Revenue growth in the towables portion of Winnebago Industries Inc.’s portfolio plus the boost from the recent Chris-Craft acquisition helped the company cruise past Wall Street’s earnings per share and revenue targets.
The Forest City, IA-based recreational vehicle company—whose brands include Winnebago, Grand Design and now Chris-Craft—reported net earnings increased 23.4 percent in the first quarter ended November 24 on a 9.7 percent climb in revenues.
Fiscal 2019 first quarter net income was $22.2 million, an increase of 23.4 percent compared to $18 million in the same period last year. Earnings per diluted share were 70 cents, an increase of 22.8 percent compared to earnings per diluted share of 57 cents in the same period last year and topping estimates by 7 cents.
Revenues for the Fiscal 2019 first quarter ended November 24, 2018, were $493.6 million, an increase of 9.7 percent compared to $450.0 million for the Fiscal 2018 period.
Gross profit was $71 million, an increase of 13 percent compared to $62.8 million for the Fiscal 2018 period. Gross profit margin increased 40 basis points in the quarter, driven by favorable business mix due to the strong growth in the towable segment and improved margins in the motorhome segment.
The first quarter of Fiscal 2019 came on the heels of Winnebago’s stellar 2018, which saw the company surpass $2 billion of net revenues for the first time, grow North American RV market share to approximately 8.5 percent and complete the acquisition of boat maker Chris-Craft.
“It was a good year,” President and CEO Michael Happe said on the earnings conference call with analysts.
That might be an understatement, as Winnebago’s solid 2018 built the foundation for an even brighter outlook in the coming year.
“We are pleased that Winnebago Industries’ overall revenues continue to grow organically and at a healthy pace at a time when the RV industry is working to normalize its overall field inventory levels in relation to a more moderate retail pace,” Happe said. “In addition, we have made material progress in increasing our profitability.
“We now look to 2019 and this fiscal year for more of the same. Sales results that surpassed those of the industries we compete in, a focus on driving higher levels of profitability and asset utilization, and an appetite to grow in new ways that position Winnebago Industries and its brands for sustained future success. We are pleased with the results from the first quarter of this new 2019 year.”
Looking across the company’s portfolio, in the first quarter, revenues for the motorhome segment were $181.3 million, down 3.6 percent from the previous year. Segment Adjusted EBITDA was $12 million, up 144.4 percent from the prior year.
“While revenues were down modestly, 3.6% versus the prior year, we believe the wholesale sales pace actually exceeded that of the industry in the Q1 period,” Happe said. “We also continued our progress to expand gross margins as efforts to implement operational improvements, manage cost input pressures, and the favorable mix related to a strong Class B quarter, all factored to yield strong results.”
Adjusted EBITDA margin increased 400 basis points, driven by net pricing and operational improvements. Backlog decreased 23.6 percent, in dollars, versus the prior year, reflecting rental unit and new product order timing, in addition to a more challenging late fall shipment environment.
Revenues for Winnebago’s towable segment were $292.8 million for the first quarter, up 12.8 percent over the prior year, driven by continued strong organic unit growth across the Grand Design RV branded line and pricing.
“Our ability to outpace the industry in terms of unit shipment and retail growth is clear affirmation of the robust appeal of both our towables brands across a broad customer base,” Happe said.
Segment adjusted EBITDA was $30.8 million, down 7.7 percent vs. the prior year. Adjusted EBITDA margin of 10.5 percent decreased 240 basis points, reflecting continued cost input pressures and a robust comparable period in the year prior.
Backlog levels remained strong but declined 3.9 percent, in dollars, versus the prior year, reflecting a re-balance from high backlog levels in first quarter Fiscal 2018 and utilizing additional capacity added during calendar 2018, in addition to a more challenging late fall shipment environment.
“We are very comfortable that our current Towables’ backlog is in line with internal growth projections we have for the remainder of the fiscal 2019 year,” Happe said.
Happe also was upbeat on the company’s Chris-Craft acquisition, which the company announced in June. Winnebago acquired Chris-Craft, the recreational boat builder, from Stellican Ltd., which had owned Chris-Craft since 2001.
“We are seeing the benefit of a full quarter of Chris-Craft’s marine sales within our financials,” Happe said. “We are pleased with the integration of this brand into our portfolio of outdoor lifestyle products. The Chris-Craft team has had a tremendous summer and fall, especially telling the introduction of two new models, the 28 and 35 Launch GT boats. Chris-Craft’s sales in the first quarter were strongly positive in shipments and retail versus the same period a year ago and they are performing on pace with the financial plan we modeled for the first full fiscal year within Winnebago Industries.”
Photo courtesy Winnebago Industries Inc.