Polaris Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 24, 2023

There are 14 speakers on the call.

Operator

Good morning, and welcome to the Polaris Third Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to J.

Operator

C. Weigelt, Vice President, Investor Relations. Please go ahead.

Speaker 1

Thank you, Gary, and good morning, everyone, or afternoon, everyone. I'm J. C. Weigelt, Vice President of Investor Relations at Polaris. Thank you for joining us for our 2023 Third Quarter Earnings Call.

Speaker 1

We will reference a slide presentation today, which is accessible on our website at dotpolaris.com. Joining me on the call today are Mike Steedzen, our Chief Executive Officer and Bob Mack, our Chief Financial Officer. Both have prepared remarks summarizing the Q3, our expectations for the remainder of the year and some initial thoughts on 2024, then we'll take your questions. 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.

Speaker 1

You can refer to our 2022 10 ks for additional details regarding risks and uncertainties. All references to Q3 2023 actual results and 2023 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 Now I will turn it over to Mike Spietzen. Go ahead, Mike.

Speaker 2

Thanks, JC. Good morning, everyone, and thank you for joining us today. This morning, we posted 3rd quarter results that were slightly lower than our original expectations, Driven by elevated manufacturing costs and an increasingly cautious consumer environment, which resulted in lower shipments. Despite these headwinds, we posted share gains across all of our segments for the quarter and we had record PG and A results that were bolstered by the broadest portfolio and all power We also had an incredibly successful off road dealer meeting in July and marine dealer meetings in August, both with positive feedback from dealers regarding our new products. We are certainly operating in a dynamic environment where we have seen declining consumer confidence given persistent inflation coupled with even higher interest rates and rising consumer debt.

Speaker 2

We saw this impact retail more than we anticipated in the 3rd quarter and anticipate this Additionally, dealers are taking a more conservative position given a slower retail environment and rising flooring costs associated with higher interest Despite all of this, I remain confident in our ability to excel in this environment as evidenced by our share gains in all three segments in the quarter and a very positive reaction to our recently introduced new products. Our teams continue to closely monitor the environment and we believe our revised guidance accounts for what we know today. Turning to our Q3 performance, sales declined 4% driven by lower shipments relative to a year ago as well as higher finance If you will recall, last year we had elevated shipping in the quarter to alleviate low dealer inventory levels and to catch up on motorcycle shipments It still remains lower than 2019. Additionally, we believe we are successfully targeting potential customers with the right promotional offers to drive dealer traffic. While retail was generally lower than we had expected, we further strengthened our share position in each of our 3 segments.

Speaker 2

This included achieving the notable milestone in North America of being the number one motorcycle company in the midsize category. Margins were down due to continued headwind from foreign exchange as well as increased pressure from floor plan promotional costs Driven by higher interest rates and higher dealer inventories. Shipping volumes were also lower as we lapped a strong shipping quarter last year. Mix was another contributing factor to lower margins as we saw a slower than expected ramp up in production of our premium off road products, including our new Polaris Expedition and Ranger XD. I would note that our marine team did a good job reacting to lower demand signals early in the quarter and made required cost adjustments to protect margins.

Speaker 2

On the manufacturing front, we have 2 big themes occurring in our off road business. The first which is encouraging is that we had some of our strongest clean build days in weeks as we neared the end of the Q3. These are days where vehicles came off the line ready to be shipped versus entering a rework process. Our teams believe they can build on the success in the 4th quarter. While this is encouraging, the later than anticipated improvements did impact our ability to get many high demand vehicles into dealers on time.

Speaker 2

The second theme is that we continue to build at a much higher cost than we should be. The supply chain has improved quite a bit, but our ability to more Cleanly and efficiently execute has not. There are several factors impacting this. Over the last few years, Our plants have contended with the pandemic, labor shortages, parts shortages, new production lines and facilities, and in the Q3, the complexity of the startup of manufacturing of our new premium products. These rapid and drastic changes have brought on an inefficient cost structure and mode of operation.

Speaker 2

As we appear to be entering a slower growth time in our industry, there is no better time than now to address these inefficiencies. We've deployed key lean resources into the most troubled facilities and remain committed to a culture of continuous improvement. While this is disappointing, it is very fixable Execution is key here and I believe we have the right team as well as the right strategy to remediate the situation. Considering these manufacturing inefficiencies and weaker than anticipated end markets, we're narrowing our full year sales guidance to the lower end of our previously issued range and lowering our margin and adjusted EPS guidance. Bob will provide more detail later in the call, but we plan to remain competitive and gain share in this dynamic environment Our goal is to continue to invest in the business, strengthen our operations and emerge from this stronger than we entered.

Speaker 2

Now let me share some thoughts related to customer trends we're seeing. We're closely watching softer retail trends that have extended into October. In off road, these trends are pointing to a cautious outlook in utility and continued weakness in recreation. We missed our Q3 retail expectations, which was the result of weaker than anticipated end markets coupled with the Slower ramp up of new product shipments and continued constraints on manufacturing our premium products. Retail continued to be strong in new and premium products.

Speaker 2

Our dealers are telling us they have sufficient inventory of base and value models and would prefer to see higher volumes of our premium NorthStar products And more of our recently launched Polaris Expedition and Ranger XD, which is obviously a big focus for us in the Q4. For On Road, Q3 retail was down low teens given a slower market and difficult comps to last year when motorcycles were retailing much later Given constrained availability early in the year, I would note that our heavyweight bikes are seeing more pressure than our midsize category. In marine, softness continued and even somewhat accelerated. We're now over 90% through the selling season and dealers seem cautious given negative headlines covering the broader market as well as elevated interest rates. Given the selling season has mostly wrapped up and the continued softness through the 1st 3 quarters of the year as well as sufficient dealer inventories, We have adjusted our marine sales guidance downward.

Speaker 2

Pressures have mounted on our retail assumptions, but we still expect to grow retail in the 4th quarter, albeit at a slower rate than previously expected. Growth is expected to be driven by snowmobiles as well as our new products. We also have a favorable comparison in snow that should help contribute to retail growth in Q4 as we are on track this year to ship snow check units As many of you saw firsthand at our dealer meeting in July, we launched 2 new categories in the power And could not be more excited about the opportunity ahead of us. Polaris Expedition, which started shipping in Q3, has seen strong demand for our premium models, And we're working hard to meet this elevated demand. In addition, feedback from early customers has been very positive.

Speaker 2

The Ranger XD is the 1st extreme duty side by side with Industry leading torque, payload and towing capacity. Shipments are slated to begin in November and dealers are telling us they have high interest and allocations to customers already established. It's also important to remember the RZR XP launch from earlier this spring. This product has been well received by dealers and customers. Importantly, the RZR XP hits at the largest sub segment of the recreational market.

Speaker 2

It's a multi terrain product that makes up approximately 35% of our RZR sales And our share in the multi terrain space is over 2x our nearest competitor over the last 5 years. This is certainly a product we love having in the portfolio and should not be overlooked in our share gain strategy. In addition to our new vehicles, we also launched the next generation Lock and Ride With our all new Lock and Ride Max cargo system, the new system adds an unmatched level of adaptability and provides customers with virtually limitless configurations to best match their needs for every journey, task and activity. Lock and Ride Max is yet another step in our industry leading parts, garments and strategy where we've seen significant content increases across all product categories related to new accessory and attachment offerings. While they are not explicitly mentioned on the page, our On Road and Marine segments also had incredible new product launches that reflect our continued commitment to industry leading innovation.

Speaker 2

It was an exciting new product year at Polaris and we believe these new products can help us gain share in the Q4 and into 2024. We continue to be in a much healthier dealer inventory position relative to last year. Dealer inventory has improved given better production and supply chain dynamics, coupled with softening demand in some markets. I would note that dealer inventory is still below 2019. As I mentioned earlier, We're continuing to evaluate and adapt our mix given current demand trends.

Speaker 2

We're putting more emphasis on prioritizing Ranger XD, Polaris Expedition and Ranger North Star lines during the Q4 as this is where we see the greatest demand. We're watching inventory levels closely and are ready to take appropriate steps necessary to manage inventory and off road and on road, similar to how we've pulled back production in marine in the face of weakening demand and rising dealer inventory. Wrapping up my comments on the quarter, while the results are short of our expectations, we did gain share and see strong demand for our new products. We're excited to get these new products into the market so consumers can again experience why Polaris leads the industry in innovation. We'll continue to watch retail trends and are prepared to adjust our business model accordingly.

Speaker 2

We'll continue to invest in innovation and to improve our operations. The strategy we laid out last year and talked about at our Capital Markets Day in July remains unchanged and I expect our team to deliver on all aspects of the strategy, which we believe can generate attractive returns for our shareholders. I'll now turn it over to Bob, who will summarize our Q3 performance and provide additional details 3rd quarter results were driven by lower shipping volumes and higher finance interest impacting both sales and margins. Manufacturing costs remained elevated versus heading into the quarter, which tempered much of the expansion opportunity. Promotions continue to be higher on a year over year basis given abnormally low levels last During the Q3, adjusted EPS was down 17% for the quarter.

Speaker 2

Positive contribution from tax and share count was more than offset by previously mentioned headwinds to margin as well as higher net interest expense, which was up over 60% relative to last year primarily due to higher rates. As Mike mentioned, PG and A had a record quarter for revenue as we continue to benefit from the broadest portfolio in powersports as well as new innovations such as Lock and Ride Max that is being very well received with our new products. In our off road business, revenue increased 6 percent driven by strong growth in utility, snow and commercial. This was partially offset by a decline of approximately 20% in recreation. North American retail was up 5% in ORV with double digit contributions from utility and crossover lines, which include General and the new Polaris Expedition.

Speaker 2

Industry data shows we took share across the ORB portfolio. Snow season is off to a good start and what is encouraging is that we are well on track to Deliver customer orders before the 'twenty three, 'twenty four riding season begins, which was a key goal of ours this year. Margins in the quarter were pressured by foreign exchange, finance interest and unfavorable mix. Another factor, which Mike mentioned, With elevated manufacturing costs that did not subside during the quarter. We do expect share gains going forward as we pick up production of Our new products and allocate promotion dollars effectively to drive customer purchase patterns.

Speaker 2

It remains an exciting time in our Off Road segment as we quarter of motorcycle share gains was driven by our strong product portfolio and healthy inventory. During the quarter, our midsized portfolio earned the distinction of number 1 market share in North This is another achievement in the rich history of Indian Motorcycles. Our midsized bike portfolio consists of the Scout, Scout Bobbert and Scout Rogue, all of which have an iconic style rooted in the 120 year history of Indian motorcycles, while offering modern performance and technology to our riders. North American Indian Motorcycle retail was down low teens driven by a challenging back drop and increased competition. On road revenue was down 19% due to lower ship volumes given industry softness Combined with comparing against our Q3 last year, which saw a large catch up on motorcycles with black painted parts given production issues earlier in 2022.

Speaker 2

On Road gross profit margin was up 3 35 basis points driven by favorable product mix, partially offset by promotions driving lower net price. This marks the 5th straight quarter expanding margin over 2 50 basis points as the On Road team continues to deliver on its profitability plan. In marine, the industry continued to be negatively impacted by slowing consumer demand. Industry data shows the pontoon market is down almost 10% year to date as customers continue to be deterred from purchasing by high interest rates. Despite these industry headwinds, our marine portfolio did gain share in the quarter led by Hurricane and Bennington.

Speaker 2

Gross profit margin was down 338 basis points given top line pressures. However, our team continues to actively manage the variable components of their cost structure to protect profits. Most of the season is behind us in marine and we are busy planning for 2024. At the August dealer meeting, we launched Some new value boats under the Bennington brand called the S and SV. We know dealers are closely watching inventory and we want to support their ability to have the right VOPICS.

Speaker 2

We believe the S and SV Bennington boats attract a different customer relative to our legacy portfolio and we look forward to helping dealers broaden the options they offer to customers More approachable pricing and features. Moving to our financial position, we continue to see our balance sheet as a competitive advantage. Cash generation continues to trend favorably and our net leverage ratio continues to be in a healthy spot at 1.7 times. Our cash flow in the quarter was impacted by late quarter shipments in off road as well as the delayed wire transfer from our Polaris Acceptance joint venture. This pushed a normal month end payment into early October.

Speaker 2

Absent these items, which provided strong cash inflows the 1st week of October, Our leverage would have been approximately 15 basis points lower. We have repurchased 1,400,000 shares year to date Now let's move to guidance and our current expectations for 2023. Given what we saw in Q3 In our updated assumptions for Q4, we are slightly narrowing sales guidance towards the bottom of the previous range and bringing margin guidance down which lowers our adjusted EPS guidance. Regarding sales, we are lowering the top end of guidance and now expect sales to grow 3% to 5% this year. While we have lowered our off road sales expectation, which has a negative impact on mix, we still expect off road sales to grow in the high single digits.

Speaker 2

We are moving on road to flat given the softness we have recently seen in the industry and moving marine down as well given year to date trends. We do expect Off Road to have a sizable contribution from snow in Q4 as we remain on track to ship a significant amount of model year 24 sleds in the quarter. Shipments of Polaris Expedition and anticipated shipments of Ranger XD are also expected to have a positive impact on sales in retail. Share gains are expected to continue for off road as well on the back of these shipments. In line with prior expectations, net price will be a 4th quarter headwind Driven by the lapping of the benefit we've seen from the price increases and a stronger promotional environment.

Speaker 2

Finance interest will also continue to be a headwind. Margin guidance is being lowered given what we saw in Q3 and the trends we expect to continue into the Q4. While we knew we had over 130 basis points Margin headwinds heading into the year associated with higher finance interest and FX, we had planned to overcome these macro headwinds with efficiencies on the operations side Improvement in warranty. While we have seen year over year benefit in these areas, they are not to the extent that we had planned. On the operations side, benefit from improved logistics costs have been somewhat offset by higher plant manufacturing costs that have not subsided.

Speaker 2

While we see the typical start up inefficiencies associated with launching major new products as temporary, they remain a headwind for Q4. Production of the Ranger XD is late relative to our initial thinking. We now expect to start shipping the product in November. As Mike mentioned, going forward, we see significant opportunity to refocus on lean principles to improve the overall efficiencies of our plants. It is also worth noting the mix benefit we are seeing in the first half of the year has gone the other direction with delays in new products and lower than previously guided off road sales.

Speaker 2

Operating expense dollars are expected to be sequentially flat in Q4. Therefore, the same factors that are impacting gross margin are also impacting EBITDA margin. Adjusted EPS is now expected to be in the range of $9.60 $10 or 8% to 4% below 2022. We are not expecting any material changes in interest expense or share count, but we are expecting our tax rate to be closer to 20% as we close out the year. For the Q4, a few things to note.

Speaker 2

We expect retail to be up year over year in off road, partially offset by on road and marine, The main driver being snowmobile ship in retail. As noted earlier, margins are expected to be down year over year. We have significant other cost headwinds from higher finance interest, debt interest and foreign exchange that we expect will persist. In summary, there are some puts and takes in the Q3, but our longer term goals of driving leadership in the powersports space and delivering on our financial goals remain on track. We have work to do and the team remains focused on the task at hand.

Speaker 2

It was encouraging to see share gains in the quarter, which are expected to continue. It was also great to see another strong quarter from our On Road team. We believe our long term strategy can generate strong shareholder value and our teams are working hard to make that happen. With that, I will turn it back over to Mike to provide some early thoughts on 2024 and summarize our call today. Go ahead, Mike.

Speaker 2

Thanks, Bob. The dynamic environment I spoke about earlier is not expected to abruptly end on January 1, and thus we need to be vigilant and agile in When I turn on the news, it does seem like a parade of horribles facing the consumer with higher interest rates, persistent inflation, Mounting credit card debt, student loan payments returning and other significant domestic and global events. However, we are focused on adjusting and adapting to these external factors. We expect to manage production, shipments and spending consistent with what we see and ongoing demand trends and we'll stay close to our dealers. We just got started with Polaris Expedition and Ranger XD is next.

Speaker 2

Therefore, we expect those to be nice contributors to retail and share gains into next year. Innovation remains key to our strategy and you should continue to expect innovative new products each year from our teams to help strengthen our leadership position in powersports. Tackling the manufacturing inefficiencies is critical to our long term strategy to expand EBITDA margin. Thus, you should expect to hear more about this opportunity when we formally provide guidance in January. Part of this will help with lowering working capital through inventory management, which should result in positive cash generation.

Speaker 2

No matter what happens externally, cash remains king and we have a strong track record of investing that cash and earning high returns for our shareholders, and I do not expect this pattern to change. I strongly believe our team with focused execution can deliver a strong year with Share gains and margin expansion in 2024 by focusing on innovation, improving manufacturing efficiencies and implementing smart capital allocation decisions. Wrapping up, it was encouraging to see share gains across all three segments during the quarter and to see record results from PG and A The feedback from dealers at our dealer meetings over the summer gave me renewed confidence that we are focused on the right areas to drive strong results. While we are tracking softer retail trends, we believe that we have an attractive lineup of products to enable share gains with new products as well as premium products We remain confident in the strategy we laid out in 2022 and with all long term strategies their objective is to see through good times as well as bad. With focused execution, I believe we can end the year strong and emerge stronger to continue marching towards our 2026 goals.

Operator

Our first question It's from Joe Altobello with Raymond James. Please go ahead.

Speaker 3

Thanks. Hey, guys. Good morning. I guess first, Mike, for you, I wanted to dive in a little bit deeper into your initial thoughts on 2024. You did make the point that you expect The continued retail softness to extend into 24.

Speaker 3

But if we look at Q3, retail was up 5, you expect retail growth in Q4 as well on an easy compare. So is the base case for 24 right now in terms of retail Flat to up modestly or somewhere in that neighborhood?

Speaker 2

Yeah, Joe. We're still working through The first views of next year, obviously, we saw a fair amount of change happen relatively quickly here in the Q3. You know, on our last call, we talked about July retail looking good and then obviously August September started moving in a very different direction. So we're still working through that. I think the key point for us is that we anticipate that the pressures are going to continue.

Speaker 2

The Fed has clearly signaled That they're not going to do much on rates here for the balance of the year. We anticipate there could be other action next year, but I anticipate interest rates are going to continue to remain a headwind. And I think when you look at the broader macro, even though the talk of recession had come down, It's kind of bounced up just a little bit. And so we do think consumers are going to continue to have a cautious mindset, given everything that's going on in the environment. That said, we do feel good about the new products.

Speaker 2

We think that's certainly going to be a tailwind as we get into next year. And given our poor performance from an efficiency and margin standpoint, even in what I'd call a flattish We do anticipate that we can improve margins next year with the level of cost discipline that we've got brought back into the business. You're starting in the Q4 and we'll continue to gain momentum as we go into next year. Operating expenses for us have been well managed We'll continue to do that as we head into next year. And our guidepost is going to be dealer inventory.

Speaker 2

We're still below where we were in 2019. We're going to continue to watch that, make sure it remains at the right levels and react accordingly. So tough to call what we think Next year is going to be we need to get a couple more months under our belt, see how things are headed for next year and then we'll talk more in January.

Speaker 3

Understood. Maybe just a kind of follow-up on that. How does the softer near term retail outlook impact your 'twenty six targets? Does it make the path A little bit more back end loaded than you thought back in Nashville?

Speaker 2

I don't think so. Clearly, the biggest Headwind that we've got is really around the margins. And I'd make a couple of comments. Number 1, the thing to keep in mind and we don't use this as an excuse, but between interest rates impacting our flooring costs as well as foreign exchange, we're dealing with 120 Points ahead went right out of the gate versus when we put the targets out originally. All that said, given the deterioration in productivity we've seen in our plants Over the past year or so, we see a pretty ample opportunity.

Speaker 2

I actually look at it very positively because these are things well within our control, And we can get after that. When you look at revenue and you look at the other measures, I feel very confident about that. The margins, we've got some work to do. I think you should Expect to see progress on that into 'twenty four and I think we'll be on the right trajectory to get ourselves into that mid to high teens EBITDA level that we committed to.

Speaker 3

Got it. Thank you.

Operator

The next question is from Craig Kennison with Baird. Please go ahead.

Speaker 4

Hey, good morning. Thanks for taking my question. I appreciate the candid call here. I wanted to ask first about the utility segment. That's an area that has held up better in recent quarters, but it seems to have changed recently.

Speaker 4

Maybe shed some light on that.

Speaker 2

Yes, I'd say a couple of things, Craig. We have seen some softening in the commercial side. As we've talked about in the past, we're a Top provider of equipment into big rental companies and we have seen some pullback and hesitation as they've seen some of the commercial building Projects either get delayed, pushed out or canceled. And so we have seen some of those things. And then I would tell you that we're seeing Similar dynamics in that kind of the value to midline side of the market, where consumers are a little bit more sensitive to interest rates And that certainly has impacted not only the rec space, but now has crept in to the utility space.

Speaker 2

All that said, as we talked about in our prepared remarks, We continue to see a high level of interest in those premium products, things like Northstar. Obviously, the XD hasn't hit dealer showrooms yet, but We know from talking to dealers, they're anxious to get the product on the floor and they've already got a number of customer commitments. So We continue to feel good about that high end of the market. We just see a little bit of a slowdown relative to expectations in the middle to lower end of the utility market.

Speaker 4

Thank you. And then on Slide 4, you mentioned that 70% of customers are new customers. That seems like an unusually high number. Maybe you can just tell me what that has been recently and then what it might say about Repurchase activity among your existing customers.

Speaker 2

Yes. I mean, it's still in the range that we've seen. I would say over the past 2 to 4 quarters, we've probably seen that number in the mid-60s. So I don't know statistically that I would say that it It has moved dramatically relative to what we've seen both historically as well over the last few years. We have seen some slowdown in repurchase rates, the near term repurchase rates, which isn't surprising given the comments that we made around the health Consumer has an existing vehicle, they probably are more apt to put accessories on it or Let that vehicle run for another year or so until they repurchase.

Speaker 2

So, we don't see anything in those numbers that has us overly concerned. The As we talked about in the prepared remarks around customer dynamics, the search, the configuration builds, all those types of things remain healthy, not just versus Last year, but in many cases relative to 2019. So we know there still is interest in the category. We think people are just hesitant to make the Purchase right now relative to what we were expecting.

Speaker 4

Thanks, Mike.

Speaker 2

Thank you, Craig.

Operator

The next question is from Robin Farley with UBS. Please go ahead.

Speaker 5

Great. Thank you. Just if we could return To the long term targets for a moment, I know you mentioned a bunch of the changes that you still expect to come over time with the manufacturing improvement. Could you circle back to kind of your top line expectations and what you've kind of thought about with this 2026 targets and whether That's impacted by starting to see utility soften here. Just how we should think about the top line part of the long term?

Speaker 5

Thanks.

Speaker 2

Yes. Robin, I guess I'm not overly concerned about it on a couple of fronts. I mean, one, we've obviously seen Strong performance, even with a tepid environment, just given the mix of vehicles we've had, some of the pricing actions that have been taken, although we expect pricing You become less of a factor moving forward. I would tell you that if you look over history, When our market slows down, it tends to come back pretty quickly. I'm not necessarily sitting here telling you I think that happens in 'twenty four.

Speaker 2

But as I look out to 'twenty six and I look at the mid single digit revenue growth that we've got out there, I'm pretty confident that Over the course of the next 2 to 3 years, we're going to see the markets move in a way that allow us to continue on the trajectory that we've been on thus far. Like I said, the biggest focus area for us, for me is ensuring that we've got the inefficiencies being addressed in our factories. The margin improvement is the probably the single largest opportunity that we have in front of us that we've got to get after. The teams are aligned. We've been working through Everything that has to happen, we've got the right trajectory change here in the Q4 and I'm confident that as we get into 'twenty four, we'll continue to see that progress.

Speaker 5

Great. That's very helpful. Thank you. And maybe just one small follow-up. In terms of the market share gains, Can you characterize a little bit about what might be happening in the market overall with market share shifts?

Speaker 5

There's been a lot of movement in the last 2 or 3 years. And are you seeing the consumer Is it do you think that the share gain is that maybe the sort of value or entry level customers not buying Products in the way that they were of your competitors or and that, that part of the market isn't there and that's making other industry Share numbers lower or is there a move to or away from premium out there in terms of market share shifts? Thanks.

Speaker 2

Yes, I'd say there's a couple of things. I mean, certainly the dynamic we saw during the pandemic when some of those value players had a lot of availability and picked up some, What I'll call short term share that certainly has moved back the other way. Those consumers are really not in the market. They are highly sensitive to interest rates in economic conditions. And so certainly, we've seen impacts there.

Speaker 2

And as we've talked about, there's a bit of a bifurcation, Us and one of our other key players, both are doing well right now. And I would say that we're viewed as more premium and high And I think that end of the market, albeit weaker than what we expected, remains strong relative to the other segments of the market. And I think that's a continuation of trends we've seen in the past and definitely a dynamic around some of the short term share gains that we had Back in 2020 2021 from those value players that had readily available albeit very cheap product The consumers went after and those consumers are really not in the market anymore.

Speaker 5

Okay. Very helpful. Thank you.

Operator

Thank you. The next question is from Sabahat Khan with RBC. Please go ahead.

Speaker 6

Great. Thanks and good morning. I guess one of your earlier comments was around Couple of drivers of the lower shipments, and I think you talked about kind of the lower demand, but also some manufacturing issues as well. Are you able to maybe parse out how much of each The product into the channel and to what extent is, I guess, mix in that composition as well? Yes,

Speaker 2

complicated question. But yes, if you think about Q3, I would say that In terms of shipments, the bigger impact was the timing of getting our new products out would have been the largest impact on shipments in the quarter. Certainly then you know because of that mix is a little bit negative because those are High margin products and then we talked about last quarter that we thought we would see an incremental $40,000,000 of Manufacturing inefficiencies costs related to those in the second half of the year and most of that would be in Q3 And what we think now is that it's going to be about $70,000,000 with most of it most of the $40,000,000 in Q3 and about $30,000,000 in Q4. And really just because of the way the accounting works, the cost we see in Q3 we incurred in Q2 and the cost We see in Q4, we incur really in Q3 just because they get loaded into inventory. So our focus right now as Mike has said It's driving those costs out as fast as we can, so that they don't carry forward into next year and that we can get a handle on them as quickly as possible.

Speaker 2

We've taken really aggressive actions. It's really our 2 largest plants. They have the most complicated product sets. If you look at the rest of our plants, they're operating at the levels of efficiency they were at pre COVID. So we feel confident that we can Get there, it's just taking longer in the large plants, but we've got a lot of resources focused on it right now.

Speaker 6

Great. And then I guess as we look out to 'twenty four and you mentioned that you're working on fixing some of these manufacturing issues. I guess is that kind of the bigger uncertainty on 'twenty four On just the consumer, is there some variability in your timeline? Are you able to get this stuff maybe sorted before it impacts 24 in a meaningful? Or is that something you're still kind of TBC on how quickly some of these issues can be contained.

Speaker 6

I'm just wondering what the timeline to get this stuff settled is, so whereas maybe the consumer The only variable in the outlook.

Speaker 2

Yes. No, we're I mean, look, we're clearly, I'm not happy with the performance And the issues that we encountered, that said, as I talked about in the prepared remarks, I mean, the business Has contended with an awful lot in terms of the supply chain, labor disruptions, schedules moving around all that. That said, as we look forward, there's really five Things that have to happen, stability in the supply chain, stability in labor, stability in our production schedule, Getting the new product production process nailed down and then this refocus on lean. And what I would tell you is, the supply chain has stabilized. I'm not saying that things are perfect, but I can tell you that We have worked through one of the last largest suppliers that was causing a bit of disruption even into Q3, and we're feeling better about where those things Stan, labor stabilization, that presented some pretty significant challenges for us in Q2 and Q3, and We feel like we've got that largely in a better spot and the team has really put a lot behind that.

Speaker 2

I would tell you that schedule stability is improving. It helps To have a more dependable supply chain, we're getting better at our demand forecasting. Certainly with the market slowing down, that takes some of the volatility out of the equation, allows The teams kind of catch a breath and get that schedule set. I feel good about the new product manufacturing on Expedition. We're obviously slated to start delivering XD in November and the teams are making really good progress on that.

Speaker 2

So I feel like that one's well underway. And then really it comes down to this Refocusing on lean, now that the environment has settled down, we can start working on things within our factories like material flow that Probably haven't been operating very efficiently over the past several years, and we can get to work on those. I laid all that out because It's important to understand there's a number of different things going on. Bob made the comment, it's really our 2 plants in Alabama and But there's reason to believe we can get this done because we did it in Roseau with our snowmobile business. We did it in Spirit Lake, Iowa with our motorcycle business.

Speaker 2

And as I mentioned in my prepared remarks, our September Production efficiency and hitting the mark was much improved and we've seen that continuing into October. Bob mentioned it, from an accounting standpoint, cost improvements or cost inefficiencies kind of fall on a 1 quarter lag. We're going to be battling a little bit of that as we get into next year, but the teams are aligned. We've got incredible lean resources that we now have embedded in each To the 2 big facilities, and we're monitoring it daily. I'm briefing on it every week.

Speaker 2

So It is a big focus for us and I'm confident the teams will get this moving in the right direction as we get into 2024.

Operator

The next question is from Megan Alexander with Morgan Stanley. Please go ahead.

Speaker 7

Hi. Thanks for taking our questions. First, I just wanted to make one clarification. Bob, I think you mentioned in the prepared remarks You lowered the off road guide, but still up high singles. I think Slide 12 said off road unchanged.

Speaker 7

So is that just a plus 7 or plus 8 Nuance type of situation?

Speaker 2

Yes. We lowered the range a little bit.

Speaker 7

Okay. And then looking at the implied Q4, you talked about Flattish volume year over year. You maybe have some shifts that you talked about from the new products from a shipment perspective into the 4th And then you talked about retail up driven by snow. So I guess is the implication that side by side retail you expect to be down in the 4th quarter? And maybe can you contextualize how that compares with what you're seeing so far in October?

Speaker 2

Yes. So Couple of things. So if you think through shipment in Q4 relative to prior year there's a fair amount more snow in '23 than there was in 'twenty two because we have production problems and snow in 'twenty two and that will all ship Q3, Q4 this year. So That's part of it from a ship standpoint that's negative to mix though. And then On the side by sides, if you think about retail, retail will be up on side by sides primarily driven Based on our expectations of shipments of the new Expedition and XT Ranger XT products, Those will be big contributors because they're shipping expeditions were shipping in Q3 for retail in Q4 And then we'll continue to ship Expeditions and we'll start shipping XDs, which dealers have orders, customers waiting for.

Speaker 2

And so that will all retail in the quarter. So we're not expecting side by side to be down. We just right now the core part of the side by side market looks a little soft.

Speaker 7

Okay, that's helpful. And then maybe a follow-up as it relates to dealer inventory levels, given those comments and some of the shipments shifting Into the Q4, you talked about down 10% versus 19%. One of your slides suggests History would imply that dealer inventory is flat on a quarter over quarter basis. So is the implication that it's actually up on a quarter over quarter basis? And guess how are you thinking about how dealer inventory ends the year and what that could mean in terms of 'twenty four sales?

Speaker 2

Yes, I mean dealer inventory improved sequentially, so it certainly is up in Q3 versus the Q2. A lot of that's driven by The slowdown we've seen and obviously even though our production inefficiencies were there, we were able to get more product into the market. We're targeting to have dealer inventory kind of either flat or down versus 2019 as we get to the end of the year. But we're going to watch that. Certainly, you've got dynamics around making Sure that we get plenty of XD and Expedition, which are both under high demand, as well as our North Star Rangers into the channel.

Speaker 2

But I wouldn't suggest that there's some substantial significant change from where we are today.

Speaker 7

Okay, awesome. Thank you very much.

Operator

The next question is from Fred Wightman with Wolfe Research. Please go ahead.

Speaker 8

Hey, guys. Good morning. I wanted to come back to the manufacturing It sounds like that's now supposed to be $70,000,000 versus $40,000,000 previously. Can you just sort of help us with the sequencing of that as we carry into the first half of the year? Sounds like that's something that you expect to continue, but just the relative impact on 1Q versus 2Q would be helpful.

Speaker 2

So the way it's flowed through this year, at the end of Q2 we thought it'd $40,000,000 and really most of those costs were incurred in Q2. So we knew they were going to come through in Q3 and we had expected to be able to have a bigger impact on them in Q3 than we did. So the Q3 sort of excess costs carried into Q4 that's about $30,000,000 that will impact us It's a little tough to say what the impact will be in Q1. We're actively working to, because we'll but the Q1 impact will be the cost we Mostly the cost we incur in Q4. And so we're working actively to bring those costs out And to address those inefficiencies as Mike discussed, so I would say it's a little early to say what the impact will be on 2024 And we're not focused on 'twenty four guidance yet, but you can count on the fact that we're working as aggressively as we can to minimize any impact going forward.

Speaker 8

Fair enough. And then there's a comment in the slides just talking about some lending metrics that were pressured. Can you just Expand on what exactly you're referring to, what categories, whether it's retail or wholesale, what exactly you meant by that?

Speaker 2

Really the comment was really related to retail. And so what we saw in the quarter was really good pen rates And volumes up versus kind of prior quarters and last year. Approval rates were pretty flat Relative to history and FICO scores are actually up. The pressure is coming from increased focus on Kind of debt to income ratios and the lenders kind of putting more focus on that versus just FICO's. And then also some of the smaller lenders, the credit unions and things like that, That we're aggressive during the pandemic have backed off a little bit, which is good for us because we've got 4 lending partners who've been aggressive in the market.

Speaker 2

So there's not a lack of But there's a little bit of pressure on this sort of debt to income as the banks continue to review their portfolios. Perfect. Thank you. We don't believe in any dramatic impact on retail or anything like that. It's just a slightly changing environment.

Speaker 8

Makes sense. Thank you.

Operator

The next question is from Tristan Thomas Martin with BMO Capital Markets. Please go ahead.

Speaker 3

Hi, good morning.

Speaker 2

Good morning. Just

Speaker 3

a question, given the kind of slower production ramp, Are you shipping in as many Ranger XD 1500s in 4Q as you expected 3 months ago or some of it going to kind of spill over into the Q1 of next

Speaker 2

We are not. We got off to a late start as we talked about, and so we Anticipate that just pushes forward into 2024.

Speaker 3

Okay. And then just Kind of back to retail, I think you said flat, maybe down a little bit versus 2019. If I just look at, I think market share is down a bit, retail is trending lower. Should your inventory levels be lower and kind of how are you thinking about what's appropriate?

Speaker 2

I didn't catch the first part. Did you say market share is down?

Speaker 3

Well, I said if I look at market share compared to 2019, at least I can see Your ORV market share is down and then also retail is running lower than 2019, but if inventory is flat, I mean why is that appropriate?

Speaker 2

Well, our inventory right now is down 10%. And the point I was trying to make when I answered the earlier question is, If we anticipate by the end of the year, we'll be either be down slightly versus 2019 or flat. The thing to keep in mind is We now have Expedition and XD shipping into the market. So if you were to adjust for those items, our inventory is definitely down versus 2019 as we come out of the year, Which is consistent with what we're seeing around retail performance more broadly.

Speaker 3

Okay. Thank you.

Speaker 9

You bet.

Operator

The next question is from David MacGregor with Longbow Research. Please go ahead.

Speaker 3

Yes. Good morning, Mike, and congratulations on the progress on the On Road. It's encouraging. I wanted to ask you about the Promotional programs you're seeing in the marketplace right now, if you could elaborate a little bit further, a little more detail around what you're seeing, kind of the competitive behaviors? And also, are consumers responding to The promotions or is that maybe not so much the case right now?

Speaker 2

Yes, I mean, the promotional environment certainly has ticked up. We look at it on a number of different measures and overall as a percentage of revenue, it's still down about 25% from where it was in 2019. And we've gotten much more specific around what we're doing in terms of tailored Promotions directed at specific consumers, as well as the interest rate buy downs. I think on the targeted offers, We see those picking up traction. The interest rate buy downs certainly have garnered a lot of interest.

Speaker 2

But as Bob mentioned, The banks have tightened lending standards and certainly that's creating some pressure. Obviously, it's no secret to this community that Credit card debt is peaked and anybody taking on a new mortgage is obviously dealing with higher interest rates. So the banks are getting more particular about Installment debt and overall debt loads and that certainly is preventing some consumers from getting finance. But Overall, we feel like we're putting them into the right spots, still more efficient than what we have been historically. But ultimately, It's tough to get consumers off the sidelines if they're worried about much larger issues and we're not going to get into Throwing just huge gobs of money into the marketplace.

Speaker 2

We're going to continue to be very targeted in how we drive consumers into the dealer and Have it be a high quality lead that the dealer can convert.

Speaker 3

Thanks for that. And just as a follow-up, can you just talk about what you're seeing in market right now and the extent to which that may be impacting your business?

Speaker 2

Yes, I mean, as we talked about, we launched Polaris Exchange, so we obviously have Very good visibility into what's going on. The used market has slowed. Used prices have come down. We see that directly through The vehicles we have coming out of Polaris Adventures and through the exchange process, I would say It's normalized relative to some of the very high percentage of MSRP resale numbers that we saw back in 21 and even into 'twenty two. And I would say it mimics more what we're seeing in the broader new vehicle retail market.

Speaker 2

Things are just slower than they have been.

Speaker 3

Great. Thanks very much. Good luck.

Operator

The next question is from Jamie Katz with Morningstar. Please go ahead.

Speaker 10

Hey, good morning. I was hoping you guys could articulate maybe what the differences you're seeing between the Marine buyers and the traditional power sports buyers are I know you've spoken a bit about everybody shifting to this like premium Purchasing that has been benefiting you in models, but I think in marine you had mentioned that you're doing some lower price point products. So I'm wondering if that's a function of just the absolute price points of boats relative to like ATVs or if there Some wider addressable market or some other thing that's driving that decision?

Speaker 2

Yes. On the Marine side, Jamie, it's really kind of 2 things. To your point, the absolute dollar value of the boats makes the or Exacerbates the interest rate problem. You're looking at boats that average $60,000 to $75,000 and go up High as $300,000 So that interest rate impact is a lot more. The tenor of the financing is a lot longer.

Speaker 2

So we think that the interest rates have had a bigger impact in marine. We still see tremendous interest at the high end of our portfolio, but The consumer as it came through the pandemic, there really just were no kind of entry level boats of ours or even most of our competitors available and Coming out of that with both production returning to normal, dealer inventory starting to return to normal, we felt like it was a good time to reinvigorate the Entry level of our Bennington line and give another option to try to bring kind of a different consumer Into the space just given the lack of availability of those products over the last 2 to 3 years. So We think it's good timing. We think it will be a positive for the Bennington brand and will help bring that new consumer in. Jamie, the other thing I'd add is, remember marine is probably more directly correlated to say our RZR business where you've got primarily Vehicles that are for people to go out and enjoy the outdoors.

Speaker 2

The utility portion of our business, even though we're obviously a little bit more cautious than we had been, That does dampen volatility because these vehicles are being used obviously for far more than just People going out and enjoying the outdoors, they're used to get work done. And so that certainly dampens some of what we see when we compare the 2 categories.

Speaker 10

Okay. And then any update on the debt that's about to mature in December?

Speaker 2

Yes. So we're we have a Board meeting after this the next few days and we'll Be discussing with the Board what our options are and what path we want to take and we expect to get that executed certainly before the Term of the 364 expires in mid December.

Speaker 10

Okay. Thanks.

Speaker 9

Thank you.

Operator

The next question is from John Healy with Northcoast Research. Please go ahead.

Speaker 11

Great. Thanks for fitting me in. Just wanted to ask a question about Feedback from the dealer community largely on inventory levels. I know you mentioned that you're 10% below today and end of the year, you'll be comparable to 2019 levels. But are dealers wanting to be at 2019 levels?

Speaker 11

And the thought process and some of the feedback we've gotten this morning is questions relating to With ASPs up relative to 2019 and just the cost to carry that inventory, is 2019 the right way to think about Where dealers want to be or should we be thinking about the right level of inventory for a dealer is Maybe 80% or 90% of 2019 level. So just curious of what the feedback has been about where they would like to be themselves?

Speaker 2

Yes, I mean, we spend a lot of time working through that obviously and the tough part about talking about dealer inventory is we don't do it justice by talking at a high level. We're looking at this by region, by model, by submarket. And so we work through that with our dealers in terms The way we set our profiles in terms of stocking levels, we are below 2019, and that's on Adjusted for the sales price dynamics basis, the key difference as we get to the end of the year is we do have 2 very new large platforms And so when we look at the numbers excluding that, we are at a point where the dealers are below where they were in 2019. And we think and I think broadly they agree that we're zeroing in on the right range. That said, we know that there's pack We've seen more pronounced slowdown in some of the razor products where we've got to work with the dealers in specific regions to make sure they can move product that isn't anything that is abnormal.

Speaker 2

We constantly have to deal with shifting dynamics and we're working through that with the dealers. And Yes, I think the key is we're using that as our guidepost as we move forward into 'twenty four to make sure that we keep those inventory levels At the right level, so that the dealers got the right product for the consumer and they can manage their finances given the higher floor planning costs.

Speaker 11

Understood. And then just a follow-up on the snow business. Obviously, you guys are enthusiastic about what's on the horizon there. Is that more about The catching up over last year or are you starting to see some benefit from maybe dealers starting to shift towards you guys and maybe away from Yamaha as they Kind of exit the category here at some point in the not so distant future. And how big of an opportunity do you think that is for you guys?

Speaker 2

Yes, the Yamaha piece is small. Really, we and BRP are the 2 major players in the snow business. There's certainly some business to be picked up there, but I would tell you that the reason we're optimistic about our snow business is All the work we've done over the past year, year and a half to get that business back on track. Part of the headwind we've got as we head into 'twenty four The dynamic of the fact that we were late delivering our 22 snowmobiles, so we ended up shipping a lot in the Q1 of this year. And we've made vast improvements in our ability to deliver and we're going to have all of our SnowCheck units delivered before the end of this year.

Speaker 2

And so, Obviously, as we get into 'twenty five, we're going to be back on a more normalized cadence. And that obviously will present some challenges as we move forward. But We're really happy with what we've been able to do in that business, both in terms of getting the production smoothed out, but also So the improvements we've made in quality, the new products that that team has ready to launch as we get into 'twenty four Has us very optimistic about that business, albeit it's a small part of the overall company, but a big part of the heritage and heart of the company. And so it's really important for us to make sure that we've got that on the right track. So we're very optimistic about where we're headed.

Speaker 11

Great. Appreciate the color.

Operator

The next question is from Scott Stember with ROTH MKM. Please go ahead.

Speaker 9

Good morning, guys, and thanks for taking my questions.

Speaker 6

Good morning.

Speaker 9

First question on the utility side of ORV, you mentioned that the How is that piece holding up?

Speaker 2

Yes, I would just echo the comments I made earlier. I would tell you Kind of at the value to mid range of our lineup has slowed relative to what we had seen. But the demand at the higher end, whether that's the North Star Ranger or the soon to be delivered Ranger XDs, Remains solid. So I think it speaks to the fact that category is We're resilient because consumers are using that to get work done on a ranch or farm and we see that holding up better than we do in many of our purely recreational categories. Yes, we talked earlier that we saw some slowing from the rental companies In the back half of the year, but the rental company rental our rental commercial business was still really strong for the year.

Speaker 2

As these guys got into their kind of Q4, they backed off on capital purchases. But we expect to see that Start to return as we get out of the year and they get back to their new capital budgets and the road projects and Chip app stuff and all that remains pretty strong. So, we do expect to see that commercial business to be pretty solid again in 2024.

Speaker 9

Got it. And last question on PG and A. You talked about it being pretty strong still as we close out the year. But if you were to back out, so The lock and ride phenomena in some of the newer products on a like for like basis, how are you viewing the attachment rates? Are people Holding off, not putting as much items on their vehicles?

Speaker 2

Well, I mean, first of all, the new Lock and Ride MAX, Really hesitant. I mean, it's obviously on the new vehicles that we've got out there, but proliferation is still relatively low. Obviously, that will pick up as we get into next year. No, the attachment rates have continued to climb. We've done a lot with the factory installed accessories we do, whether that's Through Slingshot Design Center or the customization that our off road customers can do when they order a vehicle through the dealer.

Speaker 2

And We see that continuing to be strong, which I think speaks to the fact that people want to customize vehicles, which was a big part of our strategy. So we're Optimistic they've done a lot to grow that business. And as we talked about in my prepared remarks, I mean, we have the industry's leading number of attachments. And I'm really happy with what the team has done. You look at these new vehicles that have launched, Editions launched with over 100 accessories, XD is launching with over 70 accessories.

Speaker 2

We did the same thing with our XP Razor. It really allows us to get out and get customers customizing these vehicles the way that they want to.

Speaker 9

Got it. That's all I have. Thank you.

Speaker 2

Thank you.

Operator

The next question is from James Hardiman with Citi. Please go ahead.

Speaker 12

Hey, good morning. Thanks for squeezing me in here. First, just a quick clarification. Bob, I think you said you expected side by side to be up in the 4th quarter. Is it just side by side or do you think total ORV will be up in 4Q?

Speaker 2

I think total ORV will be up and obviously off road will be up because snow is included in off road.

Speaker 12

Okay, great. And then Maybe just

Speaker 2

another point of

Speaker 12

clarification. As you think about retail, I guess ORV Retail in particular, where do you think that finishes Versus 2019, I'm just trying to wrap my brain around weeks on hand or of inventory or inventory Turns versus 2019, it feels like with retail down and inventories even close to flat That those would almost have to be more weeks on hand, fewer turns versus 2019 when I think you said coming out of 2019 that you were a little bit heavy?

Speaker 2

Yes. So I mean, as Mike said, we think it's going to be retail Be relatively flat to 2019 if you look across the whole company. And dealer inventory right now looks like it's going to be Down, if you exclude XD and Expedition that you'll have new channel fill on, so Those weren't in the base, but in terms of major categories that we don't think have a lot of overlap. So turns Are relatively consistent like Mike said. There are pockets and pockets where we're light, pockets where we're heavy.

Speaker 2

We're focused on that, helping the dealers where they're heavy and getting things like Northstar's where we're still light out into the channel. So we feel good about dealer inventory. We are part of the reason we took the revenue guide down a little bit is we are going to be cautious as we go through the quarter. We took out some marine from the quarter that we wanted to make sure we stay in the right position on dealer inventory marine, Same thing with on road. It's been the motorcycle market, retails looked a little soft.

Speaker 2

So We're making sure we go into the season with the right amount of inventory. So I don't think we're heavy from a turn standpoint. Certainly the dollars And what you probably hear from dealers is they feel the dollars and with the price increases and the heavier mix On premium products and the interest rates, obviously we're conscious of that and we're working through that to Try to optimize it for people, but we feel like we're in a good place on dealer inventory.

Speaker 12

I'm sorry, did you say you thought that full year ORV retail would be flat With 'nineteen even after, I think it was down 20% in the Q3?

Speaker 2

Yes, James, We're not going to sit here and get down into the particulars, but I think overall as a company we think will be flattish, maybe down a little bit relative to 2019. And as Bob pointed out, I mean our dealer inventory levels adjusted for the 2 new products to be comparable to 2019 should be down as well. And so we know it's not perfect in all areas, but certainly a pretty good guidepost for us as we think about Getting into 'twenty four and how we want to start planning the business.

Speaker 9

Got it.

Speaker 3

Okay. Thanks, guys.

Speaker 2

Thanks.

Operator

The next question is from Seon Siew with BNP Paribas. Please go ahead.

Speaker 13

Hi, guys. Thanks for taking Maybe on the new categories, it sounds like as you've kind of talked about before that you view them as incremental and with

Speaker 9

little overlap for the existing line.

Speaker 11

And I know it's kind of early,

Speaker 13

but are there any kind of And I know it's kind of early, but are there any kind of initial indications that you're bringing in a new customer or any kind of Is it whether it be like pre sales or anything like that?

Speaker 2

Yes, we definitely, we don't have a lot of experience yet with the Other than what we're hearing from the dealers given we haven't delivered that, but for Expedition certainly we are pulling in folks That would have contemplated buying a more of an automobile to go do the types of activities, but the expedition offers them At a far more attractive price point, the ability to have a vehicle that can get them out, you know, doing the over landing and, deep woods activities that they want. So it's still early days, but we're really encouraged with what we've seen and I'd encourage you if you get the chance there's Plenty of reviews and customer videos and things out on YouTube that I think really speak to it better than we ever could on this call. Yes, I think if you think about Expedition, right, the product we have that's most comparable is general and we've continued to see strong retail on general And no fall off there. It looks like it's as Mike said, it looks like it's proving out to be somewhat different customer. Just a customer that wants more features would have maybe traded out of a Jeep or some other type of off road vehicle into the Expedition which obviously has a lot more Then the general, which has a little bit of a different use case.

Speaker 13

Got it. Thanks. And maybe just a follow-up. It sounds like versus We talked last time, it sounds like the value segments were maybe getting a little more pressure. Can you maybe just remind us the mix of value versus premium?

Speaker 2

We don't really I don't know that we've ever given that mix, but we've CINAHL got a good growth on the premium side. Value, it's obviously units a lot lower dollars And you know that pressure like we said is coming really we think from interest rates and this you know credit pressure on debt to

Operator

This concludes our question and answer session and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Polaris Q3 2023
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