenue adjusted EBITDA breakdown by segment this year. As you can see, this transaction creates a meaningful marine segment with significant revenue and adjusted EBITDA contribution, furthering our diversification beyond RVs. We expect that over time, our Marine segment will expand in proportion to our overall portfolio, reflecting the immense growth opportunity in the Marine segment that Mike discussed earlier as well as the tremendous growth runway that Barletta has as it continues to mature and grow within Winnebago Industries and the broader pontoon boat market segment. Now I'll turn the call back over to Mike for a few final comments. Mike?

Thank you, Bryan. To wrap up, Winnebago Industries has undergone a tremendous transformation over the past 5-plus years. And the significant progress we have made in strategically expanding our portfolio, enhancing our profitability and developing into a premium outdoor lifestyle company is meaningful. Our purpose is to help our customers explore the outdoors, enabling extraordinary mobile experiences as they travel, live, work and play. Our vision is to be the trusted outdoor lifestyle leader in solutions by providing exceptional innovation, quality and service in the industries we engage. Our mission is to create lifetime advocates of our brands through a relentless focus on delivering an unsurpassed customer experience. And we continue to be focused at the enterprise level on 5 umbrella strategies: strengthening an inclusive high-performance culture, building exceptional outdoor lifestyle brands, creating a lifetime of customer intimacy, driving operational excellence and portfolio synergy, and utilizing technology and information as business catalysts. These are core to all that we do, and again, are an umbrella over all of our businesses and brands. This acquisition of Barletta will continue our track record of value-enhancing expansion and further establishing a presence in the attractive growing marine market with another superb asset. Our expanded marine presence is both a natural adjacency that will enable us to leverage our core competencies for a wider market as well as a strong balancing force and differentiator to complement our leading Motorhome and Towable portfolios. We are confident that Winnebago Industries is well positioned to fuel Barletta's continued growth and their success, which will enhance our overall enterprise growth and profitability profile and provide significant strategic and financial benefits and stability across our enterprise. Finally, I want to thank the many members of the Winnebago Industries team for their hard work to make this announcement possible. It truly is a team effort, and I have the privilege of being a messenger this morning. It is awesome to share my own excitement and our company's excitement to welcome the talented Barletta boats employees to our team. Their and our future is bright. That concludes our prepared remarks this morning. We are comfortable with answering questions and would ask the operator to please open up the line for any questions.

[Operator Instructions] Our first question comes from Craig Kennison with Baird.

First, could you frame the earn-out provisions that are outlined in the plan?

Yes, I'll take that one. Mike can chime in. Craig, this is Bryan. We structured the transaction in a way that for every additional dollar paid in earn-out, the returns for Winnebago Industries improve, okay? So while we're not going to provide the exact structure of that earn-out, I can provide you with that overview. And on top of that, I guess, some additional perspective, Craig. If we achieve the milestones in 2022 and 2023, by the end of 2023, that EBITDA multiple would be between 5.5% and 6%, kind of in that range. So I think that, that gives you some indication of the level of valuation and returns to the Winnebago Industries shareholders in the event that, that additional $50 million is achieved.

That helps, Bryan. And then just as a follow-up. With respect to the growth potential at Barletta, what is the opportunity to expand distribution? And how important is that versus your ability to expand into different product segments as you did with Grand Design?

Craig, this is Mike. What is particularly exciting about Barletta boats is the combination of their youth, their success to date, the talent they've acquired and the opportunities in front of them. We believe there are multiple growth avenues. Product line expansion is one we referenced in the call. They have a very solid product line today with the 3 different series of pontoon boats. But we know that they have great ambition to expand that product line in the future. Both in the value category, but also equally exciting for us in more of the luxury category as well. As we referenced, they have about 125 existing dealer outlets today. Within those existing outlets, we believe there is significant market share potential in further gaining sales organically. We also believe, though, that there are untapped markets. We know that there are untapped markets where Barletta can expand its dealer and retail presence in the future. Because of the significant wholesale demand in the last 12 to 15 months, driven by high retail demand and subsequent low field inventory, the Barletta boat business actually suspended channel expansion of new dealers within the last year. And we believe with the new manufacturing capacity they are bringing online, that they will begin to resume adding new dealers, and we work with them in the due diligence process to understand the geographic markets where they will grow. So both on the product side and the channel side, we believe there are significant growth opportunities. And the last comment I will make is that the relative size of the pontoon market today is approaching 70 -- around 70,000 units. And we believe that the secular popularity of this particular category, including popularity of this category that is increasing in some untraditional places, i.e., the Western U.S. but also some of the -- in the waters near some saltwater bodies means that there's great potential to expand the overall presence of the category as well. And last but not least, from a market share perspective, while they're #9 today, we believe that we have signed a purchase agreement with a company that can be a top 3 market share performer in the pontoon segment in the future. Now that will take some time and some hard work against some formidable competitors, but we believe the market share potential with this particular brand is material.

Our next question comes from Scott Stember with CL King.

Number one, can you just disclose again what the -- what Barletta's share is and the gap between them and those ahead of them? So we can frame out how difficult it will be to get to that top 2 or 3 position.

Thank you, Scott. Their share today is roughly somewhere, if I recall, between 3.5% to 4% share, and it is not unreasonable for that share percentage, we believe, in the future to reach double digits. We're not going to put a time line on that in the morning -- here this morning, but we believe that they have the opportunity to take meaningful share with the operating model that they have.

Got it. And then just lastly, can you talk about supply chain, raw materials? Obviously, a lot of OEMs and people in the supply chain have had to deal with that. How has Barletta been able to handle that from a production standpoint and profit standpoint?

Given Barletta's sales in the last 12 to 18 months, they've handled the supply chain challenges probably as well as most other OEMs, not just in the marine category, but probably in that Indiana ecosystem, which includes, as you know, many of the RV companies as well. We're excited about the opportunities to work with our suppliers and the Barletta business. As you might anticipate, there are a lot of overlap in terms of furniture and aluminum, electronics and some of the other components within the bill of materials. And we believe that we'll be able to continue to support the Barletta team to navigating the supply chain challenges in the short term, but really optimizing their supply chain going forward. So they are not immune to some of the challenges on raw materials or components or subsystems, but we believe they've done a really nice job, and our strategic sourcing team is excited to stand ready and able to assist them as needed once the transaction closes in the future.

The next question comes from Fred Wightman with Wolfe Research.

Maybe just to follow up on that supply chain question. Can you talk about where the backlog stands today, either in dollars or months, however you want to frame it and sort of how that trended over the past year?

Bryan, I'll defer to you. You may have access to that number on your fingertips.

Yes. Fred, backlog is quite extensive at the moment as it is across much of the Marine segment and RV segment. It's -- we're not going to give you an exact number today, but think of it as well over 6 months' backlog.

Perfect. And then you guys have alluded to a new facility that came online. Can you give us some context for how much capacity that added, if there's any additional CapEx contemplated post close or sort of where these guys could get output once that facility is fully ramped?

That facility has just been recently opened by the Barletta business. It has the ability to more than double their total output in the future. We will watch Barletta here in the short term, pre-close, continue to attract the labor that they need to ramp that up, which we believe they have the capability of doing. And post close, we welcome the opportunity to continue to work with them to make sure that the ramp-up is smooth and the successful one. But the timing of this acquisition is particularly exciting for us because it is right in the window of that ramp-up. Certainly, our team put a lot of effort into the due diligence phase and making sure that, that ramp-up can be successful. And so you'll see them, over the course of the next several years, continue to produce a higher rate of boats in total off their campus. We also think there's opportunity on the line that they've had in place for the last 3 to 4 years as well. So again, excited about working with these guys. But this is a campus in Bristol, Indiana, which also has a further land available on the campus should we decide working with Barletta management to add even more brick-and-mortar resources as well. So nice geographic and contiguous opportunity for growth, both in the short term but also the long term.

Our next question comes from Bret Jordan with Jefferies.

Question on the supply chain also, I guess, given the power and chip issues around outboard motor production, is, I guess, could you talk about who you're contracting power with and whether that's going to be -- is that the primary bottleneck in supply chain these days?

Bret, the primary engine manufacturers are ones that would not surprise you, particularly Mercury and also a little bit of Yamaha as well. Barletta has a very good relationship with Mercury as an example, considering how young they are, and we anticipate because of our relationships with the engine manufacturers through our existing Chris-Craft brand, that the conversations that you would expect to be happening today and in the future days and weeks to come will be healthy about maintaining a good relationship going forward. We won't comment on whether there's any expected synergy there or not, other than Chris-Craft has a healthy relationship with its engine manufacturers. Barletta has a healthy relationship with its engine manufacturers. And we'll work very hard to be a good OEM customer for any engine manufacturer working with them on quality and innovation and good delivery and cost as well. So there shouldn't be any right or left turns as it relates to Barletta's power strategy going forward. And again, we look forward to those conversations with the power plant manufacturers here in the next 24 to 48 hours.

Okay. Then a quick question on the sort of modeling how this rolled out. Big backlog now around the pandemic, but it looks like given the earn-out expectations, you would expect EBITDA to grow from current levels. I guess, going into '22, '23, there's no step back before you move forward.

Yes. We are anticipating several things to happen. Obviously, the marine industry, like the RV industry, is working hard to raise the field inventory levels within its dealer channel network, and that is no different at Barletta. There is a significant opportunity to increase the field inventory levels. And this is not unlike Grand Design, which we saw a few years ago as well. Grand Design's raw unit levels were at times higher than what some people expected, but it was a reflection of increasing market share as well. So that leads me to the second part, which is, we fully anticipate that Barletta will continue to take market share in the pontoon category over the next several years and that will further add opportunity to the field inventory rightsizing that needs to happen as well in a positive fashion. And then lastly, as I mentioned in my answer to Craig Kennison's question, we believe the pontoon category can grow in the future as well over a longer-term basis. And certainly, we'll be keeping a very close eye on retail overall. This is certainly a business or an industry that is cyclical. But we believe that this is one of the elements of the marine industry that is growing in popularity that can potentially be in a better position even if the industry slows down someday. People are coming into this type of boat at a faster rate, given the functionality that you can have in different experiences. So obviously, you can tell we're optimistic, which all leads back to your question on the model. And so yes, we do anticipate that the financial performance of Barletta will continue to grow in a positive direction over the next several years.

Our next question comes from Joe Altobello with Raymond James.

Congratulations. So first question, curious if you guys have any data that you can share with us on the overlap between your customers and Barletta's customers. How many Winnebago RV owners also own a pontoon, for example, and vice versa?

We do not have specific data on specific names and customer overlap at this time. We may be able to compare the CRMs in more sort of granular fashion in the future. We do know that there is overlap in terms of lifestyle preferences, especially between travel trailers and pontoons, very similar consumer demographics, certainly different types of lifestyles, one being on the road and more mobile and one being on the water and a little bit more stationary. But there is a genuine love for the outdoors that carries over the marine customer and the RV customer, and in many cases, those customers on both an RV and a boat of some sort. So we believe there is meaningful crossover between the Towables category and pontoons. And we'll dive into the details of our own customer overlap probably in the post-close period.

Got it. That's helpful. And just maybe if I could ask a second one on EBITDA margins. It looks like, based on your numbers, you're implying an EBITDA margin for Barletta north of 12% this year, up from the high single digits the past 2 years. It sounds like you're expecting top line growth to continue. But I'm curious how sustainable you think those 12%-plus EBITDA margins are going into '22 and beyond.

Yes, I'll take that one, Mike. James (sic) [ Joe ], we feel like with the growth of the business, there will be some leverage resulting from that growth, combined with product mix over time should yield sustainable and, in fact, improving margins in the coming years. So we feel optimistic about the margin expansion opportunity in this business specifically.

Okay. So you're not expecting a correction in '22, I guess, that's what I asked.

That's not sitting here today.

And I'm not showing any further questions at this time. I'd like to turn the call back over to our host.

Great. Thank you, Kevin, and thank you, everyone, for joining our call today. We look forward to talking to many of you in the very near future. Have a great day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day. Speaker, please standby.