Winnebago Industries reported a sharp increase in profits in the fiscal third quarter ended May 28 as sales expanded 52 percent.
Third Quarter Fiscal 2022 Results
Revenues for the Fiscal 2022 third quarter ended May 28, 2022, were a record $1.5 billion, an increase of 51.8 percent compared to $960.7 million for the Fiscal 2021 third quarter. Revenues, excluding the recently acquired Barletta business, were $1.4 billion, representing an organic growth rate of 41.1 percent over the prior-year period, driven by pricing increases and shipments related to dealer order backlog.
Gross profit was $273.0 million, an increase of 60.9 percent compared to $169.6 million for the Fiscal 2021 period. Gross profit margin increased 100 basis points in the quarter to 18.7 percent, driven primarily by operating leverage, price increases and favorable segment mix, partially offset by higher material and component costs.
Operating income, which includes $4.6 million of amortization associated with the acquisition of Barletta, was $176.7 million for the quarter, an increase of 72.5 percent compared to $102.4 million for the third quarter of last year. Fiscal 2022 third-quarter net income, which includes $11.8 million of contingent consideration fair value adjustment related to the Barletta acquisition, was $117.2 million, an increase of 64.4 percent compared to $71.3 million in the prior-year quarter.
Reported earnings per diluted share were $3.57 compared to reported earnings per diluted share of $2.05 in the same period last year. Adjusted earnings per diluted share were $4.13, an increase of 84.4 percent compared to adjusted earnings per diluted share of $2.24 in the same period last year. Consolidated Adjusted EBITDA was $191.7 million for the quarter, compared to $109.8 million last year, an increase of 74.7 percent.
President and CEO Michael Happe commented, “The trend in recent quarters continued as Winnebago Industries delivered impressive third-quarter results driven by our team’s focused execution and good progress on reducing our order backlog in the quarter from our expanded portfolio of premier outdoor lifestyle brands. In the third quarter, we capitalized on the prime spring selling season to further gain share and expand our pipeline of lifelong customers as our golden threads of quality, innovation and customer experience continue to differentiate the Winnebago portfolio and resonate with consumers. The unique strength of our brands positioned Winnebago Industries to not only gain market share but also to successfully take continued pricing actions to offset meaningful component and material cost inflation and enhance margin performance across our segments. We are incredibly proud of our results and the efforts of our talented team across the organization. As we look ahead to our last quarter in the fiscal year, we will maintain our focus on executing our proven strategy and build on our momentum to further grow and solidify our expanding market position, while driving long-term value for end customers, dealers, employees and shareholders. We will also continue to demonstrate appropriate discipline in capacity utilization in accordance with matching our production schedule to dealer demand.”
Revenues for its Towable segment were $805.6 million for the third quarter, up 45.0 percent over the prior year, primarily driven by pricing increases and solid unit growth as a result of a strong dealer order backlog. Segment Adjusted EBITDA was $117.8 million, up 47.0 percent over the prior-year period. Adjusted EBITDA margin of 14.6 percent increased by 20 basis points over the prior year. Backlog decreased to $1.3 billion, down 13.7 percent from the prior year and down 29.9 percent sequentially, as Winnebago Industries successfully replenished dealer inventories in the Towable segment.
Revenues for the company’s Motorhome segment were $516.3 million for the third quarter, up 34.0 percent from the prior year, driven by pricing increases across the segment and strong unit sales. Segment Adjusted EBITDA was $64.4 million, an increase of 71.9 percent over the prior year. Adjusted EBITDA margin of 12.5 percent increased 280 basis points over the prior year driven by price increases and operating leverage, partially offset by increased material and component costs. Backlog increased to $2.3 billion, up 4.8 percent over the prior year, driven by increased ASP’s partially offset by a decrease of 16.3 percent in units.
Revenues for its Marine segment were $126.5 million for the third quarter. Segment Adjusted EBITDA was $19.8 million, an increase of $18.2 million over the prior year and the Adjusted EBITDA margin was 15.7 percent. The backlog for the Marine segment was $245.4 million and remains at elevated levels as low dealer inventories continue. The Barletta brand has outperformed Pro-forma expectations to deliver margins accretive to the Winnebago Industries portfolio.
Balance Sheet and Cash Flow
As of May 28, 2022, the company had total outstanding debt of $541.5 million ($600.0 million of debt, net of convertible note discount of $49.1 million and net of debt issuance costs of $9.4 million) and working capital of $582.7 million. Cash flow from operations was $245.2 million in the first nine months of Fiscal 2022, an increase of $97.3 million compared to $148.0 million in the same period last year.
Quarterly Cash Dividend and Share Repurchase
On May 18, 2022, the company’s board of directors approved a quarterly cash dividend of $0.18 per share payable on June 29, 2022, to common stockholders of record at the close of business on June 8, 2022. This dividend is in line with the prior quarter’s dividend of $0.18 per share and represents a 50 percent, or $0.06 per share, increase from the dividend of $0.12 per share approved in May of 2021. Winnebago Industries executed record share buybacks of $70.0 million during the third quarter. On a fiscal year-to-date basis, share buybacks totaled $129.6 million and cash returned to shareholders totaled $147.7 million.
Happe continued, “Looking at the broader economic trends, we have been successful in managing supply chain disruptions, improving dealer inventory levels, navigating cost inflation, and driving manufacturing productivity to deliver consistently strong results. We expect supply chain inconsistencies and inflation pressures to continue in the fourth quarter, and into our fiscal 2023, and we are focused on continuing to stay ahead of them by leveraging our resilient operating structure, deep and collaborative relationships with our dealers and suppliers, and highly-differentiated, premium portfolio of brands. We are confident that the continued execution of our strategy, including a focus on innovation and a differentiated product and overall customer experience, and unwavering commitment to our team and communities positions Winnebago Industries for sustained market share gains and strong profitability across our business.”
Photo courtesy Winnebago