Winnebago Industries’ fourth-quarter results exceeded Wall Street’s targets as pricing actions and growth in its Motorhome and Marine segments offset double-digit declines in Towables.

On a quarterly call with analysts, Mike Happe, president and CEO, said Winnebago for the fiscal year delivered record revenue and profitability as well as overall outdoor market share gains. He said all five of the company’s brands – Winnebago, Grand Design, Chris-Craft, Newmar and Barletta – capitalized on continued heightened interest in the outdoors emanating from the pandemic while feeling the impact of a slowdown in the latest quarter.

“It is no secret that demand for outdoor products exploded in the last two years and that new consumer trends have emerged, which will impact our industries forever,” said Happe.

He added, “While recognizing the inevitable normalization of short-term outdoor demand, we continue to believe that growing interest in the outdoors by an increasingly diverse range of consumers are lasting in the long term and that we at Winnebago Industries are better positioned more than ever to serve a wide range of consumers with our diversified portfolio.”

Happe added that inflation and rising interest rates is also impacting “strong retail demand environment that Winnebago Industries has been so successful at capitalizing on. However, we feel confident that our business is positioned to continue to perform well through economic cycles.”

In the quarter ending August 27, revenues climbed 13.8 percent to $1.2 billion for the Fiscal 2021 period, topping Wall Street’s consensus target of $1.12 billion. Revenues, excluding the acquisition of Barletta Pontoon Boats in August 2021, improved by 4.3 percent to $1.1 billion.

Gross margins in the quarter eroded 30 basis points to 17.8 percent, as higher material and component costs and deleverage were partially offset by pricing actions.

Operating income increased 3.0 percent to $123.6 million from $120.0 million for the fourth quarter of last year.

Net income was $82.6 million, or $2.61 a share, a decrease of 1.8 percent against $84.1 million, or $2.45, a year ago. On an adjusted basis, EPS was up 14.0 percent to $3.02 from $2.65 and easily ahead of Wall Street’s consensus target of $2.71.

Happe said despite the slowdown in the quarter, Winnebago’s “leading brands continue to win with our increasingly diverse consumer base, allowing us to maintain our strong market share positions within a challenging economic environment.”

The bottom line benefited from the “pricing power of our brands the innovation of our products, the agility of our supply chain, the increasing efficiency of our operations and disciplined investments in SG&A.” Happe further noted that as market conditions have recently downshifted, Winnebago’s team has constantly adjusted production in certain business segments to calibrate to the needs of dealers to end-consumer demand levels.

“We continue to manage Towable RV production levels to align with ongoing consumer end-market demand, while our Motorhome RV and Marine businesses work to replenish dealer inventories carefully,” said Happe. “Responsibly producing and maintaining appropriate field inventory levels remains a priority, and we are working closely with each of our dealer partners to sustainably ensure they have the supply they need.”

By segment, Towables sales in the quarter reached $494.2 million, declining 11.8 percent from the prior year, primarily driven by a decline in unit volume partially offset by pricing actions. Segment-adjusted EBITDA fell 36.2 percent to $53.2 million. Adjusted EBITDA margin of 10.8 percent decreased 410 basis points from the prior year reflecting higher material and component costs and deleverage, partially offset by pricing actions. The backlog decreased to $576.5 million, down 66.2 percent from the prior year due to normalized dealer inventories.

In the Motorhome segment, revenues climbed 23.8 percent to $555.8 million year over year, driven by continued strong unit sales and pricing actions related to higher material and component costs. Segment-adjusted EBITDA surged 53.4 percent to $77.4 million. Adjusted EBITDA margin of 13.9 percent increased 270 basis points over the prior year due to pricing actions and production efficiencies, partially offset by higher material and component costs. Backlog decreased to $1.7 billion, down 26.7 percent from the prior year, driven by increased levels of dealer inventories.

Revenues for the Marine segment, which includes Barletta and Chris-Craft, were $122.1 million for the fourth quarter. Excluding Barletta, revenues for the segment were $23.7 million, a 41.8 percent increase compared to the same period last year. Segment adjusted EBITDA reached $17.5 million, an increase of $15.8 million over the prior year and adjusted EBITDA margin was 14.3 percent. The backlog for the Marine segment was $314.7 million and remains elevated as low dealer inventories persist. The Barletta brand continued to outperform pro-forma expectations and deliver margins that are accretive to the Winnebago’s portfolio.

For the full fiscal year, sales jumped 36.6 percent to $5.0 billion, driven by the addition of the acquired Barletta business, pricing actions and strong consumer demand.

Record gross profit margin of 18.7 percent improved 80 basis points year-over-year driven primarily by improved operating leverage and price increases, partially offset by higher material and component costs and production inefficiencies caused by supply constraints. Operating income was $583.5 million for Fiscal 2022, up 43.2 percent compared to the prior year.

Net income was $390.6 million, or $11.84 a share, an increase of 38.6 percent year over year. Adjusted EPS of $13.81 increased 55.5 percent while adjusted EBITDA advanced 48.8 percent to $648.9 million.

Looking ahead, Happe said Winnebago anticipates some select supply chain constraints will linger into fiscal 2023, particularly in the Motorhome and Marine segments, although the company continues to make progress minimizing the related impacts by collaborating closely with suppliers. He added, “We also continue to monitor inflation while trying to balance pricing actions in a tougher demand environment and affordability of our premium products for our customers.”

Regarding the overall RV outlook, Happe said the company is generally aligned with RVIA’s (Recreational Vehicle Industry Association) recently released projections calling for a range of 490,000 to 500,000 in shipment units for recreational vehicles for calendar year 2022.

For calendar year 2023, Winnebago believes industry RV shipments will likely trend closer to a range of 400,000 to 410,000 units, slightly lower than the latest RVIA forecast. For retail, Winnebago estimates 450,000 RV units for the calendar year 2022 and retail units equivalent to wholesale shipments in 2023.

Said Happe, ‘Overall, and in the long term, we are confident that Winnebago Industries has significant headroom for sustained profitable growth and enhanced value creation for our end consumers, dealers, employees and shareholders. The confidence we have in our ability to drive continued value as highlighted by the recent 50 percent increase in our dividend and the commitment to repurchasing record levels of shares.”

Photo courtesy Winnebago