Winnebago Industries’ earnings surged 73.5 percent in the first quarter ended November 27 on a 46 percent sales gain, easily outperforming Wall Street’s expectations. Mike Happe, president and CEO, said, “The way in which consumers have increasingly embraced an excitement for the outdoor lifestyle remained a powerful tailwind, driving demand for Winnebago Industries’ premium products, whether on land or water.”

Sales in the quarter reached a record $1.2 billion, up from $793.1 million a year ago. Wall Street’s estimate has been $1.03 billion.

Revenues excluding the recently acquired Barletta business were $1.1 billion, representing organic growth of 37.5 percent over the prior-year period. The gains come on top of a gain of 34.8 percent in the year-ago first quarter.

The top-line increases were driven by continued strong consumer demand and pricing increases related to current and anticipated higher material and component costs.

Happe said strong consumer demand for its brands drove its RV performance ahead of the overall market, resulting in further retail market share gains during the quarter. On a trailing three-month basis through October, RV market share is 13.3 percent, 1.3 share points ahead of the same period last year.

Happe said, “The catalyst continues to be our Grand Design RV brand, which consistently delivers record results and outstanding support for our dealers and end consumers. Newmar-branded diesel motorhome share and Winnebago brand towables growth also contributed nicely.”

In the new marine segment, Barletta continues to grow ahead of the pontoon market, capturing 5.3 percent retail market share on a trailing three-month basis through October, one and a half share points ahead of the same period last year.

Gross margins in the quarter likewise reached a record high. The gross margin rate improved 250 basis points to 19.8 percent, driven by operating leverage, price increases, productivity initiatives and favorable segment mix, partially offset by higher material and component costs.

Said Happe, “Our commitment to a make-to-confirm dealer order business model across the enterprise and a highly effective enterprise-wide strategic sourcing team was particularly helpful as we continue to navigate supply chain challenges and inflationary cost input pressures that we fully expect will be an ongoing reality during our fiscal 2022.”

Operating income, which includes $3.4 million of acquisition-related costs and $4.6 million of incremental amortization of intangible assets related to the acquisition of Barletta, was $146.4 million for the quarter, an increase of 72.2 percent year-over-year.

Net income, which includes $6.4 million of contingent consideration fair value adjustment related to the Barletta acquisition, was $99.6 million, or 2.90 a share, a hike of 73.5 percent. Adjusted EPS was $3.51, an increase of 97.2 percent year-over-year and far ahead of Wall Street’s consensus estimate of $2.26.

By segment, Towable revenues were $651.0 million for the first quarter, up 43.1 percent over the prior year, primarily driven by unit growth due to the strong continued end consumer demand and pricing increases. Segment Adjusted EBITDA was $112.1 million, up 77.5 percent. Adjusted EBITDA margin of 17.2 percent increased 330 basis points over the prior year and 230 basis points sequentially, primarily due to pricing increases ahead of anticipated material and component cost inflation and operating leverage. Backlog increased to a record $1.9 billion, up 116.6 percent over the prior year and 10.0 percent sequentially, due to continued strong consumer demand combined with low levels of dealer inventory, and pricing actions.

Revenues for the Motorhome segment were $421.5 million, up 30.7 percent and driven by an increase in Class B and Class A unit sales, and pricing increases. Segment Adjusted EBITDA was $50.2 million, up 65.3 percent from the prior year. Adjusted EBITDA margin of 11.9 percent increased 250 basis points over the prior year and 70 basis points sequentially, driven by operating leverage, pricing and productivity initiatives, partially offset by material and component cost inflation. Backlog increased to a record $2.4 billion, up 41.2 percent over the prior year and 4.7 percent sequentially, as dealers continue to experience low levels of dealer inventory and strong consumer demand.

In the new Marine segment, representing the combination of Chris-Craft, acquired in June 2018, and Barletta, acquired on August 31, 2021, sales were $79.3 million, an increase of $67.4 million compared to the same period last year. Segment adjusted EBITDA was $10.6 million, an increase of $9.7 million over the prior year and adjusted EBITDA margin was 13.3 percent, an increase of 610 basis points. Backlog for the Marine segment was $257.2 million, an increase of $195.4 million over the prior year. Revenue and EBITDA growth, in addition to the increase in EBITDA margin and backlog, are primarily a result of the recently acquired Barletta business.

Looking ahead, Happe said Winnebago will continue to work on replenishing dealer inventories to fulfill the record backlog.

“We continue to believe that the accelerated demand for our products catalyzed by COVID-19 by bringing even more people into the outdoor lifestyle and ultimately our premium brands is a lasting foundation to further build on,” said Happe.

He noted that recent RVIA survey data showed that 9.6 million additional households said they are considering buying an RV in the next five years. The KOA study also showed over 14 million households have camped for the first time during 2020 and 2021.

“Now, we fully recognize that not all these potential customers will actually buy a recreational vehicle but we do agree that future demand will be reasonably sustained at higher historical levels, in large part because of consumer interest and participation in the outdoors being at all-time highs,” said Happe.

Happe said the Marine segment has the potential to grow “meaningfully” and management has high expectations for the Barletta as it capitalizes on strong demand for pontoons.

“Barletta extended our reach into one of the fastest-growing boating segments, the pontoon category, and we see tremendous opportunity to further leverage their unique product innovation, quality dealer network, and service offering strengths to sustain retail market share growth,” said Happe. “Barletta is delivering both an exciting growth platform and a natural fit with our broader portfolio of premium brands. Within our marine segment, Barletta is balanced by the iconic Chris Craft Room, which was our initial entree into marine and a truly strategic entity in our premium brand portfolio. Together, they are enabling Winnebago Industries to capture more of the industry-wide demand for the outdoor lifestyle and drive incremental growth.”

Photo courtesy Winnebago Industries/Barletta