<span style="color: #a1a1a1;">Winnebago Industries Inc.’s earnings more than doubled on an adjusted basis in the first quarter ended November 28 as sales ran up 34.8 percent. Michael Happe, president, and CEO expects the strong appeal of the outdoors tied to the pandemic to continue to drive sales of recreation vehicles (RVs) in the year ahead.

The sales growth builds on gains of 39.1 percent seen in the fourth quarter ended August 29. On a conference call with analysts, Happe noted that company officials discussed on its fourth-quarter quarterly call how the pandemic spurred consumers “to combine the imperative of the safety of their families with their strong desire to be immersed in the experiences they could control, and consequently they continue to flock to the outdoor recreation lifestyle.”

The momentum continued in the first quarter. Happe added, “The expanding appeal of the outdoor lifestyle has contributed greatly to the momentum we have established in recent quarters and will be essential to our success in fiscal 2021.”

He cited a survey, The Padilla Spotlight Survey, commissioned in November by Winnebago, that “illustrated just how widespread the draw of the outdoors had been this year.”

In the calendar year 2020, the survey found 68 percent of Americans under the age of 55 participated in an outdoor activity such as camping, boating or hiking at a location away from their home or while visiting a state or national park. Overall, 60 percent of respondents pursued an outdoor activity in 2020, and for 31 percent, it was their first time participating in an outdoor activity.

“We are excited about the thousands of new consumers who have joined the RV and marine lifestyle over the last several months,” said Happe. “In addition to helping drive the growth, we have seen these new entrants join a community of RV consumers who upgrade every three to five years, providing an important source of future growth.”

Revenues Top Wall Street Targets
In the quarter, sales reached $793.1 million against $588.5 million a year ago. Excluding the impact of the last year’s acquisition of Newmar, sales climbed 22.0 percent. Net sales topped Wall Street’s consensus estimate of $748 million.

Gross margins vaulted 390 basis points in the quarter to 17.3 percent, driven by operating leverage, motorhome segment productivity initiatives and lower discounts and allowances, partially offset by the dilutive impact of mix related to the Newmar acquisition.

Operating income advanced 255.8 percent to $85.0 million. Net income climbed 308.2 percent to $57.4 million, or $1.70 a share. Adjusted EPS reached $1.69, an increase of 131.5 percent year-over-year and well ahead of Wall Street’s consensus estimate of $1.03. Adjusted EBITDA jumped 112.4 percent to $89.3 million.

Among its two segments, revenues for Towables were $454.9 million, up 33.3 percent over the prior year, primarily driven by the strong continued end consumer demand for its Grand Design and Winnebago product lines. Segment Adjusted EBITDA was $63.1 million, up 76.5 percent over the prior-year period. Adjusted EBITDA margin of 13.9 percent increased 340 basis points, primarily due to lower discounts and allowances and operating leverage during the quarter. Backlog increased to 29,659 units, an increase of 313.4 percent over the prior-year period, as dealer inventories have experienced a significant reduction amidst heightened levels of consumer retail demand since the summer of 2020.

In the Motorhome segment, revenues moved up 42.7 percent to $322.4 million for the first quarter, up 42.7 percent from the prior year, driven by Newmar and Winnebago Class B products. Excluding Newmar, segment revenues were $203.6 million, an increase of 7.0 percent over the prior-year period. Segment Adjusted EBITDA was $30.3 million, up 225.2 percent from the prior year. Adjusted EBITDA margin of 9.4 percent increased 530 basis points driven by pricing actions, including lower discounts and allowances, productivity initiatives and operating leverage. Backlog increased to 13,217 units, increasing 402.4 percent over the prior-year period, as dealer inventories have experienced a significant reduction amidst heightened consumer retail demand levels in the last six months.

Happe noted key product launches and several redesigns across its Winnebago, Newmar and Chris Craft platforms helped drive sales. On a trailing three-month basis as of October 2020, the company’s consolidated RV market share is 12 percent, up 120 basis points year-over-year, of which 70 basis points represents organic growth. He added, “Looking forward, I am energized by the fact that we have a very active new product development pipeline.”

Numerous cost-saving and productivity initiatives were also cited as a contributor to higher earnings and sales.

Happe added, “Our strong profit performance, including significant margin expansion, reflects the hard work and focus of our world-class Winnebago Industries team, which has maintained a commitment to operational excellence and safely manufacturing our products with a steadfast dedication to quality. We especially remain focused on continuing to deliver for our dealer partners, working hard to replenish their inventories, while ensuring strong financial performance and flexibility for both parties during these dynamic times.”

Winnebago Updates Brand Identity
During the first quarter, Winnebago unveiled a refreshed Winnebago Industries enterprise brand with a new tagline, “Be Great Outdoors.” Happe said, “This reinforces that while our company is made up of many great brands, our core values and foundational strengths create a company stronger than the sum of its parts. Much more than a new look, I believe our corporate enterprise brand identity will further inspire and unite our team around a common spirit of delivering extraordinary experiences to everyone we serve.”

The company also recently published its 2020 Corporate Responsibility report highlighting its commitment to sustainable practices and community support.

“We ended the first fiscal quarter with exceptionally strong retail momentum and record backlogs in our motorhome, towables and marine businesses with the second fiscal quarter underway,” said Happe. “We are seeing that the typical seasonality of our business is more muted than normal, and strong demand is continuing into the holiday season and dealer inventories remain extremely low.”

In fiscal 2021, Winnebago believes industry retail will grow in the mid-single-digits while industry wholesale shipments will expand approximately 30 percent. Happe noted that its fiscal industry wholesale shipment projection aligns with the RV Industry Association (RVIA) calendar year 2021 industry forecast of around 20-plus percent.  Happe said Winnebago believes the trade organization’s forecast “could be increasingly conservative” as retail trends continue at elevated levels and the supply chain chases inventory shortages.

Said Happe, “We are confident that the favorable dynamics in the market as more Americans discover the wonder of the outdoor lifestyle will persist and continue to drive share gains and strong performance throughout the fiscal year.”

Photos courtesy Winnebago