Winnebago Industries, Inc.’s fourth-quarter performance fell short of company expectations, primarily reflecting the sluggish retail demand environment and operating inefficiencies within the Winnebago-branded businesses as the RV industry faces various headwinds. President and CEO Michael Happe sees the challenges related to:

  • uncertain retail conditions,
  • higher inventory carrying costs and
  • slightly elevated inventories in the motorhome segment, leading to continued dealer hesitancy and increased promotional efforts.

“Despite the challenging operating conditions, in the fourth quarter, we continued to focus on the variables within our control,” Happe said when reporting results for the quarter. “We prioritized profitability and cash generation, aggressively managed inventory, and invested in new products and technologies to drive future growth.”

Winnebago Industries reported revenues of $720.9 million for the Q4 period ended September 30, a decrease of 6.5 percent compared to $771.0 million in the fourth quarter of last year. The company said the decrease was primarily due to product mix, partially offset by higher unit volume.

Gross profit was $94.2 million for the period, a decrease of 26.1 percent compared to $127.5 million in the fourth quarter of last year. Gross profit margin decreased 340 basis points in the quarter to 13.1 percent of sales, reflecting higher warranty expense, operational challenges and deleverage.

Operating expenses were $112.0 million in Q4, an increase of 60.4 percent compared to $70.0 million in the fourth quarter of last year. This increase was primarily driven by a $30.3 million impairment charge associated with

the Chris-Craft reporting unit, start-up costs associated with launching the Grand Design motorized business, strategic investments in engineering, digital technology development, and increased data and information technology capabilities.

The decline in fair value of the Chris-Craft reporting unit was driven primarily by softening in the marine industry, which resulted from sustained macroeconomic challenges impacting consumer demand, such as inflationary pressures and elevated interest rates, and current uncertainty regarding the timing and degree of an economic recovery.

The company’s operating loss was $17.8 million in Q4, compared to operating income of $57.5 million in the fourth quarter of last year.

Winnebago Industries posted a net loss of $29.1 million, or a loss of $1.01 per diluted share, in the fourth quarter, compared to net income of $43.8 million, or EPS of $1.28 per share, in the fourth quarter of last year.

Adjusted earnings per diluted share was 28 cents for the quarter, a decrease of 80.1 percent compared to adjusted earnings per diluted share of $1.41 in the fourth quarter of last year.

Consolidated Adjusted EBITDA was $28.7 million, a 60.6 percent decrease compared to $72.9 million last year.

According to the CEO, Happe announced several organizational changes focused on enhancing the Winnebago Motorhome and Winnebago Towables businesses, both of which have underperformed in recent quarters.

  • Chris West, who previously served as SVP of Enterprise Operations and Barletta Boats, was named president of the Winnebago-branded Motorhome and Specialty Vehicle business.
  • Don Clark, president of Grand Design and described by Happe as a “proven leader with an unmatched track record of success and understanding of the RV industry over the last 40 years,” was promoted to group president and will augment his responsibilities by providing executive oversight for the Winnebago Towables business.

“The extensive industry knowledge and leadership skills Chris and Don bring to their new roles will be invaluable in further enhancing Winnebago brand’s influence, impact, and market share through new products and technology innovations,” Happe commented.

Full Year Fiscal 2024 Results

  • Revenues were $3.0 billion, a decrease of 14.8 percent year-over-year, driven primarily by product mix and lower unit sales related to market conditions.
  • Gross profit margin decreased 220 basis points year-over-year to 14.6 percent of sales due to deleverage, higher warranty expense, and operational challenges.
  • Operating expenses were $333.3 million, an increase of 16.8 percent compared to $285.4 million in Fiscal 2023. The increase was said to be primarily due to the goodwill impairment charge associated with the Chris-Craft reporting unit, a full year of Lithionics operations and increased intangible amortization, start-up costs associated with the launch of the Grand Design motorized business, and strategic investments in engineering, digital technology development, and increased data and information technology capabilities, partially offset by lower incentive-based compensation.
  • Operating income was $100.2 million, a 66.7 percent decrease from $300.7 million in Fiscal 2023.
  • Net income was $13.0 million, or 44 cents per diluted share, compared to net income of $215.9 million, or $6.23 per diluted, in fiscal full-year 2023.
  • Adjusted earnings per diluted share was $3.40 for the fiscal year, a decrease of 49.8 percent compared to adjusted earnings per diluted share of $6.77 in fiscal full-year 2023.
  • Consolidated Adjusted EBITDA was $190.6 million for the fiscal year, a 46.3 percent decrease compared to $354.7 million last year.

Image courtesy Winnebago Industries, Inc.